HomeMy WebLinkAboutFCS-15-029 - 1Q Audit Status ReportStaff Report
rR finance and Corporate Services Department www.kitchener.ca
REPORT TO: Audit Committee
DATE OF MEETING: March 23, 2015
SUBMITTED BY: Corina Tasker, Internal Auditor, 519 - 741 -2200 ext. 7361
PREPARED BY: Corina Tasker, Internal Auditor, 519 - 741 -2200 ext. 7361
WARD(S) INVOLVED: ALL
DATE OF REPORT: March 1, 2015
REPORT NO.: FCS -15 -029
SUBJECT: 1st QUARTER AUDIT STATUS REPORT
RECOMMENDATION:
For information only.
EXECUTIVE SUMMARY:
The following report provides a summary of the Internal Audit activities completed during the
period of December 2014 to March 2015. The chart below shows the audit contained in this
report.
rated Planni
Proiect Debrief
The following items are currently in progress and will be brought forward at a future audit
committee meeting in 2015:
• Community Resource Centres Comprehensive Audit
• Employee Expenses Compliance and Controls Audit
* ** This information is available in accessible formats upon request. * **
Please call 519- 741 -2345 or TTY 1- 866 - 969 -9994 for assistance.
2 -1
REPORT:
1. Integrated Planning — Project Debrief
Status: Complete, December 8, 2014
Audit Objectives
The Integrated Planning Centre of Excellence (COE) was created in 2011 based on consultant
recommendations coming from the 2010 Organizational Design Review. The COE was initially
established with a 3 year term in order to meet specific short term goals. The timing of this
review coincides with the end of the 3 year term.
The objective of this review was to revisit the original goals of creating the COE and determine if
they have been met and what should happen in the future. The intended outcome for this review
was a recommended path forward regarding which services to provide, how to resource them,
and whether the COE should remain a distinct unit or be absorbed into the CAO's department
as a core service.
Methodology
This review included revisiting the original recommendations from the consultant and comparing
the cumulative high level outcomes from the COE to the goals within those recommendations.
It also involved interviewing all staff within the COE, the CAO and DCAO's, the Mayor, and 3
members of the Project Management Advisory Team' regarding their opinions on:
• Successes and level of goal achievement
• Areas requiring further or ongoing work
• Staffing requirements for the future
• Future organizational structure
Findings
By definition "integrated planning" refers to the tools and processes which link corporate strategy with
operational and financial plans. The purpose of integrated planning is to ensure that the work of an
organization directly supports the organization's vision and strategy. The original purpose of creating
the COE was "to build and enhance tools and processes to integrate business performance and
strategy ". It was expected that by dedicating resources to the various tools and processes within the
COE umbrella and providing executive leadership and accountability that this work would gain
traction that was previously lacking in a decentralized model. It was felt that the primary benefit of
grouping the functions together in this integrated planning model was to be better able to resource
initiatives and projects by looking at the whole picture and to be able to report on progress.
While it is acknowledged that staff has successfully accomplished several deliverables related to the
business plans, many of the other program areas fell short of expectations or did not get started. It is
the auditor's opinion that the initiative was moderately successful for the following reasons:
' The Project Management Advisory Team is a group of City staff who have expertise in the discipline of
Project Management by virtue of theirjob functions and professional backgrounds. The team is
responsible for developing and disseminating standardized project management tools, techniques and
training across the organization.
2-2
SCOPE - the scope of the initiative was much larger and ambitious than the resources
allocated to it. In order to make significant progress on each of the components in the COE
umbrella within the 3 year window there should have been more resources dedicated to each
program. Development of new programs and the associated change management activities
requires significant time, knowledge, engagement and a strong champion. Once the
programs became operational then resourcing could be reduced. For the majority of the
COE's term, there were essentially 2 FTE's dedicated to the program; 1 for strategic /business
planning and the other for project portfolio management.
