Moving Forward in Asset Management

1. Moving Forward in Asset Management Financial Management Institute, Ontario Chapter November 19, 2008

2. Executive Summary Changing Landscape for Asset Management – The Fed AA and New TB Policies, MAF and Integrated Management Assets and Acquired Services Framework and Investment Planning HRSDC in Context Overview

3. The landscape for how assets are to be planned and managed in the federal government is changing. Asset Management is now to be managed at a Government Wide and department wide level – changes strategy and tactics for managing. Key Management Tools are to be implemented – a more strategic Investment Plan, new Project Management and Asset Management approaches and stronger link to financial and non-financial information and supporting systems – decisions based in the contribution of assets to Program Delivery, continuously measured and assessed. Will be shaped by ongoing Government direction, Speech from the Throne, Fiscal Update, the Budget 2009, Federal Accountability Act and the Environment – with greater agility to respond to these key statements of government direction. At HRSDC current asset base is at a stage requiring a significant renewal, in facilities and IT infrastructure – so a time to build solutions aligned with the new expectations to deliver sound stewardship, value for money and service excellence. Executive Summary

4. HRSDC asset decisions over the next five years must address a series of key changes in the nature of the portfolio’s work, for example: Implementation of Citizen-centered service - Points of Service strategy, Service Experience Model to support in person delivery through strategic locations for in-person service delivery Improvement in performance and efficiency in operations Evolution and integration of service channels The need for significant re-investment and extensive change in processes is required so that the underlying infrastructure supports the accountabilities and controls associated with the Accounting officer under the Federal Accountability Act and to realize the benefits from a new Enterprise Resource Planning System. A robust Investment Planning process has been introduced establishing a consolidated and standard approach to the development and allocation of investments in projects and the asset base for the department on a Canada wide basis. Supporting asset related plans and processes are now the foundation for department wide decision making – aligned with government priorities. Executive Summary (cont.)

5. Financial Administration Act Federal AccountabilityAct TBS Policy on Investment Planning (new) Management Accountability Framework Asset Management is Governed by a Broader Framework of Laws and Policies – Measured through the Management Accountability Framework Select projects that: Investment Process

6. Department’s demonstrate that 3.1. Decisions with respect to the management of assets and acquired services: are consistent with government priorities and departmental mandates, enable program outcomes, address critical risks, and comply with legislation, regulations and policies; demonstrate public service values and ethics, rigorously assess health and safety, actively promote environmental stewardship, contribute to broader government objectives and ensure access, service quality, privacy, and security; encourage innovation by considering the full range of options available to best meet program needs; are informed by financial and non-financial performance measures and results; and are fair, transparent and accessible to serve Parliament's appropriation and oversight role and the Treasury Board's management role. So a high bar is set but a less intractable web of rules to constrain how we build sound solutions What does the new Policy Framework for the Management of Assets and Acquired Services Require……

7. Department’s demonstrate that (cont’d) 3.2. Value for money and sound stewardship in the management of assets and acquired services are achieved through: strategic and integrated decision-making and management processes at a government-wide, horizontal, portfolio, departmental and program levels to optimize the use of assets and services; risk-based and complexity-based approach to processes, systems, capacity, resourcing, oversight and reporting to promote the attainment of program outcomes; a life cycle management approach reflecting direct and indirect costs of assets and services, to ensure affordability, cost effectiveness and performance; consideration of asset performance and utilization in retention and disposal decisions made in support of program delivery; What does the new Policy Framework for the Management of Assets and Acquired Services Require……

8. Department’s demonstrate that (cont’d) 3.2. delegation of authority based on need, capacity and on an effective regime of accountabilities and responsibilities; efficient and effective business processes; and management systems, processes and information that provide the basis for managing performance and for assigning costs to support: effective fact-based decision-making, budgeting and reporting consistent with the Management Resources and Results Structure (MRRS) re-allocation in response to changing priorities, risk-based oversight and monitoring and demonstrated compliance with legislation, regulations and policy. What does the new Policy Framework for the Management of Assets and Acquired Services Require……

9. Departments Demonstrate that Deputy Heads are responsible for implementing an effective management framework, including departmental procedures, processes and systems, that demonstrates how the department is managing based on the principles identified above. The framework must demonstrate how the management of assets and acquired services is effectively integrated with program, expenditure, financial and human resources related considerations to promote value for money. Deputy Heads are responsible for ensuring that the monitoring of assets and acquired services management practices and controls is in place within the department and for acting expeditiously when control failures are identified. Policy Framework for the Management of Assets and Acquired Servicesrequire….

