Works Reform Business Solution Plan June 2009 Foreword Government buildings are fundamental to the delivery of services to the community. The Government’s $20 billion portfolio of building assets is made up of more than 4,000 individual buildings across the state including hospitals, schools and police stations. Effective management of new and existing building assets is therefore critically important to Government and the community. Government’s investment in new buildings must represent value for money; buildings must be planned, designed and constructed to appropriate time, cost and quality standards. Maintenance of new and existing buildings is also vitally important to ensure that assets maintain their value and function as they are intended, so that Government can deliver quality services to the community. This Works Reform Business Solution Plan is a major step toward ensuring government building assets represent value for money and meet all the quality parameters required to deliver government services to the community. The four-year plan outlines a comprehensive range of key initiatives to deliver better asset management outcomes and addresses the challenges of delivering new buildings, maintaining the existing portfolio and providing office accommodation. The plan will drive the Government’s $5 billion non-residential works program over the next four years. This reform agenda relies on all government agencies with building asset requirements embracing this new direction and actively engaging with the Department of Treasury and Finance’s new Building Management and Works business. We must ensure our investment in buildings for use by the Western Australian community is managed efficiently because the services provided by Government rely on it. Achieving these goals will involve new and innovative procurement methods, such as public–private partnerships, to generate savings and deliver projects on time and on budget. The new approach, under the leadership of the Department of Treasury and Finance, will involve strong project management and a more strategic focus on asset planning and business case development. I commend the direction taken in this plan and have approved all the recommendations. I strongly encourage government agencies and our industry partners to do their part in ensuring we can meet the challenge of this important reform program. Troy Buswell Treasurer; Minister for Commerce; Science and Innovation; Housing and Works June 2009 Table of Contents EXECUTIVE SUMMARY........................................................................ 6 SECTION 1: INTRODUCTION ............................................................. 10 SECTION 2: BACKGROUND............................................................... 11 SECTION 3: STRATEGIC ASSET MANAGEMENT FRAMEWORK ... 12 SECTION 4: WORKS REFORM OBJECTIVES................................... 14 SECTION 5: NEW BUILDINGS PROGRAM ........................................ 21 SECTION 6: BUILDING MAINTENANCE ............................................ 26 SECTION 7: OFFICE ACCOMMODATION ......................................... 33 SECTION 8: CENTRE FOR EXCELLENCE AND INNOVATION IN INFRASTRUCTURE DELIVERY (CEIID) ................ 37 SECTION 9: STRATEGIC PROJECTS ............................................... 39 SECTION 10: BMW ORGANISATION ................................................. 41 SECTION 11: ASSOCIATED REFORMS ............................................ 48 SECTION 12: BUSINESS CASE FOR THE PLAN .............................. 58 SECTION 13: OVERVIEW OF RECOMMENDATIONS ...................... 67 APPENDIX 1 - MAJOR PROJECTS COST PERFORMANCE ............ 73 APPENDIX 2 - CEIID STRATEGIC PLAN OBJECTIVES ................... 74 APPENDIX 3 - BMW CAREER PATHWAYS FOR PROJECT MANAGERS ....................................................................... 75 Executive Summary The ‘Building Management and Works’ (BMW) business became operational within the Department of Treasury and Finance (the DTF) on 1 February 2009, with personnel and funding directly associated with the ‘works’ functions officially transferred to the DTF from the former Department of Housing and Works (DHW). The change was the first step in the works reform program. This Works Reform Business Solution Plan outlines the proposed reforms to the planning and project management for the design, construction, maintenance and leasing of government buildings. Sections 1 and 2 of this plan provide a brief introduction and background to the Works Reform program. Over the last seven to 10 years, the former DHW’s own planning and project management capability progressively declined, which left client agencies with little choice other than to seek this support from the private sector. The direct and indirect consequence of these circumstances has been felt in a number of ways across the non-residential building program. This plan proposes a fundamental change in the approach to planning and delivery across the full range of BMW activities. To be successful, the reform will require a substantial increase in asset planning and project management capability and capacity within government. The proposed approach to these reforms is outlined in the body of this plan. Section 3 provides a background on the Strategic Asset Management (SAM) Framework, an integral part of the Works Reform program. The plan identifies the need to review the SAM Framework to support the Works Reform program and the need for all BMW functions to embrace the framework to ensure it drives business solutions. Section 4 of the plan identifies the key problems the Works Reform program aims to address with the procurement of building related projects and programs, including: • capital works project cost and time overruns; • poor strategic asset planning across government; • poor business case development for capital investment; skills and experience government; within • loss of project management • the piecemeal approach to government office accommodation planning; Page 6 Works Reform Business Solution Plan • the piecemeal approach to building maintenance planning; and • the overly centralised approach to regional capital works project management. Section 5 focuses on delivery of the State’s non-residential building program, proposing a significant change in approach to planning and delivery. The plan details a role redesign for BMW that will strengthen asset planning and business cases for capital investment. The new BMW role will include control over project management, and leadership with new, innovative and non-traditional models of procuring new buildings. It also proposes a ‘re-badging’ strategy that will see all resources within client agencies that focus on new building project management brought into a whole-of-government team led by BMW. Section 6 focuses on building maintenance and proposes an approach not dissimilar to new buildings with central leadership and a whole-of-government portfolio management role, enabling BMW to provide advice to Government on how agencies are managing their assets. A greater focus is proposed for strategic maintenance planning, including improving the rigour of the current planning process. It is recognised that BMW needs to refocus from largely responsive building maintenance and drive more strategic and innovative procurement. A new approach to funding maintenance is also proposed. Section 7 focuses on government office accommodation - also proposing a more central role for BMW that aligns with a total portfolio and master planning approach. It recognises the need for BMW to strengthen its capability in accommodation planning and procurement to facilitate this new role. Section 8 outlines the role and purpose of the Centre for Excellence and Innovation in Infrastructure Delivery (CEIID) and the importance to BMW of continuing to support its objectives, actively participating and learning from the knowledge and experience of other CEIID members. Section 9 confirms the role of the Office of Strategic Projects, its partnership with CEIID and its new direction for supporting the Works Reform program as an integral part of the new BMW business. Section 10 considers the overall functional changes required for BMW to achieve this Works Reform program, including a new organisational structure, with increased resources, a new career path for project managers, the need to develop new information systems, and a plan for regional BMW offices with appropriate resourcing. It also outlines new governance mechanisms for BMW’s client government agencies (based on a partnership approach), and enhanced building industry liaison. Works Reform Business Solution Plan Page 7 Section 11 outlines associated reforms that need to be considered as part of the overall Works Reform program, including a review of the Public Works Act (1902) and procurement policies and processes; consideration of a whole-of-government asset information and management system; issues surrounding land assembly and heritage value; the ongoing management of the Fremantle Prison; the role of the Office of the Government Architect, and the future of the Industry Training Unit. Section 12 details the business case for the plan with the fundamental change in the approach to funding BMW and the re-badging of project management resources. The preliminary cost estimate for this Works Reform program is: The $34 million recurrent cost increase will be offset by at least an equivalent cost decrease in the works program, primarily due to the in-sourcing of project management (now undertaken by private sector consultancies). In addition, a 10% improvement in the actual cost of capital works projects should be a reasonable target, given the waste and limited innovation in the current approach. For the building maintenance program, the proposed reform should see a significant reduction in wasteful breakdown repairs (by 10 to 15%) with the saving being reinvested in planned maintenance. For government office accommodation, the proposed reform should see a significant reduction in office accommodation costs for the same demand. This will be achieved through more efficient fit outs, some relocations out of the CBD, and more effective coordination of agency needs. A 10% improvement should be a reasonable target. The savings outlined above will be progressively phased in as the Works Reform program is implemented over the next four years. • $34 million over four years (recurrent); • $6 million in 2009-2010 for accommodation fit-out; and • $20 million in 2009-2013 for information systems This is a total of around $60 million over four years. Page 8 Works Reform Business Solution Plan The target savings are summarised in the following table. SAVINGS from In-sourcing Project Management New Buildings Breakdown Repairs Office Accommodation Total 2009-10 6 2010-11 8 2011-12 10 2012-13 10 Total $34m 22 4 8 $40m 36 6 10 $60m 50 8 12 $80m 65 10 15 $100m $173m $28m $45m $280m Table 1: Indicative savings for the four-year Works Reform program The business case proposal is that for an investment of around $60 million over four years, cumulative savings of around $280 million should be achievable in the same timeframe, as well as a wide range of other benefits to government and key stakeholders. The most significant of these other benefits is a reduction in time and cost overruns on capital works project budgets. Additional benefits will include improved satisfaction in government agencies, BMW staff and the building industry, on a range of important attributes. Whilst the information outlined above is still preliminary, and will need to be further analysed as part of the implementation planning, there is clearly a strong business case for this reform program. Section 13 provides a summary of the specific recommendations of this plan. There are 55 in total. Works Reform Business Solution Plan Page 9 Section 1: Introduction On 15 December 2008, Cabinet approved transferring of the ‘works’ function of the Department of Housing and Works (DHW) to the Department of Treasury and Finance (the DTF), and endorsed the commencement of the ‘Works Reform’ program. As of 1 February 2009, the ‘Building Management and Works’ (BMW) business became operational within the DTF, with personnel and funding directly associated with the works functions officially transferred to the DTF. On 28 April 2009, Cabinet approved a new lead role for BMW in the non-residential building program, and supported the growth in its project management capability and capacity. This Works Reform Business Solution Plan outlines a plan to implement this new role. It proposes reforms to the planning and project management for the design, construction, maintenance and leasing of government buildings. Page 10 Works Reform Business Solution Plan Section 2: Background Through its Works and Services division, DHW undertook a support and contract administration role on behalf of its client agencies, including asset planning, project definition, procurement and contract management. The ‘client’ or ‘owner’ government agencies were responsible for identifying and justifying building asset needs, engaging with DHW during project definition and delivery, and then taking responsibility for operation of completed facilities. Most of DHW’s activities were funded from the client agency project budget via a percentage fee applied to project turnover. The extent to which DHW was involved in the various phases of project development varied widely according to the agency request for advice and its own resource capability. This was influenced by DHW’s capacity to support them. Over the last seven to 10 years, DHW’s own planning and project management capability progressively declined, which left agencies with little choice other than to seek this support directly from the private sector. The direct and indirect consequence of these circumstances has been felt in a number of ways across the non-residential building program. Most significantly, a series of cost increases relative to approved budgets and delays to key milestone dates for building construction works has highlighted the need for more effective project control, and a more co-ordinated whole-of-government approach. This Works Reform Business Solution Plan proposes a fundamental change in the approach to planning and delivery across the full range of BMW activities. To be successful, the reform will require a substantial increase in asset planning and project management capability and capacity within government. The proposed approach to these reforms is outlined in the body of this plan. Works Reform Business Solution Plan Page 11 Section 3: Strategic Asset Management Framework RECOMMENDATION 1: That the Treasury and BMW businesses work together to promote and educate Government agencies to utilise the SAM Framework. Background The current Strategic Asset Management Framework (SAM Framework) was published by the DTF in 2005. The SAM Framework is the overarching asset policy for government, and improving compliance to its principles is the foundation of the Works Reform program. The SAM Framework is an integrated strategy to enable effective and efficient asset management and capital investment across the State public sector. All Australian Government jurisdictions have policies similar to the SAM Framework that were developed progressively over the last 20 years. The SAM Framework guides public sector agencies to: • give greater attention to maintaining existing assets so they will deliver the benefits that were initially projected; • institute greater coordination of asset management across the State public sector, particularly when involving disposal of significant assets; and • increase rigour in the capital investment process to improve the quality of information provided by agencies for decision-making. The SAM Framework comprises four key components of the asset management life-cycle (Refer to Figure 1). These components are: • asset planning; • capital investment; • asset maintenance; and • asset disposal. A package of 11 Policies and Guidelines booklets has been developed to provide guidance for each SAM component and these are publicly available on the DTF website. While the SAM Framework can be applied to all types of assets, including buildings, roads, rail, water, power and ports, its context for this plan is non-residential government buildings. The DTF can assist agencies with implementing the SAM Framework by providing support resources, advice and training, and defining roles and responsibilities. Page 12 Works Reform Business Solution Plan RECOMMENDATION 2: That the DTF reviews the SAM Framework to help support the Works Reform program. RECOMMENDATION 3: That the SAM Framework be adopted across all functions within BMW as the foundation of the Works Reform program. Figure 1: Strategic Asset Management – Asset Planning Process It is timely to review the SAM Framework, with a specific focus on improved definition of roles and responsibilities. Specific areas for review include the preparation and audit of business cases, guidelines on land assembly, asset performance and the inclusion of an office accommodation plan within strategic