2. TURNOVER - the executive director left half way through the 3 year term and was not
replaced, leaving the initiative without a champion. In addition, the CAO also left mid -term
adding to the lack of continuity of the original vision. There was also turnover of 2 of the COE
staff which contributed to the lack of continuity and a delay in the implementation schedule as
new staff took time to get up to speed.
3. COMMUNICATION OF VISION - much of the vision for the program resided with the
executive director and was not understood clearly by other staff and thus there was lack of
continuity in direction once she left. There is a feeling by stakeholders that the original goals
were too broad and not communicated or explained well to the COE staff or the corporation
as a whole. There is confusion amongst stakeholders about what was intended for some of
the program components and how they all link together.
The concept of the COE had its merits and the goal of integrating strategy with business performance
is still valid today. While there was significant progress in the area of business planning, the overall
initiative still fell well short of original expectations due to lack of resources, loss of key staff and poor
communication of vision. The introduction of the COE represented an innovation for the City of
Kitchener and, as with any innovation, learning comes through trial and error. Over the course of
the 3 year initiative, it has been discovered that some work is not as important as originally thought or
that it can be resourced in different ways.
The following progress was made on the tools and processes in each of the program areas:
Business Planning:
Definition — divisional level plans which indicate the core services and special projects planned for
upcoming years, including the associated budget and resources allocated to accomplish the plan.
Progress on this program was slow until a staff change which occurred in mid -2013. Since then
there has been significant progress and this has been considered the largest area of success in the
COE program umbrella.
Accomplishments include:
• Established a regular planning cycle
• Connections made between the strategic plan and business plans
• Easy to read, attractive business plan document which includes all four departments
• Addition of core service profiles and capacity
• Regular reporting to management and Council
• Linkage and discussions regarding projects within the business plan
2 -3
The next step for this team is to add in key results indicators (KRI's) as a means of measuring
success.
The direct benefits to the organization of this work have included the prioritization of corporate
projects, a higher degree of accountability for achieving performance objectives, and a greater focus
on community and Council priorities.
Although there was praise for the work that has been done to date, there was also acknowledgement
by some stakeholders that the strategy and business plans are not driving the work that we do to the
extent that they might.
In an ideal environment the strategic plan would have specific deliverables which could translate into
actions in the business plan which drives the work of individuals. The previous version of the
strategic plan is seen to be too high level with no clear deliverables. It is anticipated that the next
release of the strategic plan will address this deficiency.
Another failing of the current structure is that although it has established a process to prioritize
corporate and divisional projects and attempt to quantify the resources required for each, there has
been very little appetite to say "no" to projects, new or existing, when resources are scarce. There
needs to be a better link between budget / headcount and the business plans to ensure that
commitments made in the business plan can be met and that workload is manageable. Management
seems to understand this concept better now than in the past.
Measurement and Reporting
Definition — measuring and reporting to Council and management on the progress of various bodies
of work and key aspects of the business in order to better inform business decisions.
There has some progress made in this area including:
• Regular reporting to management and Council on business plan status
• Reporting on status of corporate projects
• Work progressing on development of Key Results Indicators (3 year implementation
schedule)
• Development of a simple manual "dashboard" report
It has been noted by the previous Mayor that the reports to Council may have limited value for them
in their current form. It is worth having the discussion with Council to see what their requirements are
going forward.
The reporting for management is seen to be very good but it is now up to business units to use the
information for decision making and management purposes. It is felt by many that having formalized
consistent measuring and reporting does help to keep things on track though - "what gets measured,
gets done ".
Project reporting is very basic and does not provide measurement beyond the status of the project.
The functionality of APEX (the system used to track the projects) as a reporting tool has been
maximized. If project reporting is determined to be a priority then new software should be explored
which could provide greater benefits.
2 -4
Stakeholders feel that movement into the area of KRI's is valued corporately. However, lack of
centralized data and gaps in information are a roadblock to this being successful in the short term.
Change Management
Definition – a process used to assist stakeholders adapt to organizational change.
