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Mega Projects andGovernanceTENIA CHATZINIKOLI, MBA, MSc, MEngHead of Project Risk, Phase One, High Speed 2

Corporate Governance “Corporate governance is to ensure that an organisation fulfils its overallpurpose, achieves its intended outcomes for citizens and service usersand operates in an effective, efficient and ethical manner”The Independent Commission on Good Governance in Public Service

Project GovernanceGovernance in Projects: Aspects of corporate or organisation governancerelated to project activities Ensures that the right projects are selected,executed well and in a sustainable way Alignment of organisations portfolio of projectswith corporate objectives Ensures that projects are delivered effectively andefficiently Provides corporate board and key stakeholderswith timely, relevant and reliable information

Good Project Governance “For infrastructure projects good governance is about the balance between thenatural desire of sponsor(s) to retain control, and the need of the delivery team tohave sufficient freedom to allow it to manage the risk to meet the projectobjectives”Infrastructure and Projects Authority, Improving Infrastructure Delivery, Project Initiation Route map,Governance Module

Project Governance Aims Clarity of objectives Clarity of roles and accountabilities Timely decision making based on right expertise and level of information Sufficient autonomy for the project but also oversight and involvement of the Sponsor, Boardand Stakeholders System of delegations for decision making and authority Control of Change Appropriate levels of Assurance Communications between the key parties Collaborative culture Evolving with project lifecycle

The four Governance PillarsInfrastructure and Projects Authority, Improving Infrastructure Delivery, Project Initiation Route map, Governance Module, June 2016

Heathrow Terminal 5

London Olympic Games 2012

Crossrail

Pilar 1: Accountability Clarity about who is the Sponsor and the Sponsor’s accountabilities Clarity about who is governing the project Setting the governing policy and strategy Setting requirements and who may control requirements change overtime Selecting execution strategy and delivery model Accountability for the delivery of benefits Accountabilities for other parties - Funders, Execution Team, SupplyChain, Asset Operator and key Stakeholders Definition and allocation of risk accountabilities to each party

ODA – GovernanceODA Governance Framework, London 2012 – Learning Legacy Multiple Clients Multiple Stakeholders Very big public investment Highly visible public profile Media focus Immovable deadline Dual purpose – “git for Games” andLegacy

ODA – Accountability FrameworkODA Governance Framework, London 2012 – Learning Legacy

Crossrail – Risk Accountability

Pilar 2: Authority Types of authorities: Setting policy Incorporation Allocation and draw down of money Procuring and entering into contracts Acquisition and disposal of land Limits of delegation Appropriate levels of delegation to enable timely decision Sufficient resources in decision making bodies Decision Gates, Routes and Approval/decision authorities Intervention points Gradual delegation

ODA – Decision GatesODA Programme Management Framework, London 2012 – Learning Legacy

Crossrail – Review Points and DelegationsLessons learned from structuring and governance arrangements: Perspectives at the construction stage of Crossrail, Crossrail – Learning Legacy

Alignment Delivery Model and Operating Model alignment Corporate governance suitability to deliver the Project Changes to Corporate Governance needed Project objectives and corporate objectives Alignment with other projects in Sponsor’s portfolio Project and key Stakeholder objectives Funders involvement in governance Legislative environment Corporate culture

Terminal 5 – Objectives Alignment

Crossrail - Agreements Project Delivery Agreement (Joint) Sponsor Agreement Industry Partner AgreementsCrossrail Agreements were based on early consideration of risks - ahead of developing the documents.The Crossrail Agreements capture the allocation of risks to the appropriate party.

Crossrail – Contingency and Intervention Points First Intervention Point IP0: Forecast outturn costs are higher than P50 costestimate. Crossrail to submit and implement remediation plansSecond Intervention Point IP1: When it is clear that element of the contingencyheld by Sponsor will be needed Sponsor may step in and take more responsibility forthe ProjectThird Intervention Point IP2: If the TfL funds are likely to be exhausted DfT may step in and take responsibility for the ProjectP80-P95 contingency heldby the SponsorP50-P80 contingency heldby the CRL BoardP50 cost estimate held byDelivery PartnerLessons learned from structuring and governance arrangements: Perspectives at theconstruction stage of Crossrail, Crossrail – Learning Legacy

Disclosure Information and frequency of reporting for each governance body Rules for exception reporting Escalation routes Personal conflicts of interest Transparency in decision making Assurance requirements Review over time

Terminal 5 Risk Based Audit Corporate Audit Internal Controls Risk based Audits Audits of Risk Management Process

ODA Controls and Assurance FrameworkODA Governance Framework, London 2012 – Learning Legacy Risk governance and Audit in onegroup ODA Risk & Audit to provide assuranceto ODA (LOD3) Programme Assurance (LOD2) Senior Management Assurance (LOD1) Real time assurance on live projectsIntegrated assurance aiming Integrated assurance Protection from over-assurance

ODA Assurance and Modular ReportingODA Governance Framework, London 2012 – Learning Legacy Annual reports and accounts Internal Audit Report Annual Report on Fraud and Theft ODA Programme PerformanceReport Monthly Performance Programme, Project Contract Finance Report Other

Risk Management and Governance Alignment: Between organisation risk capability/appetite and Governanceframework Alignment: Early consideration of risk to support Delivery Model decision Accountability: Risk allocation to different parties in Agreements documentation Accountability: Risk framework – a reflection of Governance structure Authority: Risk management maturity and gradual delegation of Authority Authority: Management of Contingency funds Alignment: Risk identification linked to corporate and project Objectives Disclosure: Provision of Assurance and Risk based Audit Disclosure: Reporting Risk Management performance and outcomes

About Tenia ChatzinikoliTenia Chatzinikoli MBA, MSc, MEng More than 17 years experience in risk. Leading Risk roles for major projects in the transportsector for public and private sector clients. Head of Project Risk for the delivery of Phase One of High Speed 2, since October 2014. Career as a consultant in UK and international transportation industry (CH2MHill, Halcrowand Acer). Clients including UK Government, Department for Transport, Transport for London,London Underground, BAA, Network Rail, Highways England, Transport Scotland, Irish Rail,Alstom, Utilities, other. Major projects including High Speed 2, Crossrail, Thameslink, Heathrow Terminal 5, DARTInterconnector Tunnel, CTRL, JLE, other.

Risk Management and Governance Alignment: Between organisation risk capability/appetite and Governance framework Alignment: Early consideration of risk to support Delivery Model decision Accountability: Risk allocation to different parties in Agreements documentation Accountability: Risk framework -a reflection of Governance structure