asset plans. Whilst the SAM Framework has been adopted to varying degrees in the procurement of new buildings, it is poorly applied in building maintenance and office accommodation functions. All BMW functions should now embrace the SAM Framework to ensure it drives business solutions. Works Reform Business Solution Plan Page 13 Section 4: Works Reform Objectives Role and Purpose The purpose of the new BMW business within the DTF is to lead the planning, delivery and management of public buildings for government. The Works Reform program aims to address the following key problems with the procurement of building related projects and programs: • capital works project cost and time overruns; • poor strategic asset planning across government; • poor business case development for capital investment; • loss of project management skills and experience within government; • the piecemeal approach to government office accommodation planning; • the piecemeal approach to building maintenance planning; and • the overly centralised approach to regional capital works project management. Some of these problems are expanded in the following sections. Capital Works Project ‘Overruns’ The government’s track record in planning and delivering its capital works program over the past five-to-ten years has been poor (particularly with respect to the non-residential building program), resulting in a long list of major project time and cost ‘overruns’. Budgets on most major building projects have grown significantly after a capital works project has been approved (due to inadequate project planning, definition, costing, and project contingencies; and poor project management and control, leading to scope creep). Government’s inability to control project overruns is graphically demonstrated in Appendix 1, which shows cost performance for 17 major building projects at April 2009. The current expected cost of these projects has increased from the original budget of $1.5 billion to $3.9 billion a staggering overrun of $2.4 billion or 153%. Almost half of the listed projects exhibit cost overruns of more than 100%. Page 14 Works Reform Business Solution Plan Current Problems with the SAM process Over many years, the SAM Framework has been poorly adhered to, which has led to poorly articulated planning documents that have failed to address the objectives of each phase. The problems include: • business cases not being prepared – or being prepared late in the planning cycle – rather than well in advance (five to six years) of the planned project commencement; • business cases being developed with insufficient alternative options considered and a lack of objectivity by agencies to explore options other than the initial preferred option; • a focus by the agencies on project definition and delivery of the building, resulting in a failure to assign adequate resources to articulate service delivery standards, demand management or consideration of non-asset solutions; • little input from specialist works planners who are familiar with the SAM Framework, resulting in poor quality analysis, scoping, estimating and budgeting; • a lack of real data to support the need for many proposed capital works projects and failure to articulate the objective of the project, making any assessment of whether success has been achieved impossible; • an over-investment in private sector consultants who are unfamiliar with the SAM Framework, and in some cases business case documents including detailed architectural design and site investigations for non approved options; • the planning phases failing to adequately determine and describe projects that will meet the service objectives of agencies, leading to a risk of scope creep and consequential cost increases; and • an agency culture of understating project costs and delivery timeframes at business case stage, resulting in regular requests for budget increases and milestone extensions during the project definition and procurement stages. Use of Non-traditional Procurement Strategies DHW has used the traditional ‘construct only’ approach to procurement of new buildings almost exclusively. Other works agencies in Western Australia (WA) and other Australian jurisdictions have embraced new procurement strategies – particularly for their large projects. New procurement strategies could involve bundling together the delivery of projects into a single (larger) contract, even where they involve separate sites. This approach can take advantage of economies of scale, as well as improve the risk profile. Works Reform Business Solution Plan Page 15 There are also opportunities to promote a more integrated approach to construction than the traditional silo (multi-contract) approach. The conventional wisdom is that head and trade contractors cannot be brought on board until they have a fully detailed design to price. Other works agencies in the WA Government, other major Australian States and the UK Office of Government Commerce are useful reference points for studying a more ‘collaborative project team’ approach. For example, the NSW Government Procurement Methodology Guidelines for Construction – February 2005 describes a choice of integrated delivery systems other than the traditional multiple contract approach. These systems include: • various forms of design and construct; • managing contractor; • alliance contract; and • privately financed project. The NSW guidelines also outline a range of contract systems that involve a more integrated, collaborative approach. They include: • design, development and construct (DD&C-contract for construction and design based on at least a concept design by the principal); • design, novate and construct (DN&C-contract for construction and design where the previously engaged designer is novated to the contractor); • design, construct and maintain (DC&M-contract for construction, design based on at least a project/functional brief, and then maintenance of the constructed asset); and • design, construct and operate (DCO-contract for construction, design based on at least a project/functional brief, and then maintenance and operation of the constructed asset). Alliance contracting has been used extensively (relative to other jurisdictions) in the WA Government for large, complex infrastructure contracts (e.g. some Main Roads WA road construction and maintenance contracts; and Water Corporation infrastructure projects). There are also many partnering arrangements in place (e.g. building facilities maintenance) where agreement on the achievement of common goals sits over the top of the formal contract. Page 16 Works Reform Business Solution Plan Private finance for project delivery, which is the ‘public-private partnership’ or PPP model, has been used only sparingly in Western Australia, but is more common in other Australian jurisdictions particularly for large infrastructure projects with ongoing service or maintenance elements. This model is also an area of interest for the Federal Government’s Infrastructure funding plan, as well as the Western Australian Government. Infrastructure Australia has developed a framework for the delivery of PPP projects. These National PPP guidelines seek to achieve uniformity between jurisdictions and improve the assessment and delivery of PPP’s nationally. The PPP approach uses a procurement model such as: • design-build-finance-operate (DBFO); • build-own-operate (BOO); or • build-own-operate-transfer (BOOT). The PPP approach can also involve new procurement models for providing services that are currently provided by the public sector (i.e. contracting out operational services and the leasing of existing infrastructure to the private sector operator).1 A ‘Client Service’ or a ‘Central Role’ for BMW The former DHW seemed unclear about its role either as a provider of services for the owner agency ‘client’ or as the Government’s project manager, charged with delivering projects on time and on cost. The roles and responsibilities were difficult to navigate, particularly when business cases were poor. While routine capital works projects such as schools generally ran smoothly, one-off unique projects were besieged by the problems of inadequate needs definition and option analysis, and often moved far too quickly to engaging consultants to prepare designs. Consequently, building projects were often managed by successive risk plans, avoiding or conquering problem after problem, with inadequate scoping leading to late changes with consequential cost overruns and wasteful rework. Projects were not able to be managed against an approved set of parameters that were set out in a well organised business case. Project managers were then pulled between the ever-changing requirements of the owner agencies, and budget limits that were based on providing for different outcomes. 1 Government of Western Australia (September 2008), 2008-2012 Procurement Beyond the Reforms: Future Directions Discussions Paper, Perth Works Reform Business Solution Plan Page 17 Further, the management of the capital works program suffered in the past from the disaggregation of decision-making, as the needs of each proponent agency were balanced against all other agencies’ needs. This has applied to building maintenance and leasing of office accommodation, as well as new capital investments. The best outcome for the whole-of-government was inadequately considered. The deficiencies of the decision-making hierarchy include: • opportunities available from consolidating the stock of existing government buildings as a single portfolio are lost; • state government agencies have sought funding for their accommodation needs on an individual basis, leaving no opportunity to review the government portfolio as a whole or coordinate sequential moves or vacancies; to the payment of a premium and upward price pressure; • individual agencies can be in competition for building contractors, leading • some agencies take on roles that should be only undertaken by BMW, including a direct involvement in project management tasks throughout the project definition phase and, in some cases, during the delivery phase; and • savings opportunities through centralised coordination are not being identified or delivered. The first major element of implementing a shift from the priority of individual agency’s needs, to the appropriate consideration of the needs of the whole-of-government, has occurred through the transfer of the Works function to the DTF. The DTF is well placed to lead the Works Reform program, because the DTF: • is already involved in infrastructure policy, planning, budgeting and procurement; • maintains a leadership role in the SAM Framework; • has a new infrastructure and finance business focus (e.g. with Infrastructure Australia and PPPs); • has five years experience in successfully reforming government procurement; • has been successfully facilitating the CEIID; and • requires no new legislative instrument as the Treasurer is also the Minister for Works. Page 18 Works Reform Business Solution Plan This shift to emphasising whole-of-government outcomes will enable ‘corporate government’ considerations to be given priority and will support a move to the planning and management of government buildings as a single portfolio. The Problem of the ‘Fee for Service’ approach The former DHW used a cost recovery model to fund a large part of its operations. Problems with this approach include: • a perception from agencies that the cost recovery model is a ‘client - service provider’ relationship (rather than a partnership), and the use of DHW was optional. The former DHW was thus expected to act only at the direction of the agency, rather than in the best interest of corporate government; • a view that the fee is negotiable, leading to dysfunctional behaviour, including arguments that diverted attention from delivering the program; and • a view that the fee is a cost to the agency rather than a legitimate part of the project budget. Loss of Project Management Capability Over the last seven to 10 years, project management expertise within DHW has progressively declined to the point that the project management of nearly all major projects undertaken by DHW has been contracted out to private sector consultancy firms. DHW has had difficulty in attracting suitably qualified project managers for reasons that included a low level of market presence, uncompetitive remuneration and competition from the construction boom of the last three years. This is not only extremely costly, with a skilled project manager typically costing between $175 and $210 per hour (the equivalent of around $350,000 to $420,000 per annum), but has a significant organisational impact in that these consultant project managers gain from the knowledge and lessons learnt from managing such projects, rather than knowledge being retained within the public sector. Works Reform Business Solution Plan Page 19 Until such time as the public sector is able to provide its leading project managers and project directors with a competitive remuneration package that recognises complex project management expertise, government will continue to face this issue - paying high fees and not retaining the knowledge from the lessons learnt. If the most complex and highest profile projects continue to be managed by private sector project management firms, the most enthusiastic and experienced public sector project managers will continue to leave when they reach the current ceiling of their remuneration package. Government will also continue to pay high recruitment and training costs due to high staff turnover. Another consequence of the decline in DHW project management capability has been a growing lack of confidence in DHW performance. This has led to the creation of ‘pockets’ of project management expertise in some of the major client agencies, resourced with both staff and private sector consultants. By comparison, other works agencies such as Main Roads WA and the Water Corporation have retained planning and project management capability and have introduced new and innovative procurement strategies as part of their evolution over the last decade. Main Roads WA and the Water Corporation have also invested in new information systems that support their asset planning, project management and procurement. They provide an excellent benchmark for much needed reforms to the BMW business. Page 20 Works Reform Business Solution Plan Section 5: New Buildings Program RECOMMENDATION 4: That DTF works with owner agencies to help prepare their 10-year strategic asset plan, and then select potential projects for a business case. Introduction RECOMMENDATION 5: Planning and delivery of the State’s capital works program over the past five to 10 years has been poor, reflecting a lack of rigour in project management, as Appendix 1 illustrates. Over this time many projects have been announced publicly without the fundamentals of sound strategic asset planning and business case analysis, putting time and cost estimates on the public record without the necessary rigour. In addition, industry has expressed concern over the lack of planning, ability to forecast future work, project management and innovation within government. BMW is ideally placed to achieve major change by restructuring and establishing a central role dedicated to the strategic management of new infrastructure planning and delivery for public buildings, based on the SAM Framework. The following sections examine the key issues and outline the strategies and solutions that BMW can best employ to implement the SAM Framework. That business cases for new buildings be prepared collaboratively between the owner agencies and BMW and the final business case jointly signed. RECOMMENDATION 6: That BMW builds its capability in asset planning, and its expertise in business case development. Central Role While the SAM Framework represents an investment of good policy development over decades and is in line with the approach used in other Australian Governments, the implementation of the SAM Framework has been poor, with many projects being announced without the support of good planning. Problems with the current arrangement were outlined in Section 4. There is a need to significantly strengthen government’s capacity in asset planning and business case development. Improved project outcomes require a significant change in the approach to planning and delivery. This is founded on the recently approved Cabinet mandate. In April 2009, Cabinet approved: RECOMMENDATION 7: That BMW be given control over project management of all new building procurement through direct appropriation of that part of project budgets. RECOMMENDATION 8: That DTF explores new, innovative and non-traditional models of procuring new buildings. “The new lead role for the DTF’s BMW business in the development of business cases and project managing the non-residential building program.” The recommended initiatives will successfully implement this lead role. Works Reform Business Solution Plan Page 21 The DTF’s Treasury business will also play an active role in evaluating and supporting the asset planning and business case development – and will