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Oversight Role within - The Financial Management Advisory _FMA

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					The Financial Management Advisory (FMA)
              Oversight Role
within the Investment Management Process



    Omar Najm, CMA
    Director, Financial Management Advisory Services -
    Enabling Services Renewal Program;
    Chief Financial Officer’s Branch;
    Human Resources and Skills Development Canada


                       November 24th, 2010
                   AGENDA

Background: The Investment Management Process


                 Stage Gate™


     The FMA Role: Financial Due Diligence


               Question Period
  HRSDC’S Investment Management Process
HRSDC’s Investment Management Process (IMP)

  • Supports Deputy Minister Increased Accountability (Fed AA, FAA, MAF)
        Achieve Sound Stewardship and Value for Money in Major
        Investments and Projects

  • Required by Treasury Board Secretariat (TBS)

  • Leverages world renown Industry Practice (Stage Gate™ Process)
        Protocols tailored to GoC and HRSDC environments

  • Ensures stronger focus on improved service delivery to Canadians




  IMP              Stage Gate™            FMA Role             Questions   3
    HRSDC’S Investment Management Process
Putting the IMP into Practice
• Ensure an Integrated & Horizontal view to managing projects
         Beginning with the Departmental Investment Plan

• Major Projects Investment Board: ADM-level Governance Committee
         Established by DM
         Establish Investment Plan
         Review, Recommend,& Approve Projects > $1M and Asset Plans

• Define the respective Cross-Functional roles & responsibilities
        Today’s focus will be on the FMA role

• Establish Standardized Project Management/Review Practices &Templates



   IMP               Stage Gate™              FMA Role              Questions
                 HRSDC’S IMP Governance

Major Projects Investment Review Committee (MPIRC)

• Director General level Steering Committee
• Reviews major projects through Gates 1 & 2




Major Projects and Investment Board (MPIB)

• Provides oversight through Gates 3, 4 & 5 of Stage Gate™ Process.
• Establishes annual departmental investment priorities
• Approves procurement plans & strategies for projects and assets




   IMP              Stage Gate™               FMA Role              Questions
                            IMP Stakeholders

Executive Project Sponsor

• Develop sound business case & articulates planned realization of benefits
• Presents project to governance committees for authorization

Project Team
• Cross-Functional team with defined deliverables through planning &
  implementation stages
•   Works with all stakeholder groups to develop project
Supporting Teams (Finance, Risk Assessment Team, IMP)
•   Provide guidelines/templates for planning, costing, & risk identification
• Review project documentation at each gate and performs due diligence review


     IMP                Stage Gate™              FMA Role               Questions
       Background of STAGE GATE™ Process
Stage Gate™ Process

•   Developed by Dr.’s Robert G. Cooper and Scott J. Edgett

•   Worlds most widely used innovation implementation system

•   Conceptual and operational road map for moving a new project from idea to
    launch

•   The process divides all of the effort into stages

•   Each stage is separated by a decision point (gate)
      Where governance decides whether to continue with the project




    IMP              Stage Gate™                FMA Role          Questions     7
               The STAGE GATE™ Methodology
                                                    Product Innovation &
                                                    Technology Strategy


                                                                        Portfolio
                                   Environment:
                                                                      Management:
                                   Climate, Teams
                                                                      Resources &
                                    & Leadership
                                                                      Commitment

                                                  An Idea-to-Launch
                                                     Framework:
                                               Stage-Gate Methodology




Stage GateTM is part of an overall management framework that links:

• Project selection and delivery capacity management
• Incremental risk management (by Gate)
• Assesses project expenditures from a Portfolio View
• Business and Technology plans articulating overall strategic direction
• Organizational culture, including Governance and Roles and Responsibilities
                                                                                    8
                HRSDC’S IMP Stages & Gates
Stages: where STAGES
              the activities of the project take place
   • Where the decision points for management where they can
Gates: Provide activities occur according the project plan
   • The activities are approve continuation next gate decision
assess progress andthose required to get to theof the project.
         (e.g. project planning, build and develop solution, etc.)




