Guide to Investment Planning - Assets and Acquired Services

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Alternate Formats

1. Introduction

This guide is intended to assist departments in implementing the Treasury Board Policy on Investment Planning - Assets and Acquired Services.

The Policy on Investment Planning - Assets and Acquired Services is based on the principles of value for money and sound stewardship in the management of assets and acquired services as outlined in the Policy Framework for the Management of Assets and Acquired Services. The Policy Framework sets out the principles for the management of assets and acquired services, which are consistent with the management expectations established in the Management Accountability Framework[1]. The Policy Framework also supports the role of Treasury Board Ministers in making effective management and expenditure decisions in the context of assets and acquired services while ensuring Parliamentarians have the necessary information to ensure proper oversight of management and spending in the Estimates process.

Departmental investment planning supports the effective and efficient allocation and reallocation of resources to new and existing assets and acquired services. Effective investment planning, for which deputy heads are responsible, ensures resources are allocated in a manner that clearly supports program outcomes and government priorities. Effective management includes developing a departmental investment plan, exercising oversight in the implementation of investment decisions and ensuring appropriate, ongoing measurement of investment performance.

The guide is targeted at those responsible for, and involved in, the departmental process of investment planning.

Treasury Board approved the Policy on Investment Planning - Assets and Acquired Services on June 7, 2007. This Policy supports the better and more transparent planning and management of investments within departments and agencies and across the Government of Canada as an enterprise, by clarifying the responsibilities of deputy heads for investment planning. The Policy, which replaces the Policy on Long-term Capital Plans[*], requires that all departments[2] and agencies develop, at a minimum, a five-year investment plan that describes the planned use of government resources. Organizations are expected to highlight priority investments which reflect the areas of greatest risk for the department and best support Government of Canada objectives. The investment plan will also outline upcoming projects and consider the assessed capacity of the department to manage those projects. Treasury Board Ministers will have the opportunity to review the department's investment plan, gain insight into its investment planning process, and provide strategic direction at least once every three years.

The Policy on Investment Planning - Assets and Acquired Services is designed to:

  • Clarify accountability: Deputy heads are responsible for the effective management of the investment planning function within their department.
  • Promote effective and integrated investment planning: Effective investment planning ensures resources are allocated in a manner that clearly supports program outcomes and government priorities within existing departmental reference levels.
  • Be flexible: Investment planning should meet departmental planning needs and reflect the operational environment in which the department is expected to deliver on its mandate. Deputy heads have the flexibility to tailor the investment planning process to best meet the department's specific operational requirements, in consideration of the minimum expectations outlined in the policy.

The Policy on Investment Planning - Assets and Acquired Services[3] has five areas of focus:

  1. Providing the deputy head and TB Ministers with the departmental context in which investments are planned and undertaken.
  2. Detailing investments in both assets and acquired services, including all associated resources.
  3. Enabling Treasury Board consideration of the management practices which support the planning process, not just the resulting plan.
  4. Emphasizing the planning process, including governance and decision-making, points of accountability, roles and responsibilities, planning and investment performance and risk management.
  5. Promoting strategic oversight and highlighting complex and high-risk investments for deputy heads, Treasury Board Secretariat officials and Treasury Board Ministers.

As many of the key departmental investments are managed as projects, it is important to recognize the links between this policy and other relevant Treasury Board policies. In particular, the Policy on the Management of Projects which requires that:

  • Departments undertake a standard assessment of their organizational project management capacity in conjunction with their investment planning process.
  • All projects are to be assessed to determine their level of risk and complexity, before project initiation and expenditure of funds.
  • Project approval limits are to be regularly reviewed, revised and approved by TB at least once every three years, normally as part of the consideration of the department's investment plan.

The following table outlines the roles and responsibilities of the various stakeholders:

Entity

Role / Responsibility

Specific Functions

Treasury Board of Canada

  • Treasury Board of Canada is a committee of the Queen's Privy Council for Canada, and assumes its legal responsibilities under the Financial Administration Act[4] and other statutes. (Accountable government: a guide for ministers and secretaries of state[5])
  • As the general manager of the public service, the Treasury Board has three main roles:

It acts as the government's management board;
It acts as the government's budget office; and
It acts as the employer of the core public administration.

