Financial Approval of Change Initiatives

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CONTENTS

1.Executive summary

Background

1.1Following the HQ restructure and ongoing issues with the investment appraisal and financial approval process a review and audit was conducted to identify specific areas for improvement and identify appropriate changes. Some elements of the revised process are now mandatory and detailed in this instruction. Please note the terms programme and project are used extensively throughout this instruction but on occasion, to aid readability, only one will appear. In such cases, references to either applies equally to both.

Desired outcomes

1.2The policy aims to:

• Define new mandatory process to ensure resources are only consumed in support of viable initiatives.

• Define mandatory roles to support the delivery of change initiatives.

• Increase awareness of mandatory requirements and correct procedures required to gain financial approval for change initiatives.

Application

1.3This instruction focuses on the financial approval of change initiatives only and although references are made to some external bodies it should be noted that no attempt has been made to provide an exhaustive reference to all governance requirements across government in this document. It remains the responsibility of the programme/project to obtain any and all approvals that may be required, both financial (e.g. Treasury) and non-financial (e.g. Cabinet Office). Programmes and projects must also comply with other directives and guidelines such as the principles of LEAN procurement and the Treasury Green Book.

1.4Chapter 2 defines a change initiative, explains how they obtain financial approval and highlights the mandatory actions and roles applicable. All staff must be familiar with this chapter.

1.5Chapter 3 provides additional information to support chapter 2 and should be read by staff involved in the development of change initiatives.

Mandatory actions

1.6Directors and Finance business partners (FBP’s) must ensure that all staff involved in the development of change initiatives are made aware of, and comply with the requirements of this instruction.

Resource Impact

1.7The following table summarise the direct resource impact of this policy.

2.Financial approval of change initiatives

2.1For the purpose of this instruction a change initiative is defined as:

a) Any activity requiring Treasury approval as mandated by Treasury controls

b) Any clear new areas of work

c) Any new contractual commitments, including contract renewal or re-compete

d) Any new headquarter costs beyond the agreed structure / budgets

e) Any finite work (project, programmes, pilots, exploratory work)

2.2 For a detailed diagram outlining the entry routes to the investment appraisal and financial approval process see Annex A2.

2.3The following mandatory actions must be carried out in accordance with chapter 3.

In order to ensure resources are only consumed in support of viable initiatives:

2.3.1Initial classification of the change initiative should be carried out by the sponsoring Director or Senior Responsible Owner (SRO) (where already appointed) in accordance with Annex B. The remainder of this instruction is applicable to contract renewals and initiatives classified as lifecycle one or lifecycle two, although it should be noted that whilst lifecycle three initiatives are not subject to the same level of governance they must be included in directorate delivery plans. Equally, any contract variation or extension that increases costs beyond current levels must be agreed by budget holders and FBP’s before commitment/contract signing to ensure appropriate financial plans are in place.

2.3.2The sponsoring Director or SRO (where already appointed), wishing to/accountable for taking forward a change initiative must ensure that a project brief (pre-project) as at Annex D is developed and submitted for consideration by NOMS Executive Management Committee (NEMC). For programmes the endorsement of the project brief is a precursor to development of a detailed programme mandate.

2.3.3The sponsoring Director or SRO (where already appointed), must ensure that a stakeholder workshop takes place to review the NEMC endorsed project brief and confirm the business need, delivery approach, financial viability and funding options, risks, timescales and achievability.

In order to improve the quality of business cases and increase efficiency of the approval process:

2.3.4Following endorsement of project brief by NEMC a Risk Potential Assessment (RPA) must be submitted to NOMS Quality Assurance Team (QA) for validation. Following this a full assessment of corporate governance requirements will be made by Planning and Analysis Group (PAG), NOMS Portfolio Management Office (PMO) and QA in association with MoJ colleagues (where required). PAG will provide confirmation of the initial lifecycle classification and NOMS PMO will provide confirmation of inclusion in any corporate change portfolios (Government major projects, Transforming Justice, NOMS). These details will be required to develop an Integrated Assurance and Approval Plan (IAAP).

2.3.5Where external (to NOMS) approval is required for Treasury and Cabinet Office controls it is incumbent upon the programme/project to liaise directly with the respective contact, details of which can be obtained from PAG. It should be noted that the timescales required to obtain approval can be significantly reduced through early dialogue.

