In May 2015, the Audit Office of NSW released the New South Wales Auditor-General's Report Performance Audit Large construction projects: Independent assurance.1 This Audit Report tested the effectiveness of the NSW capital project assurance processes, and compliance with these in the case studies evaluated. The Auditor-General made several observations around the investor assurance framework including:
• NSW has "adopted a relatively low monetary threshold for mandatory Gateway reviews for preliminary and final business cases compared to other jurisdictions. There is scope for New South Wales to focus its Gateway efforts more towards larger, more complex projects."
• NSW was "the only jurisdiction requiring mandatory Gateway reviews at the preliminary and final business case stages for projects not assessed as high risk, and costing as low as $10 million."
• Current NSW guidance on Gateway reviews "has no requirement to tailor the duration of a review or the composition of the review panel in terms of skills or size to the value, risk or complexity of the project. We consider this is a deficiency in the guidance material, which could take greater account of risk."
• "In view of these disparities, there is an argument that aspects of the capital project assurance system, including Gateway reviews, could have a greater focus on larger, more complex projects."
The recommendations of this Audit Report included:
• "The Treasury should: review the capital project assurance system for capital projects costing less than $100 million, including the Gateway review process and its monetary thresholds to introduce a greater focus on project risk, noting that cost is only one component of risk (by December 2015); enhance assurance processes surrounding major scope variations (by December 2015)."
• "Infrastructure NSW should: report publicly on implementation of, and compliance with, the Investor Assurance Framework (by December 2015)."
In June 2015, the NSW Government decided to further enhance the governance and oversight of capital projects by:
• moving responsibility for all independent assurance of capital projects valued at $10 million or greater to Infrastructure NSW, being supported by IIAC; and
• requiring project assurance reports to be routinely examined by Cabinet.
Infrastructure NSW began transitioning all independent assurance for capital projects in June 2015. At the same time as these transition arrangements were put in place, development of the full policy framework to support its new role began. The final IIAF policy document was endorsed by Government in June 2016.
In July 2016, NSW Treasury issued a Treasury Circular (TC16-09)2 advising all relevant delivery agencies that they are required to adhere to the protocols as outlined in the IIAF policy document administered by Infrastructure NSW.
Infrastructure NSW reported on key metrics for the first year of investor assurance activities under the IIAF for the first time in its 2015-16 Annual Report3.
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1 Auditor-General of NSW (2015), Performance Audit Large construction projects: Independent assurance, Sydney, 7 May 2015. http://www.audit.nsw.gov.au/ArticleDocuments/362/01_Large_Construction_Projects_Independent_Assurance_Complete_Full_Report.pdf.aspx
3 http://www.infrastructure.nsw.gov.au/media/57057/infrastructure_nsw_annual_report_2015-2016.pdf