Refine search

Reports

19 February 2019

Published

Transport Access Program

Transport

Infrastructure

Project management

Service delivery

The following report is available in an Easy English version that is intended to meet the needs of some people with lower literacy skills, some people with an intellectual disability and some people from different cultural backgrounds.

View the Easy English version of the Transport Access Program report

Transport for NSW’s process for selecting and prioritising projects for the third stage of its Transport Access Program balanced compliance with national disability standards with broader customer outcomes. Demographics, deliverability and value for money were also considered. However, Transport for NSW does not know the complete scope of work required for full compliance, limiting its ability to demonstrate that its approach is effective, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford.

Access to transport is critical to ensuring that people can engage in all aspects of community life, including education, employment and recreation. People with disability can encounter barriers when accessing public transport services. In 2015, there were 1.37 million people living with disability in New South Wales.

Accessible public transport is about more than physical accessibility. It also means barrier-free access for people who have vision, hearing or cognitive impairments. All users, not just people with disability, benefit from improvements to the accessibility and inclusiveness of transport services.

Transport for NSW has an obligation under Australian Government legislation to provide accessible services to people with disabilities in a manner which is not discriminatory. Under the Disability Standards for Accessible Public Transport 2002 (the DSAPT - an instrument of the Disability Discrimination Act 1992 (the Act) (Commonwealth)), there is a requirement to modify and develop new infrastructure, means of transport and services to provide access for people with disabilities. All public transport operators are required to ensure that at least 90 per cent of their networks met DSAPT by December 2017 and the networks will need to be 100 per cent compliant with all parts of the standards by 31 December 2022. Trains are not required to be fully compliant with DSAPT until December 2032.

The Transport Access Program (TAP) is Transport for NSW's largest program with a specific focus on improving access to public transport for people with disability. The TAP is a series of projects to upgrade existing public transport infrastructure across four networks: Sydney Trains, Intercity Trains, Regional Trains and Sydney Ferries. Transport for NSW established the TAP as a rolling program and, to date, it has delivered the first tranche of TAP (TAP 1) and is completing the final projects for the second tranche (TAP 2). NSW budget papers estimate that by 30 June 2018, Transport for NSW had spent $1.2 billion in the TAP since its commencement in 2011-12.

After the completion of TAP 1 and TAP 2 (as well as through other transport infrastructure programs), Transport for NSW estimates that 58.5 per cent of the Sydney Trains, Regional Trains and Intercity Trains networks, and 66 per cent of the Sydney Ferries network, will be accessible. To close the significant gap in compliance with the DSAPT target, the objective for TAP 3 is ‘to contribute to Disability Discrimination Act 1992 related targets through DSAPT compliance upgrades’.

The audit assessed whether Transport for NSW has an effective process to select and prioritise projects as part of the TAP, with a specific focus on the third tranche of TAP funding.

In August 2018, at the commencement of this audit, Transport for NSW intended to complete the selection of projects for the TAP 3 final business case in December 2018. Transport for NSW advise that it now intends to complete the development stage and final business case in the first quarter of 2019, prior to the final investment decision of the TAP program. This report is based on the TAP 3 strategic business case and information provided by Transport for NSW up to December 2018.

Conclusion
Transport for NSW’s process for selecting and prioritising projects for TAP 3 balanced DSAPT compliance goals with broader customer outcomes. It also considered demographics, deliverability and value for money. However, Transport for NSW does not know the complete scope of work required for full DSAPT compliance, and this limits its ability to demonstrate that its approach is effective.

Transport for NSW has applied most of the external review recommendations from previous funding rounds to the implementation of the third round of TAP funding (TAP3), with positive results. Changes made include a clear objective for TAP 3 to focus on improving compliance, improved governance arrangements, and better consideration of deliverability and design during project planning.

Through TAP 3, Transport for NSW is also trying to better address disability access in a way that balances DSAPT compliance with other considerations - such as population demographics, access to services and value for money. Transport for NSW developed an objective prioritisation and selection methodology to assess projects for TAP 3 funding.

Transport for NSW cannot quantify the work needed to meet DSAPT compliance targets across the rail and ferry networks as it has not completed a comprehensive audit of compliance. This information is needed to ensure the effective targeting of funding, and to measure the contribution of TAP 3 work to meeting the DSAPT compliance targets. Instead, Transport for NSW has undertaken a phased approach to completing a comprehensive audit of compliance across the networks, with a focus on first assessing compliance at locations that are not wheelchair accessible. This creates two problems. First, Transport for NSW does not know the complete scope of work required to achieve DSAPT compliance. Second, not all wheelchair accessible locations fully meet DSAPT standards.

Transport for NSW's proposed communication plan for the schedule of TAP 3 funded works does not align with its Disability Inclusion Action Plan 2018-2022. The Disability Inclusion Action Plan commits Transport for NSW to providing a full list of stations and wharves to be upgraded with their estimated time of construction when the next round of funding, TAP 3, is announced. Given the long timeframes associated with improving transport infrastructure, this information is important as it allows people to make informed decisions about where they live, work or study. Instead, Transport for NSW plans to communicate information to customers on a project by project basis.

In 2015, there were 1.37 million people living with disability in New South Wales. Access to transport is critical to ensuring that people can engage in all aspects of community life, including education, employment and recreation. People with disability can encounter barriers when accessing public transport services.

The social model of disability, outlined in the United Nations Convention on the Rights of Persons with Disabilities, views people with disability as not disabled by their impairment but by the barriers in the community and environment that restrict their full and effective participation in society on an equal basis with others.

Accessible public transport is more than the provision of physical access to premises and conveyances, it provides barrier-free access for people who have vision, hearing or cognitive impairments. All users, not just people with disability, benefit from improvements to the accessibility and inclusiveness of transport services.

According to the Australian Bureau of Statistics, the main types of difficulties experienced by people with disability when using public transport relate to steps (39.9 per cent), difficulty getting to stops and stations (25 per cent), fear and anxiety (23.3 per cent) and lack of seating or difficulty standing (20.7 per cent).

Transport for NSW has a Disability Inclusion Action Plan (the Action Plan) 2018-2022 that sets an overall framework for planning, delivering and reporting on initiatives to increase accessibility of the transport network. It covers all elements of the journey experienced when using public transport, including journey planning, staff training, customer services and interaction between the physical environment and modes of transport. Appendix five outlines the guiding principles of the Action Plan.

Transport for NSW's Transport Social Policy branch developed the Action Plan in consultation with internal and external stakeholders. The director of the Transport Social Policy branch is a member of the TAP executive steering committee, which supports alignment between the Action Plan and TAP.

Transport for NSW's Disability Inclusion Action Plan describes a customer focussed approach to accessibility

One of the guiding principles of the Action Plan is ‘intelligent compliance’. Transport for NSW describes this as compliance that prioritises customer-focused outcomes over a narrow focus on legal compliance with accessibility standards. As well as being compliant, infrastructure should be practical, usable, fit for purpose and convenient.

The TAP prioritisation and selection methodology reflects Transport for NSW’s focus on intelligent compliance. We consider this a reasonable approach as had Transport for NSW focussed exclusively on achieving compliance with the DSAPT targets by upgrading the most affordable infrastructure, some locations, that are used by more customers, would remain inaccessible to people with disability. However, this approach should not be seen as an alternative to Transport for NSW meeting its DSAPT compliance obligations.

TAP program staff consult with the Accessible Transport Advisory Committee

The Accessible Transport Advisory Committee (ATAC) has representatives from disability and ageing organisations, who provide expert guidance to Transport for NSW on access and inclusion. The ATAC provide guidance and feedback on projects and project solutions, including user testing where appropriate. TAP program staff provide regular updates at ATAC meetings, which include briefings on progress. The ATAC also provides feedback and suggestions to TAP program staff, which is considered and sometimes included in current and future projects.For example, in March 2017 the TAP program team briefed the ATAC on the challenges with respect to a number of ferry wharves and sought support for DSAPT exemptions proposed in the TAP 3 strategic business case.

