Value for Money Audit: Giant Mine Remediation Plan - Follow-up Report Status Update as of December 31, 2014

Status:

Update/Rationale:
As of 31/12/2012:

Completed – September 27, 2012

The proposed Giant Mine Remediation Project (GMRP) governance framework has been finalized, approved by the Project Leader, and fully implemented to operational status. This applies to all current governing bodies included in the proposed governance framework, specifically Senior Project Advisory Committee, Management Board, and Project Leadership Committee. Operational status for each of these bodies includes approved Terms of Reference, meeting agendas, minutes and records of decisions.

AES: Implemented. The recommendation will be closed. Closed.

PPA Phase Project Execution Plan: March 31, 2013

Overall GMRP Project Execution Plan:

December 31, 2014

Status: Request to close (completed)

Update/Rationale:
As of 31/12/2014:

The GMRP finalized the Project Execution Plan in October 2013, including a Risk Management Plan and supporting Risk Register, which is reviewed and updated annually.

AES: Implemented. The recommendation will be closed. Closed.

3. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, as part of the Major Project Office implementation, that:

• Clear roles and responsibilities between PWGSC and AANDC for the Giant Mine Remediation Project are defined, documented, communicated, agreed upon, and finalized such that the project environment can focus on optimizing, resourcing, and delivering the project in accordance with its objectives. The resulting final organizational structure should be as streamlined as possible to support a strong and clear focus on the project.
• A proper baseline schedule (prepared according to industry standards), an integrated project schedule, a management plan and a reporting regime are established to link all parties together into a standardized Critical Path Methodology. The establishment of these documents will help to ensure that a clear window to the overall position and progress for the Giant Mine Remediation Project is provided to the project management team(s).
• A rigorous and effective change management program be finalized to support the consideration and reporting of changes to the scope and total estimated cost of the Giant Mine Remediation Project.

The GMRP team accepts this recommendation. As part of the Major Project Office implementation, the following specific actions will be taken:

• The Giant Mine Remediation Project Team will finalize the draft Project Charter which lays out the roles and responsibilities.

Status: Request to close (completed)

Update/Rationale:
As of 31/03/2014:

Completed - November 19, 2012

Completed -Workshop conducted with key AANDC HQ, Region, PWGSC and GNWT members to compile single GMRP org chart (January 2013); Roles and Responsibilities developed from single GMRP org chart (March 2013); Org chart and RASCI have been incorporated into PEP (November 2013)

• The individual organizational charts for both AANDC and PWGSC will be finalized and integrated into a single GMRP organizational chart. Staffing within AANDC is underway.

March 31, 2013

• The current draft MPO Standards and Guidance Manual will be formalized, approved and implemented by the GMRP team, including PWGSC, AANDC, service providers and contractors.

• A comprehensive Schedule Management Plan will be developed, which includes an integrated project master schedule for the total project duration, as well as a baseline schedule for the five-year period of the PPA Phase. The baseline schedule will form the basis for monitoring project performance/progress and controlling schedule changes. The Schedule Management Plan will form part of the PPA Phase PEP and finally overall GMRP PEP.

Completed - Baseline schedule for Definition Phase (five-year period) revised with four-year project plans (September 2012); Master schedule for total project (2025) developed, approved and included in the PEP (November 2013); Schedule Management Plan (PEP) has been completed (November 2013)

• The current draft Change Control Process will be finalized in accordance with the MPO Standards and Guidance Manual to track changes to scope, schedule, cost, technical or other approved baselines. This plan will be part of the Project Control Plan, which will be included in the PEP.

Completed – GMRP Change Control process developed and approved (March 2013); Change Control process incorporated into PEP Chapter 4 (November 2013)

AES: Implemented. The recommendation will be closed. Closed.

4. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, through consultation with the Chief Financial Officer, that budget management and cost estimation practices for the Giant Mine Remediation Project are strengthened by:

• Developing a Master Project Total Estimated Cost to Complete document that includes a cost variance simulator, such as a 'Monte Carlo Simulation', to highlight the potential and probable deviation ranges in total cost estimates. The establishment of such a document would help to communicate key assumptions in the cost estimate and variance vulnerabilities to all project stakeholders.
• Incorporating multi-year requirements of future work and costs in a Master Project Total Estimated Cost to Complete document based on industry best practices and the Association for the Advancement of Cost Engineering International Cost Estimate Classification system. Roles and responsibilities for maintaining, reviewing, and monitoring this document should be defined and communicated.

The GMRP team accepts this recommendation. The following actions will be implemented in consultation with the Chief Financial Officer:

• A Cost-Management Plan will be developed for the overall GMRP, which includes a Master Project Budget (Total Estimated Cost to Complete), estimate basis, assumptions and cost-management processes. This Master Project Budget will utilize probabilistic simulation techniques such as a 'Monte Carlo Simulation' to establish potential and probable estimate deviation ranges. This Cost-Management Plan will form part of the overall GMRP PEP.

December 31, 2014
(Overall GMRP)

Status: Underway

Update/Rationale:
As of 31/12/2014:

A Cost Management Plan has been developed for the GMRP as part of the Project Execution Plan in October 2013, however the Master Project Budget (Total Estimated Cost to Complete) will require updating following the Final Decision on Environmental Assessment of August 2014.

This work is currently underway and is expected to be complete by 31/03/2016.

Monte Carlo and other simulations would allow the Giant Mine remediation project team to run many "what-if" scenarios to arrive at a probability-weighted distribution to support the estimation of the life cycle cost of the project. As a result, the project team agrees that a Monte Carlo (or similar) simulation should be performed in the future to support the development of future life cycle cost estimates of the Giant Mine remediation project. This simulation has not been done, and is not proposed to be done within the current phase, due to its anticipated limited value currently, given the preliminary stage of the project and the large number of cost variables with large levels of uncertainty. Performing a Monte Carlo simulation with the large number of variables, each with large levels of uncertainty, would result in a life cycle cost point estimate with such large potential variances from the point estimate that the resulting cost estimate would have limited usefulness. As a result, the project team will implement this recommendation at a later phase in the project, when the variables and their sensitivity ranges become more limited to increase the value of the simulation result.

AES: Recommend to close. Closed.

• The Cost-Management Plan for the overall GMRP will incorporate multi-year requirements for future work, which will focus initially on the five-year period of the PPA Phase and finally for the total project cost. The Cost-Management Plan shall include clear roles and responsibilities for ownership of the document.

5. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, through consultation with the Chief Financial Officer, that the current approach to procurement management for the Giant Mine Remediation Project is strengthened by:

• Improving the tools and guidance to support contract monitoring and reporting of expenditure variances and performance measures and targets.

The GMRP team accepts this recommendation. The following actions will be implemented in consultation with the Chief Financial Officer:

• A Procurement Management Plan will be developed to ensure funds that are being expended by PWGSC are achieving objectives and that variances are integrated into the Giant Mine Remediation Project's Performance Measurement Strategy and reported regularly to the Project Leader and Senior Project Advisory Committee.

Status: Request to close (Completed)

Update/Rationale:
As of 31/03/2014:

Completed - March 2013 Procurement Management Plan integrated into the Giant PMS and reporting/dashboard process (March 2013) ; An Integrated Procurement Management Plan (AANDC & PWGSC) has been developed and forms part of the Project Execution Plan (November 2013)

AES: Implemented. The recommendation will be closed. Closed.