In this article, Crowe partner Shane McQuillan, who leads our consulting team, shares his personal insight from over 30 years’ of experience working on public sector projects of the importance of a balanced and considered approach that an external advisor can bring to managing public sector capital projects.
Early in my consulting career, I was involved in a project for one of the (then) Health and Social Services Boards in Northern Ireland, to develop an economic appraisal and business case for the purchasing of a new radiology IT system for a medium-sized hospital. The project involved many meetings, lots of analysis of data, much interaction with hospital managers and clinicians, and the production of a weighty report. The system was duly approved, but what was striking about the project was that the consultancy fee (which was quite modest) actually exceeded the cost of the radiology system – and that didn’t take into account the time or cost of the hospital staff or Government officials overseeing the appraisal.
What that exercise brought home to me was that whilst capital appraisals are necessary, they should be proportionate to the scale of the investment, and properly planned and executed.
Of course, all too often we have seen the flip side of my radiology example – very large public projects which have had a light touch in terms of oversight, or weak business cases which haven’t adequately justified the public investment being sought. I’ve had direct experience of one or two past clients who have attempted to commission an “independent” business case by stating what the final recommendation should say and hoping that the consultancy team will “massage the figures” and work back from the required conclusion (we’ve refused to take on such projects). And then there is the question of political influence – local politicians, and even Cabinet ministers, lobbying for investment to be made in their constituency, despite all the available evidence suggesting that other locations would be preferable.
So the question of managing public investment is complex, and can require considerable skill in dealing with stakeholder interests. There is no set of magic solutions, as every project is different, and there is considerable guidance available in terms of published documentation and expert support from consultants.
Here is my perspective on some of the key ingredients required to develop and manage a successful capital project:
In particular, it’s really important to establish clear relationships between the objectives of the project, the activities and resources required to deliver it, and the benefits and impacts the project will bring to citizens when it is completed.
(The Public Spending Code published by the Department of Public Expenditure and Reform is a good starting point – the Lifecycle and Decision Gates from the Code are replicated below.)
Crowe’s consulting department has extensive experience helping and advising clients in Ireland across diverse sectors, from multinational organisations and major public bodies to local businesses and not-for-profit entities.