Case study: Feedback on Braille lettering for lift buttons
In June 2018, the Program team sought feedback on a variety of lift button options to improve accessibility on future TAP projects. In September 2018, during the ATAC meeting attended by the Audit Office, the program team sought feedback on the standard designs for TAP 3. Some ATAC members noted that the standard design included Braille lettering on the lift buttons, and that this was not good practice because people can accidently press the button while reading it. As a result, Transport for NSW are incorporating this feedback into design requirements for the lifts for TAP 3, which will consider larger buttons, clearer Braille and Braille signage adjacent to the button.

Transport for NSW has not briefed the Advisory Committee on the outcome of the prioritisation and selection process

TAP program staff briefed the Advisory Committee about the prioritisation and selection methodology, after the Minister approved it in 2016. However, Transport for NSW have not briefed or consulted the Advisory Committee on the outcome of the prioritisation process. Infrastructure NSW noted this issue during its review of the strategic business case.

Transport for NSW advised us that it established the ATAC as an advisory group, and that Transport for NSW does not disclose sensitive information to it. Transport for NSW intends to share the outcome of the prioritisation process following the completion of the TAP 3 development stage and final investment decision.

The TAP communication plan does not fully meet the requirements of the Disability Inclusion Action Plan

The Disability Inclusion Action Plan includes an action item to ‘provide a listing of stations and wharves to be upgraded with estimated time of construction as each new tranche of the Transport Access Program is announced’ The TAP Communication Plan that we reviewed does not include this provision instead focussing on communication on a per project basis. Given the long timeframes associated with improving transport infrastructure, this information is important as it allows people to make informed decisions about where they live, work or study.

Appendix one - Response from agency

Appendix two - Compliance requirements of Disability Standards for Accessible Public Transport

Appendix three - TAP 1 and TAP 2 sub-programs

Appendix four - Prioritisation Assessment for the TAP 3 Strategic Business Case

Appendix five - The guiding principles of Transport for NSW's Disability Inclusion Action Plan

Appendix six - Transport projects and programs that contribute to DSAPT compliance

Appendix seven - About the audit

Appendix eight - Performance auditing

Parliamentary Reference - Report number #314 - released 19 February 2019.

18 December 2018

Published

Property Asset Utilisation

Finance

Asset valuation

Infrastructure

Management and administration

Project management

Property NSW’s effectiveness in managing NSW Government owned and leased commercial office property is limited in three areas according to a report released today by the Auditor-General for New South Wales, Margaret Crawford.

At 30 June 2018, the NSW Government owned $160 billion worth of land and buildings. The NSW Treasury predicts this figure will rise over the coming years. Property NSW manages more than 900 leased office properties across the state. Approximately 250 of these are owned by Property NSW. Other NSW Government agencies maintain ownership and control of properties considered essential for service provision, such as schools, prisons and hospitals. Between 2012–13 and 2017–18 sales of property assets across the whole of the NSW Government have raised $10 billion, of which Property NSW has sold property assets of approximately $2 billion.

In September 2012, the Property Asset Utilisation Taskforce (the Taskforce) released its report on ‘real property asset management across government’ and concluded that the government has accumulated, over time, ‘a real property asset portfolio it cannot afford to maintain or protect’. The Taskforce noted that ‘a lack of centralised information seriously inhibits any whole-of-government strategic asset planning’ and that maintaining under-utilised or unnecessary properties diverted funds from areas where they might be better used. The Taskforce’s key findings included:

the NSW Government should own property only as a means to deliver or enhance services
many government properties were under-utilised, poorly maintained and inappropriate to support service delivery.

The Taskforce recommended the creation of Property NSW, as a replacement for the State Property Authority, to improve property asset utilisation and to drive efficiencies in the government’s owned and leased property portfolio. Property NSW was to achieve these goals by:

collating property information across the whole-of-government
working with agencies on longer-term strategic real property asset planning to:
- provide services to agencies as customers
- bring a whole-of-government perspective to real property asset planning.

In response to the Taskforce report, in December 2012, the Premier's Memorandum M2012-20 (the Memorandum) established Property NSW to improve the management of the NSW Government's owned and leased real property portfolio.

Under the Memorandum, Property NSW is responsible for:

management of all leased and owned commercial office accommodation
acting as the central acquisition and disposal agency
providing advice to the government on property matters and developing property policy
conducting regular and ongoing reviews of agencies portfolios, working with agencies to identify efficiencies to improve service delivery, in relation to the review of capital planning¹
maintaining the register of all government owned property.

The Memorandum states that ownership of all commercial office property should be vested in Property NSW.

This audit assessed whether Property NSW is effective in the management of NSW Government owned and leased commercial office property. To do this we assessed whether NSW Government leased commercial office space is being effectively utilised and whether the Government Property Register, a register of all government owned property, is accurate and up-to-date.

Conclusion

Property NSW’s effectiveness in managing NSW Government owned and leased commercial office property is limited in three areas.

First, Property NSW has not comprehensively reviewed many agency property portfolios to help agencies identify assets, including commercial office properties, that could be better utilised or recycled. Second, the Government Property Register is not being actively maintained and contains incomplete and inaccurate information, limiting Property NSW’s ability to use it to support strategic decisions about the use of government property assets. Third, Property NSW's decisions are not well documented and its processes to reach decisions are not transparent to stakeholders. That said, property utilisation has improved by about 14 per cent since 2012, and Property NSW is actively moving properties out of the Sydney CBD in line with the ‘Decade of Decentralisation’ policy.

Property NSW’s role is to provide a strategic approach to property asset management. Under the 2012 Premier’s Memorandum, this includes a requirement that Property NSW undertake regular reviews of agency property portfolios to identify efficiencies to improve service delivery. Property NSW completed one comprehensive review of an agency, limited reviews of four other agencies, and some reviews of government property in regional towns, prior to 2017.

In December 2017, Property NSW started working across the NSW Government to help agencies identify real property assets, including commercial office properties, that are under-utilised or surplus and that could be recycled, repurposed, or vested to Property NSW.

Following the Memorandum, agencies were directed to vest their commercial office properties to Property NSW. However, without more comprehensive reviews, Property NSW does not know how many commercial properties are yet to be vested. Agencies can approach Property NSW for assistance in managing their property portfolios, and Property NSW arranges the recycling of under utilised and surplus properties that are brought to its attention. Property NSW is improving utilisation of government office space, according to agency self-reported information which Property NSW uses to calculate utilisation rates.

The Property Asset Utilisation Taskforce report (2012) recommended that the NSW Government needed a ‘single source of truth’ to inform asset retention and disposal decisions, leasing decisions and ongoing strategic property decisions. It concluded that the Government Property Register (GPR) could perform this function ‘if populated appropriately’. However, the GPR is not comprehensively performing this function because it is still incomplete and out of date. Property NSW manages the GPR and NSW Government agencies are required to supply ‘accurate, relevant and useful information’ to populate it. Agencies are not always doing so in a timely manner, limiting its usefulness to support strategic decision making. Property NSW supplements the GPR with information from multiple other sources to assist its decisions, however, there is still no single, complete and accurate picture of the NSW Government property portfolio.

The work Property NSW does to identify, shortlist and propose new lease and agency relocation options is not well documented. Property NSW records the outcome of the process without detailing how and why decisions were made. There is limited transparency in this process for stakeholders. Record keeping is also inconsistent and many of Property NSW’s divisions do not have procedures or guidelines.

¹Capital Planning was previously referred to as Total Asset Management (TAM).

In December 2017, the NSW Government announced the Property Infrastructure Policy to create a more collaborative approach between Property NSW and NSW Government agencies to review and identify efficiencies in their property portfolios. Before this, Property NSW did not have a plan to assist agencies to identify under-utilised properties for recycling or repurposing. It still does not know how many under-utilised properties exist and will not know until it has completed all of the portfolio reviews it is currently carrying out under the Property Infrastructure Policy.

Between 2013 and 2017, Property NSW had only completed one comprehensive review of an agency, limited reviews of four other agencies, and some regional towns. Outside this process Property NSW chose to rely on other agencies to identify surplus property for recycling, repurposing or vesting ownership to Property NSW.