                    GATES


          • “Go/No Go decision points
          • Can also be “recycle”
          • Executive direction points


   IMP                Stage Gate™               FMA Role             Questions   9
                 HRSDC Adaption of Stage Gate TM
Which projects :

                           1                       Projects over $1M
                                 to Initiate, Plan, Develop/Build, Deploy/Install & Stabilize




                                                                                                     Measure Performance and Benefits
                                    PPA                  EPA


 Opportunity        Concept                  Planning/                                  Deploy/
                                                                  Develop/
Identification      Initiation               Business                                    Install
                                                                   Build
                                               Case                                    & Stabilize




             Director General-level                                   Major Projects and
 Major Projects Review Committee (DG MPRC)                        Investments Board (MPIB)

                         2 Projects of high risk and/or impact to department

      Gate decisions are irrevocable resource commitments to project teams

           IMP                   Stage Gate™                   FMA Role                  Questions 10
                      STAGE GATE™ Process: Stage 1
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




     Documents completed during Stage 1 include:
            • Gate 1 Business Case




        IMP                    Stage Gate™                     FMA Role                 Questions 11
                      STAGE GATE™ Process: Stage 1
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




     Activities supported by FMA during Stage 1 include:

            • High level estimate of project financials (+/- 100%)

            • Work Plan

            • Funding/Resource requirement for Stage 2 (+/- 10%)




        IMP                    Stage Gate™                     FMA Role                 Questions 12
                      STAGE GATE™ Process: Stage 2
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




  Documents completed during Stage 2 include:

          • High Level Business Requirements

          • Gate 2 Business Case

          • Project Management Plan & Project Charter

          • Preliminary Project Approval (PPA) Submission (if req’d)




        IMP                    Stage Gate™                     FMA Role                 Questions 13
                      STAGE GATE™ Process: Stage 2
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




  Activities supported by FMA during Stage 2 include:

          • Gate 2 Business Case with Options Analysis (costs @ +/- 50%)

          • Development of TB PPA Submission (if req’d)

          • Input to the resource costing for the Project Plan

          • Funding/Resource requirement for Stage 3 (+/- 10%)

          • Presentation to Sr. Executive Committee (MPIRC)



        IMP                    Stage Gate™                     FMA Role                 Questions 14
                      STAGE GATE™ Process: Stage 3
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




   Documents completed during Stage 3 include:
          • Gate 3 Business Case, Charter, & Project Management Plan

          • Effective Project Approval (EPA) submission (if req’d)




        IMP                    Stage Gate™                     FMA Role                 Questions 15
                      STAGE GATE™ Process: Stage 3
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




   Activities supported by FMA during Stage 3 include:

          • Gate 3 Business Case to Build & Deploy (costs @ +/- 10%)

          • Development of TB EPA Submission (if req’d)+

          • Presentation to Sr. Executive Committee (MPIB)




        IMP                    Stage Gate™                     FMA Role                 Questions 16
                      STAGE GATE™ Process: Stage 4
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




 Documents completed during Stage 4 include:

         • Project Status Report

         •Gate 4 Presentation to Sr. Executive Committee (MPIB)




        IMP                    Stage Gate™                     FMA Role                 Questions 17
                      STAGE GATE™ Process: Stage 4
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




 Activities supported by FMA during Stage 4 include:


         • Sound Project Execution practices and controls (FMF)

         • Presentation to Sr. Executive Committee (MPIB)




        IMP                    Stage Gate™                     FMA Role                 Questions 18
                      STAGE GATE™ Process: Stage 5
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




 Documents completed during Stage 5 include:

         • Project Close Out Report

         • Benefits Realization Reporting Plan

         • Gate 5 Presentation




        IMP                    Stage Gate™                     FMA Role                 Questions 19
                      STAGE GATE™ Process: Stage 5
1 – Opportunity        2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1      Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                          PPA                   EPA




 Activities supported by FMA during Stage 5 include:

         • Transfer solution and A-base budget to Ongoing Operations

         • Project Close-out (including lessons learned)




        IMP                    Stage Gate™                     FMA Role                 Questions 20
                        FMA Role on Major Projects

   Major FMA implication commences in Stages 3-5 and Gates 1-5.
If project is seeking funding when seeking its project authorities, FMA
   is heavily implicated in formulation of PPA & EPA TB Submissions.



  1 – Opportunity       2 – Concept         3 – Planning/        4 – Develop /       5 – Deploy/ Install
   Identification
                    1     Initiation   2   Business Case    3        Build       4       & Stabilize       5

                                           PPA                  EPA




      IMP                   Stage Gate™                     FMA Role                 Questions 21
                                       Timing of IMP Gates vs. Project spending
                                       Key decisions and plans are established and reviewed
                                            Example projects – Planning and Delivery Roadmap
                                        prior to theof a Project major spending is undertaken.
                       Stages




                                    Stage 1              Stage 2                            Stage 3                                Stage 4                                               Phase 5
                                  Opportunity        Concept Initiation           Planning and Business Case                  Develop and Build                                 Deploy/Install and Stabilize
                                 Identification
                                       4 Months                     8 Months                           9 Months                                    12 Months                                                     15 Months




                       $____                                                                                                                                                                                                  ___ Persons
Quarterly Spend Rate
  and Head Count




                        $____                                                                                                                                                                                                 ___ Persons



                        $____                                                                                                                                                                                                 ___ Persons



                                                                                                                                                                                                                              0 Persons
                                July



                                            Oct.