  • It has a central oversight role to play in government-wide management practices and ensuring value for money. (Accountable government: a guide for ministers and secretaries of state)

Treasury Board of Canada Secretariat

  • The Treasury Board Secretariat submits recommendations and provides advice to the Treasury Board on all matters relating to general administrative policy and organization in the public service of Canada, financial and asset management policies and procedures, review of annual and long-term expenditure plans and programs, and determination of related priorities. (Accountable government: a guide for ministers and secretaries of state)
  • Assessing each department's performance in the management of its investment planning process. TBS does this through ongoing dialogue and committee work with departments, as well as by reviewing departmental investment plans and submissions. The Secretariat also takes note of audits and reviews conducted by departments or the Auditor General of Canada. (Policy on Investment Planning - Assets and Acquired Services)
  • Reviewing the effectiveness of the policy at the five-year mark of its implementation and ensuring that an evaluation is conducted when supported by a risk-based analysis. (Policy on Investment Planning - Assets and Acquired Services)

Minister

  • Ministers are individually responsible to Parliament and the Prime Minister for their own actions and those of their department, including the actions of all officials under their management and direction, whether or not the Ministers had prior knowledge. (Accountable government: a guide for ministers and secretaries of state)
  • In practice, when an error or wrongdoing is committed by officials under their direction, Ministers are responsible for promptly taking the necessary remedial steps and for providing assurances to Parliament that appropriate corrective action has been taken to prevent reoccurrence. (Accountable government: a guide for ministers and secretaries of state)

Deputy Heads

  • Deputy heads are responsible and accountable for a wide range of duties including policy advice, program delivery, internal departmental management and interdepartmental coordination. In performing these duties, deputy ministers have a fundamental responsibility to support both the individual and collective responsibilities of their Minister. The advice that deputy ministers provide should be objective and must respect the law. If conflict occurs between the Minister's instructions and the law, the law prevails. (Accountable government: a guide for ministers and secretaries of state)
  • Deputy heads are responsible for the effective management of the investment planning function within their departments. Effective management includes developing a departmental investment plan, exercising oversight in the implementation of the investment decisions and ensuring appropriate, ongoing measurement of investment performance. (Policy on Investment Planning - Assets and Acquired Services)

Departmental investment planning is the function of allocating and reallocating all resources associated with new and existing assets and acquired services that are essential to program delivery. Departmental investment planning is a key element in achieving value for money and demonstrating sound stewardship.

To apply the requirements of the Policy on Investment Planning - Assets and Acquired Services, it is important to understand the meaning of terms used within the policy and this and other associated guidance.

Investment: the use of resources with the expectation of a future return of value (quantitative and qualitative), such as an increase in outputs, revenue or assets, or the acquisition of increased organizational capacity (knowledge, expertise or training).

Acquired services: obtained through formal arrangements, such as Crown procurement contracts, memoranda of understanding and letters of agreement (between representatives of the Crown), to support internal or external clients or stakeholders in achieving specific outcomes. These services do not include arrangements for or in support of Grants and Contributions activities.

Acquired services are provided by individuals with significant training, qualifications and expertise in a professional, scientific, technical or managerial field. These services can be used to outsource certain operational functions (such as a call-centre support service), to provide training, or to provide knowledge and expertise not available in the organization.

Assets are both tangible and intangible items of value with a future life beyond one year, whether they are Crown-owned, leased or accessed through other arrangements.