Property NSW has a role to provide a strategic approach to property asset management and is required to undertake regular reviews of agency property portfolios under the Premier's Memorandum. Property NSW only recently started working to assist agencies to identify under-utilised and surplus properties, or properties to be vested. These reviews should improve the identification of surplus and under-utilised real property assets and assist whole-of-government decisions on the recycling, repurposing of under-utilised assets and vesting of owned office accommodation to Property NSW.

Recommendations
By December 2019, Property NSW should:

combine the results of property portfolio reviews to produce a whole-of-government picture of the NSW Government property portfolio
devise a strategy and plan to recycle or repurpose under-utilised properties using a whole-of-government picture of the NSW Government property portfolio
develop and report on indicators for progress in reducing the number and value of under-utilised properties at the whole-of-government level, referencing progress against an accurate baseline stocktake.

Property NSW needs to be more proactive in its management of the GPR and in encouraging agencies to provide the information needed to improve this register. In 2012, the Property Asset Utilisation Taskforce report recommended there be a single source of truth on property assets owned by the NSW Government. The GPR is intended to fulfil this role but it is out of date and incomplete.

Without a complete and accurate central register of property, Property NSW cannot provide the NSW Government with a comprehensive picture of its property portfolio, or make whole-of-government decisions about the property portfolio. Property NSW currently supplements the GPR with information from other systems in order to make decisions about leasing, relocations, and property recycling and repurposing. Agencies are required to provide ‘accurate, relevant and useful information’ but are not consistently doing so.

Recommendations
By December 2019, Property NSW should:
4. improve the data held on government owned and leased properties by combining and automating data feeds to construct a single, consolidated and accurate whole-of-government property data set.

Property NSW documents the outcome of decisions about relocations, lease renewals, and utilisation but is unable to provide evidence of how these decisions are reached. Property NSW is also unable to provide evidence of documented guidance for its staff on how decisions should be made. Whilst some level of subjectivity will play a part in such decisions, the lack of documentation and guidance raises issues of consistency, accountability and transparency in decision-making. Property NSW states that it makes decisions based on whole-of-government outcomes rather than equitable and consistent outcomes for client agencies, which is inconsistent with the criteria it reports that it uses when making decisions about leases and relocations.

Recommendations
By December 2019, Property NSW should:
5. document and communicate to stakeholders how its assessment criteria inform key decisions including agency relocations, lease renewals and rectifying under-utilisation
6. include customer satisfaction measures in its annual reports and reviews, in accordance with the requirements set out in the Premier's Memorandum M2012-20
7. improve record-keeping and compliance with the State Records Act 1998 and the Department of Finance, Services and Innovation Records Management Policy.

Appendix one - Response from agency

Appendix two - Audit Office response

Appendix three - About the audit

Appendix four - Performance auditing

Parliamentary reference - Report number #312 - released 18 December 2018

12 December 2018

Published

Newcastle Urban Transformation and Transport Program

Transport

Planning

Compliance

Infrastructure

Management and administration

Procurement

Project management

The urban renewal projects on former railway land in the Newcastle city centre are well targeted to support the objectives of the Newcastle Urban Transformation and Transport Program (the Program), according to a report released today by the Auditor-General for New South Wales, Margaret Crawford. The planned uses of the former railway land achieve a balance between the economic and social objectives of the Program at a reasonable cost to the government. However, the evidence that the cost of the light rail will be justified by its contribution to the Program is not convincing.

The Newcastle Urban Transformation and Transport Program (the Program) is an urban renewal and transport program in the Newcastle city centre. The Hunter and Central Coast Development Corporation (HCCDC) has led the Program since 2017. UrbanGrowth NSW led the Program from 2014 until 2017. Transport for NSW has been responsible for delivering the transport parts of the Program since the Program commenced. All references to HCCDC in this report relate to both HCCDC and its predecessor, the Hunter Development Corporation. All references to UrbanGrowth NSW in this report relate only to its Newcastle office from 2014 to 2017.

This audit had two objectives:

To assess the economy of the approach chosen to achieve the objectives of the Program.
To assess the effectiveness of the consultation and oversight of the Program.

We addressed the audit objectives by answering the following questions:

a) Was the decision to build light rail an economical option for achieving Program objectives?
b) Has the best value been obtained for the use of the former railway land?
c) Was good practice used in consultation on key Program decisions?
d) Did governance arrangements support delivery of the program?

Conclusion
1. The urban renewal projects on the former railway land are well targeted to support the objectives of the Program. However, there is insufficient evidence that the cost of the light rail will be justified by its contribution to Program objectives.

The planned uses of the former railway land achieve a balance between the economic and social objectives of the Program at a reasonable cost to the Government. HCCDC, and previously UrbanGrowth NSW, identified and considered options for land use that would best meet Program objectives. Required probity processes were followed for developments that involved financial transactions. Our audit did not assess the achievement of these objectives because none of the projects have been completed yet.

Analysis presented in the Program business case and other planning documents showed that the light rail would have small transport benefits and was expected to make a modest contribution to broader Program objectives. Analysis in the Program business case argued that despite this, the light rail was justified because it would attract investment and promote economic development around the route. The Program business case referred to several international examples to support this argument, but did not make a convincing case that these examples were comparable to the proposed light rail in Newcastle.

The audited agencies argue that the contribution of light rail cannot be assessed separately because it is a part of a broader Program. The cost of the light rail makes up around 53 per cent of the total Program funding. Given the cost of the light rail, agencies need to be able to demonstrate that this investment provides value for money by making a measurable contribution to the Program objectives.

2. Consultation and oversight were mostly effective during the implementation stages of the Program. There were weaknesses in both areas in the planning stages.

Consultations about the urban renewal activities from around 2015 onward followed good practice standards. These consultations were based on an internationally accepted framework and met their stated objectives. Community consultations on the decision to close the train line were held in 2006 and 2009. However, the final decision in 2012 was made without a specific community consultation. There was no community consultation on the decision to build a light rail.

The governance arrangements that were in place during the planning stages of the Program did not provide effective oversight. This meant there was not a single agreed set of Program objectives until 2016 and roles and responsibilities for the Program were not clear. Leadership and oversight improved during the implementation phase of the Program. Roles and responsibilities were clarified and a multi-agency steering committee was established to resolve issues that needed multi-agency coordination.

The light rail is not justified by conventional cost-benefit analysis and there is insufficient evidence that the indirect contribution of light rail to achieving the economic development objectives of the Program will justify the cost.

Analysis presented in Program business cases and other planning documents showed that the light rail would have small transport benefits and was expected to make a modest contribution to broader Program objectives. Analysis in the Program business case argued that despite this, the light rail was justified because it would attract investment and promote economic development around the route. The Program business case referred to several international examples to support this argument, but did not make a convincing case that these examples were comparable to the proposed light rail in Newcastle.

The business case analysis of the benefits and costs of light rail was prepared after the decision to build light rail had been made and announced. Our previous reports, and recent reports by others, have emphasised the importance of completing thorough analysis before announcing infrastructure projects. Some advice provided after the initial light rail decision was announced was overly optimistic. It included benefits that cannot reasonably be attributed to light rail and underestimated the scope and cost of the project.

The audited agencies argue that the contribution of light rail cannot be assessed separately because it is part of a broader Program. The cost of the light rail makes up around 53 per cent of the total Program funding. Given the high cost of the light rail, we believe agencies need to be able to demonstrate that this investment provides value for money by making a measurable contribution to the Program objectives.

Recommendations
For future infrastructure programs, NSW Government agencies should support economical decision-making on infrastructure projects by:

providing balanced advice to decision makers on the benefits and risks of large infrastructure investments at all stages of the decision-making process
providing scope and cost estimates that are as accurate and complete as possible when initial funding decisions are being made
making business cases available to the public.

The planned uses of the former railway land achieve a balance between the economic and social objectives of the Program at a reasonable cost to the government.

