Governance - developing the environment for successful outcomes

From the origins of Project 13’s development back in 2017, Governance has been recognised as one of the key Pillars to the creation of the enterprise model that is central to its philosophy.  As Project 13’s adoption has steadily grown, influencing more sophisticated approaches across the infrastructure owner community, both in the UK and internationally, there is increasing recognition of the need to strengthen this area and provide more guidance.   

The Project 13 Governance Group, drawn from across the infrastructure sector’s clients, contractors and consultants as well as government, governance experts and academics has been working over the last few months to explore and build on previous work in this area.  The Group’s aim is to create a better definition of how to use governance to underpin the establishment of an effective enterprise delivery model for infrastructure.

The Group’s discussions regarding governance and the enabling platform for success that it creates, have been many and wide-ranging.  That it does provide such a platform is not disputed, establishing consensus on how it enables that success is more problematic.  The output from our discussions has taken us through a fascinating exploration of personal professional experiences, academic work and case history examples, some of these including examples from the military sphere, fall far outside the boundaries of our sector.  The work has also exposed a plethora of reports as we have attempted to distil learning from recent experience encompassing best practice, including the Infrastructure and Projects Authority’s (IPA) Routemap and Construction Playbook, and less edifying analysis from NAO, Department for Transport and Select Committees.  There is also clear data (e.g. aggregated IPA review data) that suggests governance has a very significant role in securing successful outcomes from infrastructure investment.  Perhaps that’s unsurprising.

Attempting to find a useful guiding pattern from this material has been challenging, but we conclude that the themes that commonly recur are both identifiable and useful.  These themes include the quality of definition of the enterprise, its mission and outcomes, behaviours and accountabilities, how data informs decisions, access to the right capabilities at the right level and organisation.   In short, effective governance provides a structured approach to informed and collaborative challenge, underpinning the quality of decision making and creation of the operational arrangements and a culture that optimises outcomes across the enterprise.

Perhaps having found this consensus we might have developed a report, as we had anticipated, but there is another part to our journey of discovery.

In 2010 the Financial Reporting Council launched the first UK Corporate Governance Code and since its introduction, it has provided a series of guiding principles for company boards.  Its origins can perhaps be traced back to the financial scandals of the early 1990s, particularly Maxwell and Bank of Credit and Commerce International, which in turn led to the progressive Cadbury Committee, Turnball Committee and Higgs Review.  The UK Corporate Governance Code (and the Charity Commission Governance Code in the charitable sector) have proved their worth in setting, and progressively developing, expectations regarding the establishment and optimisation of good governance in these areas.

The UK Corporate Governance Code is founded on the establishment of principles, it is not a prescriptive book of rules.  It is succinct; 18 principles over 5 sections and 12 pages and that it is not prescriptive arguably provides its ultimate strength.  The rules-based approach adopted in other countries has proved an open door to litigation and challenge; it is much more difficult perhaps to challenge a principle.   It also adopts an approach of “comply or explain” allowing companies in the UK to meet each principle as anticipated, or to find another way to articulate the adoption of alternative but effective arrangements.

In a changing world, the accelerated creation of large temporary organisations, comprising multiple entities, to deliver infrastructure investment on par with the scale of a FTSE100 company, is an immensely challenging undertaking.  Despite this and the particular challenges of our sector and notwithstanding the available data that suggests governance is central to success, no such governance code has existed in infrastructure.

The Project 13 Governance Group has identified this as an opportunity to leverage the work done to date.  As a result, a draft code has been developed following the approach of principles adopted by the UK Corporate Governance Code.  As a developed draft, it is being used to consult across the wider stakeholder group before we pursue its launch and adoption.

The UK Corporate Governance Code and its original ancestor, The Cadbury Code, has proved a defining factor in establishing reliance in governance over a period of 25 years.  In that time it has changed, most recently in 2018, to reflect emerging best practices and developing expectations.  As we seek to establish a better route to governance in our own sector, recognising its particular demands and a growing move to enterprise adoption, perhaps our own code, and its progressive evolution, will provide for a similar pathway to more successful outcomes.