While assets can have a broader meaning in accounting terms, for the purpose of this policy, assets are only those considered to be long-term assets in the Government of Canada's financial statements that have a future life beyond one year (with the exception of prepaid expenses). Assets such as cash, receivables and prepaid expenses are not covered in this policy. Examples of assets include:

  • Land
  • Buildings
  • Machinery and equipment
  • Works and infrastructure
  • Computer hardware
  • Computer software
  • Arms and weapons for defence
  • Motor vehicles
  • Military vehicles
  • Ships and boats
  • Aircraft

2. Investment Planning Process

Investment planning is the process of allocating and reallocating limited resources, within departmental reference levels for both existing and new assets and acquired services, in a diligent and rational manner to support program outcomes and government priorities. When pursued effectively, investment planning is characterized as being:

  • Essential to departmental operations and effective program delivery;
  • Responsive to government priorities and a dynamic operational environment;
  • Affordable, productive and financially sustainable;
  • Reflective of an appropriate balance of risk, benefits, and return between the Crown and third parties;
  • Consistent with relevant laws, regulations and policies, and codes of conduct;
  • Protective of Canadian heritage, the environment and in consideration of other relevant socio-economic factors; and
  • Reflective of departmental, portfolio, horizontal and government-wide perspectives while taking into account strategic government-wide initiatives, as appropriate.

Essentially, effective investment planning is a proactive approach to management, which better positions deputy heads to:

  • Determine the best value for money of public investments;
  • Account for and demonstrate investment results; and
  • Allocate and reallocate resources in a manner which best contributes to the priorities of the department and the Government of Canada.

Effective investment planning is supported by the necessary systems and processes which integrate relevant planning information and determine priority investments across the department. These systems and processes should be evident in the plan by documenting:

  • strategic investment priorities;
  • trends affecting investment decisions;
  • roles and responsibilities, including key points of accountability;
  • resource allocation and reallocation processes;
  • risk management strategies;
  • processes for integrating enabler functions (e.g. human resources, information technology, corporate services, etc.);
  • life-cycle management practices;
  • the control and monitoring regime; and
  • the performance management strategy.

The plan should also clearly explain how these systems and processes support long-term investment decisions.

Departmental investment planning should consider all departmental activities that contribute to the achievement of strategic objectives. These activities employ resources such as materiel, assets, systems, and people that are expected to produce short-term and intermediate results. Over time these results will contribute to outcomes and long-term objectives, such as improved government operations, enhanced program delivery and greater value for Canadians.

Effective integrated planning requires a coordinated effort and an established governance structure. If considering changes to existing governance, the department should examine the full range of available options to best meet their investment planning needs. For example, the deputy head may choose to establish a new investment planning working group based on existing committees, systems and processes in the department. However, whether creating new teams or working groups, or expanding the mandate of existing ones, the investment planning process should have a documented and approved governance structure in place which reflects representation from all functional areas of the department. It is also important that accountabilities and responsibilities be clear. These should include approval, oversight, monitoring and reporting requirements in relation to achieving investment and investment planning objectives.

A key component to meaningful and integrated investment planning is to engage the right people and areas of responsibility early in the planning process. This can be achieved by first identifying the planners and managers in all business lines within the department and then those areas which support their activities. Within a department, investment planning could include officials in the following areas[6]:

  • Strategic/Corporate Plans and Priorities;
  • Procurement and Contract Management;
  • Project and Program Management;
  • Asset and Materiel Management (including lifecycle management);
  • Information and Information Technology Management;
  • Financial Management;
  • Human Resource Management;
  • Performance Management;
  • Risk Management;
  • Evaluation; and
  • Internal Audit.

Effective investment planning should also include the engagement of relevant external stakeholders. The Policy on Investment Planning - Assets and Acquired Services (Section 6.1.8) requires that departments keep stakeholders informed of planned investments. A department should first identify relevant stakeholders and then determine how to best keep them informed of planned investments on a regular basis.

Key federal stakeholders typically include, but are not limited to, central agencies, relevant socio-economic departments and common service providers. Among the socio-economic departments that should be considered as stakeholders are: Industry Canada, Atlantic Canada Opportunities Agency, Economic Development Agency of Canada for the Regions of Quebec, Western Economic Diversification Canada, Environment Canada, and Indian and Northern Affairs Canada. Contracting authorities and common service organizations such as Public Works and Government Services Canada and Defence Construction Canada should also be considered in the department's stakeholder analysis. Federal stakeholders need to be informed of planned investments in an effort to improve investment planning across the broader Government of Canada (GC) enterprise and better achieve planned investment objectives.