review, evaluate and audit the final documents. Benefits of Role Redesign for BMW • Agencies will be better supported by the DTF’s BMW business to produce quality strategic asset plans. • All business cases will be developed by an expert team, ensuring consistent quality and compliance with requirements for content and timeframe. the SAM Framework • The DTF’s Treasury business will take an independent evaluation and audit role to ensure the strategic asset plans and business cases have been rigorously prepared, with appropriate consideration to future requirements, and having considered recurrent cost implications and maintenance investment. • Business cases will be available for review by the relevant Ministers and the Economic and Expenditure Reform Committee, ahead of the budget forward estimate period. • A greater development and reliance on internal government expertise and a decrease in expensive private sector consultancy advice. • An appropriate level of effort (and expenditure) for the preparation of business cases will be established (and waste through the preparation of inadequate business cases minimised). • Capital works projects will be project managed in a more effective and consistent way, in line with the SAM Framework. This new approach is shown diagrammatically in Figures 2 and 3. Page 22 Works Reform Business Solution Plan TREASURY AGENCY BMW SAM Framework – Capital Investment Process 19 10 9 8 FINANCIAL OUTYEARS 7 6 5 4 3 2 1 BUDGET YEAR NOTIONAL ESTIMATE LONG TERM INFRASTRUCTURE PLANNING AGENCY CAPITAL INVESTMENT PLAN – INVESTMENT MANAGEMENT MODULE (IMM) TREASURY FORWARD ESTIMATES STRATEGIC ASSET PLANNING Updated annually via strategic Asset Plan submission to DTF • Capital Investment Plan for new projects with a notional view of years 5-10 • Maintenance Plan • Disposal Plan P LA N N I NG • execute summary of evaluation process and high-level recommendations • produced in collaboration between Agency and BMW PROJECT DEFINITION PLAN • detailed plan of project scope, costs and procurement • to be produced by Building Management and Works PR O J E C T DELIVERY • release of funds based on annual budget predictions POTENTIAL FUTURE PROJECTS IDENTIFIED THROUGH THE ANNUAL SUBMISSION/ UPDATE OF THE STRATEGIC ASSET PLAN Figure 2: Capital Investment Process BMW CALL IN BUSINESS CASES BUSINESS CASE SUBMITTED PR O J E CT D E L I V E RY BUSINESS CASE TREASURY AGENCY BMW Business Case Process – New Government Buildings e indicators recurrent cost ROLE models ESTABLISH BUSINESS NEEDS EVALUATION DEFINITION DELIVERY • • • • EXECUTIVE APPROVAL (EXECUTIVE SERVICE DELIVERY STRATEGY DIRECTORS AGENCY/BMW) CONSULTATION service delivery policy change/innovation performance indicators SERVICE/ BUDGETARY EVALUATION PLANNING • review strategic asset plan • project options • value/risk management • • • CO-SIGNATORIES • • • • service impacts social impacts performance evaluation cost/recurrent implications • funding options recurrent cost model SERVICE DELIVERY STRATEGY STRATEGIC ASSET PLANNING CONSULTATION AGENCY • performance indicators • recurrent cost models • service delivery policy • change/innovation • corporate planning • ideal asset mix • review existing asset mix • gap analysis • strategic asset plan CAPITAL INVESTMENT PLAN FINANCIAL/ECONOMIC BUSINESS CASE PROJECT DEFINITION PLAN ASSET DELIVERY STATEMENT OF NEED • project concept review • develop shortlist • evaluation plan • financial impacts of each option • cost benefit analysis • sensitivity analysis • funding options • conclusion and recommendations • summary of findings DTF – BUILDING MANAGEMENT & WORKS (BMW) TECHNCIAL INPUT • Gov. policy requirements • Office of the Government Architect brief • feasibility/cost/time/ procurement • Risk management plan • construction/escalation / Indicative time plan RESOURCES • process support • planning advice/ guidance • benchmark data • whole-of government outcomes • consultant panels • procurement plan • schedule of accommodation • risk/time management plan • total project cost estimates and life - cycle costs • BMW to develop all project definition plans • project and contract management • design and construction • commissioning and handover • maintenance plan EVALUATION AND AUDIT • • EVALUATION AND AUDIT Independent review probity, accuracy, thoroughness and legibility DTF - TREASURY • • • Independent review Considers recurrent and capital cost implications of service delivery strategy Probity, accuracy, thoroughness and legibility Figure 3: New Building - Business Case Process Re-badging Strategy The primary asset aim of agencies, as defined in the SAM Framework, is to identify the maintenance requirements, develop an approved strategic asset plan and work with government’s project manager, BMW, to ensure their requirements for new buildings are timely and represent good value for money. As a consequence of the former DHW not being able to replenish its project management resources, some agencies have endeavoured to deliver their building works programs by directly engaging staff or consultants themselves. This has resulted in pockets of project management activity forming in agencies, with varying degrees of experience and approaches. This applies primarily in the agencies with large building asset portfolios, being: RECOMMENDATION 9: That the resources within agencies that now undertake new building project management be re-badged to BMW. • Department of Health; • Department of Education and Training; • WA Police; • Department of Corrective Services; and • Department of the Attorney General. The actual amount of this resource is unknown, with estimates ranging from 40 to 60 people (made up of both staff and private sector consultants). To achieve a common approach to the implementation of the SAM Framework, it is proposed to bring all the resources located in agencies that focus on new building project management into a whole-of-government team led by BMW. Resources focusing on asset planning will remain with agencies. The current estimate is that ‘re-badging’ will impact on around half the resource; the actual FTE impact will need to be agreed with each agency. These FTEs and associated consultant budgets would be transferred under section 25 agreements between agency CEOs and the Under Treasurer. The asset planning resources remaining with the agencies would then be able to focus on the core activities of developing strategic asset plans and providing information to BMW regarding their service requirements. This investment in the forward planning of the building asset program will lead to greater project control and surety surrounding time and cost estimates. The term re-badging is used because it is likely that most of these resources will remain in the current office locations. However, their employment, and hence control of their approach to infrastructure planning and delivery, will transfer to BMW. Works Reform Business Solution Plan Page 25 Section 6: Building Maintenance Introduction The government has a State-wide portfolio of non-residential buildings (such as schools, TAFE colleges, hospitals, police stations, courts, prisons, sports facilities etc.) on over 4,000 sites, with a replacement value of over $20 billion. The approach taken to the program planning, management and delivery of maintenance to these buildings has been varied and the subject of reform since the 1980s. In the 1990s, the pursuit for more effective service delivery saw the large day-labour workforce of the Building Management Authority (BMA) contracted to a small number of facilities management firms. This placed all the metropolitan government buildings under a new delivery model, while regional buildings were managed by in-house government facility management teams. The BMA retained the program planning and management role. During the last seven to 10 years, DHW has focussed on establishing procurement frameworks that can be used by owner agencies. It has progressively unpacked the facilities management approach established in the 1990s, by focussing on schedule of rates breakdown repair zone contractors. Two major facility management firms remain largely focused on arranging the delivery of planned maintenance and minor works at schools. DHW has been unclear on its role and has progressively withdrawn from any strategic maintenance planning or whole-of-government portfolio planning. It has been criticised by its client agencies for having no influence on budget planning and decision-making. The continuously changing environment for maintenance and the generally piecemeal approach taken to planning has resulted in reduced planned maintenance budgets, with much of the available funding being consumed on breakdown repairs. Some agencies have taken over their own maintenance delivery. Page 26 Works Reform Business Solution Plan DHW has retained a relatively strong presence in country regions, with staff located in 13 towns arranging breakdown repairs, planned maintenance and minor works. However, they have been integrated into local ‘housing regional operations’, and there has been limited coordination or centralised planning for the Government’s building program in regional areas. The Works Reform program will seek to achieve a life-cycle approach to asset management that includes a strong link between building construction and maintenance, and improved application of the SAM Framework for building maintenance, improvement and disposal. BMW’s approach will need to fundamentally change to achieve these outcomes, by restructuring and establishing a central role dedicated to the strategic maintenance management of government buildings, not just procurement frameworks. This section examines the key issues and the strategies and solutions that BMW can best employ to achieve better outcomes. A Central Role The absence of a central agency with a mandated responsibility for building maintenance has led to confusion over the boundaries, roles and responsibilities of public authorities towards the maintenance planning, budgeting and ownership of their property portfolio. The SAM Framework released by the DTF in 2005 has confirmed that public authorities are the custodians of government owned assets, and are responsible for ensuring that assets under their control are maintained at an appropriate level. However, many public authorities do not appear to be assuming this responsibility and are not effectively planning and managing their maintenance needs. A lack of focus on asset maintenance has led to an increasingly deferred maintenance liability across much of the portfolio. Building maintenance has not been viewed as a priority issue until breakdowns impact the day to day operations of public authorities. In addition, whole-of-life maintenance and final disposal issues are not given sufficient consideration in the planning of new assets. This leads to an accumulation of problems inherited by future asset managers. Information that could be used to help agencies set their strategic direction is fragmented. There is no central asset management database for government owned and leased assets containing information to inform their strategic asset planning. Works Reform Business Solution Plan Page 27 RECOMMENDATION 10: That BMW be given a new leadership role in supporting agencies in the development of their business cases for maintenance programs on government buildings. A new governance framework for positioning maintenance that addresses and clarifies boundaries, roles and responsibilities needs to be developed. This could involve reconsidering the SAM Framework principle that public authorities are the custodians of government owned assets, and investigating whether BMW should manage all government owned buildings as a single portfolio. Alternatively, as a minimum, if public authorities are to remain in control of their building assets and responsible for their maintenance, then BMW should offer a central agency role where agencies must seek advice on business cases developed to support maintenance projects and programs. BMW should also be able to offer expert advice regarding maintenance liabilities and costs for the whole life of the proposed asset and options for the final disposal of the building, which could include environmental implications of demolition, re-use and refitting for other purposes. It is in the planning phase of new assets that these issues can be given appropriate consideration; it is often too late once the building has been completed. BMW, in a central agency role, would: RECOMMENDATION 11: That BMW takes on a whole-of-government portfolio management role and provides advice to Government on how agencies are managing the maintenance of their buildings and property portfolio. • establish practices for monitoring and benchmarking that aim to improve accountability for property assets throughout their life; RECOMMENDATION 12: That BMW develops guidelines to help integrate whole-of-life maintenance thinking into the planning stage of the procurement of new buildings. • develop and promote guidelines that set standards for asset management; • improve the knowledge management of built assets at a central and local level; and • provide guidelines for strategic asset planning to support the SAM Framework at an operational level. An opportunity exists for BMW to develop a central hub to access data about government assets to assist agencies plan their asset portfolio. Responsible agencies could work collaboratively with BMW to maintain the required information. Strategic Maintenance Planning The primary workload of the former DHW was focused on building maintenance and minor works delivery, assisting with breakdowns and short term maintenance. Page 28 Works Reform Business Solution Plan Some resources need to be refocused towards strategic maintenance planning. For this to occur, not only is a portfolio approach required, but a total life-cycle approach to capital works programs and building planning strategies needs to be adopted. Corporate planning cycles within agencies currently focus on service outcomes and capital acquisitions with limited consideration of ongoing maintenance required for assets critical to service delivery. Business plans for maintenance programs should consider all the service delivery requirements of public authorities, not just maintenance, but also how a building is to be used, its operation, energy usage, staffing and information technology needs. Business cases for new building assets should consider maintenance for the life of the asset, right through to consideration and planning for disposal. Property assets raise issues of long term sustainability and sustainable development. A better understanding of the energy and environmental consumption of buildings, in conjunction with maintenance planning has the potential to deliver significant benefits to Government. To date, the maintenance planning function has been limited to creating Building Condition Assessments (BCAs) and routine maintenance plans. While the BCAs provide a useful platform to prioritise maintenance across a portfolio (such as schools), neither the BCAs nor the maintenance plans are sufficient for comprehensive strategic planning – the BCAs have been regarded as a partial end result, whilst the maintenance plans are technical reports on the state of the building portfolio and the required maintenance funding. A greater focus on strategic maintenance planning, including improving the rigour of the current planning process, is required in order to: RECOMMENDATION 13: That BMW and Treasury ensure asset disposal options are addressed in the development of strategic asset plans and business cases for capital investment. RECOMMENDATION 14: That strategic maintenance planning with a whole-of-life cycle view be strengthened and updated accordingly within the SAM Framework, with agencies required to prepare a 10-year maintenance investment plan. • create a balance between planned and unplanned maintenance – reducing the public authority deferred maintenance liability; • preserve the value of the building and decrease operating and maintenance costs; • improve asset management by collecting strategic information about property assets, including the operational and maintenance costs, and as capital costs (over the life of the asset) and final disposal; • provide more comprehensive advice to public authorities; • divert decision making away from building occupant’s focus on improvements to the built assets’ needs; and • tackle issues of long term sustainability and sustainable development. A model of how this would operate is shown at Figure 4. Works Reform Business Solution Plan Page 29 TREASURY AGENCY BMW Business Case Process Proposal – Maintenance Planning e indicators recurrent cost ROLE models ESTABLISH BUSINESS NEEDS EVALUATION DEFINITION DELIVERY • • • • EXECUTIVE STRATEGY SERVICE DELIVERYAPPROVAL (EXECUTIVE DIRECTORS AGENCY/BMW) service delivery policy change/innovation performance indicators CONSULTATION EVALUATION PLANNING SERVICE / BUDGETARY • location • function • comfort CONSULTATION AND AD HOC LOW RISK MAINTENANCE • • • recurrent cost model SERVICE DELIVERY STRATEGY STRATEGIC ASSET PLAN AGENCY • performance indicators • recurrent cost models • service delivery policy change/innovation CO-SIGNATORIES MAINTENANCE PLAN (10 year) • review current asset portfolio • risk assessment • prioritisation of indentified maintenance needs • • • • • corporate planning ideal asset mix review existing asset mix gap analysis strategic asset plan FINANCIAL / ECONOMIC • cost-benefit • efficiency BUSINESS CASE PROGRAM & PROJECT PLAN MAINTENANCE DELIVERY STATEMENT OF NEED • establish resource requirements • produce a maintenance schedule • strategic maintenance programs (2-4 years) • risk management • procurement strategy • recurrent cost • review of strategy to meet current demand and service needs RESOURCES TECHNCIAL INPUT • compliance with laws and codes • conformance to benchmark standards • maintenance requirements • reliability of services DTF – BUILDING MANAGEMENT & WORKS (BMW) • building condition assessments • laws and codes • consultant panels • benchmark standards • cost-benefit • historical expenditure data • procurement plan • detailed scoping for tender • detailed costing for budget management • project and contract management • design and construction • commissioning and handover EVALUATION AND AUDIT • • EVALUATION AND AUDIT Independent review probity, accuracy, thoroughness and legibility DTF - TREASURY • • • Independent review Considers recurrent and capital cost implications of service delivery strategy Probity, accuracy, thoroughness and legibility Figure 4: Maintenance - Business Case Process Procurement Limited central co-ordination and control presents a barrier to strategic procurement. Current building maintenance procurement is associated with high volume low value maintenance purchases. Strategic procurement is not being used as a functional enabler for larger maintenance works where savings potential and transfer of risk is achievable. A piecemeal approach has been taken to maintenance procurement. Funds are frequently committed on a project by project basis and often with short timeframes that restrict the options for arranging works. The fragmentation of decision making about property asset management has also led to inefficiencies and increased costs for maintenance. Procurement strategies should: RECOMMENDATION 15: That BMW explores new, innovative and non-traditional modes of procuring building maintenance services. RECOMMENDATION 16: That BMW mandates the use of central procurement frameworks for building maintenance. • allow for the consolidation of maintenance works within the metropolitan area and respective regions, as well as across agencies (not just on a project by agency basis) to improve value for money; and • reduce repeat efforts in procurement and project management of low value works where like projects can be consolidated. BMW needs to refocus from largely responsive maintenance to driving more strategic and innovative procurement. Recommendation 16 needs to consider those owner agencies that do not use the DHW maintenance services. The most significant example of this is the Department of Health, which has only used DHW on a piecemeal basis. Bringing hospitals into a ‘whole-of-government’ approach would open up new opportunities, given the increased economies of scale that would eventuate. Funding A new approach to funding maintenance is needed in order to: • prevent the continued deterioration of public authority assets. The management of government’s built assets cannot improve without adequate investment of funds; • address the imbalance between planned maintenance and unplanned maintenance. Unplanned maintenance is costly; it rarely attends to the whole-of-life issues for built assets. A prolonged pattern of investing in unplanned maintenance at the expense of planned maintenance erodes the value of the built asset; and • reform the discretionary funding of maintenance that sees funds that were tentatively allocated for maintenance diverted to service delivery or building improvements. Works Reform Business Solution Plan Page 31 RECOMMENDATION 17: That the ‘fee for service’ funding model for BMW maintenance and minor works services be replaced with direct appropriation. Improved value for money can be achieved where strategic procurement is used to deliver maintenance projects. This requires public authorities to fund maintenance projects, derived from strategic maintenance plans, over consecutive years. The discretionary use of funding for maintenance divorces the budget planning cycle from maintenance planning and limits the accountability and capacity for improving assets over the long term. The commitment of funding for maintenance needs attention in this reform. To enable strategic procurement of maintenance of their existing portfolio of buildings, public authorities must commit funding to support work projects over consecutive years. The development of business cases and budgets for new buildings should also address ongoing maintenance needs. As more integrated procurement strategies are introduced (such as design-build-maintain and PPPs) this will happen as a matter of course. For traditional construct only, there needs to be a budgeting approach that ensures that ongoing maintenance needs are addressed. A new approach to the way BMW maintenance and minor works services are funded is also required. The current fee for service is based on the value of individual projects and collected as a re-imbursement added to project turnover. The issue of fee for service (as outlined in Section 4) is also a significant barrier to the development of BMW’s strategic role. This mode of funding has focussed attention on largely reactive rather than planned maintenance through servicing the demands of existing clients. RECOMMENDATION 18: That BMW develops a new approach to the planning and funding of maintenance and refurbishment programs for government buildings. Page 32 Works Reform Business Solution Plan Section 7: Office Accommodation Introduction The government has a current demand for around 30,000 office based workstations for its public sector workforce. These are spread as follows: • around 65% are in the central business district (CBD) of Perth; • around 30% are in metropolitan Perth suburbs; and • around 5% are in country regions. Over recent years, DHW has introduced a devolved approach to office accommodation planning, with the individual government agencies generally deciding where they will accommodate themselves, and what approach they will take to office fit-out. Agencies are now guided by policies and standards previously established by the Commercial Property division of DHW, and approved by Government, but there has been very little regulation of these standards. A reporting regime has been seen as the best approach to regulation. The Commercial Property division (now located in BMW) responds to government agency requests for leased accommodation and provides advice on options and market capacity. It also negotiates and administers leasing arrangements and ensures that agencies fund their contractual commitments. The Commercial Property division also acts as the owner for some government owned buildings (such as Dumas House and Albert Facey House) and largely manages these buildings through property management contracts. It encourages agencies to take up space in these buildings ahead of leased accommodation. The disadvantages of the piecemeal approach described above are that: • the strategy does not prescribe which geographic locations are a Government priority for locating government agencies; • government agencies make the final decision about their office location in each case, allowing little control over Government’s ability to fulfil its strategic objective; and • the management decision-making is fragmented and uncoordinated. Works Reform Business Solution Plan Page 33 RECOMMENDATION 19: That agencies be required to include a 10-year office accommodation plan as part of their annual capital investment plan. Whether Government is getting the best value from its total building portfolio, is maintaining an effective office fit-out regime, or is driving other policy initiatives (such as growth of metropolitan regional centres) is not transparent from the current governance arrangement. Government owned office accommodation that is occupied by a single government agency is typically vested in the responsible Minister and managed by the agency. Mineral House, on the corner of Adelaide Terrace and Plain St in East Perth, is an example of this type of arrangement. Some agencies also lease office accommodation directly with building owners, bypassing central Government leasing requirements. This prevents a complete, whole-of-government approach to managing the accommodation portfolio. These fragmented approaches to office accommodation limit Government’s ability to make use of its purchasing power as a very large tenant in the Western Australian office accommodation market. Opportunities for efficiencies relating to maintenance and property management suppliers are not available in this devolved model. RECOMMENDATION 20: That BMW be given a new leadership role in the development of business cases and office accommodation programs, using a master planning approach. RECOMMENDATION 21: That BMW reviews existing government office accommodation policies and develops a policy suite that aligns with the total portfolio approach. A Central Role At present there is no well defined process for government agencies to procure office accommodation and to obtain funding for accommodation costs, including rent, outgoings, fit-out, and refurbishment. The SAM Framework needs to be strengthened to include agencies’ requirements for office accommodation as part of the 10-year strategic asset plan. As with other capital investment projects over $1million, business cases should be prepared to fully assess all available options, including lease versus buy, locations and terms of lease. A model of how this would operate is shown at Figure 5. An advisory group for government office accommodation was established by DHW in January 2008. This group – the Government Office Accommodation Advisory Group was established to advise the Minister for Works on the overall management of the government office accommodation portfolio. The group includes representatives from Department of Premier and Cabinet, Department for Planning and Infrastructure and the Department of Treasury and Finance. To date, the group has had an operational focus. Page 34 Works Reform Business Solution Plan Under a more centralised approach to policy and decision-making for government office accommodation, there would be an opportunity for the advisory group to take a more active role in planning the overall approach to government accommodation, as well as specific government agency relocation. There is also an opportunity to review the objectives, composition and Terms of Reference of this group to support a whole-of-government approach through its members. RECOMMENDATION 22: That BMW strengthens its capability in accommodation planning and procurement. RECOMMENDATION 23: Non-Office Leases Government also occupies leased premises that are not considered office accommodation and are not centrally managed by BMW. Examples of these include mental health facilities, day care centres, aircraft hangars and warehouses. This has resulted in a limited number of non-office accommodation (or operational) leases being signed by the Minister for Works (and now managed by BMW). These sites, the extent of development and their utilisation are not currently captured in any central database of government property and they are not routinely considered in planning and decisions at a portfolio level. There is an advantage in capturing this information so that underutilised sites can be considered, for example, among lease versus own options for future government office accommodation. A systematic approach to this issue should be considered, including the number of operational leases that currently are managed across government, any particular issues or risks associated with the management of these leases, and the resourcing implications for BMW. That BMW reviews the governance of the Office Accommodation Advisory Committee with a view to enhancing consultation and representation. RECOMMENDATION 24: That BMW reviews the approach to non-office property leases and develops a more comprehensive database. Works Reform Business Solution Plan Page 35 TREASURY AGENCY BMW Business Case Process Proposal – Office Accommodation e indicators recurrent cost ROLE models ESTABLISH BUSINESS NEEDS EVALUATION DEFINITION DELIVERY • • • • SERVICEEXECUTIVE APPROVAL (EXECUTIVE DIRECTORS AGENCY/BMW) DELIVERY STRATEGY service delivery policy change/innovation performance indicators CONSULTATION EVALUATION PLANNING SERVICE / BUDGETARY • location • function • comfort • review strategic asset plan • lease/buy • value/ risk management CONSULTATION • • • recurrent cost model SERVICE DELIVERY STRATEGY STRATEGIC ASSET PLAN CO-SIGNATORIES AGENCY • performance indicators • recurrent cost models • service delivery policy change/innovation • • • • • corporate planning ideal asset mix review existing asset mix gap analysis strategic asset plan OFFICE ACCOMMODATION PLAN (10 year) FINANCIAL / ECONOMIC BUSINESS CASE • conclusion and recommendations • summary of findings ACCOMMODATION PLAN DELIVERY STATEMENT OF NEED • prioritisation of indentified accommodation needs • establish resource requirements • Whole-of-life costs • Risk transfers • cost-benefit • lease analysis • procurement plan • detailed scoping for tender • detailed costing for budget management • project and contract management • design and construction • commissioning and handover DTF – BUILDING MANAGEMENT & WORKS (BMW) TECHNCIAL INPUT • compliance with policies • conformance to benchmark standards • lease analysis RESOURCES • accommodation policies • consultant panels • benchmark standards • cost-benefit • historical data EVALUATION AND AUDIT • • EVALUATION AND AUDIT Independent review probity, accuracy, thoroughness and legibility DTF - TREASURY • • • Independent review Considers recurrent and capital cost implications of service delivery strategy Probity, accuracy, thoroughness and legibility Figure 5: Office Accommodation - Business Case Process Section 8: Centre for Excellence and Innovation in Infrastructure Delivery (CEIID) Outline of Purpose and Members The Centre for Excellence and Innovation in Infrastructure Delivery (CEIID) is a collaborative alliance between key infrastructure delivery agencies, Government Trading Enterprises and other Government bodies. CEIID was established in 2007 to improve collaboration, share knowledge and drive reform across a broad spectrum of activities associated with public works, infrastructure delivery and strategic asset management. Membership of CEIID is voluntary. The overarching expectation is that member organisations play a genuine role in creating a platform for knowledge exchange and collaboration that promotes innovation and improvements in infrastructure planning, delivery and management across government. The following organisations are current members of the CEIID collaborative alliance: RECOMMENDATION 25: That the DTF continues to support the objectives of CEIID, actively participating and working cooperatively to progress its objectives, to share knowledge and deliver tangible benefits. • Main Roads Western Australia; • Public Transport Authority; • Department for Planning and Infrastructure; • Fremantle Port Authority; • Water Corporation; • State Solicitor’s Office; and • Department of Treasury and Finance. The DTF is strongly represented on CEIID through its Infrastructure and Finance business unit, its Strategic Projects business unit, and BMW. BMW also facilitates CEIID though a Program Management Office. Objectives CEIID member organisations cooperate and collaborate to achieve the following broad objectives: • development of CEIID as a key alliance across government; • build agencies’ capability to meet the challenges of delivering the State’s building and infrastructure program; Works Reform Business Solution Plan Page 37 • facilitation of better decision-making and improved focus to project delivery; • draw on agency experiences to identify common issues and the sharing of lessons learnt; and • development of common operating frameworks, business processes, systems, protocols and tools. CEIID Strategic Plan The CEIID agenda is guided by the CEIID Strategic Plan 2008 – 2011. The strategic plan has five key business areas of focus: • forward planning; • project development and management; • delivery methodology and procurement management; • knowledge sharing and information management; and • workforce capability. The objectives within each of the focus areas are shown at Appendix 2. Key achievements during 2008 included: • development of a Project Management Framework with standardised stages, deliverables and terminology, which accords with the SAM Framework; • an industry workshop (comprising over 50 key industry stakeholders at an all-day workshop, in which industry priorities were identified); • a strategic planning