The Ministry is responsible for the infrastructure programs of the government. The Ministry’s activities are focused on:
Background
The ministry is responsible for both owned and supported infrastructure
• owned infrastructure—capital assets that are managed by the Ministry such as highways, bridges, and buildings
• supported infrastructure—capital assets that are managed by other organizations such as school boards, post-secondary educational institutions, municipalities, and health authorities and funded by the Ministry
Grant funding for supported infrastructure is provided for the construction and/or upgrading of facilities. The Ministry may provide 100% of the funding for supported infrastructure such as school and health facilities, or provide a portion of the funding, as is the case for post-secondary educational facilities.
The following table provides details of the assets owned and managed by the Ministry.
The Ministry owns and manages over $5.1 billion
in capital assets Classification of asset %
(in millions of dollars)
Highways $2,840 55.4
Bridges 336 6.5
Land 875 17.1
Buildings 882 17.2
Computer equipment and
system 19 0.4
Equipment 20 0.4
Other (trailers, leasehold
improvements and airplanes) 32 0.6 Dams and water management systems
- work in progress 122 2.4
Total $5,126 100.0
Net Book Value Total
Source: Ministry of Infrastructure March 31, 2000 Financial Statements
The estimated net book value of certain supported infrastructure at March 31, 2000 is as follows:
• School Facilities $2.3 billion
• Post-secondary Facilities $2.1 billion
• Health Facilities $2.4 billion
Audit Scope Our review of the Ministry’s capital asset management systems was concentrated on the general framework for capital asset management within the Ministry. This included a high-level analysis of the Ministry’s processes for highways, owned and leased facilities and supported facilities,
specifically educational and health facilities. We also reviewed the results of the Capital Planning Initiative (CPI).
The remainder of the audit was focused on the Ministry’s processes for managing owned and leased facilities.
Capital Planning Initiative
Background As previously noted, the Ministry has been designated as the lead ministry for the government’s Capital Planning
Initiative (CPI). The stated goal of the CPI is to ensure
effective, innovative capital planning and funding decisions.
Four strategies were identified in the 1999-2000 government business plan to address the overall goal of the CPI. The results of the work to date, as reported in the final report on the CPI, include:
A corporate capital plan
has been prepared • A Corporate Capital Overview was prepared in the spring and fall of 1999 based on submissions from ministries. A Corporate Information Technology Overview was also prepared.
• A report was prepared identifying issues and options for multi-year infrastructure budgeting. As a result, a decision was made to provide ministries with flexibility to
reallocate funds between operating and capital budgets.
The CPI identifies the components of
infrastructure management systems and common performance measures for infrastructure
• The components of effective infrastructure management systems, common performance measures and a strategy for review and co-ordination of government wide systems were identified and agreed upon.
The three performance measures to be used across government to report on the management of physical
this information on a consistent basis, recognizing
differences in standards and criteria for different types and purposes of infrastructure. The three performance
measures are expected to be key drivers in making funding decisions across government.
• A framework for assessing the potential for private sector provision of infrastructure and divestitures/alternative uses of underused infrastructure.
The final report of the CPI identifies strategies for 2000-2001
The final report of the CPI also identified the next steps
required to complete the work set out in the CPI. The following strategies will be continued in 2000-01:
• support funding decision with a five-year capital plan for both owned and supported infrastructure
• implement infrastructure management systems and common key performance measures for owned infrastructure to improve planning and priority setting
• develop a strategy for design and implementation of an infrastructure management system for supported infrastructure
• ensure effective, innovative management of physical infrastructure
• divest properties that are no longer required for government programs
Monitoring the Ministry’s implementation of the Capital Planning Initiative strategies
Recommendation No. 25
We recommend that the Ministry of Infrastructure monitor and evaluate its progress in implementing the strategies of the Capital Planning Initiative.
Implementation of the CPI will provide the Ministry with better information to support capital asset decisions
As the lead ministry for the government’s Capital Planning Initiative (CPI), the Ministry has formally adopted the strategies of the initiative and is in the process of implementing the necessary changes to its systems. We reviewed the CPI and concluded that implementation of the strategies would improve the Ministry’s infrastructure management systems and, therefore, provide better information to support capital asset decisions.
Monitoring of progress is needed to ensure that the Ministry achieves its objectives
The full benefits of the initiative will not be achieved until the Ministry has developed and implemented infrastructure management systems and is measuring and reporting on common key performance measures for all infrastructure assets. The strategies of the CPI may take several years to fully implement; therefore, monitoring of progress is needed to ensure that the Ministry meets its objectives. We recognize that the CPI is a relatively new initiative for the Ministry and, therefore, monitoring processes have not been fully
established. Information on the achievement of actual results against targets for strategy implementation, performance measures, and costs will be required for effective monitoring.
This information should be reviewed and evaluated by the Ministry’s Executive Committee on a regular basis.
Long-term capital asset plans for owned and supported facilities
Recommendation No. 26
We recommend that the Ministry of Infrastructure obtain further information on the strategic service delivery
options and forecasted needs of client ministries to assist in the development of long-term capital asset plans for owned and supported facilities.
