For the Scrutiny Management Board to receive a report on the delivery and management of Herefordshire Council’s capital projects.

 

The Service Director Economy and Growth introduced and gave an overview of the report.

 

The Chair invited comments and discussion from the committee in relation to the report and advised that questions be kept to one of four areas:

 

o   Governance and prioritisation

o   Resourcing

o   Efficiency and effectiveness

o   Impact and social value

 

The key points of the discussion are detailed below:

 

Governance and prioritisation

 

1. The committee enquired as to who would be responsible for the project management and centre of excellence function within the council, and which individual would be responsible for standards and ensuring that project managers and client project managers had the right training, skills and expertise to deliver the projects.

 

o   The Head of the Chief Executive’s Office explained that they carried out this function within the Project Management Office and that below this was a matrix management framework, which ensured standardisation and consistency was in place and correct for: training, skills and expertise. Within the framework it was vital that staff worked with the senior responsible officer (SRO) and directors to deliver projects.

 

2. The committee enquired about if and how the budget was split when project managers were allocated to directorates through the matrix management framework. It was asked if there was an exchange of income between the Project Management Office and the directorates to establish some type of accountability route by which the flow of money could be seen.

 

o   The Head of the Chief Executive’s Office explained that every capital project had a budget that was set through the governance process and was included in the business case setting, this accounted for technical resources need for project delivery and was set through the governance structures

 

o   The Service Director Economy and Growth pointed out that whenever a member made a decision to agree the spend on a capital project, this would include a line for how much of the spend would be used against the Project Management Office (PMO) resource. Each member of the PMO would fill in a time sheet that would state where their time went against each of the projects that they were working on so that there was a clear flow through of information available.

 

3. The committee asked who would be accountable for the project in the event that there was a problem with the delivery of it.

 

o   The Head of the Chief Executive’s Office explained that projects were continuously reviewed and the amount of money required was part of the review process. Costs involved in projects would change in relation to the expertise and skills required along the way and were not static.

 

4. The committee enquired whether the Project Management Office reported into the executive delivery board. It was also asked who was on the board and what function did the board serve.

 

o   The Head of the Chief Executive’s Office explained that the Executive Delivery Board had closed and the growth, infrastructure and commissioning boards within the Economy and Environment directorate now escalated directly into the senior leadership team.

 

5. The committee asked if there was a safety mechanism in place to ensure that if a project manager could not continue working on a project that a deputy or colleague would be available to continue the work.

 

o   The Head of the Chief Executive’s Office explained they would look for capacity within a project management team to fill any gaps that had emerged. There was a project management knowledge system in place, which stored all the knowledge and documentation relevant to a project so that if needs be another project manager could come along and pick things up straight away.

 

o   The Service Director Economy and Growth detailed the structure of project manager boards, which were comprised of people from across the council working on the project and usually met on a monthly basis, to review progress and make recommendations on key decisions around the project. The outcomes of board meetings would then be fed into a project highlight report, which provided a detailed month-by-month record of what was happening on the project. This ensured corporate knowledge was not lost if a particular individual had to step away from a project.

 

o   The Delivery Director Infrastructure noted that Herefordshire Council’s project management systems and structure were similar to those of other local authorities. The director praised the ‘Verto’ project management system, which enabled swift and quick understanding of multiple projects through the highlighting reporting system.

 

6. The committee asked where the Project Management Office sat within the council’s structure.

 

o   The Head of the Chief Executive’s Office stated that in terms of reporting lines the office currently sat within the Economy and Environment directorate, but the office also carried out work for other directorates and services and there were staff across the whole of the council involved with and delivering projects - each directorate had access to project managers as and when required.

 

7. The committee enquired if and how it could ascertained that overspends were related to the Project Management Office

 

o   The Director of Finance explained that within the budget monitoring report all variances of above £250,000 were explicit and explained.

 

8. The committee asked if it might be possible to obtain a flow chart or explanation of where finances around the Project Management Office flowed throughout the council structure.

 

o   The Service Director Economy and Growth explained that the Project Management Office sat corporately, but its staff were allocated to projects and those projects tended to be led by within each of the directorates - the time was charged into those projects at the point of when the staff were working on them.

 

9. The committee raised concerns about an apparent lack of prioritisation of capital budgets outside of the Economy and Environment directorate.