3. The Investment Plan

The investment plan should directly support a department's strategic plan (if there is one in place). The strategic plan is typically a high level document that outlines the department's long-term strategic direction and objectives, and articulates how these are aligned with the objectives and priorities of the Government of Canada.

The departmental investment plan should be one element of the department's overall management and reporting function. The investment plan should clearly align with and consider the following documents:

  • Strategic objectives and priorities of the department and the GC;
  • Report on Plans and Priorities (RPP) and Departmental Performance Report (DPR);
  • Specific asset plans and associated strategies and/or policies and frameworks - for instance on real property, material management, information technology, project management, etc;
  • Business/program plans - including plans for acquired services;
  • Organizational capacity - including project management capacity;
  • Project complexity and risk assessments;
  • Program Activity Architecture (PAA); and
  • Corporate Risk Profile.

While the above documents would not be included in the investment plan, they should be used to support investment planning decisions and referenced in the plan as necessary.

The investment plan should provide a summary of the activities and long-term investments that the department plans to undertake, based on reference levels, which will best contribute to the achievement of the department's strategic objectives. These planned activities and investments will employ resources such as materiel, assets, systems, and people, and given limited resources, must be planned effectively over an extended period. When implementing these investment decisions, there are expected short-term and intermediate outputs which contribute to intermediate and long-term outcomes that should ultimately support strategic objectives such as improved government operations, enhanced program delivery, and greater value for Canadians.

An investment plan is expected to provide the deputy head with the relevant information needed to support strategic and operational decisions in consideration of key risks and appropriate mitigation strategies. The plan will further inform Treasury Board of key future investments within the Government of Canada and should include an understanding of:

  1. The departmental context: A high-level summary of the department's vision, strategic plans and priorities, briefly describing the department's current operational environment (including lessons learned from the most recent investment plan) and its future direction over the planning horizon. The financial reality of the department should also be included to provide a clear understanding of available resources over the planning period and what is detailed in the plan (e.g. excluding transfer payments);
  2. The governance structure: A high-level description of the department's plan for investing in assets and acquired services which identifies relevant delegated authorities and decision-making processes to ensure appropriate integration and effective oversight. The investment planning process should also include steps to revise/update the investment planning governance and reporting structures (authorities, prioritization and decision-making processes, integration and oversight) based on relevant performance information.
  3. Investments: A detailed description of high-profile, complex and high risk investments should be included, as well as a summary of all other investments up to relevant reference levels. The affordability of the investment portfolio over the planning horizon is expected to be clear. This would include any relevant rationale as well as a description of the prioritization process. The Project Complexity and Risk Assessment (PCRA) levels would be used to support investment decisions on individual projects and guide a discussion with TBS as to which projects should be profiled in the investment plan. There should be a summary of projected resource requirements needed to support planned investments (both financial and human), including all relevant assumptions and procurement information[**] over a minimum 5-year horizon. There should also be projected 5-year cost estimates[7] which include likely future conditions, impacts, and any life-cycle management considerations.
  4. Capacity management: This section should summarize the results of the departmental Organizational Project Management Capacity Assessment (OPMCA), and identify any capacity issues or considerations for managing investments in assets and acquired services including those in real property, materiel, information technology and fleet. The appropriateness of the capacity should be explained, within the context of the risk and complexity of planned projects. This section should also link to the resource requirements identified in the previous section; explain the financial and human resources capacity identifying any gaps and risks in meeting those requirements, as well as any plans to build capacity in these areas.
  5. Performance and risk management: A mechanism which demonstrates the relevance of the planning process is crucial to ensuring management practices are appropriate. The plan should provide an understanding of the performance management mechanisms which seek to ensure the effectiveness of the investment planning activities. This should include how lessons learned from previous investment planning cycles are applied to improve current processes and any future plans for enhancements. This section should also provide an overview of the risks to achieving the performance objectives of the investment plan and the effective management of investments in assets and acquired services. The relevant risk mitigation strategies should also be described.

The investment plan is not a vehicle for Treasury Board (TB) approval of individual projects, contracts, real property transactions or any other activities cited or referred to in the plan. TB approval is sought of the management principles, processes and practices which led to the production of the departmental investment plan. The department must seek, through separate proposals in the submission, TB approval for other authorities such as the Organizational Project Management Capacity Assessment (OPMCA) class.