workshop (comprising the CEOs and other key CEIID agency leaders, in which the four-year strategic plan was developed); and • an endorsed Memorandum of Understanding (MOU), acknowledging the collaborative alliance between key infrastructure delivery agencies, Government Trading Enterprises and other Government bodies. The MOU is a voluntary instrument setting out the operating framework for the CEIID collaborative alliance. The CEIID business areas of focus are well aligned to the Works Reform program required for non-residential buildings. There is much to be gained for BMW by continuing to facilitate CEIID and progressing its objectives. Page 38 Works Reform Business Solution Plan Section 9: Strategic Projects The Office of Strategic Projects (OSP) was established in February 2008 in response to the increasing risk associated with the delivery of the large and complex capital works program. The Office originally reported directly to the Minister for Works, but now reports to the Under Treasurer, and has been integrated into the new BMW business as a stand alone business unit. When it was established, OSP’s role was described as follows: In partnership with the Centre for Excellence and Innovation in Infrastructure Delivery, OSP will: RECOMMENDATION 26: That Strategic Projects continues in its current role and grows its expertise as an integral part of the new BMW business. • develop and maintain specialised project management processes and procedures for complex, high-risk Western Australian public sector projects; • develop, implement and maintain a state-of-the-art web-based project management system for complex projects; • instruct and train government agencies in complex project management; • develop and implement a project announcement process and guidelines; and • participate in CEIID initiatives as a member of the Board of Management and Steering Committee. OSP will guide and assist managing agencies in: • project initiation, governance and resourcing; • feasibility and business planning; • risk management and procurement planning; • contract development, evaluation and operation; • commissioning, maintenance and operation; and • project close-out and review. Works Reform Business Solution Plan Page 39 Further, OSP has a legal and commercial role to: • in partnership with the State Solicitor’s Office and CEIID, develop and maintain a suite of contract templates for mandatory use in the delivery of complex public sector projects; • review and assist in development of contract documents to tender stage; • assist agencies in negotiation, execution and administration of legal agreements; and • assist agencies in the resolution of contractual claims and disputes. The final articulated role is in monitoring and reporting of infrastructure projects, which includes: • assisting in executive governance of key strategic public sector infrastructure projects through Steering Committee representation; • monitoring and reviewing agency performance in the management of key strategic projects; and • developing and implementing best practice feedback mechanisms for complex projects. Strategic Projects currently has nine staff, with a plan to take on greater responsibilities as its portfolio of designated high-risk projects grows. Its roles will continue to develop in the context of its new placement within BMW. Page 40 Works Reform Business Solution Plan Section 10: BMW Organisation RECOMMENDATION 27: That BMW implements a new organisational structure that will grow its leadership and project management capabilities. A New Structure The previous sections have outlined the problems restricting the effective management and procurement of Government’s requirements for building assets and office accommodation, recommending business solutions for many of these issues. However, these solutions will not be effective unless BMW itself changes, for without fundamental change, the Works Reform program will have limited effect. This issue was incorporated into a paper considered by Cabinet on a new role and direction for BMW. In April 2009, Cabinet supported: RECOMMENDATION 28: That BMW accommodates all its existing metropolitan planning and project management people (apart from any re-badged employees) at one location. “The growth in leadership, project management capability and capacity within Building Management and Works required to implement its new role”. In order to drive these reforms, a new structure for BMW should be established that provides: • strategic leadership to manage emerging issues in the sector (for example, new planning and non-traditional procurement delivery models); • improved planning capability to support agencies with appropriate advice on strategic asset plans and more rigorous business case development; • significantly improved project management capability and capacity, to drive innovation and enhance project control and outcomes; and • improved project management capability in regional centres, to help support local service delivery. To lead the organisational changes required, a proposal will be submitted to the Public Sector Commission involving an increase in the number of Senior Executive Service positions for BMW. Additionally, new recruitment strategies must be found to attract and retain skilled personnel to build project management capability in BMW. This is further outlined below. The proposed BMW structure is shown at Figure 6. Existing BMW staff are spread across four metropolitan office locations. This restricts team building and collaboration. Co-location of staff offers many new opportunities for improved performance. Works Reform Business Solution Plan Page 41 Building Management & Works Leading the planning, delivery and management of buildings for Government Proposed New Divisional Structure from July 2009 Under Treasurer Government Architect Executive Director BMW Executive Director Strategic Projects General Manager Building Management General Manager Infrastructure Delivery Group 1 Director Regional Programs Assistant Director Program Planning Project Manager Pool • Health • Other agencies • Education & Training • Law & Order Project Manager Pool Regional Manager North General Manager Infrastructure Delivery Group 2 General Manager Program Planning and Practice Director Business Planning and Coordination Assistant Director Business Planning Director Review & Reform Assistant Director Portfolio Planning Director Policy & Practice Assistant Director Review and Reform Director Maintenance Services Director Asset Planning & Program Mgt Agency Group 1 Assistant Director Business Services Director Office Accommodation Services Director Asset Planning & Program Mgt Agency Group 2 Regional Manager East Assistant Director Business Systems Assistant Director Heritage Properties Program Director BER Program Assistant Director Land Assembly Regional Manager Central Assistant Director Organisational Development Executive Manager Fremantle Prison Regional Manager South Assistant Director CEIID PMO Non SES SES Figure 6: New Building Management and Works Structure A New Project Management Career Path As outlined in Section 4, there is significant need to establish new project management skills within BMW, and an opportunity to obtain better value for money than the current outsourced approach. However, this needs the current human resource constraints to be removed. There is a need to pursue options to resolve the issues of recruitment and retention with revised remuneration arrangements for the most qualified and experienced project managers. It is proposed that BMW will build its capability to support its new role, resulting in a significant shift from private sector project management to public sector project management. In order to make this improvement to the project management capability of BMW, it is proposed to re-orient the portion of capital works budgets currently directed to private sector consultants (specialist project managers or part of the role now done by architects) to BMW control and resourcing. In-sourcing will result in a significant saving, given that many of these consultants are currently charging between $175 and $210 per hour (the equivalent of around $350,000 to $420,000 per annum). BMW is also disadvantaged in attracting project managers from within Government because the remuneration paid for an equivalent public servant classification is significantly lower than that paid by other works agencies (such as Main Roads WA, the Public Transport Authority, or Government Trading Enterprises). To address these issues a number of strategies are proposed: RECOMMENDATION 29: That BMW grows its pool of highly skilled project managers, (as permanent public servants) to reduce the reliance on consultancies for major infrastructure projects. RECOMMENDATION 30: That a new career path for project managers be established – equivalent to the specified callings arrangements available to other professionals – to help attract and retain staff required to deliver these reforms and ensure a sustainable workforce for the delivery of buildings for Government. RECOMMENDATION 31: That BMW establishes new skills development programs for project managers. • an increase in the number of project managers within the BMW workforce, achieved through new recruitment campaigns (including recruiting experienced private sector project managers, graduate programs, and lateral recruitment from within government); • the project managers in the proposed ‘pool’ would be developed through new programs that include scholarships for tertiary study, formal in-house training and mentoring programs; • a new public sector career path that goes beyond the current ceiling of a Senior Executive Service class 1 to class 4; • new salary scales for BMW project managers that match those provided to Main Roads WA and the Public Transport Authority; and • new remuneration arrangements, such as a ‘golden handcuff’ (where some of the salary is held and paid as a lump sum if the project manager stays beyond certain project milestones). A model for a new BMW career pathway for project managers is shown at Appendix 3. Works Reform Business Solution Plan Page 43 New BMW Information Systems BMW needs to develop contemporary new systems that support the SAM Framework and project management approach to managing government assets. Existing systems are largely focused at more routine management processes (for example payments), with little effective support for overall project management, asset management or strategic decision making. Key Issues for Existing BMW Systems • Project management – The provision of systems and processes to support the delivery of more effective project management for all projects, but in particular for major projects, is a key issue for the Works Reform program. • System and process issues for project management include the need for: more timely and effective contract management; more proactive and useful project reporting; integrated time, risk and cost management; and greater leverage of contracted project managers and design consultants. • Asset management – existing project systems do not link to asset management and it is not possible to create an ‘asset view’ from the existing systems. • Quality of Systems – Current systems are simple, outdated, fragmented and poorly linked to the full range of processes that support asset management and delivery. There is a significant need for a systems environment that supports better project outcomes. • Processes – Most key project management processes are manual processes and are not consistently applied, reported on or able to be interrogated or reviewed. Page 44 Works Reform Business Solution Plan The development of improved systems will drive: • better decision making; • improved project management (including time/cost management), which in turn will result in fewer project overruns; RECOMMENDATION 32: That BMW develops a business case for systems support required for its new role and then seeks capital funds to implement the new platforms over the next four years. • better whole-of-life asset planning and management, leading to improved asset facility and lower overall asset costs; and • the ability to manage a larger asset construction portfolio much more efficiently. In addition, there is a need to integrate BMW into the DTF corporate systems (including email, internet, intranet and document management) as well as transition to new finance, payroll, personnel and procurement systems run by the Office of Shared Services. A substantial investment will be required to enable these systems to be developed, estimated at between $15 million and $20 million over four years. Main Roads WA has recently implemented a range of new systems as part of its transition into Shared Services. This has included a project accounting module delivered through Shared Services, which BMW can take advantage of when it transfers to Shared Services for its financial and human resources requirements. Main Roads has also developed new planning, project management and reporting systems, which should provide an excellent platform for BMW requirements. RECOMMENDATION 33: That BMW’s transition to Shared Services be advanced to 2010 (from the current planned schedule of 2012). RECOMMENDATION 34: That the DTF regional procurement staff from both BMW and Government Procurement be integrated into four regional teams, with offices located across 13 towns. New Regional Solutions The BMW currently has a state-wide presence of staff in 13 country towns, with a workforce of approximately 45 FTEs located in the Department of Housing regional offices. The primary role of these staff is to manage the repair and maintenance of government buildings in their local area. Some very small capital works projects are managed by regional staff, but all major projects (e.g. a new school, new hospital etc) are managed from Perth, usually using private sector project managers and architects. Over the last four years, as part of its Procurement Reform program, the Government Procurement business in the DTF has established four Regional Buying Centres (RBCs) in the major country regional centres (based in Bunbury, Geraldton, Kalgoorlie and Albany). It is currently looking to establish a fifth RBC in Broome for the Pilbara and Kimberley regions. Works Reform Business Solution Plan Page 45 RECOMMENDATION 35: That the current regionally based facilities management role be retained and enhanced, and the building maintenance planning and procurement strategies integrated into a State-wide portfolio approach (as discussed in Section 6). With the consolidation of both Works and Government Procurement into the DTF, there is an opportunity to merge the staff resources located in country towns into a single office, and develop a more integrated approach to planning and procurement of all works, goods and services. This would also provide an economy of scale that could support some additional project management resources (relocated from Perth on either a temporary or permanent basis according to workload), allowing more regional based capital works projects to be managed from major regional centres. As part of the new BMW organisational structure, new regionally based offices should be established with appropriate staffing capacity. It is proposed to create four regional offices, as well as retain a presence within district offices, to enhance local delivery of Government’s requirements for building assets. The proposal is shown in the following table. Region North Central East South Regional Office Location Broome Geraldton Kalgoorlie Bunbury District Offices Kununurra, Port Hedland, Karratha Carnarvon Merredin, Esperance, Northam Albany, Narrogin RECOMMENDATION 36: That project management capability be strengthened in regional centres to enable more regional capital works projects to be managed locally, rather than from Perth, including temporary relocation for specific projects. RECOMMENDATION 37: That the new BMW regions take on additional responsibilities in office accommodation planning and procurement, integrated into the proposed total portfolio approach (as discussed in Section 7). Table 2: Proposed Regional Office locations and District Offices Page 46 Works Reform Business Solution Plan New Governance models With the new centre-led approach to project planning and management and removal of the fee for service, BMW will need to introduce new governance models to establish its new role with key stakeholders. Two of these mechanisms are outlined below. RECOMMENDATION 38: That BMW establishes a strong partnership with its key client government agencies (including a Client Council). Client Partnership Approach BMW needs to develop strong partnerships with all of its major client government agencies, using the approach that has been successfully applied by DTF in the reform program for goods and services procurement over the last five years. This will ensure that BMW is recognised by its client agencies for its strong customer focus, its professional advice, and its focus on business outcomes, not just good process. RECOMMENDATION 39: That BMW ensures effective liaison is maintained with key building industry associations. Building Industry Liaison Over 96% of the BMW controlled expenditure will be managed through contracts with the private sector (primarily designers and builders). It is therefore essential that a positive, collaborative relationship is maintained with the building industry. This is best delivered by way of liaison through the various industry bodies. This will include the: • Australian Institute of Project Managers; • Australian Council of Built Environment Design Professionals (BEDP); • Master Builders Association; • Construction Contractors Association of WA; and • Property Council of Australia. To support this ongoing liaison, a forum that brings all the major industry associations together (say on a six monthly cycle) would be worthwhile. This would enable industry issues to be collected, and for major works reform initiatives to be shared with industry, in an efficient manner. Works Reform Business Solution Plan Page 47 Section 11: Associated Reforms RECOMMENDATION 40: That BMW liaises with the DTF Government Procurement business to develop a common policy suite for all procurement. Whole-of-Government Procurement Policy In the context of the recent merger of the State Supply Commission (SSC) with the Government Procurement Business of the DTF, there is an opportunity to review current works policy – with a view to ensuring there is a consistent and efficient framework for the future. Aligning the works policy with the SSC policy, so there is a consistent approach to all procurement policy, should now be possible. While the reform to the SSC policies over the last few years has made a significant contribution to the procurement reform program, there are further opportunities for procurement policy reforms. Of particular value would be the simplification of the Buy Local Policy – and a clear focus on its prime objectives. Some further policy reform to support the sustainability objectives could also be considered.