Information on strategic service delivery options is needed to optimize the allocation of resources
As part of the CPI, the Ministry is developing information systems to obtain current information on the condition, utilization and functionality of infrastructure. The Ministry also requires information on strategic service delivery options and forecasted needs to develop strategic long-term capital plans. Such information would include strategic policy changes, options, and priorities as well as forecasted needs based on economic analysis and projected demographic data.
In the absence of this information, there is a risk that the government will not have the most cost-effective program delivery methods nor will it optimize the allocation of
resources to the acquisition, preservation and maintenance of capital assets.
Information on service delivery needs is not available for all types of facilities
The Ministry receives capital project requests from client ministries that are prioritized based on the proposed purpose of the project, such as maintain health and safety, preserve infrastructure, and address functional obsolescence. However, we noted that sufficient information for an evaluation of the alignment of these proposed capital projects with current and future program delivery needs is not available for all types of
for their long-term facility requirements but to date only a few ministries have produced such plans. In addition, we noted opportunities for improvement in linking the information on strategic education program delivery, as developed by Learning, to the capital plans for school facilities. Last year we recommended that the planning for health facilities be improved; we understand that progress is being made but that improvements are still required. This year we noted that information on the strategic direction and needs of the post-secondary institutions is now becoming part of the capital planning process for their facilities.
Capital project decisions should be made in context of program needs and directions
The Ministry should obtain additional information on strategic service delivery alternatives and projected facility
requirements from all ministries so that capital project decisions can be made in context of program needs and strategic directions. Understanding trends in program delivery and forecasted needs will assist the Ministry in setting
priorities and optimizing resource allocation decisions. In our view, long-term capital plans should reflect the strategic program delivery needs and the condition, utilization and functionality of the capital assets.
Infrastructure Management Systems Background
A sub-committee concluded that it would not be practicable to develop a single infrastructure management system for all departments
A sub-committee of the Capital Planning Initiative (CPI) was given the task of making recommendations regarding
development, common reporting, sharing and coordination of the existing and planned systems in the six government
departments that hold infrastructure assets. The sub-committee reviewed the systems in existence at each of the six
departments and estimated the cost of implementing and maintaining the required system improvements. The sub-committee concluded that it would not be practicable to develop a single infrastructure management system (IMS) for all departments but that there should be a high degree of commonality across all systems. This will allow comparison of data extracted from all systems using common measures.
The sub-committee also noted that, if the departments are to meet the requirement for infrastructure management systems, then approximately $5 million is required in the next year for systems development and an additional $750,000 will be required annually to operate and maintain these systems. This amount does not include the estimated $13.8 million to
develop the Transportation Infrastructure Management System
that is being developed for highways and bridges.
Ministry Infrastructure Management Systems
Recommendation No. 27
We recommend that the Ministry of Infrastructure review the plans in place for the development of the Ministry’s infrastructure management systems and satisfy itself that the most cost-effective systems are being developed and that it has the resources necessary to successfully develop and implement the systems.
There is a risk that systems will not be developed in a cost-effective manner
The Ministry is in the process of implementing and/or enhancing several systems to enable it to comply with the requirements of the CPI and ensure that it has adequate information to manage its capital assets. We consider that the risk that systems will not be developed in a cost-effective manner and that they may not support the Ministry in its responsibilities for capital asset management is not being sufficiently mitigated.
The Ministry faces a significant challenge in guiding systems development
The Ministry’s vision is to have a single integrated IMS for all types of infrastructure. The Ministry faces a significant
challenge in guiding systems development. There appear to be conflicting views on an appropriate solution to the Ministry’s infrastructure management system needs. There are
proponents of a single integrated IMS for all types of
infrastructure that advocate using the transportation IMS as the foundation for a single system. Others propose separate systems. They consider that the re-developed transportation
IMS will be more complex than required and may be more costly than developing separate systems. Several system developments in progress and the recent identification of problems with the model used for the transportation system, further complicate the issue.
Systems are being developed in three areas:
• Transportation (highways and bridges)
• Realty Services (leased assets and land)
• Property Development (government-owned buildings and supported facilities)
A number of issues have been encountered with the
The transportation section of the Ministry has been developing an infrastructure management system for the past four years.
development to April 2000 was approximately $8 million. A number of issues surfaced with Release 2 and, as a result, a firm of consultants was engaged to perform a review of the systems development. The firm concluded that the original scope and objectives of the system are still valid but the development of the system is not consistent with the plan and does not support the objectives. The consultant has
recommended that the system be re-configured based on a common data architecture and clearly defined objectives. The consultant also recommended that the roles of the Ministry and the systems developer be clearly defined. As a result of the consultant’s report, the systems developer has assembled a new team for the project and a new project plan is being developed.
A problem was also encountered with an IMS for health facilities
A problem was also encountered at the Ministry with the development of an infrastructure management system for Health facilities. The system is web-based and is to be used by Regional Health Authorities for recording information about the facilities they manage. The system is perceived to be unworkable in its present state and is not being used by the Authorities. The system is currently being reviewed to determine how it could be enhanced to meet the needs of the Authorities and the requirements of the CPI.