There was disagreement amongst the stakeholders as to what was meant to be included in this
program. Some felt this referred to the change management applied to introducing business
planning and project management. Some were unclear on the scope definition. Some correctly
identified that this referred to building up a change management discipline in order to build capacity
and skills across the corporation.
This program area did not advance for reasons outlined above.
Portfolio Management
Definition - the centralized management of processes, methods, and technologies used by project
managers and project management offices to analyze and collectively manage current or proposed
projects. The objectives are to determine the optimal resource mix for delivery and to schedule
activities to best achieve an organization's operational and financial goals — while honouring
constraints imposed by customers, strategic objectives, or external real -world factors.
Again there was disagreement amongst stakeholders over what was meant for this program. Some
felt this was the work done to prioritize all projects while others were unclear on the scope definition.
More clarity needs to be established around what portfolio management means to the corporation
and what the deliverables are.
If it does refer to the prioritization of projects, much work has been done to establish the framework
and process for project identification, classification, and prioritization. There have been additional
steps taken this year to try to identify the supporting resources required for each project and assess
capacity and timing. At this point, however, it is not felt that the prioritization is used to manage the
project portfolio effectively nor has it provided the ability to say "no" to projects which are beyond
capacity. Stakeholders do not feel they are receiving benefits from the prioritization other than to
officially identify the project list. There is an understanding by some that this is just the first step to
fully integrating the information with decision making related to the business plans.
Project Management
Definition – a process used to successfully manage and complete projects on time, on budget, and
within scope.
There are mixed reviews of this program area. Although there were several concrete deliverables
completed, as shown below, some stakeholders felt that not enough was accomplished or
communicated.
The following deliverables were completed:
• Project Management (PM) Advisory team formed
• Templates and tools created
• APEX system used for reporting on project status
• 3 day Project Management course created and rolled out
• Some investigation on software tools to manage and track projects
• Mentorship program discussed
2 -5
Although templates and tools were created, these were not communicated to the corporation at large
nor were these posted on an intranet page as was planned. Benefit could be gained by closing the
loop on this item.
The PM Advisory team consisted of a cross section of staff with interests in project management,
some with practical experience and skills in the area and some who wanted to learn more. The team
met sporadically and completed work on projects together such as investigating the software tool and
discussing the mentorship program. Team members who were interviewed were unclear on the
deliverables going forward and the benefit of such a team.
The APEX reporting is regarded as a good way to inform senior management of the status of
projects. However, there is no formalized accountability or consequence if projects slip behind
schedule. As mentioned previously, the tool also has technical limitations and its functionality has
been fully maximized already. Early research into alternative tools indicated that the cost was
prohibitive and therefore further research was abandoned.
Regarding the training course, this was procured by the City and delivered by an expert instructor.
50 staff from across the corporation in project management positions have been selected to take the
course with the intent of spreading the knowledge and skills more widely across the corporation.
The mentorship program is a good idea and just needs to be fully implemented. Senior management
will need to decide what they want to see related to project management in the future and what the
best way to resource that is.
Risk Management
Definition — a process to identify and proactively address risks and seize opportunities related to the
achievement of objectives.
Many of the stakeholders commented that they did not feel anything had been done in this program.
A few people recognized that the responsibility for risk management had been moved outside of the
COE to the Internal Auditor.
At the time of this transition it was decided that the goal for this program was to more fully embed risk
management across the organization, rather than having a centralized function. The ownership of
the risk management policy and framework and the responsibility for providing assurance to the audit
committee still resides with the Internal Auditor.
A CapaCity course has been created as an optional module to the Project Management course. The
first session had 11 attendees out of a potential 25. The intent of the course is to give project
managers and divisional management the tools and techniques to perform their own risk
assessments and manage their own risks. It was felt by some stakeholders that this module should
be mandatory for participants of the project management course.
It is planned that key risks affecting each division will eventually be part of the business plans. This
will allow the explicit link between what we plan to do and what could hold us back.