 

o   The Cabinet Member Finance and Corporate Services stated that the majority of capital budget projects sat within the Economy and Environment directorate and that this essentially counterbalanced the savings expectations and revenue hit that had been focused at the directorate over the last few years.

 

10. The committee asked how it could be established that the governance of projects was being done well.

 

o   The Head of the Chief Executive’s Office explained that capital projects were regularly tested and monitored in line with the governance set out in the constitution. Constant tests ensured that the right governance decisions were being made and that everything was legally compliant and following a standardised process. Regular evaluation of performance against the delivery of the projects was being conducted to ensure that projects were delivered on time and on budget, and that industry best practice was applied to all council projects.

 

11. The committee requested more detail around the escalation process and structure by which an accountable board would decide which projects were given priority of available resources. 

 

o   The Service Director Economy and Growth explained that the project board would meet with the senior responsible officers, if there was an issue or issues on the agenda that needed to be escalated they would be flagged and rated as a risk in the highlight report and then that project would automatically go to the next delivery board meeting where a more senior set of officers would review the project and try to determine how the issue could be remedied. If an issue couldn’t be resolved at that stage, then it would it go to the Corporate Leadership Team directly.

 

o   The Executive Delivery Board had included most of the Corporate Leadership Team, but sat outside the team, which meant there were two almost identical operational meeting taking place. The new system had direct Corporate Leadership Team ownership and oversight with a structure underneath it.

 

12. The committee voiced concerns around the costs regularly being incurred in the earlier stages of the project delivery process.

 

o   The Cabinet Member Finance and Corporate Services pointed out that it was an accepted industry standard that the design of the build of a project could often account for anywhere between 15-25% of the overall costs of a project. Factors such as legal advice and surveying work could also prove expensive in the initial stages depending on the complexity of a project.

 

 

Resourcing

 

13. The committee questioned whether there were sufficient human resources within the council to deliver all of the projects. Was there a gap, if so what was being done to fill it and were new project management training schemes and apprenticeships in place to help meet any shortfall. 

 

o   The Head of Chief Executive’s Office provided details around ‘lunch and learning’ sessions and the buddying systems that were in place for ‘softer’ project management roles, covering internal council processes and stakeholder management.

 

o   The Head of the Chief Executive’s Office pointed out that a technical skills gap had been identified within the project management workforce and that the office was working with delivery directors to be able to scope out what that looked like.

 

o   Technical teams consisting of specialist workers were regularly required and employed for certain projects, but were not generally employed as full-time and permanent members of staff. The Project Management Office was currently going through an exercise to identify where there were skills gaps, with the objective of speeding up delivery.

 

14. The committee enquired if constantly having to rely on expensive external consultants posed a threat to successfully delivering and completing certain projects on time and on budget.

 

o   The Head of the Chief Executive’s Office explained that it was a difficult labour market. Specialists such as building or quantity surveyors were often essential for capital projects, but were almost exclusively based in the private sector - where salaries could not be matched by the council. Recruiting in these technical areas was difficult so the council used models of how it could get specialist teams together per project to come in and complete fixed-term pieces of work.

 

o   It was crucial to achieve a balance on how and when the council accessed those specialist services and to determine whether it was more cost efficient to have full-time technical staff in-house on a permanent basis or to use agency and fixed-term technical staff as and when required.

 

o   It was pointed out that often bringing in technical and specialist consultants near the beginning of a project often ended up paying for itself in terms of avoiding potential costs incurred from having to pay for compensation events later down the line.

 

15. The committee asked if the council was being intelligent and clever in prioritising certain projects that required specialist technical staff in such a way that they got maximum value for money from these individuals when they were contracted, by using them on a number of concurrent projects.

 

o   The Head of the Chief Executive’s Office gave an assurance that there was an ongoing reshaping of how projects were prioritised within the council, with a view to obtaining a clear steer within the stages regarding which resources would be needed and when.

 

16. The committee highlighted the potential risks involved in going out to the market to bring in specialist skillsets without having a strong in-house client side skillset in place, and asked how the council managed that risk.

 

o   The Service Director Economy and Growth explained that in many instances when recruiting a design team the council would also recruit a capital project manager to essentially act as a specialist client for the manager. They would also go on to manage the critical implementation stages of projects. However, the council was currently looking at gaps in its workforce where in-house individuals or teams might be needed on longer term or permanent basis.

