The Shergold Report calls for better governance and better project controls!

The recently released report by Professor Peter Shergold, ‘Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved’ (the Shergold Report), sets out a framework designed to improve the delivery of major Australian Government programs.  But the framework is not limited to government; the concepts can be usefully applied by any organisation seeking to initiate a major program of works.

The report focuses on making practical recommendations to enhance the capacity of the Australian Government to:

1. Design and implement large public programmes and projects;
2. Develop robust and effective governance and accountability arrangements for such programmes and projects;
3. Understand the broader environment in which programmes and policies are designed and implemented;
4. Identify, understand and manage risks; and
5. Provide accurate, timely, clear and robust advice to ministers and within the APS.

Substitute ‘organisation’ for ‘Australian Government’ and ‘senior stakeholders and governors’ for ‘ministers and within the APS’ and the value of the document to the wider community becomes apparent.

The Shergold Report does not make specific recommendations to the government; rather it reaches a series of immutable conclusions based on the narrative in each section and is intended to spark public comment and discussion from a wide spectrum of people both within and outside of the Australian Public Service.

The Shergold Report contains 28 proposals for improvement; the key conclusions are reproduced below are reformatted as recommended good practices for any organisation planning to undertake a major program of works:

Ensuring Robust Advice: Good governance is founded on good policy, and good policy depends on good advice. To this end, executives and managers should be held accountable for the quality of advice they provide. Significant advice should be provided in writing and records maintained.

Decision Making: The importance of decision-making, and the circumstances under which it occurs, underscore the need to have well-functioning support systems in place.

Creating a Positive Risk Culture: Moving the organisation from reactive, defensive risk management; to proactive, performance-focused risk engagement. The major challenge is to embed the new approaches within a strong risk culture. This requires: understanding appetites for risk on individual programs and across the portfolio, appointing a Chief Risk Officer, at a senior executive level, proposals should be supported by an endorsed Risk Management Plan, and preparing a bi-annual whole-of-organisation Risk Assessment for the governing body, analysing the system-wide impact of operational, financial, strategic, legislative and procurement risks faced by the organisation.

Enhancing Program Management: Program and project management are too often seen as control activities; they are actually creative processes!  They require discipline and professional expertise to maintaining single point accountability while being open and flexible to the opportunities of networked governance structures. To achieve this requires:

• Defined standards of proficiency for project and program managers, with active support through career development opportunities, continued education and participation in professional communities of practice such as the upcoming Project Governance and Controls Symposium.
• For each project or programs[1], a clear understanding of who accepts end-to-end responsibility for managing implementation (typically the Sponsor[2]), wields delegated authority and where accountability resides.

Opening up to diversity: A diversity of perspectives in the workplace and the boardroom improves performance. Diversity increases critical analysis of information, results in better decision-making and challenges ‘groupthink’. Program advisory groups should be established that include representation drawn from outside the organisation in order to capture a broader diversity of perspectives and knowledge.

Embracing adaptive governance: Organisations that thrive are flexible. They seize opportunities, learn rapidly and recognise that partners will be needed to deliver long-term goals. When they enter uncharted territory they respond fast, start small, test new approaches, watch market responses, learn from doing, scale-up their activity or, if necessary, try again.

Most importantly, they are honest about failure. They recognise that mistakes happen, interrogate why they occurred and set in place remedial measures to ensure that they perform better next time. Failure and its lessons are an inevitable part of entrepreneurial life but are also central to maintaining organisational competitiveness. This means (where possible) new proposals should include a trial or demonstration stage, allowing new approaches to be developed fast and evaluated early. Large projects should incorporate staged decision-making[3].

Conclusions

Good governance is focused on creating good outcomes, not developing a straightjacket of impenetrable and restrictive procedures – the person or organisation that has never made a mistake has never made anything! The art of effectively using project and programs to create a new and desirable future is effective governance, backed by prudent risk management and effective, adaptive delivery and change management processes. The Shergold Report concludes that:

1. Policy is only as good as the manner in which it is implemented
2. Policy advice can only be frank and fearless if it is supported by written argument.
3. Deliberations, oral and in writing, need to be protected.
4. Deliberative documents need to be preserved, whether written on paper or delivered by digital means.
5. It is up to ministers (the governing body), not officials (management), to make policy decisions.
6. The effective management of risk is just as important in the public sector as in the private – perhaps more so.
7. As the public service fully commits itself to measuring results by outcomes, program management needs to be accorded far greater professional status.
8. Good governance increasingly depends on collaboration across sectors.
9. The APS needs to be further opened up. Diversity and external inputs to the organisation.
10. An adaptive government (organisation) can respond rapidly to changing circumstances without taking unnecessary (and unforeseen) risks.

The one area missing from the Shergold Report is recognition of the importance and difficulty of implementing organisational change (and the disciplines of change management and benefits realisation). The concepts are implicit in many aspects of the report but would have benefitted from direct discussion.

These limitations aside, the Shergold Report is a very deep and well considered document, well worth the effort of reading by both private and public sector mangers and governors. It highlights failures and the learning that can be taken from the experiences to improve future outcomes. To quote Confucius “By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest”. Learning from other’s experience may not be the ‘noblest’ option but is far preferable to repeating avoidable mistakes.

We will be commenting further on this report in future posts and I’m sure it will feature prominently in discussions at the upcoming Project Governance and Controls Symposium that is being held in Canberra in May.

The full report can be downloaded from: http://www.apsc.gov.au/publications-and-media/current-publications/learning-from-failure

From a completely different source, the Australian Infrastructure Plan Priorities and reforms for our nation’s future (Feb. 2016), recommendations under Chapter 9 – Governance calls for very similar processes to the Shergold Report.  These reports, and many previous, have consistently promulgated the same message.  We know what needs to be done, understanding why its not being done is the real challenge.

[1] To understand the difference between a project and a program see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf

[2] For more on the role of the Sponsor see: http://www.mosaicprojects.com.au/WhitePapers/WP1031_Project_Sponsorship.pdf

[3] For more on ‘gateway reviews see: http://www.mosaicprojects.com.au/WhitePapers/WP1092_Gateways-Scorecards.pdf