FINAL INTERNAL AUDIT REPORT

Transcription

1 FINAL INTERNAL AUDIT REPORT Business Cases in TfL Ian Nunn, Managing Director, Finance Audit Conclusion: Audit Closed 19 October 2015 Issue categories Agreed actions Satisfactorily addressed Partially addressed No longer applicable Not addressed Priority Priority Priority

2 CONTENTS EXECUTIVE SUMMARY... 3 STATUS OF AGREED ACTIONS... 4 APPENDIX 1 DISTRIBUTION LIST... 9 Audit information Draft versions issued 1 Draft report issued 1 October 2015 Page 2

3 EXECUTIVE SUMMARY Objective The objective of the audit was to review the use of business cases to provide a sound basis for decision-making. In particular this focused on: options appraisals; the extent to which the wider implications of TfL sponsored projects, (such as crime and disorder, fraud risk, social value, and equality and inclusion) are compliant with TfL requirements, consistently addressed and captured; and the inclusion of appropriate levels of detail. Scope The audit focused on the control environment in relation to the following key risk areas: The requirements for the development of business cases The thoroughness of options appraisals Consistency in the assessment and capture of wider impact areas of projects and programmes The consideration of monetisable costs and benefits, quantifiable benefits and non-quantifiable benefits Engagement with internal and external stakeholders (e.g. City Hall,) relating to the wider impact of projects and programmes Appraisal and reporting on business cases and the evaluation of the impacts of projects and programmes Whether business case outputs are being reviewed and challenged as part of the decision making process. Summary of findings Our Interim Internal Audit Report dated 4 November 2014, entitled Business Cases in TfL identified one Priority 1 issue relating specifically to Business Change business cases and two Priority 2 issues relating to the focus of business cases on the Benefit to Cost Ratio (BCR) and the suitability of the Business Case Development Manual (BCDM) for Surface requirements. Management have implemented all the recommendations made in respect of these findings and this audit is now closed. Page 3

4 STATUS OF AGREED ACTIONS Ref Agreed action Owner and due date Status Priority 1 actions 1. Establish clear owner of Business Change Framework (BCF). 2. Once an owner for the BCF is identified they will undertake the following actions to strengthen guidance on the content and structure for change business cases. Ensure that change business case documents clearly identify: the business case owner, business case writer, who has reviewed the business case, and version control. Define the criteria for requiring assurance of change business cases; the type of assurance required and identify who would undertake these assurance reviews. Define when a business case will be produced/updated for change projects. Ben Plowden (with Theo Haughton) 31 January 2015 (revised 30 June 2015) 31 August 2015 (revised 30 September 2015) The Managing Director, Finance and the Human Resources Director have been confirmed as joint owners of the BCF. The BCF Business Case Template has been updated to incorporate: Records of the business case sponsor, author, reviewers and version control Requirements for the production of a business case and how it should evolve through the project change lifecycle A high-level statement on assurance has been provided, as there are no mandated assurance requirements for business cases with an expected final cost under 5m. A paper will be submitted to the Value Programme Board in October 2015 to consider whether additional assurance and governance requirements should be established. Page 4

5 Ref Agreed action Owner and due date Status 3. The BCF owner will promote to change business case writers where they can find more information and guidance on how to develop business cases including: TfL Business Case training course Business case guidance documents and templates Key people to contact for advice on developing their business cases. Priority 2 actions 4. Revise TfL business case training materials to make sure they address: the importance and approaches to considering non- monetisable benefits and wider factors in appraisals. 5. Promote the TfL Business Case training course to sponsors and those receiving business cases and monitor attendance of training courses. 31 March 2015 (revised 30 September 2015) 28 February February 2015 The BCF Business Case Template has been updated to provide information on training, guidance, templates and key contacts for assistance with business case development. Business case training materials have been updated to cover the need to account for all quantifiable and non-quantifiable benefits. For example, the Elements of a Business Case Narrative require explanation of non-financial benefits, such as social benefits. TfL staff that work with/ have input into business cases but have not attended the Introduction to Business Cases Course in the past two years were identified and invited to attend the course by . A Business Cases training course has been created for Band 4 & 5 managers; they have been contacted Page 5

