This Toolkit item relates to Part 3 - Investment Implementation and Part 4 - Investment Management of the Commonwealth Investments Resource Management Guide.
What is governance?
Public sector governance covers ‘the set of responsibilities and practices, policies and procedures, exercised by an entity's executive, to provide strategic direction, ensure objectives are achieved, manage risks and use resources responsibly and with accountability.’
Good governance guides an organisation in achieving its objectives, including:
- promoting and assisting a whole of Government approach to projects (where appropriate) and utilising the expertise of the private sector where necessary
- ensuring greater contestability and robustness of advice and decisions
- ensuring greater consistency in government decisions and advice, and their communication
- ensuring greater compliance with the financial management framework and other relevant Government policies
- ensuring probity issues and processes are clearly outlined to manage conflicts and stakeholders
- ensuring better record keeping and audit trails.
Approaches or structures to governance can differ significantly depending on the entities involved, legislative and policy background, and complexity of the project and structure. Good governance structures are able to be scaled up and down depending on these factors, and should be fluid to adapt to changing circumstances. Different governance structures may also be required for different stages of a project’s life. For example, governance structures may differ between the pre and post investment phases of a project.
This toolkit item assists Commonwealth entities and officials to plan and establish fit for purpose operational governance structures and ongoing management processes for Commonwealth investments. Important factors to consider when establishing good project governance include how the project is managed, how decisions are made, who is responsible and the risk and funding/financing exposure to government. Governance arrangements should be considered during business planning and clearly explained in implementation and project plans and a project’s business case.
When selecting the appropriate structure, consideration should be given to stakeholders, risk, priority, timeline and value of the investment. The frequency of meetings, attendees, formality of documentation (for example, Terms of Reference) should be proportionate to the risks of the project.
Further information on governance and its importance can be found on the Australian Public Service Commissioner website.
Different types of project governance
As mentioned above, governance structures differ significantly depending on the entities involved, what stage the project is at, complexity of the project, structure and legislative and policy background.
Establishment of an investment
- what is the correct governance structure for the project? This may include:
- a steering committee of senior executives (with membership including entity head and deputies)
- working group/s of core managers and staff for key work streams (broader SES membership)
- an advisory committee (including commercial, legal, process and probity, expert/technical private sector advisers).
- what are the terms of reference detailing the purpose and role of the various levels of the committee and the responsibility of members?
- to whom (and to what legislation) the committees are accountable?
- what is the membership of each committee?
- do the committees have the necessary skills to perform their role?
- who will undertake the secretariat function, including distributing briefing papers, key documents and noting next steps and action items?
- what frequency should the committees meet?
The below image is an example of how the governance structure can be scaled up or down depending on the level of work/involvement required. These particular governance arrangements will typically only be used for sensitive projects or where there is a significant investment or third party to negotiate with.
Consideration should be given to the following questions and elements:
- Who is the final decision maker?
- What is the best structure?
- Are there different work streams that should be considered by sub groups of the various committees?
- How should Ministers be consulted and briefed on progress?
- Is a Steering Committee required?
- The role of the Steering Committee is primarily as the key decision makers and to provide guidance to direct the working group (including negotiation team as required) and advisers.
- Is a Working Group required?
- The role of the working group will typically be to discuss issues and work through tasks, including supporting the Steering Committee and advisers.
- The working group can be further broken down into discrete work streams
- Is a separate negotiation team required?
- Do other entities have an interest in the project and should they be represented in the various committees?
- What external advisers are required (commercial, legal, process and probity, specialist/technical)?
Ongoing management
- Which government body will lead the work?
- Which government body, specialist financing entity or fund manager will be responsible for managing the investment?
- What is the objective of the investment?
- How will the investment be distributed to projects or groups?
- What is the criteria for distributing the investment?
- How will the ongoing success/performance of the investment be reported?
- What is the return to the Commonwealth?
- How will the proposal address the market gap/failure?
Particular attention should be given to projects that are high risk, sensitive, or high value. For those projects, robust and senior governance structures should be in place. In comparison, projects that are low risk and low value may require a different governance structure.
Gateway reviews
Gateway reviews strengthen governance and assurance practices, and to increase project management capability across government. Gateway reviews examine projects at key decision points during design, implementation and delivery. Gateway reviews aim to provide independent, timely advice to Senior Responsible Officials as the person responsible for delivering the project outcomes.