Consultants have advised that systems be compatible
The Ministry recently engaged a firm of consultants to prepare business requirements studies as a basis for the development of systems by the Realty Services and Property Development divisions of the Ministry. The studies concluded that all systems should be developed around a core data store based on common architecture. The core data store will be used to share data with other ministries and stakeholders.
The Ministry should be satisfied that the systems developments will be cost-effective and successfully implemented
The Ministry is incurring significant systems development costs. It should be satisfied that the approach being taken is the most cost-effective and in line with the long-term objective of having an integrated system which meets the requirements of the CPI. A detailed analysis of the approach planned, including comparative costs of each alternative, by each of the three divisions currently developing new systems, would allow the Ministry to satisfy itself that the systems are being developed in a cost-effective manner and that the systems will meet requirements. The Ministry should also review the systems development processes to ensure that the necessary resources are available to make the most appropriate
decisions and monitor the projects.
We were advised that the Ministry is taking steps to address the above issues. A recent decision was made to have some common membership on each systems development project steering committee. The purpose is to ensure that a common approach is being taken. Business requirements identified for all systems will be reviewed and aligned prior to further advancement of systems development. The Ministry is also developing an information technology strategic plan.
Contract review processes We recommend that the Ministry of Infrastructure ensure that significant contracts and grant arrangements be reviewed by finance personnel to identify potential financial and accounting issues.
The Ministry and other organizations are entering into arrangements for private sector provision of owned and supported infrastructure
As part of the CPI, a framework for assessing the potential for private sector provision of infrastructure was developed. As a result, the Ministry, along with other ministries and
organizations, is currently investigating and undertaking a number of projects with new and innovative funding arrangements, such as private-public sector partnerships.
These new arrangements may have significant accounting or financial implications.
These arrangements should be reviewed to ensure that all potential risks and implications have been identified and addressed
In our view, personnel with financial and accounting expertise should review all significant contracts or grant agreements prior to finalization. This review will provide assurance that all potential financial and accounting implications are
considered and that significant risks have been identified prior to approval of the agreements. It is also important that the personnel responsible for accounting are aware of the nature of all contracts signed to ensure that they are being accounted for in accordance with generally accepted accounting
principles. We understand the high volume of contracts managed may prohibit a contract-by-contract review and suggest that standard contracts be reviewed in detail initially and then only when exceptions to the standard arise.
Government facility usage policy
We recommend that the Ministry of Infrastructure adopt and implement a government facility usage policy.
One third of the government’s
accommodation space is occupied by non-department users
Departments occupy approximately two thirds of the
government’s total accommodation space. The remainder of the space is occupied by various agencies, boards, and commissions, funded organizations (RHAs, post secondary institutions and schools), contracted agencies, government-sponsored non-profit organizations, other levels of
government, and some private companies. In addition, various government departments and agencies are providing programs in partnership arrangements with both private and not-for-profit organizations as well as other levels of government. In some cases, volunteers from the program partner may be working in government premises. In these cases, government facilities are being used by other organizations that may or may not be charged for the use of the space.
Various usage policies and charging practices exist for the non-department users
Various usage policies exist for non-department users. Entities supported by other government ministries such as regional health authorities or post-secondary institutions may or may not contribute to the operating costs incurred by the Ministry on their behalf. Other groups are charged fees closer to market lease rates plus operating costs and taxes.
A consistently applied policy will enhance the effective use of government facilities
We understand that the Ministry is drafting a policy to address the issue of the use of government space by non-department users. In our view, it is important that the policy clarify who will be eligible to use government space and what charges, if any, they will be required to pay. Such a policy will ensure that organizations are treated in a consistent manner and that there is effective use of government facilities.
Guidance to reader
The mission of the Ministry of Innovation and Science is to enhance the contribution of science, research, and information and communications technology to the sustainable prosperity and quality of life of all Albertans. The Ministry wasreorganized in May 1999 to improve the management of research and technology in Alberta. The Ministry has three core businesses:
• The management of science and research
• The development of technology knowledge and use of technology throughout the Province
• The management of cross-government information technology issues
The Ministry comprises:
• the Department of Innovation and Science
• the Alberta Science, Research and Technology Authority
• the Alberta Research Council Inc.
• the Alberta Informatics Circle of Research Excellence
• the Alberta Oil Sands Technology and Research Authority
• the Alberta Agriculture Research Institute
Total operating expenses for the Ministry of Innovation and Science for 1999-2000 was $195.5 million (1998-99
$85.1 million). The significant increase from last year arises from additional responsibilities, primarily relating to
information technology management, which were transferred to the Ministry in the reorganization. In addition, the Alberta Heritage Foundation for Medical Research, which is an organization accountable to the Minister, had expenses of
$45.4 million that are not reflected in the above expenses.
The Ministry had revenue of $22 million for 1999-2000
The Ministry had revenue of $22 million for 1999-2000