6. This guidance will assist the acquisition community, by articulating what MOD PFU expects from acquisition teams and functional lead assurors and what they should expect from the MOD PFU, and will assist:
o Acquisition teams in the development of tailored assurance plans;
o Functional lead assurors in providing assurance of PFI and PPP projects/programmes;
o Senior Responsible Owners (SROs) and Single Points of Accountability (SPAs) in ensuring project/programmes meet their objectives and deliver projected benefits by providing them with a structured impartial view of project/programme maturity, and;
o MOD PFU PSOs acting as subject matter experts to the functional lead assurors.
7. The objective of assurance is to provide the Top Level Budget (TLB) holders, SROs and SPAs with confidence in the investments that TLB is responsible for delivering, and to support acquisition teams in that delivery. Its key principles are:
o It is a through-life activity based on early engagement and agreement of a tailored Assurance Plan between functional lead assurors and project staff. Tailoring plans means that assurance evidence requirements are appropriate to the risks and issues specific to that project.
o It is about evidence-based sign-off by certified & specifically appointed functional lead assurors using subject matter expert advice, cluster based where appropriate to help the business get it "right first time".
o During the operational phase post contract signature, the focus of assurance should be on future actions or investment decisions in that phase (e.g. readiness for continued capability delivery, contract management or major changes). It is not intended to replace project evaluation as required by JSP 507, which is largely backwards looking.
8. Assurance statements will form one part of the evidence pack required by the scrutiny community when projects/programmes seek investment approvals and will be provided (on behalf of the TLB) by a functional lead assuror in each of the functional assurance areas (e.g. 1 Star Commercial Heads or Financial Controllers). These functional lead assurors may be based in a cluster or a central team, calling on subject matter experts for support as appropriate. The functional lead assuror will initially manage the interfaces rather than handing the acquisition team on to a series of other experts.
9. In the case of PFI/PPP, the MOD PFU provides a central corporate focus for PFI/PPP policy and support within the MOD and provides DGDC, IAB and HM Treasury with corporate assurance that PFI/PPP projects are properly managed, governed and are viable, desirable and achievable and comply with current policy and legislation. Acquisition teams must consult the MOD PFU on all projects considering the use of private finance. Therefore, The MOD PFU will also expect functional lead assurors to consult the MOD PFU for subject matter advice before forming their own assurance opinion. This is particularly important in relation to potential derogations7 from HMT and MOD PFU mandated specific PFI terms and conditions in MOD PFI Agreement Version 1 - for which MOD PFU approval must be sought.
10. The benefits of assurance are to prevent poorly conceived, immature or unstable projects/programmes to proceed until appropriate action is taken to remedy their defects. Consequently, the assurance role needs to identify not only where projects/programmes are not appropriately structured, are making poor decisions, or are not sufficiently mature to proceed (especially prior to industry engagement or at the selection of preferred bidder), but should also identify the appropriate action to be taken. MOD PFU will therefore be robust in its provision of assurance advice in the interests of overall benefit to the MOD.
11. A list of evidence required by the MOD PFU and criteria used for establishing project/programme assurance (by phase) for each key PFI/PPP issue/risk (also known as critical success factors) is provided at Annex A. Annex B provides a guide to assessing the level of assurance established using the criteria and evidence mentioned above8. The list of "agreed issues/risks" are derived from the critical success factors of PFI/PPP projects/programmes as identified by the MOD PFU and supported by the MOD PFU's own corporate risk analysis9 and other key sources, e.g. NAO report "Allocation and management of risk in MOD PFI projects".
12. Acquisition teams (assisted by the functional lead assuror) are requested to provide the MOD PFU with full and open access to the required evidence (as identified in Annex A) in a timely manner through-out the life of the project as and when it is produced by acquisition teams; by means of ensuring MOD PFU is on the distribution/invite list of all project documents and meetings. They are also requested to ensure that project timescales allow sufficient time for assurance activities to take place. Where the MOD PFU believes that functional assurance is either not happening or is adequate, it may initiate an assurance "stocktake" review of the project in order to quickly establish an assurance snap-shot. Such "stocktake" will be based on the same issues/risks (critical success factors) and require the same evidence as outlined above.
13. The principle deliverable from the MOD PFU acting in the subject matter expert assurance role will be a written note (in the form at Annex C) jointly addressed to the functional assurance lead, acquisition team leader, and Senior Responsible Owner; copied to Head of CAG. It will provide a succinct summary of the issues arising from the assurance activity and making recommendations with regard to the action to be taken.
14. MOD PFU intends to use the same list of assurance issues/risks (critical success factors) as a means of corporately monitoring the MOD's PFI/PPP portfolio of projects on a monthly basis. This reporting is principally internal to the MOD PFU and will help it identify trends and emerging issues, target advice/assistance and prioritise the development/promulgation of future guidance and best practice. Such monitoring does not remove the need for acquisition teams to have their own TLB and stakeholder project reporting mechanisms (in which the MOD PFU should also be a recipient) and the need for acquisition teams to engage with their TLB functional lead assurors when seeking investment decisions for changes post contract award. However, no additional reporting information is required from acquisition teams over and above the regular contact and provision of evidence outlined above.
__________________________________________________________________________________________
7 See MOD PFU Guidance Note: MOD PFI Project Agreement Derogations Process, Version 1 dated May 2009.
8 In due course, MOD PFU hopes to provide more granular advice (by Phase) of what each assurance level looks like.
9 MOD PFU Risk Management Plan, Version 1 draft issue A dated Feb 09.