6 Ref Agreed action Owner and due date Status by and encouraged to attend. 6. Strengthen BCDM guidance on the use of multi-criteria analysis to facilitate the appraisal of project options based on a range of quantifiable and non-quantifiable factors. 7. Clarify BCDM guidance on the relative importance of the value of the BCR to the decision to invest. 8. Complete a review to establish a clear understanding of how the Treasury 5 Case Model for business 28 February 2015 (revised 1 June 2015) 28 February 2015 (revised 1 June 2015) 31 August 2015 BCDM guidance benefits section has been reviewed. The guidance contains a section on multi-criteria analysis and how it can capture wider benefits of a project than those in the traditional benefit-to-cost ratio. This has been deemed sufficient. The BCDM is formally updated annually in May, when the new guidance will be incorporated A new Value Management section has been added to the BCDM; the definition of value includes monetary and non-monetary benefits. A quantification section has been added, providing guidance on the BCR. This is followed by the section on multi-criteria analysis, including non-quantifiable factors. The BCDM is formally updated annually in May, when the new guidance will be incorporated. A briefing paper was issued to the Finance and Policy Committee Chairman s Briefing Meeting. This discussed the difference between and importance of both a formal benefit-to-cost ratio and other measures of benefits. The Business Case Narrative has been updated to Page 6

7 Ref Agreed action Owner and due date Status cases could be adopted in TfL and identify where key changes to existing processes would be required. (revised 30 September 2015) align with the Treasury 5 Case Model for business cases. This included adding guidance to demonstrate the Commercial Case and Management Case, as well as strengthening other sections. 9. Develop a business case awareness programme for Sponsors and Directors. 10. Develop and disseminate guidance targeted at senior sponsors and Directors appraising business cases. 11. Develop local level training for Surface Transport sponsors/business case writers that addresses the: importance and approaches to considering non-monetisable benefits and wider factors in appraisals. (with Tanya Durlen) 31 March 2015 Tanya Durlen (with ) 31 March 2015 Tanya Durlen 31 March 2015 A new training course has been created specifically for Band 4 & 5 managers (see above). Bespoke training for Directors is also offered, tailored to meet individual requirements. Guidance is disseminated to senior sponsors and Directors through the new training courses that have been introduced. In addition, a briefing paper issued to the Finance and Policy Committee Chairman s Briefing Meeting provides guidance on Business Cases And Appraisals. A How to build a strong story for investment training course has been developed, aimed at people who write business cases or are involved in benefits management. This covers Multi-Criteria Analysis and non-monetised Page 7

8 Ref Agreed action Owner and due date Status benefits. 12. Develop and agree a project plan for improving quantification and monetisation of benefits for Surface projects. 13. Undertake a preliminary review to identify key areas where there is insufficient/unclear guidance and data in the BCDM and identify highest priorities and strategies for improvement. 14. Identify additional models and techniques that are a high priority for Surface business cases. Tanya Durlen 31 January 2015 Tanya Durlen 30 April 2015 (revised 26 June 2015) Tanya Durlen 31 July 2015 An Improving quantification and monetisation of benefits for Surface projects project plan has been developed. The actions include: Gap and issue identification Clarifying existing methodologies and data sources Making improvements to data assumptions Proposing new tools to improve use of existing methodologies Developing new methodologies/tools to quantify more benefits A review has been completed and a spreadsheet capturing the gaps and issues has been produced. These were prioritised and actions to resolve the gaps/issues have been identified. The actions resulting from the gaps/issues analysis include liaising with TfL modelling teams regarding specific models and how they could be adjusted or supplemented to meet the needs of Surface Transports. Page 8

9 APPENDIX 1 Distribution list This report was sent to Ian Nunn, Managing Director, Finance by Clive Walker, Director of Internal Audit, and copied to: Nick Brown Leon Daniels Richard De Cani Ben Plowden Rachel McLean Garrett Emmerson Patrick Doig Mike Weston Dana Skelley Nick Fairholme Alan Bristow Peter Blake Steve Burton Lisa Taylor Karlene Reid Steve Griffiths Gareth Powell Andrew Pollins Sarah Atkins Jill Collis David Waboso Mike Strzelecki Jonathan Fox Mark Evers David Hughes Michael Bridgeland Doug Norman Ed Wells Dave Proctor Interim Managing Director R&U Managing Director, ST Managing Director of Planning, TfL Director of Strategy & Planning, ST Change Director, Capital Programme Directorate Chief Operating Officer, ST Director of Finance, ST Director of Buses Director of Asset Management Director of Projects & Programmes Director of Road Space Management Director of Service Operations Director of Enforcement and On Street Operations Chief of Staff, MD Surface Head of Risk & Assurance, ST Chief Operating Officer LUL Director of Strategy & Service Development & Chief Operating Officer, LR Director of Finance, R&U Commercial Director, R&U Director of Safety Director of Capital Programmes Business Transformation Director Director, London Rail Director of Customer Strategy Director of Major Programme Sponsorship Head of Project Assurance Head of Functions & Capability Development Interim Head of TfL PMO Governance Manager, R&U Business Case Functional Lead Page 9

10 Carol Lynton Nigel Blore Andrea Clarke Howard Carter Karl Havers as Key Risk Representative Head of Group Insurance Director of TfL Legal General Counsel EY Page 10