² RECOMMENDATION 41: That a review of the Public Works Act (1902) be undertaken to clarify legislation on the procurement of works, land, goods and services. Public Works Act The Public Works Act (1902) is the head of power for the construction of public buildings and also provides land powers for other public works including roads, rail and ports. It also provides for the Governor to declare any work of the State a Public Work. The act reflects the functions of Government at the time of its drafting early last century, with its primary focus on providing infrastructure for the social and economic development of the State. Over the last century, the Public Works Act has been impacted by a whole range of new legislation that established specialist water, road, rail and port authorities. In addition, specialist land agencies have been established with their own legislation. ² Government of Western Australia (September 2008), 2008-2012 Procurement Beyond the Reforms Future Directions Discussions Paper, Perth Page 48 Works Reform Business Solution Plan The procurement of non-residential public buildings has evolved to a more modern model reflecting a partnership relationship with the private sector, a negotiated and consultative approach to site acquisition and a range of contracting forms. A review of the Public Works Act would be of benefit to identify areas of confusion concerning references to ‘power to construct’ for a range of agencies and to facilitate a simpler procurement framework. The recent changes to the State Supply Commission (with integration of its policy functions into the DTF) and the proposed repeal of the State Supply Commission Act (1992), provides an opportunity to investigate the development of a single head of power for all government procurement. The review of the Public Works Act could be undertaken with consideration of the regulatory framework for ‘goods and services’ procurement and could investigate further opportunities for savings to government. These may come from aligning policies across works and goods and services, dispersing proven processes and skilled staff and reducing duplication. The confusing arrangements with respect to land acquisition could also be addressed. Asset Management Systems Government currently relies on outdated information systems to procure, maintain, repair, refurbish, and dispose of its assets. A whole-of-life cycle asset management strategy requires a single source of asset data to maximise opportunities to reduce total life-cycle costs. Only when resources and knowledge are shared across departments can this be fully achieved. There are a wide range of systems in place across government to manage assets, with the integration between asset management and financial management systems uncommon or inconsistent. Diversity of assets has led to diversity in asset recording, with a wide reliance on individually developed databases or spreadsheets. The implications of this are: • poor information to support asset planning; • difficult correlation of agency asset records with financial records; and • lack of whole-of-government view of State assets. To maximise the benefits of the SAM Framework and prepare meaningful annual strategic asset plans, the manner in which government records and manages its assets needs to be reviewed. While Treasurer’s Instruction 410 provides guidance on what assets are to be recorded on registers and which attributes are to be collected, its focus is on the accounting treatment of assets, not strategic asset management. Works Reform Business Solution Plan Page 49 RECOMMENDATION 42: That BMW prepares a business case for the development of a whole-of-government asset information and management system. A whole-of-government approach to the recording of public assets could be enhanced by linkages with the Department of Land Information’s Graphical Information System and then being able to plot future infrastructure plans on the Department for Planning and Infrastructure Development Program. Utilising emerging building information management technology would create linkages, reports and plans that should create significant efficiencies and enable better decision making. The data generated would also enable the DTF to better utilise agencies’ strategic asset plans and visualise the State’s program over a ten-year horizon, as well as facilitating land assembly for BMW. While the rationale is clear and the technology solution possible, the adoption of the related policies, procedures and processes is ultimately a business decision that requires a considerable investment. Such a decision needs to be based on sound financial judgement presented in a clear business case. RECOMMENDATION 43: That BMW prepares a business case investigating the benefits and costs of linking asset management data with government’s Geographical Information Systems. Land Assembly Up until the mid 1980’s, the Land and Property section of the Public Works Department coordinated all government acquisitions of sites for public works throughout the State. The role was then transferred to the Department of Land Administration, and as part of Government’s devolution processes during the 1990’s the role fragmented further with individual agencies becoming directly responsible for identifying and securing sites. The Department for Planning and Infrastructure now deals with statutory matters relating to planning and land acquisition, with agencies generally engaging consultants to assist in site selection and the land assembly process. Under the SAM Framework, land assembly is not explicitly dealt with as a project requirement and outcome. Land assembly involves site identification, site acquisition and approval implementation. Issues include site suitability, legal considerations (including titles and encumbrances), rezoning, cultural heritage, Aboriginal heritage, Native Title, environmental (including contamination and clearing permits), and development approval. These processes can be time consuming and in some cases may take years to resolve before paving the way for project delivery. Page 50 Works Reform Business Solution Plan The risk of inadequate attention being given to land assembly may result in a delay in the construction of facilities and the delivery of community services, building escalation, which may result in cost overruns, or a reduction in the scope of works, and poor public perception/relations. The current approach on land assembly provides for limited whole-of-government coordination of land required for new buildings. It has resulted in an environment where agencies are required to resolve complex land assembly processes within a limited policy framework through the use of external consultants with limited expertise in government land matters, and with marginal funding capacity to secure land in advance of requirements. A more co-ordinated centre-led approach has the potential to assist this critical area of project delivery. There is now an opportunity to improve land assembly processes for public buildings by establishing a small Land Assembly unit within the BMW business that can liaise with the Department for Planning and Infrastructure. This should result in improved planning outcomes for overnment through: RECOMMENDATION 44: That BMW prepares a business case for the establishment of a Land Assembly unit to facilitate land acquisition for public buildings (in liaison with the Department for Planning and Infrastructure and the relevant agencies). • securing information from agencies on land needs, to ensure decisions to acquire land can consider other government agency requirements, for example multiple agency site needs within a given locality; • monitoring agency progress with land assembly for key projects; • the better use of existing government assets for public works, or other government initiatives; • use of the planning system to progress opportunities to identify, acquire and manage sites for future public works; and • a more coordinated government approach on native title and heritage, including indigenous land use agreements. A BMW land assembly unit could work with the Department for Planning and Infrastructure to establish guidelines within the SAM Framework. These Guidelines would: • outline the policy framework on land assembly as part of project delivery; • inform and provide a framework and checklist to assist agencies and their consultants on the what, why and how of land assembly for government projects; and • outline a corporate government perspective on land assembly in terms of reviewing and developing related policy and providing advice. A current example is streamlining the development approval process for public works with the Western Australian Planning Commission and Department for Planning and Infrastructure, which has taken on greater significance with the Commonwealths economic stimulus package over the next two years. Works Reform Business Solution Plan Page 51 RECOMMENDATION 45: That BMW develops an asset register of all government building assets with heritage values, and pursues sustainable management regimes for these buildings. Managing Heritage Value The government owns many buildings with unidentified heritage values as well as formal identification through listing on local authority, Heritage Council or National Trust schedules. There are opportunities to identify under-utilised heritage properties owned by the Government and other agencies, with the objective to conserve those assets and find sustainable funding arrangements to ensure the future protection of the buildings. Adaptive reuse can be used more effectively to analyse the potential of existing heritage and non-heritage buildings. The suitability and associated costs of retrofitting, including maintenance and life cycle operational costs, need to be analysed for each asset. The National Trust has maintained interest in the acquisition of heritage buildings for a rolling heritage fund. Their intention is to value add by seeking new fund sources, including selling some properties to provide funds for heritage conservation of properties that they own or manage. Research in the past has identified some 60 government buildings with heritage values, of which approximately 10 properties are now managed by BMW. The approach to the management of this important building portfolio should be considered in consultation with the Heritage Council, Department for Planning and Infrastructure and the National Trust. RECOMMENDATION 46: That BMW prepares a business case for the future management of Fremantle Prison, including the appropriate funding model for its ongoing conservation and activation. Fremantle Prison The Fremantle Prison is one of Western Australia's premier heritage sites, centrally located in the heart of Fremantle. The site is listed on the Australian Heritage Commission's Register of the National Estate, on the Heritage Council of Western Australia's Register of Heritage Places and in the Fremantle West End conservation area. Many of the buildings in the precinct are also listed with the National Trust of Australia (WA). Fremantle Prison won the ‘Major Tourist Attraction’ and ‘Cultural and Heritage Tourism’ Awards in the 2008 Australian Tourism Awards. It will be considered for World Heritage listing in 2009-2010. Page 52 Works Reform Business Solution Plan The future management of Fremantle Prison needs to be considered in the light of its development over the last 15 years. There are a range of potential options, ranging from retaining its placement within BMW to the establishment of a new Trust, or even a Statutory Authority. Management by the National Trust is also a possible option. The prime limitation on finding a suitable alternative to its current management by BMW is the uncertainly around conservation funding. While the prison is now close to covering all its operational costs, it is never likely to cover its conservation costs. RECOMMENDATION 47: That BMW engages with the new Government Architect to develop design standards to meet the objectives of government buildings and provide advice and support for the Works Reform program. Office of the Government Architect The Australian Institute of Architects has actively encouraged all State and Territory Governments to establish Government Architect positions. The position exists in most States and Territories in Australia (South Australia and the ACT are the two exceptions) and a recommendation exists for establishing a Commonwealth Architect position to deliver independent strategic advice to the Commonwealth Government with the aim of achieving high quality, sustainable design outcomes. The role of Western Australian Government Architect, within DHW’s Office of the Government Architect (OGA), was established in 2003. The purpose of the position is to provide leadership and strategic advice to Government to achieve the objective of improving the design of public buildings and spaces and enhancing the quality of the built environment. The OGA: • promotes the value of good design; • inspires decision makers to value the built environment; • pursues quality design and sustainable outcomes; • seeks to ensure that good design is a core requirement in the procurement of public buildings; • assists Government to develop design ambitions; • sets quality benchmarks for key public projects; and • encourages architectural excellence by implementing design review processes. The Government has recently appointed a new Government Architect, the first having completed a five year contract at the end of 2008. The Government Architect is required to have a whole-of-government focus and, where requested, provide advice to the highest levels of Government. The objectives of design advice on government buildings includes the development of appropriate design standards that focus on whole-of-life building efficiency and buildings that can add positively to the well-being of users. The Government Architect will also have an important role in the reform of works, providing valuable advice and support to the directions outlined in this plan. Works Reform Business Solution Plan Page 53 RECOMMENDATION 48: That BMW develops greater skills in the application of the SAM Framework as it applies to building assets and adopts the Framework as the foundation of all policy and practice processes. While the introduction of a Government Architect has been quite successful, the previous arrangement saw this support somewhat removed from the key areas of decision making and policy direction. As a result, the relationship with DHW was ambiguous. With the appointment of a new Government Architect the role of the OGA should be clarified to ensure it contributes to the strategic intent and new priorities of BMW. Asset Planning, Project Management, and Procurement Standards and Practice DHW did not have a strong culture of standardisation or process improvement. Consequently, there was no defined allocation of the responsibility to ‘own’ the SAM Framework as it applies to buildings. The standards and practice roles in BMW cover a vast array of issues, but focus has been lost and ‘who does what’ is not clear. BMW requires a strong, centralised and skilled