253.Both the Pre-Feasibility Study and the IOA stressed the need to set up clear, accountable governance arrangements for the next phase of the R&R Programme. The Pre-Feasibility Study said that the creation of a single client authority to oversee the Programme and to be politically accountable for decisions, costs and risks would be a “key requirement for a full renovation and modernisation”. The IOA also concluded that the Programme’s success would depend on the establishment of an effective delivery model “with strategic governance and sponsor and client roles all clearly defined” and advocated the establishment by statute of a single client body. In this Chapter we outline the governance required for the R&R Programme.
254.The R&R Programme will require engineering and construction capability beyond anything that Parliament currently retains for routine maintenance and projects. Commercial partners will therefore be required to mobilise a skilled and sophisticated supply chain. The project will, rightly, be under continuous national and international scrutiny and there will be strong pressures to deliver on time, on budget and with appropriate quality.
255.The Programme Team has already carried out significant analysis of the risks which arise in complex, large-scale building projects, including those which arose during the construction of Portcullis House and the Scottish Parliament. While both of those projects were new buildings, the risks are certainly no less, and possibly greater, on a major renovation project. The generic risks include discovery of previously unknown building issues, an incomplete or ambiguous definition of the brief, changing the scope part-way through the project, lack of continuity in governance, changes in the political context, weak project and programme management, and weakness in the management of procurement and contracts. Obviously, it will therefore be essential to develop a governance structure which minimises and manages such risks.
256.Expert witnesses emphasised the need to create a clearly identifiable client for the Programme, akin to a non-executive board. Such a client would need to be precise in defining the scope and objectives of the Programme but, having authorised the delivery partner to proceed, would need to let the partner deliver the Programme without undue interference. Such a client would clearly need to have a deep understanding of the work of both Houses, but also be distinct from Parliament and be dedicated to the R&R Programme. This would allow the normal administration of both Houses (at both a political and official level) to continue with the different and equally important challenge of managing Parliamentary business as usual in temporary accommodation.
257.It has been suggested to us that a two-tier governance structure, similar to that adopted for the 2012 Olympic Games and the Crossrail project, might be appropriate. The two tiers would involve a Sponsor Board (which would be the client) and a Delivery Authority.
258.In a two-tier governance system, the top level of governance would be the body that ‘sponsored’ the Programme, and became the guardian of it. The Institution of Civil Engineers (ICE) said it was “vital” that there should be a strong Sponsor Body for the Programme. The Chartered Institution of Building Services Engineers (CIBSE) noted that the successful completion in recent decades of three large and complex projects—the Olympic Park, the Channel Tunnel Rail Link and Heathrow Terminal 5—all involved a client body with “a clear vision, excellent leadership and world class project managers.”
259.The Sponsor Board would fulfil the following tasks:
260.The Sponsor Board would define and set the objectives relating to the R&R Programme and would need to be established in time to oversee major decisions at the start of the Programme. The exact role and composition of the Sponsor Board would be outlined in the implementing legislation for the Programme, so both Houses will have an opportunity to scrutinise and debate those issues as the bill passes through both Houses.
261.However, as a starting point, we suggest that legislation should address the following points:
262.Sitting underneath the Sponsor Board, the second level of governance would be the Delivery Authority. The Delivery Authority would be a statutory body and would have its own chair, chief executive and directors. The Delivery Authority would employ its own staff, who would not be civil servants, and would have the management capacity and expertise to enter into contracts with a commercial delivery partner or partners. This would provide the additional client-side expertise needed to procure and manage the supply chain. Once the designs, budgets and schedules had been agreed by the Sponsor Board and Parliament, the Delivery Authority would be empowered to manage the Programme.
263.Mr Hirst of the ICE told us that a Delivery Authority would be very important in helping to bridge the gap between the client organisation and the agents delivering the work. In his view, it would be a challenge to agree the detail of the mandate for the Delivery Authority, but he advised that it would be crucial to set clear instructions about what the Authority was expected to do and what authority it had to act in its own name. This would provide it with some leeway in order to cope with the unexpected and to deal with issues as they arose. In their written evidence, the ICE also pointed to the role of the Delivery Authority in helping to prevent scope creep—something that could be one of the Programme’s biggest risks.
264.The overheads associated with creating a dedicated arm’s-length delivery structure would be more than offset by the overall gains in efficiency and cost-effectiveness. The experience of the 2012 Olympics indicates that structures of this kind are also effective at working within tight time constraints.