                                                      Jan.



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                                                                               July



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                                                                                                                            July



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                                                                                                                                                                                                                       June
                            Year 1                                        Year 2                                         Year 3                                       Year 4                                Year 5




                                                   Project Gates 1, 2 and 3                                                 Major Spend Period


                                IMP                                            Stage Gate™                                                    FMA Role                                                     Questions 22
                   FMA Due Diligence Checklist : Gate 1
 1 – Opportunity        2 – Concept            3 – Planning/           4 – Develop /       5 – Deploy/ Install
  Identification
                    1     Initiation    2     Business Case      3         Build       4       & Stabilize       5

                                             PPA                      EPA


       Key Elements                                            Financial Due Diligence

Problem/Opportunity               Have financial benefits of the opportunity been reasonably quantified?
Definition

Proposals for next stage          Are all costs included in proposal, are they valid and are they being captured
                                 consistently?
                                  Has the opportunity funding source been identified, and confirmed, for the
                                 next stage of activities.
                                  Has high-level cost for overall project been identified in high-level business
                                 case?


Recommendations
                                  Do you have any recommendations for the project team at this stage before
                                 continuing on to the next stage of work?



        IMP                     Stage Gate™                          FMA Role                   Questions 23
                           Role of the FMA : Stage 2
1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                         PPA                   EPA




   Duties completed during Stage 2 include:
          • Provide guidance to project team in developing the project plan and
            activity based funding requirements for next stage (+/- 10%) and the
            remainder of the project (+/- 50%).
          • Ensure costing between project documentation and costing templates
            required to support the PPA TB Submission (if req’d) align and reconcile.
          • Exercise challenge function with rigor to ensure costing for Stage 3
            remains within +/- 10%
          • Feed into financial due diligence report to brief members of MPIRC.


        IMP                   Stage Gate™                     FMA Role                 Questions 24
                  FMA Due Diligence Checklist : Gate 2
1 – Opportunity        2 – Concept             3 – Planning/            4 – Develop /           5 – Deploy/ Install
 Identification
                   1     Initiation    2      Business Case     3           Build         4         & Stabilize       5

                                             PPA                      EPA


    Key Elements                                         Financial Due Diligence
Project Charter and    • Have all relevant costs from stakeholders and enablers been accurately captured in the
Plan                   project charter and project plan?
Source of Funds        • Has the source of funds been verified?
Options Analysis       • Has costing for each option received been developed in consistent manner?
                       • Are costing for each option of sufficient quality for consistent options analysis?
Options / Risk         • Have all costs been included for each option?
Analysis               • Have life-cycle costs been verified?
Proposals for Next     • Have costing for next stage been developed in a consistent manner?
Stage                  • Are next stage estimates documented and consistent with the project management plan?
Detailed Work Plan     • Are costs for Stage 3 (Planning/Business Case) activities detailed and complete at +/-
                       10% for Stage 3 Planning and +/- 50% for the remainder of the project?
Recommendations        • Do you have any recommendations for the project team at this stage before continuing
                       on to the next stage of work?




       IMP                    Stage Gate™                         FMA Role                        Questions 25
                  FMA Due Diligence Checklist : PPA
1 – Opportunity       2 – Concept               3 – Planning/           4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation       2     Business Case      3         Build       4       & Stabilize       5

                                              PPA                      EPA



       Key Elements                                             Financial Due Diligence

PPA TB Submission                     Is the required financial and costing information provided by
Document                             activity, as required?

                                      Does the financial information reconcile with all the supporting
                                     Gate 2 project documentation?

                                       Have all internal stakeholders been consulted in the formulation of
                                     the TB submission?

                                        Has the submission been routed through the respective Quality
                                     Assurance teams to ensure adherence to TB format specifications
                                     (i.e. SCU)?



         IMP                   Stage Gate™                            FMA Role                 Questions 26
                           Role of the FMA : Stage 3
1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                         PPA                   EPA




   Duties completed during Stage 3 include:
          • Provide guidance to project team in developing the project plan and
            funding requirements for the remainder of the project.
          •Ensure costing between project documentation TB costing
           templates supporting EPA TB Submission align and reconcile.
          •Exercise challenge function with rigor to ensure costing remains
            within +/- 10% for remaining stages (4 & 5)
          •Feed into financial due diligence report to brief members of MPIB.