2.3.6Business cases must be checked and signed off by the SRO and appropriate FBP before being submitted for appraisal by keyholder review to PAG. The business case and keyholder recommendations will be passed to NOMS Finance Management Committee (NFMC) for financial approval and approval at MoJ (TJ committee or Finance Committee) where required in addition to that of NFMC.

In order to ensure programme and project changes are delivered:

2.3.7As a minimum all programmes and projects must have the following:

• SRO
• Senior User
• Senior Supplier (typically from procurement)
• Financial Responsible Officer (FRO)
• Programme/project manager
• Business change manager (ideally from the business area affected)

2.3.8SRO's must ensure that an IFAC qualified FRO is appointed to support delivery of programmes/projects and provide ongoing financial guidance and expertise

In order to ensure the planned benefits are realised:

2.3.9Named individuals must be identified and held accountable for the benefits to be delivered in their areas of responsibility

2.3.10FBP's must agree savings within the directorate/s they support and maintain oversight of delivery to plans

2.3.11All ongoing change programmes and projects classified as lifecycle 1 or 2 must submit a financial return utilising the approved template to PAG in accordance with commissioning requests. For those included in the NOMS Change Portfolio further non-financial reporting to the NOMS Change Delivery Committee (CDC) will also be required.

In order to ensure continuous improvement:

2.3.12The SRO must ensure that a Post Implementation Review workshop is carried out to confirm successful delivery and capture any learning points

3.Supporting guidance

Mandatory process diagrams and key roles

3.1For details of the key roles and diagrams outlining the mandatory financial approval processes for change initiatives see Annex A.

Investment initiative classification

3.1For details of investment initiative classification and required treatment see Annex B.

Contract renewal brief submission

3.2Renewal or recompete of any existing contract with a gross whole life cost more than £5m that is not subject to any Treasury controls (see note 1 of Annex B) will require submission of a NOMS Contract Renewal Brief (Annex C) to NFMC for financial approval.

Project brief submission

3.3 Submission and approval of the project brief is an integral part of NOMS planning and governance process and is part of the project initiation stage. The Project Brief and subsequent business cases must demonstrate clear and tangible alignment with, and contribution to, NOMS strategic and Business plans. NEMC will consider all submitted project briefs during the autumn as part of the planning cycle, although ad-hoc submissions may be accepted in exceptional circumstances throughout the year. In order to provide control and coordination submissions must be made to the Business and Financial Planning team in PAG using the functional mailbox .

3.4Project Briefs should set out the strategic fit, business justification, key deliverables, high level costs and benefits, risk potential and outline timelines of proposed changes. Once the Project Brief has been endorsed by NEMC it becomes part of the planning assumptions and will be incorporated into business and financial plans. This approach will ensure the strategic alignment of new business cases, a clear forward look of forthcoming projects, ensure there are no gaps between NOMS objectives and strategies and the projects that underpin them. All submissions must be made on the approved Project Brief Template (Annex D).

Governance planning

3.5Early planning of corporate governance is critical to ensure NOMS delivers programmes and projects in accordance with wider government controls, requirements and guidelines with minimal delay to delivery. The planning required is supported and agreed by PAG, PMO and QA who will ensure that the resources required to carry out the necessary assurance and approvals are in place.

Stakeholder Project Initiation Workshop

3.6 This stakeholder workshop is part of the initiation stage and underpins the development of the business case. It should include all appropriate stakeholders; end-users, PAG, project managers, FBP, business change managers, HR / ICT / procurement specialists.

Mandatory roles

3.7 The mandatory roles identified should not be held by the same individual. For detailed information regarding each role description refer to the Programme and Project Management Role Descriptions (Available from PAG via ).

Business case submission

3.8In order to improve the overall quality of business case submissions and reduce the number that need to be re-submitted, all business cases must be checked and signed off by the SRO and appropriate FBP before being submitted for keyholder review. Business cases that fail to obtain SRO and FBP sign-off or are rejected by the keyholder panel will not be considered for approval.

Controlling business changes

3.9 FBP's must agree savings within the directorate/s they support and maintain oversight of delivery to plans and remain accountable for ensuring costs and savings of change initiatives are included in budgets and financial plans.