standards and practice area to implement many of these reform outcomes and maintain a leadership role across the sector for works policy, planning, project management and procurement standards. The standards and practice area needs to develop effective processes and guidelines on: RECOMMENDATION 49: That BMW develops procedures and guidelines for building works procurement and project management that establishes best practice standards. RECOMMENDATION 50: That BMW becomes a leader in the development of business cases, and the application of supporting tools (such as Investment Logic mapping and Value Management). • application of the SAM Framework as the foundation of all processes and practices; • project management methodologies; • procurement policies and contracting forms; and • procurement documentation and templates. A practice management unit should also drive: • consistent advice to internal staff and external stakeholders; • integration of research, national standards and emerging issues; and • expert input into design, including sustainability and whole-of-life maintenance planning. Page 54 Works Reform Business Solution Plan Further, BMW needs to develop its professional skills across a range of tools that are widely used in the private sector and other areas of government. The successful introduction of the Gateway Review Process in WA by the DTF is an example of the type of value-add process that can assist in value for money and improved efficiency. BMW should investigate other processes and take on a sector wide lead in analysis tools (for example: value management) and business case development. Investment Logic Mapping (used extensively in the Victorian State Government) is one such opportunity which could greatly reduce the effort and time required for business case development, as well as a range of decision-making processes. RECOMMENDATION 51: That BMW prepares a business case on the future directions of its Industry Training Program. Industry Training Program In 2005, an Industry Training Program was developed by DHW to help address the building and construction skills shortage, with the purpose of developing and providing direct support for apprentice training. The Program was designed to focus on attraction and retention of apprentices and trainees to the building and construction industry as a career, provide quality training and manage apprentices to trade completion by deploying them on government construction and maintenance projects. As DHW was not in a position to directly indenture apprentices, it formed partnerships with Group Training Organisations. In February 2006, the Program commenced with its first recruitment of 40 apprentices in five trades in the metropolitan area. In 2007, the program expanded to regional locations and the number of trades increased to nine, including: • electrical; • carpentry and joinery; • plumbing and gas fitting; • glazing and bevelling; • refrigeration mechanical; • painting and decorating; • tiling; • plastering; and • bricklaying. There are currently 140 apprentices and trainees engaged in the program (of which 18% are Aboriginal, and 5% are female) and six Group Training Organisations. Participants are located within the metropolitan area, Peel/Bunbury, Halls Creek, Fitzroy Crossing, Port Hedland, and more recently Broome and Albany. Works Reform Business Solution Plan Page 55 Strategic directions for the Program are to increase Aboriginal and female participation to 30% and 10% respectively, and increase the numbers of harder-to-engage and at-risk individuals, breaking cycles of poverty and recidivism. To this end discussions and partnerships are being forged with the Department of Corrective Services and Outcare. It is intended for the total number of participants to grow to about 150. In addition, for a two to three year period, the Federal Government Stimulus package will fund up to 80 additional apprentices through the Building the Education Revolution program. Under this program, BMW contractors and subcontractors provide on the job training and daily supervision, an essential element of trade training. In return, BMW has developed a ‘shared cost model’ that shares the financial cost of the apprentice with the contractor. This model recognises the cost versus the benefits of an apprentice to contractors through the term of the apprenticeship. BMW Year 1 Apprentice - Certificate II Trainee Year 2 Apprentice Year 3 Apprentice Year 4 Apprentice (electrical/plumbing only) 100% 50% 30% 0% BMW Host Employer 0% 50% 70% 100% Table 3: BMW Contribution to the Apprentice Costs BMW apprentices are not restricted to working on government projects and may be deployed by the contractor on private work wherever it is most appropriate to meet the training needs of the apprentice and workforce needs of the contractor. The Program is a sound concept that has proven itself over the past three years and could be developed and expanded to other areas of the State. It has the potential to broaden its scope to include other government agencies and community groups. Page 56 Works Reform Business Solution Plan Whether this role fits well within the BMW business has been questioned. Alternative governance models could see it relocate to the Building Industry Development group (that is soon to transition to the Department of Commerce). Alternatively, the Department of Education and Training (which administers the Priority Access Policy for apprenticeship training) might be a better fit for this function. RECOMMENDATION 52: That BMW completes the transition of its Building Industry Development division to the Department of Commerce by 30 June 2009. Building Commission The Building Industry Development (BID) division was transferred to the DTF from DHW on the 1 February 2009. BID develops, regulates and supports the housing, construction and property management industries in Western Australia and provides building industry information and advice to the industry and its consumers. Its key functional areas are Building Codes and Regulation, Industry Policy and Advice, Building Commission Strategy, and Building Commission Implementation. BID will be progressively integrated into a Building Commission, to be established in the Department of Commerce. The creation of a Building Commission includes a plan to draw together the Builders' Registration Board, Painters' Registration Board, Plumbers' Licensing Board and the former DHW BID division. A Building Commission is to be established on 1 July 2009. Legislation to establish the Building Commission as a statutory authority is being drafted, but the timing of its finalisation is uncertain. The Department of Commerce is now planning to create a new division that will implement the intentions of the Building Commission with effect from 1 July 2009. Works Reform Business Solution Plan Page 57 Section 12: Business Case for the Plan Introduction The changes proposed by the role redesign, increase in project management capacity and direct funding of BMW will deliver savings to Government. Indeed, it is a fundamental objective of the Works Reform program that these savings will far outweigh the costs associated with implementation of the program itself and particularly, the new BMW structure. The overall expenditure on private sector consultants will be reduced, with the savings invested in improved business case development. Budgeting will be improved, with more reliable project budgets and scheduling. There will also be more innovative project delivery models such as integrated design, construction and maintenance, as well as PPP’s, which will result in reduced scope creep and more efficient and effective building infrastructure. In April 2009, Cabinet approved: “The new model for funding the DTF’s BMW business in implementing its new role.” The new funding model for BMW will be implemented as part of the 2009-2010 budget process. BMW Funding A fundamental change in the approach to funding BMW will be implemented. Currently, BMW is part funded from direct appropriation, and partly from fees that are applied to the value of works programs. This fee is billed to agencies at the same time as the project cost is recouped. The proposed new approach is outlined below. Page 58 Works Reform Business Solution Plan Capital Works fees and New Funding Model Firstly, the cost recovery model implemented by DHW based on project turnover will be removed, and replaced with direct funding allocation from the capital works project budgets. This shift in funding allocation represents no addition to the capital works budgets, rather a simple cost shift to collect the ‘fee’ as a direct allocation to BMW at the commencement of each year. This will immediately eliminate both the costs associated with invoicing agencies and the problems with the perception that BMW’s role is an optional fee for service. Secondly, BMW will build its capability to support its new role, resulting in a significant shift from private sector project management to public sector project management. In order to make this improvement to the project management capability of BMW, the portion of capital works budgets currently directed to private sector consultants (specialist project managers or part of the role now performed by architects) will be redirected to BMW control and resourcing. Thirdly, some staff positions and consultants that are now working directly for the major agencies (e.g. Department of Health, Department of Education and Training, Western Australia Police), will be re-badged and established as part of the BMW business. The actual number is unknown, but the focus for re-badging is the people involved in project delivery (not asset planning). This could result in 20 to 30 FTEs being transferred from agencies to BMW, and would be achieved through Section 25 fund transfers from the agency to the DTF. Project Management Services Of the services currently provided by consultants, those provided by specialist project managers and the project and contract management role provided by some Architects, represent functions that could be brought back in-house and provided by public sector employees within BMW. By bringing these project funds under the direct control of BMW, a share of the funds can be used to recruit the proposed BMW project management team. The intention is not to in-source the entire project management role – because the capital works program fluctuates from year to year. There will always be a need for BMW to supplement its own project management capacity with outsourced services – with the proportion depending on its own staff capacity and the size of that year’s works program. The design consultants and other specialist consultants, such as cost planners and environmental advisors, will all remain outsourced. Works Reform Business Solution Plan Page 59 Analysis of last year’s completed capital works program shows that the former DHW recovered costs of around 2% of the total project expenditure, to cover its previous (limited) role. It is proposed to shift all of the funds currently expended on the provision of project management services to BMW control – which will result in an allocation of around 4.5% of non-residential building project budgets to BMW. This is shown in the following graph. The actual amount controlled by BMW will vary on a sliding percentage scale, depending on the value of the project. Maintenance, Minor Works and Fit-out Fees and New Funding Model The issues associated with the current fee for service approach applies to other BMW services not just the capital works projects. It is also proposed that the BMW fees now applied to office fit-out projects, and for building maintenance and minor works programs, will also be removed and replaced with direct funding allocation from the program budgets. Page 60 Works Reform Business Solution Plan The process for removing the maintenance fees will require a Section 25 transfer agreement between agencies and the DTF, and will be progressively introduced during 2009-2010. Implications for BMW’s Budget The DHW (now BMW) budget for 2008-2009 comprised the building works program that it has administered, plus funds to cover its own operations. This is shown in the table below. ACTIVITY Capital Works Program Maintenance and Minor Works Program Commercial Properties Program Total Works Program Employee Expenses Supplies and Contracted Services Other Expenses Depreciation Total Operational Expenses Total Cost of Services BUDGET $650m $162m $193m $1005m $27m $29m $9m $7m $72m $1077m Table 4: BMW budget for 2008-09 All the cost of the works program is recovered from other government agencies and is therefore an ‘income’ to BMW. Income from fees was budgeted at $38 million, and service appropriation from the State Government was budgeted at just under $30 million. The implications of this proposed new funding model for the BMW’s own budget include: • the removal of any fees recovered from other Government agencies and a corresponding increase in appropriation; • the transfer of around $5 million of consultancies (now included in the capital works program) for project management and administration services, to BMW employee expenses; and re-badging. contract • the transfer of up to $3 million of agency resources to BMW through Works Reform Business Solution Plan Page 61 These changes will have very little impact on the total BMW budget. The benefits of reorienting this spend include: • BMW can control the amount of project management resource employed within government; • BMW can develop a new career path for public sector project managers and help the Government retain valuable and experienced resources; • more knowledge is kept within government and can be re-used and passed on to developing project managers; • the potential conflict of interest, that now arises in the event there are problems from poor design being project managed by the same architect who was responsible for that very design, will be removed; and • project overruns will be significantly reduced – due to improved project management, better planning and better upfront costing. Costs and Benefits of the Works Reform Program Once the strategies and recommendations in this Business Solution Plan have been approved, an Implementation Plan will be developed. The costs and benefits of the plan can then be analysed in more detail. However, at this stage in the planning, an outline of the likely costs and benefits is summarised below. Costs Additional recurrent costs will include: • five additional leadership positions • 25 additional project managers on staff • five additional asset planners on staff • new training and skills development programs • team building and cultural change programs • new analysis and reporting arrangements • redeveloped country regional offices • additional accommodation and administration support $0.7m pa $3m pa $0.5m pa $0.5m pa $0.2m pa $1m pa $2m pa $2m pa Page 62 Works Reform Business Solution Plan Most of these costs are associated with the growth of BMW staff (currently at 325 FTEs), with a projected 35 FTE increase, phased in as follows: • 2009-2010 • 2010-2011 • 2011-2012 20 FTEs 10 FTEs 5 FTEs Around eight of these new FTEs will be in country regions. These numbers do not include any re-badging, which would be cost neutral. The total recurrent cost increase is estimated to reach around $10 million by 2011-12. It will comprise around $34 million over four years as follows: • 2009-2010 • 2010-2011 • 2011-2012 • 2012-2013 $ 6m $ 8m $10m $10m There will also be capital costs associated with fit-out of new offices in both the metropolitan and county regions (estimated at around $6 million in 2009-10). The development and implementation of a wide range of information systems will be the most significant capital cost. These systems need to include the following components: • financial and resource management (from Shared Services); • project accounting (from Shared Services); • project management; • lease management; • procurement (contract development and contract management); • service provider management; • client asset management; • knowledge management (policies, practice and standards); and • data warehouse and reporting frameworks These systems are estimated to cost around $20 million implemented over a four to five year period. This includes the cost of a project team comprising four to seven FTEs. Works Reform Business Solution Plan Page 63 In summary, the preliminary cost estimate for this Works Reform program is: • $34 million over four years (recurrent); • $6 million in 2009-2010 for accommodation fit-out; and • $20 million in 2009-2013 for information systems. This is a total of around $60 million over four years. Benefits As outlined earlier, the recurrent cost increases in this reform program will be offset by at least an equivalent cost decrease in the works program, primarily due to the in-sourcing of project management (now undertaken through private sector consultancies). Hence, cost decreases in the works program from in-sourcing are estimated at $34 million over four years as follows: • 2009-2010 • 2010-2011 • 2011-2012 • 2012-2013 $ 6m $ 8m $10m $10m However, the most