10. The Investment Plan is Aligned with departmental strategic planning, reflecting a departmental, portfolio, horizontal and government-wide perspective and takes into account strategic government-wide initiatives; Framed by the outcomes in the department's Management Resources and Results Structure – Program Activity Architecture – addresses the greatest risks to departmental objectives; Assesses the performance, including cost, and risks of assets, services arrangements and projects; Considers alternative and innovative options for meeting assets and services requirements, including internal and external delivery models and a range of instruments; Asset Management Starts in Investment Planning

11. Is within existing reference levels and takes into account the whole-of-life cost of stewardship based on the life cycle of assets and services. Information systems are in place that support planning, budgeting and accounting for resource allocation and which enable performance measurement and reporting related to the management of departmental investments. The presentation of key departmental priorities and strategies over a five-year investment horizon demonstrating consideration of portfolio, horizontal and government-wide objectives and priorities, as well as a clear link to departmental program activities and outcomes. The Key Asset Related Aspects of Investment Planning

12. An explanation of the department's risk management approach to investment planning, including the identification of areas of greatest risk to program integrity, risk mitigation strategies and residual risk. Descriptive information is provided on planned investments with elaboration for those investments in assets or acquired services deemed to have significant strategic, public policy, operational, risk and financial implications for the department. Each planned investment, at a minimum, outlines: the total estimated cost of the investment, investment or procurement strategies, and opportunities for achieving broader government objectives. The Key Asset Related Aspects of Investment Planning?

13. The presentation of key departmental priorities and strategies over a five-year investment horizon demonstrating consideration of portfolio, horizontal and government-wide objectives and priorities, as well as a clear link to departmental program activities and outcomes. An explanation of the department's risk management approach to investment planning, including the identification of areas of greatest risk to program integrity, risk mitigation strategies and residual risk. Descriptive information is provided on planned investments with elaboration for those investments in assets or acquired services deemed to have significant strategic, public policy, operational, risk and financial implications for the department. Each planned investment, at a minimum, outlines: the total estimated cost of the investment, investment or procurement strategies, and opportunities for achieving broader government objectives. The Key Asset Related Aspects of Investment Planning

14. Investment Planning within the Annual Government Expenditure Management Cycle Supplementary Estimates A ARLU decisions Federal Budget Tabled Supplementary Estimates B Tabling of DPR TB Government Performance Report to Parliament Government of Canada RPP Due Speech from the Throne/ Economic Update Government Expenditure Plan Main Estimates Part I & II Tabled Departmental Performance Report Confirmation of Departmental Budgets MAF assessment and discussion Branch and Regional Business Plans finalized and PMAs completed SCMB Fall Retreat Strategic priorities / key initiatives DPR Due Report on Plans and Priorities SCMB Discussion on proposed approach for business planning Based on functional guidance, Regions prepare and submit business plans Draft Business Plans from NHQ Branches for functional guidance Integrated Business Plan Call Letter to NHQ Branches Stage 1 Investment Proposals - List Environmental Scan and Corporate Risk Profile Ongoing Stage-Gate Investment Process: Project Gating, Monitoring, Review and updates to budget forecasts Stage-Gate Investment Process: Project Gating, Monitoring, Review and updates to budget forecasts Stage 1 Assessment of Proposals Start of approved projects Budgeting Investment Planning Investment Allocation finalized Update Value Assessment Tool Tools, training, development Investment Plan to TBS Stage 1 Approved List of Investment Proposals and Funds required TB Investment Submission (if required) Update Investment /Plan Supp (A) Due To TBS Supp (B) Due To TBS Budget Allocations finalized Branch/ Regional notional budget allocations determined CFOB Budget Adjustments due to Federal budget ME Due To TBS P6 Forecast P8 Forecast P10 Forecast P4 Forecast

15. Investment Plan 2008/09 – 2012/13 Asset Management is Addressed Through Key Asset Plans and Major Project Investments “By Stage” View Investment Support Investment Plan 2008-09 to 2012-13 • Investment Support team within CFOB has started to support and provide guidance • Key tools and templates available (or under development) There is now a starting point: - a list of the large projects - positioned in a pipeline- next decision gates identified Investment Review Board “the gate keepers”

16. Terms of Reference of the IRB • The Investment Review Board (IRB) is a sub-committee of the portfolio Corporate Services Committee (CSC) with a mandate to: • develop and recommend for approval by the Portfolio Senior Management Board (PSMB) the Portfolio Investment Plan (formerly Long Term Capital Plan) aligned with the overall strategic direction, objectives and priorities and plans of the Department; • provide oversight to project investments using the Stage-Gate methodology and other matters related to investments; • approve or recommend as appropriate procurement transactions greater than $1M and/or those of a sensitive nature; and, • oversee implementation of budget allocation decisions approved by the PSMB as they pertain to investment items vs. on-going operations. • In fulfilling it mandate, the IRB is accountable for: • ensuring investment, project and contracting decisions represent value for money, sound stewardship and reflect a service excellence culture; • ensuring projects in the Long-term Capital Plan/Corporate Investment Plan are aligned with and will realize the Department’s Strategic Plan at an enterprise level, including regularly updating the plan and assessing progress in its implementation; • monitoring investments, projects, procurement processes, and benefits realization commitments at an enterprise level, and assessing the impact on budgeting and allocations from a multi-year perspective; • recommending process improvements to support the continuous improvement of the Investment Management Process; and, • recommending appropriate control systems for HRSDC including Delegations of Authority, Project Approvals and Procurement Review.

