The Public Spending Code (PSC) was first published in 2013 as a structure to ensure value for money in public expenditure particularly in major infrastructure projects, writes Jenna Davis, Associate Director of Infrastructure and Government at KPMG Ireland.
Complex and major projects can take over a decade to cycle through inception, detailed design, and delivery to get to the operational phases. Societal needs, uncertainty of future demand as climate change progresses, and significant world events such as a pandemic add layers of challenge to large scale infrastructure projects as these drive changes in need over that time. The ability to manage change and remain agile as projects transition from design to delivery will be the differentiating factor for successful infrastructure investment going forward.
The Public Spending Code also brought in significant changes to the governance over project development and project delivery. That will delay project development, but it is making sure projects being brought to market will have more developed scopes and more realistic cost estimates. We need to ensure that it also allows projects to remain agile and responsive to societal changes. Governance needs to be made to work effectively for the project and be seen as a positive agent for change for the better.
To achieve the ambitions of Project Ireland 2040, as detailed in the National Planning Framework (NPF) and the National Development Plan (NDP), there are three key aspects to consider to ensure appropriate governance yet enable agility:
Complex capital projects require a multitude of resource and expertise with the sector. Procurement strategies developed as part of the initial business case stages should be regularly reviewed to identify gaps and opportunities to further align with the current supply chain environment and updated NDP. There is also a need to ensure an external assurance process (Update of the Public Spending Code: Guidelines for the External Assurance Process for Major Public Investment Projects; effective 17 November 2021) is included as part of any contracting arrangements.
Public and private engagement
Public entities at a national and local level, such as government departments, local authorities, state agencies, devolved agencies, semi-state companies and approved independent bodies are all responsible for the delivery of capital programmes. These entities need to work with the supply chain to communicate the increased capability and capacity needs with realistic timetables to allow enough time to plan, upskill and respond to project tenders without potential delay to execution. A strategic procurement strategy that engages the private sector early at home and abroad will be needed to bridge the skills gap. Public entities will also need to review their internal capability to evolve from planning teams to capital project managers leading the execution stages.
Key performance measures form the structure of effective governance in project delivery. To understand the actual status and performance of a delivery team, KPI measures on schedule, costs and risk are needed but measures that reflect progress towards meeting the ultimate objective of the project will maintain clarity for decision making, particularly at board level. You can have a project delivered on time and on budget, but we also need a stand back to make sure it has met the need identified in the first place. These measures need to be incorporated at procurement stages so that external assurance throughout can be applied effectively to add insight during delivery and as part of a post execution review.
The overriding theme for publicly funded major capital projects will be managing transition and change. Transition from planning to execution will see change in terms of what was planned, sector change in the demand for more skills and people; and change in what is actually needed now. Smart procurement, clear communication and meaningful measures will allow the ability to anticipate change and react effectively to manage the outcomes. These changes could manifest as scope variations or amendments to government policy or new regulation. Infrastructure projects are long term investments delivered often over decades. We must be agile to avoid under delivery on the outcomes that Ireland needs from its infrastructure and at the same time exercise appropriate governance and change processes to oversee them.