The planned uses of the former railway land align with the objectives of encouraging people to visit and live in the city centre, creating attractive public spaces, and supporting growth in employment in the city. The transport benefits of the activities are less clear, because the light rail is the major transport project and this will not make significant improvements to transport in Newcastle.

The processes used for selling and leasing parts of the former railway land followed industry standards. Options for the former railway land were identified and assessed systematically. Competitive processes were used for most transactions and the required assessment and approval processes were followed. The sale of land to the University of Newcastle did not use a competitive process, but required processes for direct negotiations were followed.

Recommendation
By March 2019, the Hunter and Central Coast Development Corporation should:

work with relevant stakeholders to explore options for increasing the focus on the heritage objective of the Program in projects on the former railway land. This could include projects that recognise the cultural and industrial heritage of Newcastle.

Consultations about the urban renewal activities followed good practice standards, but consultation on transport decisions for the Program did not.

Consultations focusing on urban renewal options for the Program included a range of stakeholders and provided opportunities for input into decisions about the use of the former railway land. These consultations received mostly positive feedback from participants. Changes and additions were made to the objectives of the Program and specific projects in response to feedback received.

There had been several decades of debate about the potential closure of the train line, including community consultations in 2006 and 2009. However, the final decision to close the train line was made and announced in 2012 without a specific community consultation. HCCDC states that consultation with industry and business representatives constitutes community consultation because industry representatives are also members of the community. This does not meet good practice standards because it is not a representative sample of the community.

There was no community consultation on the decision to build a light rail. There were subsequent opportunities for members of the community to comment on the implementation options, but the decision to build it had already been made. A community and industry consultation was held on which route the light rail should use, but the results of this were not made public.

Recommendation
For future infrastructure programs, NSW Government agencies should consult with a wide range of stakeholders before major decisions are made and announced, and report publicly on the results and outcomes of consultations.

The governance arrangements that were in place during the planning stages of the Program did not provide effective oversight. Project leadership and oversight improved during the implementation phase of the Program.

Multi-agency coordination and oversight were ineffective during the planning stages of the Program. Examples include: multiple versions of Program objectives being in circulation; unclear reporting lines for project management groups; and poor role definition for the initial advisory board. Program ownership was clarified in mid-2016 with the appointment of a new Program Director with clear accountability for the delivery of the Program. This was supported by the creation of a multi-agency steering committee that was more effective than previous oversight bodies.

The limitations that existed in multi-agency coordination and oversight had some negative consequences in important aspects of project management for the Program. This included whole-of-government benefits management and the coordination of work to mitigate impacts of the Program on small businesses.

Recommendations
For future infrastructure programs, NSW Government agencies should:

develop and implement a benefits management approach from the beginning of a program to ensure responsibility for defining benefits and measuring their achievement is clear
establish whole-of-government oversight early in the program to guide major decisions. This should include:
- agreeing on objectives and ensuring all agencies understand these
- clearly defining roles and responsibilities for all agencies
- establishing whole-of-government coordination for the assessment and mitigation of the impact of major construction projects on businesses and the community.

By March 2019, the Hunter and Central Coast Development Corporation should update and implement the Program Benefits Realisation Plan. This should include:

setting measurable targets for the desired benefits
clearly allocating ownership for achieving the desired benefits
monitoring progress toward achieving the desired benefits and reporting publicly on the results.

Appendix one - Response from agencies

Appendix two - About the audit

Appendix three - Performance auditing

Parliamentary reference - Report number #310 - released 12 December 2018

18 October 2018

Published

Mobile speed cameras

Transport

Compliance

Financial reporting

Information technology

Internal controls and governance

Management and administration

Regulation

Service delivery

The primary goal of speed cameras is to reduce speeding and make the roads safer. Our 2011 performance audit on speed cameras found that, in general, speed cameras change driver behaviour and have a positive impact on road safety.

Transport for NSW published the NSW Speed Camera Strategy in June 2012 in response to our audit. According to the Strategy, the main purpose of mobile speed cameras is to reduce speeding across the road network by providing a general deterrence through anywhere, anytime enforcement and by creating a perceived risk of detection across the road network. Fixed and red-light speed cameras aim to reduce speeding at specific locations.

Roads and Maritime Services and Transport for NSW deploy mobile speed cameras (MSCs) in consultation with NSW Police. The cameras are operated by contractors authorised by Roads and Maritime Services. MSC locations are stretches of road that can be more than 20 kilometres long. MSC sites are specific places within these locations that meet the requirements for a MSC vehicle to be able to operate there.

This audit assessed whether the mobile speed camera program is effectively managed to maximise road safety benefits across the NSW road network.

Conclusion

The mobile speed camera program requires improvements to key aspects of its management to maximise road safety benefits. While camera locations have been selected based on crash history, the limited number of locations restricts network coverage. It also makes enforcement more predictable, reducing the ability to provide a general deterrence. Implementation of the program has been consistent with government decisions to limit its hours of operation and use multiple warning signs. These factors limit the ability of the mobile speed camera program to effectively deliver a broad general network deterrence from speeding.

Many locations are needed to enable network-wide coverage and ensure MSC sessions are randomised and not predictable. However, there are insufficient locations available to operate MSCs that meet strict criteria for crash history, operator safety, signage and technical requirements. MSC performance would be improved if there were more locations.

A scheduling system is meant to randomise MSC location visits to ensure they are not predictable. However, a relatively small number of locations have been visited many times making their deployment more predictable in these places. The allocation of MSCs across the time of day, day of week and across regions is prioritised based on crash history but the frequency of location visits does not correspond with the crash risk for each location.

There is evidence of a reduction in fatal and serious crashes at the 30 best-performing MSC locations. However, there is limited evidence that the current MSC program in NSW has led to a behavioural change in drivers by creating a general network deterrence. While the overall reduction in serious injuries on roads has continued, fatalities have started to climb again. Compliance with speed limits has improved at the sites and locations that MSCs operate, but the results of overall network speed surveys vary, with recent improvements in some speed zones but not others.
There is no supporting justification for the number of hours of operation for the program. The rate of MSC enforcement (hours per capita) in NSW is less than Queensland and Victoria. The government decision to use multiple warning signs has made it harder to identify and maintain suitable MSC locations, and impeded their use for enforcement in both traffic directions and in school zones.

Appendix one - Response from agency

Appendix two - About the audit

Appendix three - Performance auditing

Parliamentary reference - Report number #308 - released 18 October 2018

7 June 2018

Published

HealthRoster benefits realisation

Health

Compliance

Information technology

Management and administration

Project management

Workforce and capability

The HealthRoster system is delivering some business benefits but Local Health Districts are yet to use all of its features, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford. HealthRoster is an IT system designed to more effectively roster staff to meet the needs of Local Health Districts and other NSW health agencies.

The NSW public health system employs over 100,000 people in clinical and non-clinical roles across the state. With increasing demand for services, it is vital that NSW Health effectively rosters staff to ensure high quality and efficient patient care, while maintaining good workplace practices to support staff in demanding roles.

NSW Health is implementing HealthRoster as its single state-wide rostering system to more effectively roster staff according to the demands of each location. Between 2013–14 and 2016–17, our financial audits of individual LHDs had reported issues with rostering and payroll processes and systems.

NSW Health grouped all Local Health Districts (LHDs), and other NSW Health organisations, into four clusters to manage the implementation of HealthRoster over four years. Refer to Exhibit 4 for a list of the NSW Health entities in each cluster.

Cluster 1 implementation commenced in 2014–15 and was completed in 2015–16.
Cluster 2 implementation commenced in 2015–16 and was completed in 2016–17.
Cluster 3 began implementation in 2016–17 and was underway during the conduct of the audit.
Cluster 4 began planning for implementation in 2017–18.

Full implementation, including capability for centralised data and reporting, is planned for completion in 2019.

This audit assessed the effectiveness of the HealthRoster system in delivering business benefits. In making this assessment, we examined whether:

expected business benefits of HealthRoster were well-defined
HealthRoster is achieving business benefits where implemented.

The HealthRoster project has a timespan from 2009 to 2019. We examined the HealthRoster implementation in LHDs, and other NSW Health organisations, focusing on the period from 2014, when eHealth assumed responsibility for project implementation, to early 2018.