17. The Plan and Investment Oversight Process were designed to drive out the important priorities Transform Business Delivery Model Accelerated long term strategy for transformational service delivery improvement COULD DO ($$$) Improving Performance and Cost Effectiveness Business Process Re-engineering(e.g. Process Automation, Contact Centres) Enhanced IT Platforms(e.g. mainframe transition, knowledge mgmt) Enhanced Accommodation Network(i.e. Service Experience Model) Transition Business Delivery Model SHOULD DO ($$) Base-level National Accommodations Plan Base level IT Infrastructure LTCP Minimum Requirements Maintain Current Business Delivery Model MUST DO ($) Financial constraints and capacity are key considerations

18. Consider: Alignment – Are these projects supporting the strategies of the GoC and of HRSDC/SC ? Are they collectively “telling the same story”? Is it clear how these projects are building towards a future vision? Client Needs – Are we meeting the most critical needs for service and service improvements with this set of projects? Value for Money – Is there a long term benefit to HRSDC/SC from this set of projects? How can this be measured? Risk – Are the risks understood? Is there acceptable risk relative to the impact to the department’s priorities surrounding this project, including the risk of not proceeding? Is this a complex project with high project implementation risk? Capacity for all Branches to participate in the projects – Can we implement flawlessly? Do our employees have the capacity to absorb the changes? Key Considerations In Investments in Assets at HRSDC

19. National Accommodation Program (NAP) • NAP is the departmental program that ensures appropriate accommodations are provided and sustained to support the delivery of Human Resources and Development Canada (HRSDC)/ Service Canada (SC) programs within an approved departmental financial and management framework. • NAP is managed by Corporate Accommodation Management (CAM) within SC Chief Financial Officer Branch (CFOB) and regionally managed by 11 Regional Accommodation Management (RAM) groups. • NAP = HRSDC/SC Accommodation Program = A budget • Department has operates under a full funding regime governed by a Master Occupancy Agreement (MOA), HRSDC/SC holds the funds for its accommodation budget and is responsible for reimbursing PWGSC for actual rent and accommodation services.

20. NAP Provides an Overview of the National Real Property Portfolio • Approx 435 total sites with various Business lines collocated • - 329 sites housing Service Canada Centres - 100 sites housing Processing Centre - 17 sites housing a Call Centre - 5 sites housing an ITC - 10 RHQ + 28 NHQ - Warehouses, Labour, Integrity, etc…

21. Business Lines: SCC:$38M Call Centres:$10 Processing:$35 Admin:$15 Other:$2 Business Lines: SCC:$22M Call Centres:$3 Processing:$23 Admin:$11 Other:$1 Business Lines: SCC:$19M Call Ctrs:$7 Proc:$7.5M Admin:$14 Other:3 Business Lines: SCC:$8M Call Centres:$10 Processing:$15 Admin:$11 Other$0 Business Lines: SCC:$7 Call Centres:$0 Processing:$.8 Admin:$8 Other:$.3 $49M 94 Projects $100M 130 Projects $60M 77 Projects $16M 48 Projects $44M 32 Projects 11/12 12/13 08/09 10/11 09/10 The Plan Rationalized Proposed Projects Across the Country (Rent $186M) (Rent $191M) (Rent $176M) (Rent $182M) …that far exceed the 07/08 Baseline (Rent $180M)

22. The investment priorities for the next 5 years – Strategic Alignment NAP Plan is integral to the Investment Plan • Sound Plan = an investment strategy • Effective governance (PWGSC) • Project/financial and Information management • End-to-end process – sound basis for accountability • Changing business model – Points of Service, Strategy, Service Experience model and standards; Contact Centre/National Payments and Processing; Passports, longer term impacts call, click and in-person, • Functionality/Utilization of space/sites, Physical performance of space/sites, Financial performance Strategic Alignment of Investments Basic Business Requirements = Refit/Fit-ups & Lease actions • Acquisition - Operation • Maintenance - Disposal