It is important to note that the development of the investment plan should reflect the department's operational needs while keeping in mind the targeted audience - the deputy head and ministers. With that said, this section offers some guidance for considerations during the development of the departmental investment plan. These steps may vary by department, depending on the structure and the planning environment.

3.2.1 Steps to consider

The following are suggested steps to consider in the development of the investment plan (the order may vary by department). This guidance is intended to help determine what should be detailed in the investment plan and to develop an outline for the content of the planning document.

  1. Manage and define the development of a departmental investment plan as a project. The project should include milestones, deliverables and any deadlines with performance metrics to track progress and manage possible risks to achieving planned objectives and completing the plan according to the defined schedule.
  2. Create cross-functional teams of planners, program and project managers with documented terms of reference, defined roles and responsibilities, lines of authority, decision-making points, risks/challenges, and performance expectations. This information could be formalized in a project charter.
  3. Document relevant governance and reporting mechanisms (including delegated authorities, as well as decision-making, integration, prioritization, and oversight processes).
  4. Review existing documents and data, such as:
    1. Strategic plans;
    2. Environmental scans;
    3. Frameworks for the management of materiel, real property, information management (IM) and information technology (IT);
    4. Asset management strategies;
    5. Report on Plans and Priorities;
    6. Business plans, including program, corporate, financial, human resources, IM and IT;
    7. Project management frameworks.
  5. Create an outline of the plan (e.g., context, governance, investments, capacity, and risk and performance management). Refer to the Appendix - Content of Investment Plans, in the Policy on Investment Planning - Assets and Acquired Services.
  6. Identify and document key elements of departmental strategic objectives and priorities linking them to the asset plans and plans to acquire services (including relevant rationale and prioritization processes). Discern how investments have supported, and will continue to support, the achievement of these objectives and priorities. This process should be supported by relevant performance information.
  7. Detail the high risk and complex investments (in both assets and acquired services) and summarize all other investments up to relevant departmental reference levels. This section of the plan should be linked to program activities and could be categorized by asset class for inventories and by service type for acquired services, but should reflect how the investment decisions are made (e.g. program area, branch, business line, etc.). Alternatively, it could be in sections by program activity related to the department's Program Activity Architecture including all planned investments in assets and acquired services with associated projects, Crown procurement contracts, or other transactions. How this is explained in the plan should reflect the operational reality within the department to facilitate the understanding of the deputy head, and TB Ministers. Either way, showing the link between planned investments and the program activities will strengthen the plan. This link could be achieved as simply as creating a table that lists planned investments by program activity.
  8. Conduct an assessment to determine the Organizational Project Management Capacity[8] (OPMCA) class for the department and assess each individual project to determine its level of risk and complexity using the Project Complexity and Risk Assessment[9] (PCRA) tool. Together the results of these assessments should support investment planning decisions based on departmental priorities and in consideration of limited resources.
  9. An analysis of available resources is key to integrated planning and to establishing the limits and parameters around the consideration of different investment options. It will inform prioritization and resource allocation decisions and will enable informed discussions around resource requirements to acquire, maintain, manage and dispose of proposed investments. This information will support the consideration of options to build or buy based on projected long-term cost estimates, likely future conditions, relevant risks, impacts, and life-cycle management issues.
  10. Engage TBS in the review of early drafts of the plan, OPMCA and PCRAs and to prepare a submission to the Treasury Board seeking the requisite approvals.