Conclusion

The HealthRoster system is realising functional business benefits in the LHDs where it has been implemented. In these LHDs, financial control of payroll expenditure and rostering compliance with employment award conditions has improved. However, these LHDs are not measuring the value of broader benefits such as better management of staff leave and overtime.

NSW Health has addressed the lessons learned from earlier implementations to improve later implementations. Business benefits identified in the business case were well defined and are consistent with business needs identified by NSW Health. Three of four cluster 1 LHDs have been able to reduce the number of issues with rostering and payroll processes. LHDs in earlier implementations need to use HealthRoster more effectively to ensure they are getting all available benefits from it.

HealthRoster is taking six years longer, and costing $37.2 million more, to fully implement than originally planned. NSW Health attributes the increased cost and extended timeframe to the large scale and complexity of the full implementation of HealthRoster.

Business benefits identified for HealthRoster accurately reflect business needs.

NSW Health has a good understanding of the issues in previous rostering systems and has designed HealthRoster to adequately address these issues. Interviews with frontline staff indicate that HealthRoster facilitates rostering which complies with industrial awards. This is a key business benefit that supports the provision of quality patient care. We saw no evidence that any major business needs or issues with the previous rostering systems are not being addressed by HealthRoster.

In the period examined in this audit since 2015, NSW Health has applied appropriate project management and governance structures to ensure that risks and issues are well managed during HealthRoster implementation.

HealthRoster has had two changes to its budget and timeline. Overall, the capital cost for the project has increased from $88.6 million to $125.6 million (42 per cent) and has delayed expected project completion by four years from 2015 to 2019. NSW Health attributes the increased cost and extended time frame to the large scale and complexity of the full implementation of HealthRoster.

NSW Health has established appropriate governance arrangements to ensure that HealthRoster is successfully implemented and that it will achieve business benefits in the long term. During implementation, local steering committees monitor risks and resolve implementation issues. Risks or issues that cannot be resolved locally are escalated to the state-wide steering committee.

NSW Health has grouped local health districts, and other NSW Health organisations, into four clusters for implementation. This has enabled NSW Health to apply lessons learnt from each implementation to improve future implementations.

NSW Health has a benefits realisation framework, but it is not fully applied to HealthRoster.

NSW Health can demonstrate that HealthRoster has delivered some functional business benefits, including rosters that comply with a wide variety of employment awards.

NSW Health is not yet measuring and tracking the value of business benefits achieved. NSW Health did not have benefits realisation plans with baseline measures defined for LHDs in cluster 1 and 2 before implementation. Without baseline measures NSW Health is unable to quantify business benefits achieved. However, analysis of post-implementation reviews and interviews with frontline staff indicate that benefits are being achieved. As a result, NSW Health now includes defining baseline measures and setting targets as part of LHD implementation planning. It has created a benefits realisation toolkit to assist this process from cluster 3 implementations onwards.

NSW Health conducted post-implementation reviews for clusters 1 and 2 and found that LHDs in these clusters were not using HealthRoster to realise all the benefits that HealthRoster could deliver.

By September 2018, NSW Health should:

Ensure that Local Health Districts undertake benefits realisation planning according to the NSW Health benefits realisation framework
Regularly measure benefits realised, at state and local health district levels, from the statewide implementation of HealthRoster
Review the use of HealthRoster in Local Health Districts in clusters 1 and 2 and assist them to improve their HealthRoster related processes and practices.

By June 2019, NSW Health should:

Ensure that all Local Health Districts are effectively using demand based rostering.

Appendix one - Response from agency

Appendix two - About the audit

Appendix three - Performance auditing

Parliamentary reference - Report number #301 - released 7 June 2018

17 May 2018

Published

Regional Assistance Programs

Premier and Cabinet

Planning

Transport

Compliance

Infrastructure

Management and administration

Project management

Infrastructure NSW effectively manages how grant applications for regional assistance programs are assessed and recommended for funding. Its contract management processes are also effective. However, we are unable to conclude whether the objectives of these programs have been achieved as the relevant agencies have not yet measured their benefits, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford.

In 2011, the NSW Government established Restart NSW to fund new infrastructure with the proceeds from the sale and lease of government assets. From 2011 to 2017, the NSW Government allocated $1.7 billion from the fund for infrastructure in regional areas, with an additional commitment of $1.3 billion to be allocated by 2021. The NSW Government allocates these funds through regional assistance programs such as Resources for Regions and Fixing Country Roads. NSW councils are the primary recipients of funding provided under these programs.

The NSW Government announced the Resources for Regions program in 2012 with the aim of addressing infrastructure constraints in mining affected communities. Infrastructure NSW administers the program, with support from the Department of Premier and Cabinet.

The NSW Government announced the Fixing Country Roads program in 2014 with the aim of building more efficient road freight networks. Transport for NSW and Infrastructure NSW jointly administer this program, which funds local councils to deliver projects that help connect local and regional roads to state highways and freight hubs.

This audit assessed whether these two programs (Resources for Regions and Fixing Country Roads) were being effectively managed and achieved their objectives. In making this assessment, we answered the following questions:

How well are the relevant agencies managing the assessment and recommendation process?
How do the relevant agencies ensure that funded projects are being delivered?
Do the funded projects meet program and project objectives?

The audit focussed on four rounds of Resources for Regions funding between 2013–14 to 2015–16, as well as the first two rounds of Fixing Country Roads funding in 2014–15 and 2015–16.

Conclusion

Infrastructure NSW effectively manages how grant applications are assessed and recommended for funding. Infrastructure NSW’s contract management processes are also effective. However, we are unable to conclude on whether program objectives are being achieved as Infrastructure NSW has not yet measured program benefits.

While Infrastructure NSW and Transport for NSW managed the assessment processes effectively overall, they have not fully maintained all required documentation, such as conflict of interest registers. Keeping accurate records is important to support transparency and accountability to the public about funding allocation. The relevant agencies have taken steps to address this in the current funding rounds for both programs.

For both programs assessed, the relevant agencies have developed good strategies over time to support councils through the application process. These strategies include workshops, briefings and feedback for unsuccessful applicants. Transport for NSW and the Department of Premier and Cabinet have implemented effective tools to assist applicants in demonstrating the economic impact of their projects.

Infrastructure NSW is effective in identifying projects that are 'at‑risk' and assists in bringing them back on track. Infrastructure NSW has a risk‑based methodology to verify payment claims, which includes elements of good practice in grants administration. For example, it requires grant recipients to provide photos and engages Public Works Advisory to review progress claims and visit project sites.

Infrastructure NSW collects project completion reports for all Resources for Regions and Fixing Country Roads funded projects. Infrastructure NSW intends to assess benefits for both programs once each project in a funding round is completed. To date, no funding round has been completed. As a result, no benefits assessment has been done for any completed project funded in either program.

The project selection criteria are consistent with the program objectives set by the NSW Government, and the RIAP applied the criteria consistently. Probity and record keeping practices did not fully comply with the probity plans.

The assessment methodology designed by Infrastructure NSW is consistent with2 the program objectives and criteria. In the rounds that we reviewed, all funded projects met the assessment criteria.

Infrastructure NSW developed probity plans for both programs which provided guidance on the record keeping required to maintain an audit trail, including the use of conflict of interest registers. Infrastructure NSW and Transport for NSW did not fully comply with these requirements. The relevant agencies have taken steps to address this in the current funding rounds for both programs.

NSW Procurement Board Directions require agencies to ensure that they do not engage a probity advisor that is engaged elsewhere in the agency. Infrastructure NSW has not fully complied with this requirement. A conflict of interest arose when Infrastructure NSW engaged the same consultancy to act as its internal auditor and probity advisor.

While these infringements of probity arrangements are unlikely to have had a major impact on the assessment process, they weaken the transparency and accountability of the process.

Some councils have identified resourcing and capability issues which impact on their ability to participate in the application process. For both programs, the relevant agencies conducted briefings and webinars with applicants to provide advice on the objectives of the programs and how to improve the quality of their applications. Additionally, Transport for NSW and the Department of Premier and Cabinet have developed tools to assist councils to demonstrate the economic impact of their applications.