3.10 Costs and savings from change initiatives will be included in financial plans by PAG and quarterly financial reporting will be reconciled with delivery plans and budgets to ensure plans remain on track.

3.11 Named individuals must be identified, agree, accept and be held accountable for delivering planned benefits.

Reporting

3.12Quarterly financial reports will be commissioned by PAG. Returns are to be completed by the appointed FRO in conjunction with the programme/project manager. FBP’s remain accountable for reported financial information and will validate and sign-off all reported financial information ensuring appropriate actions are taken to address any arising financial risks/issues. Non-financial reporting will be commissioned by PMO.

Stakeholder Post Implementation Review Workshop

3.13 This stakeholder workshop is part of the project close stage and is carried out to confirm successful delivery, identify any remaining issues/actions to be managed after the project has closed and capture any learning points. It should include all appropriate stakeholders; end-users, PAG, project managers, FBP's, business change managers, HR / ICT / procurement specialists.

Approved for publication:

Andrew Emmett

Director of Finance and Analysis, NOMS

Annex A – Mandatory process

Annex B – Investment initiative classification

Annex C – Contract Renewal Brief template and guidance

Annex D – Project brief template and guidance

ANNEX A

MANDATORY PROCESS

Key Roles

A1.The key roles in the investment appraisal process are:

A1.1NOMS Executive Management Committee (NEMC), who consider project briefs against the Agency’s strategic and business plan objectives and ensure the strategic alignment of change initiatives, that there are no gaps between NOMS objectives and strategies and the projects that underpin them, and that the selected mix of change programmes and projects are capable of delivering the necessary change.

A1.2NOMS Finance Management Committee (NFMC), who assess and grant approval to business cases on behalf of NEMC.

A1.3Change Delivery Committee (CDC), who oversee delivery and realisation of benefits in accordance with plans on behalf of NEMC.

A1.4NOMS Planning and Analysis Group (PAG), who, in addition to supporting governance planning and financial reporting of programmes/projects are also accountable for investment appraisal and approval.

A1.5NOMS Portfolio Management Office (PMO), who support governance planning and non-financial reporting of programmes/projects.

A1.6NOMS Quality Assurance, who support governance planning and provide a quality assurance service to programmes and projects.

A1.5Keyholder review panel, who are drawn from directorates and specialist functions within NOMS as required to scrutinise business cases and make recommendations to NFMC. Where external (to NOMS) approval is required a joint MoJ/NOMS keyholder panel is used.

A1.6Competition Evaluation Committee (CEC), who are comprised of the NOMS Chief Executive Officer (CEO), Director of MoJ Procurement, chairs of MoJ Finance Management Committee, Transforming Justice Committee, NOMS Finance Management Committee, Offender Services Competitions Programme Board and the SRO of the specific competition project. Their role is to provide final sign-off of the full business case when there are commercial or staff sensitivities and the wider distribution of final bids could compromise the procurement process. The financial envelope within which CEC work will be pre-approved via a draft full business case utilising the standard approval process and the subsequent final FBC will be reviewed and signed off by the C&C FBP.

Process diagrams

A2. The diagram below shows the entry route to the investment appraisal process.

A3. The diagram below outlines the financial approval process for initiatives not requiring Treasury approval.

A4. The diagram below outlines the financial approval process for initiatives that do require Treasury approval.

A5. The diagram below outlines the quarterly financial reporting process

ANNEX B

INVESTMENT INITIATIVE CLASSIFICATION

A NOMS investment initiative is one where NOMS leads or funds (in whole or in part):

a) Any NOMS activity requiring Treasury approval as mandated by Treasury controls (see note 1 below)

b) Any clear new areas of work

c) Any new contractual commitments, including contract renewal or re-compete

d) Any new headquarter costs beyond the agreed structure / budgets

e) Any finite work (project, programmes, pilots, exploratory work)

• May be listed in NOMS portfolio and subject to NOMS PMO reporting
• Subject to MoJ/NOMS corporate governance and approval process and may require Treasury and/or Cabinet Office approval
• Subject to Finance reporting

• May be listed in NOMS portfolio and subject to NOMS PMO reporting
• Subject to NOMS corporate governance and approval process
• Subject to Finance reporting

• Included within directorate delivery plan
• Controlled through BAU management structures

• Controlled through BAU management structures

Existing contract renewal/recomplete