Portfolio assurance of Transport for Londons £12bn Investment Programme

The challenge

Transport for London (TfL) is the integrated body responsible for the capital’s transport system. As of April 2005, TfL embarked on a mammoth Investment Programme (IP) equating to a c. £12 billion investment (£3.5 billion enabling 2012 Olympic transportation), over the forward five-years.

The organisation recognised, however, that delivery of the IP would require new structures and processes at the senior levels to ensure that the chief executive (TfL Commissioner at conception – Bob Kiley; TfL Commissioner at completion – Peter Hendy) and the TfL Board had adequate visibility.

A key component of the new organisation was the need for an Oversight Group to provide the TfL Commissioner with independent assurance as to the progress of the IP and the mitigation of identified risks.

Our approach

Working directly to the TfL Commissioner, we led a joint working team that included cross business representation. After a period of analysis and benchmarking, the team designed new structures and processes to provide the necessary assurance. The resultant Oversight function, along with the cultivated “challenge and support” culture, now provides the Commissioner and the TfL Board with assurance as to IP progress (independent of the line management structures).

A key element of the TfL Oversight’s assurance capability is the Independent Engineer construct. We:

• designed the structures and processes for running the Independent Engineer programme and piloted early Independent Engineer reviews
• procured the independent engineering firms to provide this additional technical assurance on critical projects and programmes, ensuring that the selected firms adopted a thorough PPM-based approach
• ramped up the new framework and programme of reviews and handed over to the newly recruited permanent Oversight team

How did this deliver value to the client?

The benefits of the independent assurance provided by the Oversight function is estimated conservatively as a net present value of c. £90m in avoided costs (improved programme delivery, retention of TfL’s credit rating etc). This was recently attested to when the second year £200m bond (early 2006) was issued at 12 basis points below the first issue – a reflection of the market’s confidence in TfL and its management structures.

Direct ‘second opinion’ benefits of the reviews are also expected - in one early review alone, these were estimated at c. £2-3m worth of ‘value engineering’ savings.

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