significant benefit from this reform program will be seen in the reduction of time and cost blow-outs on capital works project budgets. As shown in Appendix 1, of a sample of 17 major existing projects, there are no projects that will meet their original approved budget. Over the next four years, this reform program should deliver a very significant improvement in this performance. This will lead to an improvement in Treasury and Government confidence in planning and budgeting for the non-residential buildings capital works programs, which should have a positive impact on Government’s ability to maintain its AAA credit rating. Page 64 Works Reform Business Solution Plan In addition to improved budget reliability, a 10% reduction in the actual cost of capital works projects should be a reasonable target, given the waste and limited innovation in the current approach. On a capital works program of $650m, this saving would be around $65 million per annum. For the building maintenance program, the proposed reform should see a significant reduction in wasteful breakdown repairs (by 10 to 15% or around $10 million per annum), with this saving being re-invested in planned maintenance. An effective asset maintenance planning process should also see a growth in planned maintenance budgets. This will improve the ongoing utility of the existing buildings for the occupants, as well as more efficiently maintain Government’s investment in its building portfolio. For government office accommodation, the proposed reform should see a significant reduction in accommodation costs for the same demand. This will be achieved through more efficient fit-outs, some relocation out of the CBD, and more effective co-ordination of agency needs. A 10% improvement should be a reasonable target. This would achieve a saving of at least $15 million per annum. The savings targets outlined above will be progressively phased in as the Works Reform program is implemented over the next four years. They are summarised in the following table. SAVINGS from In-sourcing Project Management New Buildings Breakdown Repairs Office Accommodation Total 2009-10 6 2010-11 8 2011-12 10 2012-13 10 Total $34m 22 4 8 $40m 36 6 10 $60m 50 8 12 $80m 65 10 15 $100m $173m $28m $45m $280m Table 5: Indicative savings for the four-year Works Reform program Works Reform Business Solution Plan Page 65 RECOMMENDATION 53: That BMW now develops an Implementation Plan, for all the recommendations in the Works Reform Business Solution. Other benefits of the reform program will be measured through stakeholder satisfaction surveys. Focus of Stakeholder Satisfaction Surveys • Government agency satisfaction with: the timeliness of their new building delivery; the quality of their new buildings; RECOMMENDATION 54: That BMW further develops the business case for the Works Reforms (including likely costs and the potential benefits) as part of the Implementation Plan. the value for money of planning and delivery of new buildings; the value for money of planning and delivery of building maintenance; the value for money of planning and delivery of office accommodation; and the BMW planning and delivery services. • BMW staff satisfaction with: the work they do; their career path; and the BMW policies and practices. RECOMMENDATION 55: That BMW undertakes cost and benefit analyses for the four-year Works Reform program, and provides an annual report to the Treasurer. • Building industry satisfaction with the: BMW procurement policies and practices; and information on future works programs. Cost and Benefit Comparison While the information outlined above is still preliminary, and will need to be further analysed as part of the implementation planning, there is clearly a strong business case for this reform program. The proposal is that for an investment of around $60 million over four years, cumulative savings of around $280 million should be achievable in the same timeframe, as well as a wide range of other benefits to Government and key stakeholders. The most significant of these other benefits is a reduction in time and cost overruns on capital works project budgets. Page 66 Works Reform Business Solution Plan Section 13: Overview of Recommendations Each works reform strategy has been translated into specific recommended reform initiatives in the previous chapters – aimed at successfully implementing the business solution. A summary of these proposed initiatives follows. It is recommended: STRATEGIC ASSET MANAGEMENT FRAMEWORK 1. That the Treasury and BMW businesses work together to promote and educate Government agencies to utilise the SAM Framework. 2. That the DTF reviews the SAM Framework to help support the Works Reform program. 3. That the SAM Framework be adopted across all functions within BMW as the foundation of the Works Reform program. NEW BUILDINGS PROGRAM 4. That DTF works with owner agencies to help prepare their 10-year strategic asset plan, and then select potential projects for a business case. 5. That business cases for new buildings be prepared collaboratively between the owner agencies and BMW and the final business case jointly signed. 6. That BMW builds its capability in asset planning, and its expertise in business case development. 7. That BMW be given control over project management of all new building procurement through direct appropriation of that part of project budgets. 8. That DTF explores new, innovative and non-traditional models of procuring new buildings. 9. That the resources within agencies that now undertake new building project management be re-badged to BMW. Works Reform Business Solution Plan Page 67 BUILDING MAINTENANCE 10.That BMW be given a new leadership role in supporting agencies in the development of their business cases for maintenance programs on government buildings. 11.That BMW takes on a whole-of-government portfolio management role and provides advice to Government on how agencies are managing the maintenance of their buildings and property portfolio. 12.That BMW develops guidelines to help integrate whole-of-life maintenance thinking into the planning stage of the procurement of new buildings. 13.That BMW and Treasury ensure asset disposal options are addressed in the development of strategic asset plans and business cases for capital investment. 14.That strategic maintenance planning with a whole-of-life cycle view be strengthened and updated accordingly within the SAM Framework, with agencies required to prepare a 10-year maintenance investment plan. 15.That BMW explores new, innovative and non-traditional modes of procuring building maintenance services. 16.That BMW mandates the use of central procurement frameworks for building maintenance. 17.That the ‘fee for service’ funding model for BMW maintenance and minor works services be replaced with direct appropriation. 18.That BMW develops a new approach to the planning and funding of maintenance and refurbishment programs for government buildings. Page 68 Works Reform Business Solution Plan OFFICE ACCOMMODATION 19.That agencies be required to include a 10-year office accommodation plan as part of their annual capital investment plan. 20.That BMW be given a new leadership role in the development of business cases and office accommodation programs, using a master planning approach. 21.That BMW reviews existing government office accommodation policies and develops a policy suite that aligns with the total portfolio approach. 22.That BMW strengthens its capability in accommodation planning and procurement. 23.That BMW reviews the governance of the Office Accommodation Advisory Committee with a view to enhancing consultation and representation. 24.That BMW reviews the approach to non-office property leases and develops a more comprehensive database. CENTRE FOR EXCELLENCE AND INNOVATION IN INFRASTRUCTURE DELIVERY (CEIID) 25.That the DTF continues to support the objectives of CEIID, actively participating and working cooperatively to progress its objectives, to share knowledge and deliver tangible benefits. STRATEGIC PROJECTS 26.That Strategic Projects continues in its current role and grows its expertise as an integral part of the new BMW business. BMW ORGANISATION 27.That BMW implements a new organisational structure that will grow its leadership and project management capabilities. 28.That BMW accommodates all its existing metropolitan planning and project management people (apart from any re-badged employees) at one location. 29.That BMW grows its pool of highly skilled project managers, (as permanent public servants) to reduce the reliance on consultancies for major infrastructure projects. Works Reform Business Solution Plan Page 69 30.That a new career path for project managers be established – equivalent to the specified callings arrangements available to other professionals – to help attract and retain staff required to deliver these reforms and ensure a sustainable workforce for the delivery of buildings for Government. 31.That BMW establishes new skills development programs for project managers. 32.That BMW develops a business case for systems support required for its new role and then seeks capital funds to implement the new platforms over the next four years. 33.That BMW’s transition to Shared Services be advanced to 2010 (from the current planned schedule of 2012). 34.That the DTF regional procurement staff from both BMW and Government Procurement be integrated into four regional teams, with offices located across 13 towns. 35.That the current regionally based facilities management role be retained and enhanced, and the building maintenance planning and procurement strategies integrated into a State-wide portfolio approach (as discussed in Section 6). 36.That project management capability be strengthened in regional centres to enable more regional capital works projects to be managed locally, rather than from Perth, including temporary relocation for specific projects. 37.That the new BMW regions take on additional responsibilities in office accommodation planning and procurement, integrated into the proposed total portfolio approach (as discussed in Section 7). 38.That BMW establishes a strong partnership with its key client government agencies (including a Client Council). 39.That BMW ensures effective liaison is maintained with key building industry associations. Page 70 Works Reform Business Solution Plan ASSOCIATED REFORMS 40.That BMW liaises with the DTF Government Procurement business to develop a common policy suite for all procurement. 41.That a review of the Public Works Act (1902) be undertaken to clarify legislation on the procurement of works, land, goods and services. 42.That BMW prepares a business case for the development of a whole-of-government asset information and management system. 43.That BMW prepares a business case investigating the benefits and costs of linking asset management data with government’s Geographical Information Systems. 44.That BMW prepares a business case for the establishment of a Land Assembly unit to facilitate land acquisition for public buildings (in liaison with the Department for Planning and Infrastructure and the relevant agencies). 45.That BMW develops an asset register of all government building assets with heritage values, and pursues sustainable management regimes for these buildings. 46.That BMW prepares a business case for the future management of Fremantle Prison, including the appropriate funding model for its ongoing conservation and activation. 47.That BMW engages with the new Government Architect to develop design standards to meet the objectives of government buildings and provide advice and support for the Works Reform program. 48.That BMW develops greater skills in the application of the SAM Framework as it applies to building assets and adopts the Framework as the foundation of all policy and practice processes. 49.That BMW develops procedures and guidelines for building works procurement and project management that establishes best practice standards. 50.That BMW becomes a leader in the development of business cases, and the application of supporting tools (such as Investment Logic mapping and Value Management). 51.That BMW prepares a business case on the future directions of its Industry Training Program. Works Reform Business Solution Plan Page 71 52.That BMW completes the transition of its Building Industry Development division to the Department of Commerce by 30 June 2009. BUSINESS CASE FOR THE PLAN 53.That BMW now develops an Implementation Plan, for all the recommendations in the Works Reform Business Solution Plan. 54.That BMW further develops the business case for the Works Reforms (including likely costs and the potential benefits) as part of the Implementation Plan. 55.That BMW undertakes cost and benefit analyses for the four-year Works Reform program, and provides an annual report to the Treasurer. Page 72 Works Reform Business Solution Plan Appendix 1: Major Projects Cost Performance Project Name Original Approved Budget $’000 14,000 11,000 420,000 44,000 Expected % Cost Increase (Apr 2009) $’000 70,000 54,500 1,761,000 135,000 400% 395% 319% 207% Of the 17 projects in this sample: Albany Entertainment Centre Muchea Saleyards Fiona Stanley Hospital Stage 1 Albany Regional Resource CentreRedevelopment Stage 1 Perth Arena Kalgoorlie Court Redevelopment New Performing Arts Venue (NPAV) Joondalup Hospital – Development Stage 1 DAFWA Relocation from South Perth West Kimberley Regional Prison Albany Waterfront Project Kalgoorlie Regional Resource Centre Redevelopment Stage 1 Perth Police Complex Carnarvon Police and Justice Complex Rockingham/Kwinana Hospital Redevelopment Hedland Regional Resource Centre Stage 2 CBD Courts – Central Law Courts Refurbishment TOTAL • seven (or 41%) had a cost blowout over 100%; and • four (or 23%) had a cost blowout over 200%. This is clearly unacceptable, and significantly impacts the reliability of Government’s budgeting, and its project management credibility. This reform program should include a key performance indicator (KPI) that measures budget overruns (from when the project budget was announced to the final cost). A target of keeping all capital works projects within their budget should be set. In this sample, none of the 17 projects met this target. 160,000 20,790 41,700 119,000 186,600 92,700 27,800 40,000 81,000 40,000 92,136 114,000 37,250 1,542,000 442,500 48,700 91,000 229,800 349,200 150,000 42,000 55,800 113,000 55,000 116,200 138,400 43,000 3,895,000 177% 134% 118% 93% 87% 62% 51% 40% 39% 38% 26% 21% 15% 153% Works Reform Business Solution Plan Page 73 Appendix 2: CEIID Strategic Plan Objectives Business Area of Focus Appendix 3: BMW Career Pathways for Project Managers Project Manager Career Pathways Inspiring individuals to a professional career path in project management will be encouraged through four major pathways, as outlined below. Practitioner to professional There are some high-performing project officers who clearly aspire to the professional project management role – and these people need to be nurtured and supported with their own development program. Recruitment of professional project managers from the private sector Recruiting ready-made project management professionals into government from the private sector. They will have professional qualifications in project management, engineering, architecture (or similar) and experience in our industry. The focus of their development would be on the public sector context. The current labour market should provide significant opportunities for this option. Graduate to professional project manager Recruiting recent university graduates. These are bright, innovative, young people who will make an impact on the future of asset planning and project management. They need to gain knowledge of project management policies and procedures, experience in the public sector context, and gain professional acumen. They will have the capacity to move very quickly through the project officer roles to the entry-level project manager professional – probably within a few years. Lateral recruitment Lateral recruitment focuses on the large pool of people within government who may have never considered infrastructure project management as a career path. These people have been working in their own profession for many years, understand the government environment, and are typically good risk managers and good project managers in their own field. They already know about many of the asset management and strategic project management needs. They may be professional procurement managers in a non-works area. They need to extend their knowledge of asset management and project management policies, procedures and experience. They may have the capacity to quickly move in to a project manager professional role after an intensive development program focussing on the project management process in the public works context. Page 76 Works Reform Business Solution Plan 169 Hay Street, EAST PERTH WA 6004 Telephone: 08 9440 2345 Email: firstname.lastname@example.org The Works Reform Business Solution Plan has been prepared by the Building Management and Works business within the Department of Treasury and Finance.