 

17. The committee asked if project managers holding, on average, between four and seven cases at one time was typical of other local authorities. 

 

o   The Delivery Director Infrastructure, stated that case load allocation depended on the complexity of the projects in question, but was confident that the project managers in the council all appeared to have a full and manageable workload.

 

18. The committee enquired if the council was confident that it was trying to deliver the right number of capital projects.

 

o   The Cabinet Member Finance and Corporate Services stated that the council was spending more to deliver more, and suggested there was little point in having projects sitting with funding approved by the council and then not delivering them.

 

19. The committee asked if there had been any instances where funding had had to be returned because projects could not be delivered.

 

o   The Cabinet Member Finance and Corporate Services stated that they were not aware of any instances where funding or grants had needed to be returned.

 

 

Efficiency and effectiveness           

 

20. The committee noted that the council already used Hoople for certain specialist services and asked if this could be expanded in terms of other specialisms required under the capital programme.

 

o   The Head of the Chief Executive’s Office explained that a workshop with Hoople had been scheduled for the following week and would involve discussions about the potential for expanding Hoople’s supply of specialist services to the council.

 

 

21. The committee asked where the point of no return was in a project, whereby the council would say it had gone so far it couldn’t stop spending now and couldn’t not deliver.

 

o   The Service Director Economy and Growth explained that the costed risk log identified certain risks that might come to fruition based on designs and investigations and will set aside an amount of money as a contingency fund. This contingency amount related to the level of risk associated with a project and could be drawn down against any contingency as it was needed.

 

o   If a project did ever get to a point where the funds had run out, then full council would have to make a decision about how best to fund and deliver the outcome of the project, possibly by phasing back some of the intended works or utilising funds from elsewhere.

 

22. The committee enquired if there was a retrospective on how things had gone at the end of each project and how this was captured and recorded.

 

o   The Head of the Chief Executive’s Office explained that there was a ‘lessons learned’ exercise at the end of each project and the output of these exercises were recorded and intelligence shared. Notably survey work was now being widely shared to avoid the council procuring the same piece of work time after time for different sites in the same location.

 

23. The committee asked what metrics were being used for evaluation of projects as part of the lessons learned exercises.

 

o   The Head of the Chief Executive’s Office stated that different templates were used depending on the project and the metrics used would vary on a case-by-case basis.

 

 

Impact and social value

 

24. The Committee were concerned that having too ambitious a Capital Programme might impact on business-as-usual and the resources left available to deliver front line services. This might impact on the social value that might be derived from the Programme itself. It was suggested that there wasn’t a clear link between capital project and revenue in terms of managing the resources that might have to come from both.

 

o   The Cabinet Member Finance and Corporate Services explained that whilst going through recent capital projects that had been brought forward, the projects were looked at not only based on return from investment, but also through the lens of social values, such as the number of jobs created, housing implications and other non-financial measures.

 

o   The Head of the Chief Executive’s Office provided the committee with details of the social value engine and how the project management team was working to define how social values could be measured and used as part of the decision making stage of future projects and procurements.

 

25. The committee asked if there were plans to use the social value engine as more than just a marketing tool. When the Project Management Office was looking at projects would it be possible for the social value engine to be weighted, or provide a percentage, in some way that could be considered when prioritising projects and determining budgets.

 

o   The Head of the Chief Executive’s Office explained that the social value engine was in a pilot stage at the moment, but that the plan was that the engine would be used to generate a social value for each project being developed, which would be included in the forecasting in the business case during procurement stages. It was confirmed that it should be possible to convert the social value generated by the engine into a financial figure.  

 

26. The committee suggested that the council needed to be explicit, beyond just adding paragraph or two in reports, about the fact that it thought the environment mattered.

 

27. The committee welcomed the work being done around the social value engine, but noted that it was heavily slanted towards the gathering and production of quantitative material, and that the council should be gathering qualitative data through ethnographic research - or something similar - that would capture the experience of residents and local people.

 

 

At the conclusion of the debate the committee agreed to trial a new approach to making recommendations.

 

Resolved:

 

The committee agreed that, following the meeting, it would compose and send a letter to the executive that would highlight: areas the committee thought represented good practice, areas where improvement might be needed and include any specific recommendations.