In November 2013, the NSW Government undertook a Capital Performance Review aimed at lifting the quality of oversight and the effectiveness of decision-making across government for major capital investments. The review set out to define good practice principles, undertake a gap analysis of current frameworks, review practice in NSW and elsewhere, and identify ways to improve assurance for major projects in NSW.
The review, sponsored by Infrastructure NSW and NSW Treasury, was assisted by an Executive Steering Group comprising the CEO of Infrastructure NSW, Secretary of NSW Treasury, and senior executives of Transport for NSW (TfNSW), Ministry of Health, Sydney Water and Ausgrid.
The Capital Performance Review sought to understand the outcomes government infrastructure expenditure is achieving, and to identify ways that government can improve value for money outcomes and mitigate risk across the infrastructure lifecycle, from early stage planning and prioritisation through to delivery and procurement and managing the use of its assets. Specifically, the review sought to:
• Identify what drives capital decision-making and how well agencies make these decisions, comparing regulated with non-regulated agencies, and consider how well existing assets are being used; and
• Identify best practice in asset management, project procurement, project delivery and apply learnings across agencies.
The principal finding of the Review was that there is a need for stronger investor oversight and assurance. In practise, it is too often the case that assurance protocols follow rather than precede project commitments. The implication of this is that the Government as an investor is playing 'catch-up' with the Government as a deliverer.
The Review found that the most critical opportunity to improve capital performance lies in improving the processes used at the centre of government, with a specific focus on the "investor perspective" and the role of the investor at all stages of the capital investment lifecycle. The role of the investor is to ensure that scarce capital is used as effectively as possible to deliver defined social, economic and other outcomes. It is a broader perspective than that of a project team, which is generally focused on outputs such as the delivery of scope as specified, on time and within budget. Strengthening the investor oversight and assurance function provides a foundation for enhancing agency practices and improving investment outcomes.
To ensure "whole of government" investor oversight of major capital projects over $100 million, in December 2014 the NSW Government endorsed the outline of the Infrastructure Investor Assurance Framework (IIAF) proposed by Infrastructure NSW as the GCA. This also included approval to establish the Infrastructure Investor Assurance Committee (IIAC) convened, chaired and managed by Infrastructure NSW