3.2.2 Questions to be answered in the investment plan

The following questions should be addressed in the Investment Plan:

Key Initiatives, Priorities and Strategies:

  1. What are the strategic objectives and priorities for the next five years?
  2. What are the available investment options?
  3. What enabling and resource factors need to be considered?
  4. What horizontal objectives must be considered and factored into planned investments?
  5. What government-wide objectives must be considered and factored into planned investments?
  6. How do the planned investments link to program activities and outcomes?
  7. What is to be considered a significant investment - high risk, complex, sensitive (publicly or politically)?
  8. What is the anticipated procurement strategy for planned investments?[***]

Investment governance and decision-making mechanisms:

  1. What relevant governance structures are in place?
  2. What investment planning processes are in place?
  3. How are investment priorities determined and resources allocated?
  4. How are investments approved and on what basis?
  5. How are key stakeholders informed of planned investments?
  6. How are the information systems to support investment planning integrated?
  7. What investment planning control systems are in place?
  8. How are these systems (of questions 4 and 5) monitored?
  9. What evidence is there that the investment planning process supports good decision-making? How could it be improved?
  10. What does an investment planning cycle include? How is it linked to strategic planning?

Continuous improvement from previous investments and investment planning:

  1. Did previously planned investments achieve their intended outcomes?
  2. How did the previous investment planning cycle meet defined outcomes?
  3. What are the lessons learned from the previous investment plan?
  4. How can the investment-planning framework be improved?
  5. What are the challenges to, and opportunities for organizational investment planning and resourcing capacity (requirements vs. capacity gaps)? How are these to be managed?

3.2.3 What to include in the investment plan

The investment plan is a high-level document that should meet the planning and operational needs of the department, the Minister and Treasury Board. The investment plan, in providing an overview of the investment planning process and of the planned investments, should include certain information. Departments are to determine the best approach to presenting this information. An investment plan should include:

Executive Summary

  • A stand-alone brief of the investment plan.

Introduction/Departmental Context

  • Department's mandate.
  • Departmental Reference Levels (over next five years at a minimum) with the amounts detailed by the plan highlighted. Should include a funding strategy and relevant assumptions.
  • Relevant historical data.
  • Grand total of all planned investments and other funding commitments over the short, mid, long-term (cash forecast) to reflect reference levels.
  • Contribution of assets and acquired services to program outcomes.
  • High level profile of existing assets and acquired services in support of program activity.
  • Value of existing assets.
  • Evaluation of existing assets in terms of issues, risks, and opportunities, including an issue statement.

Strategic objectives and priorities:

  • Strategic objectives and priorities for the period covered by the plan.
  • The available investment options.
  • Any horizontal initiatives to consider related to the investment plan.
  • Any government-wide objectives of relevance to planned investments.
  • The links between planned investments, program activities and defined outcomes.

Continuous improvement from the previous investment plan:

  • Assess performance of previous planning cycle and current investments.
  • Identify lessons learned (gap analysis - the challenges to and opportunities for improving organizational planning and capacity).
  • Describe any improvements to the investment planning framework.

Governance, Planning, and Decision-making Structures

Planning Framework:

  • Describe the applicable governance structures in place.
  • Detail investment decision-making and approval processes to ensure clear accountability.
  • Describe the mechanism used to determine investment priorities and allocate and re-allocate resources.
  • Describe the process or processes used to inform key stakeholders of planned investments.
  • Explain how investment information is integrated (include description of systems used).
  • Describe how investment alternatives were considered, including opportunities for reallocation.

Planning Cycle:

  • Describe the investment planning cycle, include its frequency and outputs (i.e. updated investment plan, revised list of investments, etc..).
  • Demonstrate how it is linked to strategic planning.
  • Demonstrate how it is integrated and considers the existing resource base and all other relevant information (e.g. PCRA, Project Profile and Risk Assessment (PPRA), condition of existing asset base, etc.).

The Investments

The section on investments should not include an exhaustive list of all planned investments. Rather it should provide a summary of low risk investments and should highlight details of the more significant investments identified as being complex, high risk, sensitive or extraordinary (investments that should be brought to the attention of the deputy head and TB Ministers).

  • Summarize the investments in assets and acquired services planned over the next five years (at a minimum); include a summary of current, ongoing investments, including projects, which are expected to comply with the requirements of the Standard for Project Complexity and Risk.
  • Summarize and provide references/links to the departmental Real Property, Materiel and IT Investment Planning Frameworks where applicable and any relevant procurement strategies[o].
  • Provide reference/links to any other supporting documents related to investments such as those in information technology, real property, materiel, and acquired service.