The relevant agencies provided feedback on unsuccessful applications to councils. Councils reported that the quality of this feedback has improved over time.

Recommendations

By June 2018, Infrastructure NSW should:
- ensure probity reports address whether all elements of the probity plan have been effectively implemented.

By June 2018, Infrastructure NSW and Transport for NSW should:
- maintain and store all documentation regarding assessment and probity matters according to the State Records Act 1998, the NSW Standard on Records Management and the relevant probity plans

Infrastructure NSW is responsible for overseeing and monitoring projects funded under Resources for Regions and Fixing Country Roads. Infrastructure NSW effectively manages projects to keep them on track, however it could do more to assure itself that all recipients have complied with funding deeds. Benefits and outcomes should also start to be measured and reported as soon as practicable after projects are completed to inform assessment of future projects.

Infrastructure NSW identifies projects experiencing unreasonable delays or higher than expected expenses as 'at‑risk'. After Infrastructure NSW identifies a project as 'at‑risk', it puts in place processes to resolve issues to bring them back on track. Infrastructure NSW, working with Public Works Advisory regional offices, employs a risk‑based approach to validate payment claims, however this process should be strengthened. Infrastructure NSW would get better assurance by also conducting annual audits of compliance with the funding deed for a random sample of projects.

Infrastructure NSW collects project completion reports for all Resources for Regions and Fixing Country Roads funded projects. It applies the Infrastructure Investor Assurance Framework to Resources for Regions and Fixing Country Roads at a program level. This means that each round of funding (under both programs) is treated as a distinct program for the purposes of benefits realisation. It plans to assess whether benefits have been realised once each project in a funding round is completed. As a result, no benefits realisation assessment has been done for any project funded under either Resources for Regions or Fixing Country Roads. Without project‑level benefits realisation, future decisions are not informed by the lessons from previous investments.

Recommendations

By December 2018, Infrastructure NSW should:
- conduct annual audits of compliance with the funding deed for a random sample of projects funded under Resources for Regions and Fixing Country Roads
- publish the circumstances under which unspent funds can be allocated to changes in project scope
- measure benefits delivered by projects that were completed before December 2017
- implement an annual process to measure benefits for projects completed after December 2017

By December 2018, Transport for NSW and Infrastructure NSW should:
- incorporate a benefits realisation framework as part of the detailed application.

Appendix one - Response from agencies

Appendix two - Maps of funded projects

Appendix three - About the audit

Appendix four - Performance auditing

Parliamentary reference - Report number #300 - released 17 May 2018

2 March 2018

Published

Detecting and responding to cyber security incidents

Finance

Cyber security

Information technology

Internal controls and governance

Management and administration

Workforce and capability

A report released today by the Auditor-General for New South Wales, Margaret Crawford, found there is no whole-of-government capability to detect and respond effectively to cyber security incidents. There is very limited sharing of information on incidents amongst agencies, and some agencies have poor detection and response practices and procedures.

The NSW Government relies on digital technology to deliver services, organise and store information, manage business processes, and control critical infrastructure. The increasing global interconnectivity between computer networks has dramatically increased the risk of cyber security incidents. Such incidents can harm government service delivery and may include the theft of information, denial of access to critical technology, or even the hijacking of systems for profit or malicious intent.

This audit examined cyber security incident detection and response in the NSW public sector. It focused on the role of the Department of Finance, Services and Innovation (DFSI), which oversees the Information Security Community of Practice, the Information Security Event Reporting Protocol, and the Digital Information Security Policy (the Policy).

The audit also examined ten case study agencies to develop a perspective on how they detect and respond to incidents. We chose agencies that are collectively responsible for personal data, critical infrastructure, financial information and intellectual property.

Conclusion

There is no whole‑of‑government capability to detect and respond effectively to cyber security incidents. There is limited sharing of information on incidents amongst agencies, and some of the agencies we reviewed have poor detection and response practices and procedures. There is a risk that incidents will go undetected longer than they should, and opportunities to contain and restrict the damage may be lost.

Given current weaknesses, the NSW public sector’s ability to detect and respond to incidents needs to improve significantly and quickly. DFSI has started to address this by appointing a Government Chief Information Security Officer (GCISO) to improve cyber security capability across the public sector. Her role includes coordinating efforts to increase the NSW Government’s ability to respond to and recover from whole‑of‑government threats and attacks.

Some of our case study agencies had strong processes for detection and response to cyber security incidents but others had a low capability to detect and respond in a timely way.

Most agencies have access to an automated tool for analysing logs generated by their IT systems. However, coverage of these tools varies. Some agencies do not have an automated tool and only review logs periodically or on an ad hoc basis, meaning they are less likely to detect incidents.

Few agencies have contractual arrangements in place for IT service providers to report incidents to them. If a service provider elects to not report an incident, it will delay the agency’s response and may result in increased damage.

Most case study agencies had procedures for responding to incidents, although some lack guidance on who to notify and when. Some agencies do not have response procedures, limiting their ability to minimise the business damage that may flow from a cyber security incident. Few agencies could demonstrate that they have trained their staff on either incident detection or response procedures and could provide little information on the role requirements and responsibilities of their staff in doing so.

Most agencies’ incident procedures contain limited information on how to report an incident, who to report it to, when this should occur and what information should be provided. None of our case study agencies’ procedures mentioned reporting to DFSI, highlighting that even though reporting is mandatory for most agencies their procedures do not require it.

Case study agencies provided little evidence to indicate they are learning from incidents, meaning that opportunities to better manage future incidents may be lost.

Recommendations

The Department of Finance, Services and Innovation should:

assist agencies by providing:
- better practice guidelines for incident detection, response and reporting to help agencies develop their own practices and procedures
- training and awareness programs, including tailored programs for a range of audiences such as cyber professionals, finance staff, and audit and risk committees
- role requirements and responsibilities for cyber security across government, relevant to size and complexity of each agency
- a support model for agencies that have limited detection and response capabilities
revise the Digital Information Security Policy and Information Security Event Reporting Protocol by
- clarifying what security incidents must be reported to DFSI and when
- extending mandatory reporting requirements to those NSW Government agencies not currently covered by the policy and protocol, including State owned corporations.

DFSI lacks a clear mandate or capability to provide effective detection and response support to agencies, and there is limited sharing of information on cyber security incidents.

DFSI does not currently have a clear mandate and the necessary resources and systems to detect, receive, share and respond to cyber security incidents across the NSW public sector. It does not have a clear mandate to assess whether agencies have an acceptable detection and response capability. It is aware of deficiencies in agencies and across whole‑of‑government, and has begun to conduct research into this capability.

Intelligence gathering across the public sector is also limited, meaning agencies may not respond to threats in a timely manner. DFSI has not allocated resources for gathering of threat intelligence and communicating it across government, although it has begun to build this capacity.

Incident reporting to DFSI is mandatory for most agencies, however, most of our case study agencies do not report incidents to DFSI, reducing the likelihood of containing an incident if it spreads to other agencies. When incidents have been reported, DFSI has not provided dedicated resources to assess them and coordinate the public sector’s response. There are currently no formal requirements for DFSI to respond to incidents and no guidance on what it is meant to do if an incident is reported. The lack of central coordination in incident response risks delays and increased damage to multiple agencies.

DFSI's reporting protocol is weak and does not clearly specify what agencies should report and when. This makes agencies less likely to report incidents. The lack of a standard format for incident reporting and a consistent method for assessing an incident, including the level of risk associated with it, also make it difficult for DFSI to determine an appropriate response.

There are limited avenues for sharing information amongst agencies after incidents have been resolved, meaning the public sector may be losing valuable opportunities to improve its protection and response.