265.Legislation will be required in order to establish the new governance mechanisms. However, it would be possible to establish a Sponsor Board and Delivery Authority in shadow form before the legislation received Royal Assent, provided that Parliament’s intention to legislate was clear. This is common practice when new non-departmental bodies are being established. In this case, Parliament’s intention to legislate could be indicated by the passing of the draft motion, outlined in Chapter 6. Once both Houses had agreed to this motion, a shadow Sponsor Board could be appointed jointly by the House of Commons and House of Lords Commissions using existing powers. For the sake of continuity it would be desirable that appointments to a shadow organisation were made with the possibility in mind that some at least of those appointed might carry forward to the future Sponsor Board and serve as longer term advocates and guardians for the project.
266.Even in its shadow form a Sponsor Board could not only guide the implementation of decisions regarding the Palace but, if necessary, it could also oversee the enabling projects on which a timely commencement of the Palace work depended, such as the preparation of temporary accommodation. Agreement to cede control of particular enabling projects, such as the Northern Estate Programme (see paragraph 295), to the Sponsor Board would have to be given by the House of Commons and House of Lords Commissions.
267.The shadow Sponsor Board could also begin the process of appointing a shadow Delivery Authority. To begin with, this would be likely to involve the appointment of an Executive Chair, who could then make other key appointments and begin to establish the shadow body. A shadow Delivery Authority could begin to assemble delivery capability and to plan its strategies for engaging with commercial delivery partners. There would be an expectation that most recruits to the shadow Delivery Authority would remain in place once the statutory arrangements came into effect.
268.In the meantime, the Corporate Officers of the two Houses already have powers under the Parliamentary Corporate Bodies Act 1992 to initiate the process of acquiring properties for temporary accommodation, so could begin the work of examining the availability of possible buildings required and the terms on which they could be obtained. This information is likely to be required by the Delivery Authority in order to carry out its validation and feasibility work, so could be passed to the Delivery Authority once it was established. The business case to justify and obtain funding for acquisition would be completed as soon as possible (preparatory work has already begun) and design for fit-out would proceed as rapidly as possible.
269.It will be vital during the delivery phase of the Programme that the statutory Sponsor Board has full control of the agreed scope and the associated budget. However, in developing the agreed scope—which will include a concept design—the Sponsor Board will need assurance that the plans are acceptable to both Houses. There will therefore need to be a clear process for consulting Members and staff of both Houses as the designs are developed. Ultimately, both Houses will also need to approve the concept design, budget and schedule before the works can commence.
270.A Programme of the size and complexity of Restoration and Renewal will require strong governance in order to set clear and realistic budgets and timescales, to ensure that the works are conducted in a way which ensures that the needs of both Houses are met, and to avoid changes to the scope of the work part way through the Programme.
271.We recommend that a Sponsor Board should be established to oversee the delivery of the R&R Programme and to become a guardian for it. The Sponsor Board should include representatives from both Houses and Government, and possibly others with a heritage or construction background. Appointments to the Sponsor Board should be made with continuity in mind. The Sponsor Board should also be required to report to both Houses on a regular basis.
272.We recommend that the Sponsor Board appoint an arm’s-length Delivery Authority to manage the delivery of the Programme. The Delivery Authority should be given responsibility for the delivery of the Programme and for ensuring that it is delivered on time, to budget and to specification. The Delivery Authority should also be responsible for validating Parliament’s preferred choices on the delivery option and scope of the Programme, as well as the temporary accommodation provided for both Houses.
273.Given the need to proceed quickly with the Programme, we recommend that, subject to both Houses’ approval of this recommendation, the House of Commons and House of Lords Commissions should establish a Sponsor Board in shadow form. This shadow Sponsor Board would be able to make a start on all the essential work required for the Programme, before being formally established. The shadow Sponsor Board should begin the process of appointing a shadow Delivery Authority in order to initiate work on the Programme. The shadow Delivery Authority could also carry out the preparatory work required by the Delivery Authority, before being formally appointed. Enabling legislation should nonetheless still be introduced as soon as possible.
149 , October 2012, p 7
150 Deloitte LLP, , September 2014, Volume 1, p 25
151 Written evidence from the Institution of Civil Engineers ()
152 Supplementary written evidence from the Chartered Institution of Building Services Engineers ()
154 Written evidence from the Institution of Civil Engineers ()
155 (Cabinet Office, 2006), Chapter 4: Setting up a New Executive NDPB – The Practical Tasks