Crossrail: lessons in governance

Martin Buck FICE FRICS

Transition and Strategy Director Crossrail

Governance

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What is governance?

Why governance matters

Considerations

Who are the parties?

Establishing good governance

Crossrail example

Contents

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Corporate governance can be defined as:

“The function of governance is to ensure that

an organisation or partnership fulfils its overall

purpose, achieves its intended outcomes for

citizens and service users, and operates in an

effective, efficient and ethical manner.”

The Independent Commission on Good Governance in Public Services

Governance - what do we mean?

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Governance of project management can be defined as:

“The governance of project management concerns those areas of

corporate governance that are specifically related to project

activities. Effective governance of project management ensures

that an organisation’s project portfolio is aligned to the

organisation’s objectives, is delivered efficiently, and is

sustainable. Governance of project management also supports

the means by which the corporate board and other major project

stakeholders are provided with timely, relevant and reliable

information.“

Directing Change, Association for Project Management, 2011

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For Infrastructure projects, good governance

is about a balance between the natural desire

of sponsor(s) to retain control, and the need of

the delivery team to have sufficient freedom to

allow it to manage the risk to meet the project

objectives.

Project Initiation Routemap – Governance Module

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Why governance matters

Effective project governance is critical to project success.

5 of the 8 common causes of project failure attributable to

weak governance;

7 of the 10 common causes attributable to good governance;

3 out of 5 elements fundamental to successful project

delivery relate to good governance;

effective governance as one of six key responsibilities for

client organisation;

Weak governance main contributor to project failure.


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Factors to consider

Accountability

Authority

Alignment

Disclosure

But also scale and lifecycle

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Programme or Project

Sponsor

Parties - typical structure

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Promoters Developers Financiers

Sub-projects Partners Supply chain

Accountability

Authority

Alignment

Disclosure

Sponsors – commissioning body

Policy/business case owners

Expertise

Constraints

Resources

Land and other enabling interests

Funding

The parties

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Project - executing body

Programme and project management

Procurement and supply chain

Safe delivery

Programme controls

Personnel

Risk management

Reporting

The parties

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Factors – scale & lifecycle

Complexity of the project

Maturity of both parties

Complexity of commissioning body

Development curve of execution body

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a clear statement of the objectives and parameters

for delivery between the sponsor(s) and the

execution team including arrangements for remedy

in the event of difficulty;

the project being sufficiently autonomous with a

single controlling mind;

a clear system of delegation and determined

process for timely decisions that fall outside the

limits of delegation;

a determined process for controlling change;

Establishing good governance

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a determined process for reporting and other

communications between the sponsor(s) and

execution team;

a collaborative culture and working relationship

between sponsor(s) and execution team;

board members have sufficient understanding of the

project context to make reasonable timely decisions

(or seek advice to help them); and

a defined system for assurance at all levels.

Establishing good governance (cont)

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Background

Parties

Principal risks

Crossrail

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January 1989

East West Crossrail

Chelsea-Hackney line

Jubilee line extension

Crossrail Route

National/strategic champion

Local champion

Stakeholder support

Population

BusinessGroups – London First

Companies – Canary Wharf/Berkeley Group/John Lewis

IndustryNetwork Rail/TfL London Underground

Project/construction/equipment suppliers

Losers as well as winners

Political commitment

Parties

Department for transport

Transport for London

Network Rail

Canary Wharf Group

British Airports Authority

Corporation of London

London First

Funding

(£14.8bn)Other Funding

(£2.45bn)

Network Rail

Others

DfT(£5.20bn)

TfL(£7.15bn)

GLA

BRS & Direct Contribution

CommunityInfrastructure Levy

TfL

Direct Contribution

DevelopersContribution

Land and Property

BAA plc

City of London

Direct Contribution

(4.7bn)

Catastrophic failure

Cost escalation

Change

Operator and systems interface

Principal risks

Integrated Team

Governance and stakeholders

TfLDfT

Project Partners

Crossrail Ltd

Sponsors’ Agreement

Project Development

Agreement (PDA)

Shareholder

Agreement

Design Consultants

London Underground

NR (on-network works)

Docklands Light Railway

Canary Wharf Group

Berkeley Homes

Contractors

CTOC

Rolling Stock / Depot

Industry

Partner

Agreements

Delivery

Contracts

‘Crossrail Project’Executive

TeamOperator

RfL

P Rep

Operating

ContractsFramework

Contracts

JST

Sponsors

DfT

TfL

Project - Crossrail Ltd

Independent Board

Chairman

4 independent directors – 1 serving official CoL

2 DfT/TfL nominees

Parties & Roles

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Act together through

a joint sponsor team

Parties & Roles

Network Rail

No sponsor role

Delivery agreement with Crossrail

Canary Wharf group

No sponsor role

Delivery Agreement for Canary Wharf station

BAA

No role

Corporation of London

No formal role

London First

No formal role

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Sponsor Board

Rotating Chair

TfL MD Finance

TfL Head of Programmes

DfT Head of Rail Investment

DfT DG Rail

Head of Joint Sponsor

TeamP Rep

Crossrail Ltd Board

Non-exec Chair

TfLnominee

DfTnominee

Non-exec Non-exec Non-exec

CRL Finance Director

Executive

Directors

CRL Programme

Director

CRL CEO

Project Development Agreement

Quasi private sector arms length DA

CRL obligation to deliver

Programme, milestones, funding

Change

Reporting and assurance

Review Points, Intervention Points

Joint Sponsor Team

Relevant Events

No relief

Review point 1 – July 2008

Parliament grants powers - Crossrail Bill passed

Review point 2 - 2008

Sign core project documents

Review point 3 – Sept 2009

Interim assurance point – programme and cost

Review point 4 – April 2011

Final withdrawal point for either sponsor, full operational powers to CRL inc award of contracts

4 Review Points

Delegation increased as stages of development demonstrated

Summary

Complex multi-stakeholder environment

Clear definition of sponsor and deliverer

Obligations formally agreed

Funding certainty

Autonomous SPV style delivery organisation

Authority and delegations aligned with

development

37km of tunnels

Station progress

Thank you

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