Recommendations

The Department of Finance, Services and Innovation should:

develop whole‑of‑government procedure, protocol and supporting systems to effectively share reported threats and respond to cyber security incidents impacting multiple agencies, including follow-up and communicating lessons learnt
develop a means by which agencies can report incidents in a more effective manner, such as a secure online template, that allows for early warnings and standardised details of incidents and remedial advice
enhance NSW public sector threat intelligence gathering and sharing including formal links with Australian Government security agencies, other states and the private sector
direct agencies to include standard clauses in contracts requiring IT service providers report all cyber security incidents within a reasonable timeframe
provide assurance that agencies have appropriate reporting procedures and report to DFSI as required by the policy and protocol by:
- extending the attestation requirement within the DISP to cover procedures and reporting
- reviewing a sample of agencies' incident reporting procedures each year.

Appendix one - Response from agency

Appendix two - ISMS maturity model

Appendix three - About the audit

Appendix four - Performance auditing

Parliamentary reference - Report number #297 - released 2 March 2018

15 June 2017

Published

Sydney Road Maintenance Contracts

Transport

Infrastructure

Internal controls and governance

Management and administration

Procurement

Project management

In November 2013, Roads and Maritime Services (RMS) outsourced the maintenance of State roads in the Sydney region south and west zones using an innovative contracting approach called the Stewardship Maintenance Contract (SMC). The SMC links risk to reward, and uses a performance framework where outcomes should drive improved performance over time.

Roads and Maritime Services (RMS) is responsible for the Sydney region State roads network This includes over 2,800 kilometres of roads and associated road corridor infrastructure such as bridges, tunnels and drainage structures. RMS divides the network into three geographical areas: south, west and north zones.

In 1995, RMS first outsourced road corridor infrastructure maintenance for the north zone through a Performance Specified Maintenance Contract (PSMC). The current 10-year PSMC for the north zone will expire in October 2018. Prior to November 2013, RMS maintained roads in the south and west zones through its Road and Fleet Services unit.

In November 2013, RMS outsourced road maintenance services for the south and west zones using Stewardship Maintenance Contracts (SMC). The contracts run for seven years with an option for a further three years at RMS’ discretion. RMS estimated that the annual cost of these contracts was around $240 million in total. In March 2018, the contract prices are due to be reset by negotiation to reflect the contractors’ experience with, and better information about, the road networks and routine maintenance requirements.

The SMC model adopted stewardship principles to improve value for money. RMS defined stewardship principles as a broad set of values, attitudes and behaviours, required of the contractor to effectively manage the assets on behalf of RMS. The SMC also includes commercial principles, such as linking risk to reward, and a performance framework where outcomes drive performance.

This audit assessed whether RMS had effectively managed the outsourcing of road maintenance in the Sydney region south and west zones. In making this assessment, we answered the following questions:

Did RMS justify the decision to adopt the SMC model?
Do SMCs include key performance indicators (KPIs) and incentives which promote efficiency and effectiveness?
Does RMS collect high quality information on contractor performance and take action to correct performance deficiencies?
Are the expected benefits being achieved?

Conclusion

RMS developed an innovative contracting approach with the SMC. RMS has realised some benefits in the first year, including savings, from outsourcing road maintenance in the Sydney region south and west zones using the SMC. However, RMS’ management of the SMC has key elements missing which reduces its effectiveness.

The SMC includes performance measures and incentives to drive efficiency and effectiveness improvements over time.

RMS has established a contract management framework which includes most elements of good practice, including governance and dispute resolution mechanisms. However, it does not have procedures to guide its contract managers in managing specific provisions of the SMC. Consequently, RMS has not exercised several significant SMC requirements, such as having the contractor account for an efficiency dividend in its pricing at the start of each three-year works period. It also has not done enough to assure itself that the contractor provided performance and financial data are correct. This is important because the data is used to measure performance and calculate contractor payments.

RMS assessed that it had achieved around 80 per cent of the expected cost benefit in the initial year of the SMC. However, it has not tracked its achievement of benefits since then.

The Stewardship Maintenance Contract

RMS justified adopting the SMC model and included KPIs to drive efficiency and effectiveness

The SMC model includes features that RMS had not previously used for road maintenance contracts. These included adopting stewardship principles and transferring price risk to the contractor over time as the contractor becomes familiar with the assets being maintained.

The SMC model meets RMS’ requirements for flexibility in pricing models, the need for collaboration in asset maintenance planning, promoting innovation and effective performance management.

RMS used many good practices to develop the SMC model, including:

preparing a robust business case comparing the SMC model to RMS maintaining the road network itself, as well as assessing whether two other contracting models
(traditional and alliance) would meet its requirements
assessing experiences with similar arrangements in other jurisdictions and identifying elements that worked to get the best outcomes
developing a robust performance framework, which included a mix of efficiency and effectiveness KPIs that reflected NSW Government policy and RMS priorities
incorporating risk and reward incentives delivered through cost sharing arrangements which change as the contract matures
using a contract duration that supports RMS priorities and provides an incentive for better quality outcomes.

RMS uses data provided by the contractor to measure performance and calculate payments to the contractor. The SMC includes a specific sanction if RMS finds that the contractor provided incorrect performance data, but no specific sanction if the contractor provides incorrect financial data. If RMS finds that the contactor provided incorrect performance or financial data, RMS can only recover over-payments which may have been made using the incorrect data.

To provide a stronger incentive for the contractor to ensure data it provides is accurate, RMS should consider whether to incorporate stronger sanctions when negotiating the commercial reset due in mid-2018 for south and west zones. RMS should also consider this for the new contract for the north zone when the current PSMC contract expires in October 2018.

RMS' contract management approach and benefits realization

RMS can improve the effectiveness of its oversight and management of the SMC

RMS does not have SMC specific contract procedures to guide its contract managers. Consequently, RMS has not exercised several significant SMC requirements, such as having the contractors account for an efficiency dividend in their pricing at the start of each three-year works period. Effective contract management should be supported by contract specific procedures, with explanations of, and allocation of responsibility for, the various interventions that RMS may be required to exercise in the SMC.

Performance and financial reporting under the SMC is based on a mix of RMS and contractor provided data. While there are a range of audits of contractor provided performance and financial data that RMS can conduct each year under the SMC, it does not have a schedule of audits it will conduct and when.
During the first year of the SMC, RMS commissioned some limited audits of financial data. In the first three years of the SMC, RMS did not conduct any audits of performance data. Had there been SMC specific procedures in place, this would have reduced the risk of RMS not implementing a systematic audit program to give it reasonable assurance on the quality of the data that the contractor has provided. This is important because the data is used to measure performance and calculate contractor payments.

RMS has been aware of data quality issues since 2015. While RMS advised that it commenced addressing some data quality issues in response to a series of reviews conducted in 2015, a recent internal audit report indicates that RMS has not resolved the data quality issues.

RMS achieved benefits in the first year, but has not tracked benefits since

As part of the business case, RMS agreed to implement a benefits realisation strategy, including a benefits tracking tool. RMS commenced tracking benefits, but did not establish a comparative baseline pre-SMC on non-financial benefits, and has not tracked benefits past year one.

In 2015, a benchmarking study commissioned by RMS found that it had achieved 80 per cent of the expected recurrent cost savings and other benefits, such as improved workplace safety, in the first full year of the SMC. However, there was no clear baseline to measure
non-financial performance. The study was qualified due to gaps in available data. The study also did not reconcile the actual one-off transition costs to the business case estimate.

During the course of the audit, RMS advised that it intends to repeat this type of study to determine whether it has achieved all expected benefits (and their value), and that it would use the results to inform its negotiation with the SMC contractors as part of the commercial reset due in mid-2018.

Roads and Maritime Services is responsible for the State Roads network in the Sydney region

Roads and Maritime Services (RMS) is responsible for the Sydney region State roads network. This includes over 2,800 kilometres of roads and associated road corridor infrastructure such as bridges, tunnels and drainage structures. The network is divided into three geographical areas: south, west and north zones. Prior to November 2013, RMS maintained roads in the Sydney region south and west zones through its Road and Fleet Services unit.

In 1995, RMS first outsourced road corridor infrastructure maintenance for the north zone through a Performance Specified Maintenance Contract (PSMC). The current 10-year PSMC for the north zone will expire in October 2018. This contract is worth around $35 million per annum.

