Treasury stretched in keeping tabs on major projects

Wednesday 8th March 2017

The Treasury's ability to closely monitor the largest and most complex government projects is stretched as demand for greater oversight from public sector agencies expands.

Speaking to Parliament's finance and expenditure select committee, Treasury deputy secretary of budget and public services Struan Little confirmed it was getting tougher to keep on top of the growing number of major projects that demand extra supervision. The government's financial adviser has 53 major projects on its watch, up from just nine when the current administration took office in late 2008.

The committee was hearing submissions on the Office of the Auditor-General's report 'Using Gateway reviews to support public sector projects', which found the independent reviews had helped specific projects, but that more could be done to share any lessons found across the wider public sector, something Little said the Treasury was trying to do. Gateway reviews are independent and confidential peer reviews that seek to get a project over the line and rate their chance of success rather than an audit.

Labour Party finance spokesman Grant Robertson questioned how the reviews fit into the wider suite of oversight tools the Treasury uses to monitor major projects and noted the department's briefing to the incoming minister flagged the need for a ministerial decision on reducing the number of major projects under its watch.

The Treasury's Little said demand for some of those reviews had been rising. With a broader array of projects, "inevitably we are stretched" with an "almost inexhaustible line of projects we could look at". That meant the department has to apply "judgment in terms of applying ... resources."

Last year when he was still finance minister, Bill English scaled back the number of major project reports published annually by the Treasury to one full report and two high-level updates from what had been three reports, in an effort to cut costs.

The gateway reviews cost $75,000 apiece and because the agencies undertaking the work are charged, the Treasury covers its costs once 25 are done in a year. Since they were introduced in 2008, more than 180 have been completed on 80 projects, with a total value of some $42 billion and involving 40 agencies,

Treasury investment asset management performance manager Ricky Utting told the committee that demand for the reviews had "gone through the roof", with between 35 and 45 likely to happen this year, compared to the usual 20-to-30. It is bringing in short-term resource to help cover the shortfall.

"There's a real demand for this - part of it's that we're victims of our own success in trying to promote these tools in the system," Utting said.

A cost-benefit analysis hadn't been done for the New Zealand gateway reviews, but UK analysis had found cost savings of between 2 percent and 4 percent. Green Party co-leader James Shaw questioned why that value hadn't prompted Treasury to scale up its coverage of major projects, to which Little said it was down to ministerial priorities.

"There's opportunities throughout our business. If the government wants to invest more, we could do more," Little said.

When asked by NZ First leader Winston Peters whether the wrong people were running the major projects in the first place, Little said the public sector's commercial skills had traditionally been weak, especially in contract management and procurement.

Utting said there were efforts across government to raise the capability of the public sector, which should lift performance and capability. However, procurement was one of several areas suffering from a national skills shortage, he said.

BusinessDesk.co.nz

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