Portfolio management support to Transport for London's £12bn Investment Programme

The challenge

With a portfolio in excess of £12bn, Transport for London (TfL) required support in relation to improving the alignment investment portfolio to its overall strategy – through programme and project prioritisation and targeted assurance reviews.

Our approach

We took a staged approach to the OVERSIGHT programme:

• Undertook a benchmarking review. To ensure that TfL harnessed ‘best practice’ portfolio management we visited eight external organisations (BP, Shell,
  Vodafone, National Grid, Network Rail, Ministry of Defence, the Torino Winter Olympics, and the New York MTA). We developed a benchmarking framework
  to capture this knowledge and assess its relevance to TfL. This, in turn, enabled us to set clear portfolio management targets for the organisation.
• Developed a Prioritisation Model. We developed a prioritisation model that enabled us to assess the TfL portfolio by weighting each programme against
  a business value and risk criteria. We used an investment framework based on four types of investment categories: innovation, productivity, growth and
  maintenance. This helped to identify whether the TfL strategic vision, that envisaged a number of high profile and complex ‘new build programmes’, was
  suitably balanced against getting the infrastructure to a ‘state of good repair’- a critical balance in terms of ‘deliverability’.
• Collected Programme Data: We collected programme and project information using standardised project diagnostic templates. This allowed us to
  categorise the benefits using a mapping tool.
• Analysed Portfolio: We assessed the current portfolio based on: value contribution to the business; alignment with strategic objectives; the inherent
  strategic and operational risk; and annual constraints such as resources and budget.
• Reports and Communication: Having gained a clearer picture of the entire portfolio we developed processes, governance structures and tools to
  communicate and report the progress of portfolio delivery and risk mitigation. We also created performance management dashboards to provide health indicators for the portfolio, with the aim of enabling improved executive decision making on strategic ‘trade-off’ issues.

How did this deliver value to the client?

The main objective of the engagement was to establish a permanent (TfL staffed) portfolio assurance function by 31 March 2006. This was completed on-time and to budget. At completion, it was recognised that the benefit of the function was beyond question in relation to facilitating senior executive visibility and control of a £multi-billion portfolio.

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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If you would like to talk to us call on the number below. Alternatively, click on the consultants email address, provide us with your details and we will call you back. We look forward to speaking to you. Contact: Email: Tel: Paul Mansell paulmansell@moorhouseconsulting.com +44 (0) 1225 446 313