Audit of capital assets management: chapter 9

Annex 4 - Systems-Under-Development Audit of The Asset Lifecycle Management System - Lessons Learned

Environment Canada has long lacked a tool to monitor and track capital assets throughout their full lifecycle. The department’s financial system (Merlin) did contain a Fixed Asset module which was meant to deal with the existence of capital assets and their depreciation for accounting purposes, but the completeness and accuracy of the data in that system was unknown.

In December of 2008 the Commissioner of the Environment and Sustainable Development (CESD) devoted a chapter in his report to the Management of Severe Weather Warnings. In that chapter he noted the lack of a lifecycle management system had contributed to the “rust out” of the radar network capital assets. In 2009, the department completed an audit readiness assessment for its financial system that identified the lack of a lifecycle management system for capital assets as a weakness.

Resulting largely from these two assurance projects, the department embarked on a project to implement an available module in its Merlin financial system for performing Asset Lifecycle Management (ALM) functions. This process was carried out jointly by Finance Branch and the Chief Information Officer’s Branch (which is now part of Corporate Services Branch). This project was the subject of a system’s-under-development audit.

This development project ended without having met all of its stated objectives. In particular, the uptake of the system by the program areas that manage capital assets was uneven. This chapter deals with the lessons that were learned during the development project.

4.1 Following a good process does not guarantee good results

This project was managed using the Prince2 methodology. Each of the required deliverables for a project of this size and complexity were developed during the project. Most of the problems that occurred during this project were identified as risks during the project in the on-going status reporting but the mitigation strategies were either not adequate to address them or they were not carried out. For example uneven engagement of stakeholders was identified as a high risk for the project almost immediately but it remained a problem throughout the project.

4.2 Project champions need to foster strong stakeholder involvement

For a project to be a success, the stakeholders will see their needs reflected in the likely results. In this project, the “pilot” stakeholder (MSC) was also the largest stakeholder in the department. MSC’s needs for a lifecycle management system were urgent if they were to respond to the concerns raised by the CESD and if they were to be able to manage the condition of their capital assets more effectively. As a result, they were very motivated to participate in this project and this led to a situation where many of the implementation decisions were tailored to meet their requirements. Other stakeholders had less immediate needs for the system and their participation was, as a result, less even.

While mitigating controls for this risk were proposed during project status reports, they do not seem to have been successful. We feel that when risks are identified and remain un-acted upon, the project champion has to quickly take firm control of the situation, escalate the problem as necessary, and ensure that the appropriate level of participation is provided by all stakeholders.

4.3 Project management must be sustained throughout the entire life of a project

During the implementation, discussions around an eventual move from Merlin to SAP became apparent. These discussions seemed to undermine the project. Rather than clarifying a course of action regarding ALM, the project seemed to lose direction and activity simply petered out. We felt that when external factors, arise, such as the decision to implement SAP, they need to be evaluated quickly, decisions need to be taken and then the decisions need to be communicated clearly and widely throughout the stakeholder community. Furthermore, we feel that the upcoming implementation of SAP presents an excellent opportunity for re-engagement with those stakeholders whose requirements were not well represented in the original ALM implementation.