For the high risk and complex investments, include detailed descriptions of:

  • The opportunities to contribute to broader government objectives.
  • The investment or procurement strategy that will be used to acquire, maintain and/or dispose of the asset or acquired service.
  • The total estimated costs[10] (including all life-cycle management costs).
  • The Project Complexity and Risk Assessment (PCRA), as appropriate.
  • The risk assessment[11] and mitigation strategies.

Capacity Management

  • Identify all resources required to support investments in assets and acquired services (people, financial, systems, infrastructure, accommodations, etc.).
  • Identify how investment planning is linked to human resources, financial and information management / information technology planning.
  • Include all relevant cost projections over a minimum 5-year period.
  • Provide a description of the departmental processes used to assess the Organizational Project Management Capacity (OPMC)[12], determine the OPMC class and any associated impacts on the department and planned investments.
  • Consider likely future conditions, risks, impacts, and life-cycle management issues.

Performance and Risk Management

  • Describe the performance management approach used for the investment planning process and for the asset and contract management regimes (based on performance management requirements set out in related Treasury Board policies such as those for the Management of Real Property, Materiel, Information Technology and Procurement/Contracting).
  • Describe key performance indicators.
  • Describe the investment control, monitoring and evaluation processes.
  • Demonstrate how continuous improvement is used to leverage lessons learned into the future investment planning cycles.

Risk Management (for planned investments and the impacts of investments not made):

  • Explain the process which ensures that the areas of greatest risk are identified.
  • Describe the risk management approach used to ensure investment planning, asset and contract management objectives are realized.
  • Describe the methodology used for measuring the achievement of investment planning objectives.
  • Include risks mitigation strategies for the investment plan.

While ensuring that the investment planning cycle meets the needs of the organization, the planning process must consider a minimum 5-year horizon and incorporate a minimum 3-year update to Treasury Board Secretariat, and /or the Treasury Board.

Mechanisms should be built into the planning processes to ensure that new developments and their relevant impacts are considered on a regular basis and the investment plan is adjusted and updated accordingly. Any significant variations, such as changes to the organizational project management capacity, the departmental reference levels or funding strategy, the governance and decision-making process for investments or perhaps environmental considerations that increase risks for the department, should be discussed with program sector at TBS. TBS will determine whether and how a revised departmental investment plan is to be brought forward to TB for approval.

Keeping TBS informed of all changes is seen as the best way to ensure any significant changes are appropriately communicated to TB Ministers.

4. Investment Performance and Risk Management

It is important to ensure that planned investments and the relevant governance and oversight perform as envisioned. The plan should describe the performance management strategy and systems supporting planned investments and demonstrate how performance monitoring supports the continuous improvement of investment planning activities.

Measuring performance is a sound management practice and will help demonstrate whether the investment planning cycle achieved defined objectives, while identifying any gaps and opportunities for improvement. Performance results, project close-out reports and other lessons learned should also be documented and considered in future investment planning cycles.

Regular reviews within each fiscal year should be conducted to monitor progress of investment activities towards the objectives identified in the investment plan. Variances may occur if and when new pressures arise, priorities change, or initiatives do not develop as planned, at which time it may be necessary to update the investment plan to reflect these changes. However, as previously stated, it is important to document the variances, the supporting rationale any corrective action taken, and how this will impact future investment planning decisions.

The investment planning performance management system should be aligned with the performance measures outlined in the Management, Resources, and Results Structure Policy[13], the supporting Program Activity Architecture (PAA) and defined strategic outcomes. The planned investment activities should be aligned with the departmental Report on Plans and Priorities (RPP) and therefore the actual performance and results of the investment activities should support the Departmental Performance Report (DPR).

Performance management is the link between the plan and the planning process. Measuring performance helps determine whether the investment planning process resulted in the right plan and whether the plan effectively supported the achievement of expected results. Lessons learned from performance results should be taken into consideration to improve future investment planning cycles, which should in turn result in improved planning decisions and better plans.

Within the context of the Policy on Investment Planning - Assets and Acquired Services, it is a requirement for departments to evaluate, monitor and document the investment planning process and its results.