Performance Measurement
Definition - measuring and tracking performance (individual, divisional, and corporate) against targets
or objectives, with the intent of using the data to make decisions and course corrections when
necessary in order to meet objectives.
2 -6
There was some disagreement amongst the stakeholders as to what the scope of this program was.
Some felt it was related to measuring divisional performance. In which case the implementation of
KRI's has started and will be implemented over 3 years. Some felt it referred to how we link
individual performance back to the goals in the business plan and strategic plan and hold people
accountable for achievement of those goals. They felt that nothing had been done in this regard and
that perhaps it should be an HR led initiative.
Recommendations
The following recommendations are the steps that were outlined by the Auditor for management
in order for them to make decisions about the future of the COE. Management was provided
with the auditor's opinion to contribute to the discussion.
1. Define each program component in terms of specific deliverables and how they support
or link to other program components. Identify any missing components based on
emerging trends.
2. Prioritize the program components. What is important in the near future? What is the
next logical evolution of the business plan?
3. Identify staffing requirements for each prioritized program component. Are there other
divisions which could accomplish the work? Are more resources needed?
4. Present and discuss several organizational models to determine the best approach to
govern and implement the prioritized program components.
Management Response
Through a discussion with the CAO, DCAO's and the Executive Director, Office of the CAO on
January 7, 2015 the following decisions were made based on recommendations from the
auditor:
1. "Integrated Planning" will be formalized as a permanent section within the CAO's
Department. It will continue to report to the Executive Director, Office of the CAO and
be led by the Manager of Integrated Planning (continuation of an existing role). The core
focus of the division will be to integrate the City's Strategic Plan with the day to day
work. It will include these core services:
a. Strategic Plan
b. Business Plans (including the addition of Key Results Indicators, link to budget,
link to strategic plan, link to risk management)
c. Project tracking and reporting
d. Ownership of project management and change management tools and templates
2. The Manager of Integrated Planning will assume the chair of the Project Management
Advisory Committee. This committee will continue to function in the short term in order to
complete the following project management tasks and will then be disbanded having
concluded its mandate:
a. Post and communicate the existence of the project management templates
b. Establish the project management mentors program, including thought to the
addition of change management mentors
3. The Manager of Integrated Planning will collaborate with the Director of Financial
Planning to establish a link within the business plans to budget and headcount.
4. The Manager of Integrated Planning will collaborate with the Internal Auditor to establish
a link within the business plans to divisional risks.
5. Finance and Corporate Services staff will take the lead, in collaboration with
representatives from across the organization, to develop a refreshed performance
management system for management staff.
2 -7
6. Portfolio management is already captured in the work already completed and will not be
required as a program area going forward.
7. Risk management will continue to reside with Internal Audit on a limited basis.
8. Project management is a skill which must be learned by those selected to run projects.
The CapaCity course will be run by Human Resources as needs dictate. Staff will have
access to mentors and online templates which will be maintained by the Integrated
Planning division.
9. Change management is also a skill which must be learned and is closely linked to
project management. Thought will be given to the need for CapaCity training in this
area. Any templates related to change management which emerge from the project
management work or training will also be posted for use by staff and maintained in a
centralized fashion by Integrated Planning. Change management is also closely linked
to the leadership competencies and skill gaps can be identified and addressed through
the performance management process described above.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Work falls within the Efficient and Effective Government plan foundation area of the Strategic
Plan. The goal of Internal Audit work and service reviews is to protect the City's interests and
assets through
• ensuring compliance with policy, procedures and legislation
• ensuring adequate controls are in place to protect our assets
• ensuring our operations are as efficient and effective as possible
This helps support the financial goal of long term financial stability and fiscal accountability to
our taxpayers.
FINANCIAL IMPLICATIONS:
There are no financial implications related to this report.
COMMUNITY ENGAGEMENT:
Members of the community have been informed of the results of this audit status report
through the posting of this report on the internet on March 18, 2015.
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO, Finance and Corporate Services
2 -8
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