Management Approaches to Resource Allocation
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6. International Experiences
The Treasury Board Secretariat has conducted a preliminary review of two Commonwealth countries (The United Kingdom and Australia) on their approaches to project approval and oversight.
Key Findings:
- Although not all of these governments exercise their oversight through limiting expenditure authority in the approval of projects by a central agency as that of the Canadian government, the concept of a tailored approach considering project risk and complexity and organizational capacity has been reflected either in the project approval process or in the project implementation.
6.1. The United Kingdom
In the UK, performance target and budget allocation decisions are made for departments by the cabinet committee that conducts the UK government’s spending reviews. Once the decisions are made, departments have the authority to launch and execute the spending initiatives that they determine as necessary to achieve their business objectives. It is unclear whether there is a project financial threshold for departmental projects.
In January 2011, the UK government created a Major Projects Authority (MPA) body with the mandate to improve the delivery success rate of major projects. The creation of the MPA formalizes the role of Her Majesty’s Treasury (HMT) in collaboration with the Cabinet Office to oversee the ongoing approvals and assurance reviews of projects. This process is supported by the introduction of a compulsory Integrated Assurance framework which covers the life cycle of each Major Project. Gateway Review is one of the assurance tools to assess a project’s performance.
The Gateway Review Process was developed in 2001 to examine projects at key decision points throughout their life cycles. The governmental oversight is carried out through a Gateway Review Process by the UK’s Office of Government Commerce, which is an independent office of HMT to support the procurement and acquisition process through policy and process guidance.
All acquisition and procurement projects are subject to the Gateway Review Process. A Risk Profile Assessment, not unlike the Project Complexity and Risk Assessment (PCRA), is conducted for each project to determine its level of risk being high, medium or low before a Gateway Review Process is tailored to provide oversight reflecting the corresponding risk level during the project implementation life cycle. For projects classified as low risk, departments may decide that a Review is not needed. This decision must be made on the basis of a full understanding of the implications and departments must be accountable for their action.
When significant risk is identified during the Gateway Review Process, a letter from the Chief Executive of the Office of Government Commerce to the Permanent Secretary of the department responsible to alert the most senior levels to take immediate remedial action. Only issues that cannot be resolved are escalated to Ministers by MPA.
6.2. Australia
Australia has a project approval process that follows the Lead Agency Framework adopted by the Cabinet in August 2009 to improve the project approval process. According to this Framework, five departments were identified as lead agencies to provide tailored assistance to preparing project submissions based on the complexity and the significance of the project proposals, which are assessed as Level 1, 2 or 3. It is not clear whether approvals are subject to financial thresholds set out by a central body; however, it appears that a detailed Project Definition Document covering all aspects of a project identifies the required level and complexity of the approval processes, including the needed approvals and the level of details of submissions.
The Australian Government has introduced the Gateway Review Process in 2006 to strengthen the oversight and governance of major projects. The Process is managed by the Department of Finance and Deregulation, which plays an important role in assisting government across a wide range of policy areas to ensure its outcomes are met, particularly regarding expenditure and financial management, deregulation reform and the operations of government.
Once a project meets certain financial thresholds, the risk level is determined using the Gateway Assessment Tool and oversight process of the project implementation is tailored to reflect the assessed risk level. The risk threshold for entry to the Gateway Review Process is High Risk and projects assessed as High Risk must move sequentially through the full Gateway Review phases throughout the project’s full life cycle.
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