        IMP                   Stage Gate™                     FMA Role                 Questions 27
              FMA Due Diligence Checklist : Gate 3

 1 – Opportunity       2 – Concept         3 – Planning/        4 – Develop /       5 – Deploy/ Install
  Identification
                   1     Initiation   2   Business Case    3        Build       4       & Stabilize       5

                                          PPA                  EPA



    Key Elements                                     Financial Due Diligence

Source of Funds                Has the source of funds been confirmed?
Research, Prototype,          Are the activity costs been accurately captured in the project
Proof of concept             costing?
                              Have preliminary estimates been updated/confirmed?
Proposals for next            Have costing for next stage been developed in a consistent
stage                        manner?
                              Are next stage estimates documented and consistent with the
                             project management plan?
Recommendations                Do you have any recommendations for the project team at this
                             stage before continuing on to the next stage of work?


     IMP                    Stage Gate™                    FMA Role                    Questions 28
                  FMA Due Diligence Checklist : EPA
1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                         PPA                   EPA


     Key Elements                                    Financial Due Diligence
EPA TB Submission                Is the required financial and costing information provided
Document                        by activity, as required?

                                 Does the financial information reconcile with all the
                                supporting Gate 3 project documentation?

                                  Have all internal stakeholders been consulted in the
                                formulation of the TB submission?

                                 Has the submission been routed through the respective
                                Quality Assurance teams to ensure adherence to TB format
                                specifications (i.e. SCU)?

         IMP                   Stage Gate™                    FMA Role                 Questions 29
                           Role of the FMA : Stage 4
1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                         PPA                   EPA




 Duties completed during Stage 4 include:

         • Ensure accurate tracking and monitoring of project costs.

         • Monitor actual project spending vs. the +/- 10% costing for the Develop
           and Build stage of the solution.

         •Feed into financial due diligence report to brief members of MPIB.




        IMP                   Stage Gate™                     FMA Role                 Questions 30
                  FMA Due Diligence Checklist : Gate 4
    1 – Opportunity       2 – Concept           3 – Planning/            4 – Develop /       5 – Deploy/ Install
     Identification
                      1     Initiation   2     Business Case       3         Build       4       & Stabilize       5

                                               PPA                      EPA


       Key Elements                                             Financial Due Diligence

Project Charter and Plan         Are all relevant costs from stakeholders and enablers accurately captured in
                                project documents?
Source of Funds                   Is the source of funds strategy plausible?
Project Plan Execution           Have activity costs been monitored and accurately captured in project
                                documentation?
Controlled Testing / Pilots      Have activity costs been monitored and accurately captured in project
                                documentation?
Deployment                        Has the availability of funds been confirmed for deployment?

Recommendations                  Do you have any recommendations for the project team at this stage before
                                continuing on to the next stage of work?




        IMP                     Stage Gate™                            FMA Role                   Questions 31
                           Role of the FMA : Stage 5
1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
 Identification
                  1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                         PPA                   EPA




 Duties completed during Stage 5 include:


         • Input into the Benefits Realization Reporting Plan – will the anticipated
           benefits been realized? Why or why not?

         • Feed into the financial due diligence report to brief CFO and MPIB
           members.




        IMP                   Stage Gate™                     FMA Role                 Questions 32
                FMA Due Diligence Checklist : Gate 5
  1 – Opportunity       2 – Concept         3 – Planning/         4 – Develop /       5 – Deploy/ Install
   Identification
                    1     Initiation   2   Business Case    3         Build       4       & Stabilize       5

                                           PPA                   EPA



  Key Elements                                      Financial Due Diligence
Deployment /                  Have activity costs been monitored and accurately
Installation                 captured?

Transition &                  Have project close-out financials been accurately
Replacement                  captured?
Benefits

Recommendations                Do you have any recommendations for the project team at
                             this final gate?




      IMP                     Stage Gate™                       FMA Role                   Questions 33
           Best Practices & Lessons Learned

Project Close-Out Report:

• Summarizes project results

• Details activities required to transition from development to production

• Identifies extent to which project objectives were met and benefits realized.

• Documents best practices

• Documents lessons learned

• Provide final financial status performance report




  IMP               Stage Gate™               FMA Role               Questions
      Thank you! / Merci!

          Questions?



IMP     Stage Gate™   FMA Role   Questions 35

				
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