23. Accommodation Investments are Assessed through Objective Criteria Accommodation Criteria • Carry over & Financial Obligation • Health & Safety • Student Space • Lease Expiry (Must be tendered) • Space Saving • Investment can be Delayed • HR Strategy CCSB Criteria • SCC New Point of Service • SCC Improvement to SDS – • existing space • SCC Improvement to SDS – space increase • SCC Improvement seeking prime SDS • Meets or aligned with POSS • Financial and Program Management • Affordability • Program Management • Capacity to Deliver • Call Centre / Processing Criteria • Call Centre Strategy • Meets/aligned with Call Centre Strategy • Processing Strategy • Meets/aligned with Processing Strategy

24. Design and implement a common benefits delivery platform Assess requirements and business case Leverage COTS technology opportunities Proactively integrate and manage citizen information Integrated citizen information Develop Contact Center Strategy: Improve access to services Integrate channels Improve agent tools Modernize corporate administrative management systems Implement Enterprise Resource Planning System (ERP) Application Modernization Mainframe Transition IM/IT Considerations

25. Making choices through Business IT Alignment Governance: IPRC and DG IT Priorities Committee Operating Model – how IITB operates People Processes (e.g.) Opportunity Management Investment management Project Management Technology Strategy:

26. Architecture Roadmap Business Understanding the business strategy and business model Information Fragmented today, IM charter & strategy Application Service Oriented Architecture Service Delivery Platform SADE Generic Intake capability/Service Business Rules Imaging Testing Improvements Infrastructure Modernize, rationalize, business continuity Telecommunication (ICTR ) Wireless Servers and Desktop Commercial Software Technology Plan

27. Design and implement a common benefits delivery platform Assess requirements and business case Leverage COTS technology opportunities Proactively integrate and manage citizen information Integrated citizen information Develop Contact Center Strategy: Improve access to services Integrate channels – integrate information. Improve agent tools Modernize corporate administrative management systems Implement Enterprise Resource Planning System (ERP) Mainframe Transition Program: De-linking of applications & proprietary technology Mainframe consolidation Data consolidation Application Modernization IM/IT Initiatives

28. The Asset and Invest Processes Meet Key Challenges HRSDC Challenge: Governance “rules” unclear Advocacy (of “favourite” projects) Principle: Visible Governance and decision making forums Decisions are clear and communicated Empowered and committed executive team Agreed to governance, guidelines Agreed roles and responsibilities Repeatable and predictable input to the decisions

29. The Stage Gatetm Methodology Stage Full Team Commit $ Stage Larger Team More $ Stage Small Team Small $ Managing Risk by Stage of Work This is a significant change for most organizations. Project implementation approval and funding is NOT provided at the beginning of the process “because it is a good idea, a mandated requirement”. That commitment is only made AFTER the project has been planned with cross functional team input and a business case developed.

30. Summary of Role/Responsibility of Project Oversight The Investment Management Process describes the minimum oversight required by this committee: Opportunity Identification and Gate 1: • No requirement for formal oversight or steering committee • Sponsor ADM and DG must be supportive of opportunity going to DG ITPC and IRM Concept Initiation and Gate 2: Formal and documented approval of: • Scope, Charter and Plan (overall project and for this stage) • High Level Business Requ. • Options Analysis & Rec. Options • Preliminary Business Case Planning and Business Case Development and Gate 3: Formal and documented approval of: • Revised Scope, Charter and Plan • Detailed Business Requirements of a recommended option • Solution Design • RFP document • Final/Detailed Plan & Business Case Develop and Build and Gate 4: Formal and documented approval of: • Revised Scope, Charter, Plan • Gate 4 presentation - Readiness to Deploy/Install solution Deploy/Install and Stablize and Gate 5: Formal and documented approval of handover solutions to operations and ready to realize benefits or performance improvement

31. Business Case Structure Problem Definition Workshop and as further refined in Concept Dev. and Planning stages Section 1 – Project Overview Section 2 - Problem Definition Section 3 – Business Requirements Section 4 – Stakeholder Analysis Section 5 – Key Drivers Section 6 – Solution Options Section 7 – Recommended Solution Section 8 – Risk Assessment and Mitigation Strategies Section 9- Procurement Strategy Section 10 – Implementation Strategy Section 11- Benefits Realization and Performance Measurement Section 12- Financials Section 14- Conclusion Appendix A – Project Charter and Governance Summary of Assessments of impacts from each enabler and stakeholder with sign offs Summary of Business Requirements Document Summary of all key assumptions, critical success factors from the Business Requirements document Summary of options analysis done by the Project Team and of Options Analysis/Risk Assessment Workshop in Concept Initiation Summary of output from Risk Assessment Workshop Summary of the Procurement Strategy and Plan Consolidation and summary of • Project Plan (from Project Manager) • Change Mgmt plans for clients and employees (key enablers) • Specific requirements for next stage (from project team) Summary of the benefits of the project and how they will be measured and by when they will be realized Project Costs and ongoing costs from each impacted stakeholder. Financial Model completed by Financial Advisor. Includes recommended non financial benefits and Financing Options.