NSW Government priorities and road maintenance

Efficient and effective road maintenance contributes to the following NSW Government priorities:

improving road travel reliability
ensuring on-time running of public transport
reducing road fatalities
improving government services
keeping our environment clean.

The NSW Commission of Audit recommended outsourcing the maintenance of State roads

The NSW Commission of Audit in its Final Report on Government Expenditure (May 2012) recommended contestability as an appropriate strategy to consider for improving road maintenance service delivery for State roads.

The Commission benchmarked RMS’ road surface quality and cost per lane kilometre against those of Western Australia, Victoria, and Queensland. This showed that New South Wales lagged the other states on both these measures.

Exhibit 1: Interjurisdictional comparison of road maintenance outcomes 2009–10
	WA	VIC	QLD	NSW
Roads managed (lane kms)	52,659	50,510	71,353	80,348
Estimated spend ($/lane km)	5,000	4,500	6,000	7,000
Road quality measure (%)	99	99	94	91

Source: NSW Commission of Audit Final Report May 2012.

The Commission noted that RMS had conducted two independent reviews to examine the potential for extending road maintenance contestability. The Commission found that there was inadequate and inconclusive benchmarking to establish the efficiency of RMS’ Road and Fleet Services unit when compared to outsourcing. It recommended that RMS bring forward a proposal to conduct a competitive tender for the road maintenance of the Sydney region south zone road network to inform the feasibility of a progressive rollout of road maintenance contestability across other areas of the State. In August 2012, the NSW Government adopted the Commission’s recommendation.

The NSW Government introduced road maintenance contestability through Stewardship Maintenance Contracts

In April 2013, the NSW Government announced that it would introduce road maintenance contestability across the Sydney region, using a Stewardship Maintenance Contract (SMC) model to improve value for money. In doing so, it excluded RMS’ Road and Fleet Services unit from tendering.

The SMC model is based on the following key commercial and performance principles set by RMS:

performance driven by outcomes
flexible and adaptable
transparent and measurable
linking risk to reward
continuous improvement
criteria for selection of, and transition to, different payment models.

The following key stewardship principles underpin the SMC’s broad set of values, attitudes and behaviours, which are required of the contractor to effectively manage the assets on behalf of RMS:

putting RMS’ customers (road users and the general public) first and being responsive to them
being responsible and accountable for the outcomes resulting from the management of the assets
managing the assets diligently, efficiently and effectively with limited direction from RMS
working collaboratively with RMS to deliver services that are tailored to meet RMS’ evolving needs
acting with integrity and transparency in performing the services
performing the services in the best interests of RMS and asset users.

Other key features of the SMC include:

service requirements which describe the scope of the services, and the standards the contractor must meet
a commercial framework which defines how payments are structured, how performance assessment will impact on payments and outlines the key commercial principles. SMCs primarily divide payments into two main mechanisms, these being the priced component (or fixed price) and the target cost calculated as follows:
- fixed price – the contractor is paid a pre-agreed amount for specific services being provided, regardless of the actual costs incurred
- target cost – RMS and the contractor agree on a target cost for a project, and any cost overruns or underruns are shared between them
a performance framework which provides mechanisms for assessing contractor performance. This includes a comprehensive listing of the key result areas (KRAs) and key performance indicators (KPIs) against which RMS measures the contractor’s performance. The framework also outlines the scoring methodology that RMS uses to determine whether the contractor’s bid margin (profit and overheads) is reduced due to less than satisfactory performance or whether a bonus is paid if a threshold performance score is exceeded.

Road maintenance under SMCs for Sydney region south and west zones commenced in November 2013

In November 2013, RMS awarded SMCs to the Leighton Boral Amey consortium, now named Ventia Boral Amey (VBA), for the south zone and the DownerMouchel (DM) consortium for the west zone. The contracts run for seven years with an option for a further three years at RMS’ discretion. In April 2014, full services commenced following a four-month transition period. RMS estimated that the annual cost of these contracts was around $240 million in total. In March 2018, the contract prices are due to be reset by negotiation to reflect the contractors’ experience with, and better information about, the road networks and routine maintenance requirements.

Roads and Maritime Services should consider whether to incorporate stronger sanctions in the Stewardship Maintenance Contract if the contractor provides incorrect performance or financial data to RMS, when:
1. negotiating the commercial reset for the next works period with the Sydney region south and west zone contractors due in July 2018.
2. finalising a new SMC contract for the Sydney region north zone, due to commence in October 2018.

Roads and Maritime Services should, by September 2017:

2. Review its contract management framework for SMCs to ensure that all authorities and accountabilities of
contract managers are clearly defined, including:

a) accountability and procedures for exercising all operational clauses in the SMC where RMS may opt to, or be required to intervene, or make a decision

b) authority to approve or initiate the interventions RMS is required to, or may, exercise under the SMC

c) the audits that RMS will conduct to systematically validate the performance and financial data that the SMC contractors provide

d) the accountabilities of RMS contract managers to systematically review audits and quality reviews that the SMC contractors must conduct to demonstrate compliance with their service plans

e) the accountabilities of RMS contract managers to check that the monthly and annual reports provided by SMC contractors do not contain errors, omissions or inaccuracies.

3. Improve its management of benefits realisation by:

a) initiating a further benefits realisation review and record the benefits delivered against those
estimated following the tender process, including the one-off transition costs

b) identify any benefits, including savings, not yet attained and develop strategies to address any short-falls

c) establish a tool to track the ongoing realisation of benefits.

Parliamentary reference - Report number #288 - released 15 June 2017

30 November 2016

Published

CBD and South East Light Rail Project

Transport

Compliance

Financial reporting

Infrastructure

Internal controls and governance

Management and administration

Procurement

Project management

Risk

Transport for NSW did not effectively plan and procure the CBD and South East Light Rail (CSELR) project to achieve best value for money according to a report released today by NSW Auditor-General, Margaret Crawford.

Transport for NSW is on track to deliver the project, but it will come at a higher cost with lower benefits than in the approved business case.

Parliamentary reference - Report number #278 - released 30 November 2016

25 August 2016

Published

Red tape reduction

Premier and Cabinet

Finance

Financial reporting

Internal controls and governance

Management and administration

Project management

Regulation

Shared services and collaboration

Overall, NSW Government initiatives and processes to prevent and reduce red tape were not effective, according to a report released today by the NSW Auditor-General.

In 2015, the Government reported that its red tape reduction initiatives, implemented between 2011 and 2015, had resulted in $896 million in savings. While these initiatives resulted in some savings, the total value of savings is unknown because estimates for some initiatives were based on unverified assumptions, cost transfers or unrealised projections.

Parliamentary reference - Report number #272 - released 25 August 2016

Audit progress

Sector

Year

Report type

Topic

Reports

Transport Access Program

Transport for NSW's Disability Inclusion Action Plan describes a customer focussed approach to accessibility

TAP program staff consult with the Accessible Transport Advisory Committee

Transport for NSW has not briefed the Advisory Committee on the outcome of the prioritisation and selection process

The TAP communication plan does not fully meet the requirements of the Disability Inclusion Action Plan

Property Asset Utilisation

Newcastle Urban Transformation and Transport Program

Mobile speed cameras

HealthRoster benefits realisation

Regional Assistance Programs

Detecting and responding to cyber security incidents

Sydney Road Maintenance Contracts

The Stewardship Maintenance Contract

RMS justified adopting the SMC model and included KPIs to drive efficiency and effectiveness

RMS' contract management approach and benefits realization

RMS can improve the effectiveness of its oversight and management of the SMC

RMS achieved benefits in the first year, but has not tracked benefits since

Roads and Maritime Services is responsible for the State Roads network in the Sydney region

NSW Government priorities and road maintenance

The NSW Commission of Audit recommended outsourcing the maintenance of State roads

The NSW Government introduced road maintenance contestability through Stewardship Maintenance Contracts

Road maintenance under SMCs for Sydney region south and west zones commenced in November 2013

CBD and South East Light Rail Project

Red tape reduction