Specifically, section 6.2 of the policy states:

  • Performance relative to the obligations under this policy is measured and documented.
  • The effectiveness of the investment-planning regime is reviewed on an ongoing basis, consistent with the department's risk-based audit planning.
  • The implementation of departmental investment plans, approval of investments and resourcing decisions is monitored.

Performance management of the investment planning process is expected to identify opportunities for improvement in:

  1. Investment planning activities;
  2. Governance of investment management;
  3. Investment management capacity (people, financial and systems); and
  4. Investment performance and risk management;

In general, a department should consider the long, intermediate and short term objectives in the above four areas and:

  1. Develop one or two key indicators for each, to measure performance;
  2. Identify and assess risks to achieving defined performance objectives;
  3. Develop appropriate monitoring and risk mitigation strategies;
  4. Implement these strategies as required.

The following is a sample template of a performance measurement table:

Investment Planning

Category

Outcome

Activities/ Outputs

Indicator/ Target/ Milestone

Measure

Risks

Investment Planning

Clear and effective departmental investment plan

       

Governance

Clear and effective governance structure

       

Clear and transparent accountability

       

Processes

Efficient and effective investment planning processes

       

Prioritization of investments

       

Well-supported, timely and documented investment decisions

       

Capacity

Sufficient financial resources for investment management

       

Right HR resources at the right time for investment management

       

Results

Performance metrics/ assessments/reviews/etc. of investment management

       

Continuous Improvement

Results and gap analysis feed into future planning where corrections are made when necessary

       

4.1.1 Evaluating the planning process[14]

An evaluation of the investment planning process should be linked to its key objectives and outcomes and should at a minimum consider the following questions:

  1. Is there a clearly articulated investment planning governance structure?
  2. Are there ongoing assessments and reviews of the investment planning governance structure (identifying the challenges and opportunities for improvement)?
  3. Is there transparency in governance, accountability and responsibility for investment planning and the management of investments?
  4. Is the planning process straightforward and clear or is it confusing and difficult?
  5. Does the process adequately support investment planning in that it provides the right information (top investment priorities across the department aligned with strategic objectives and program delivery in consideration of available resources)?
  6. Does the planning process lead to well-informed and effective investment decisions?
  7. Are the right people/groups/divisions involved or are sections of the department that should be involved left out or not participating?
  8. Are the information systems in place adequate (are they integrated across the department, do they support planning, budgeting and accounting for resource allocations)?
  9. Do the systems support performance measurement and reporting related to the integrated management of departmental investments?
  10. Are mechanisms in place to ensure TBS is advised in a timely manner of deviations from and significant changes to the plan?
  11. What is the level of capacity for investment planning and management and is it capable of effectively planning and managing investments?
  12. Is a feedback mechanism in place to ensure that lessons learned are applied to future planning cycles to promote for continuous improvement towards realistic and accurate plans?
  13. Was the plan effectively implemented? What evidence is there that the plan was effectively implemented?

4.1.2 Evaluating the investment plan

An evaluation of the investment plan should consider the following questions:

  1. Does the investment plan clearly support the strategic objectives and priorities and the program outcomes of the department?
  2. Does the plan identify the key issues likely facing the department on the horizon?
  3. Is the plan succinct and clear?
  4. Does the plan contain key investment information highlighting those investments that are high risk and complex?
  5. Does it provide an accurate picture of the department's planned investments over at least a 5-year time frame?
  6. Does the plan capture investment information on both assets and acquired services?
  7. Does the plan effectively explain the governance, planning, and decision-making structures?
  8. Does the plan consider the department's investment management resource and capacity levels?
  9. Are the investment risks sufficiently defined, assessed, and managed?
  10. Does the planning cycle include a process for managing investment performance management process?
  11. Do investment activities reflect the plan? If not, why not?
  12. Are lessons learned from previous investment planning cycles applied to improve current processes and future plans, and are they reflected in the plan?
  13. Does the plan reference the organizational project management capacity assessment and express the appropriateness of the capacity in light of the risk and complexity of projects?

The department will need to provide evidence to demonstrate to TBS that the investment planning policy's specific monitoring and reporting requirements are being met, which include:

  • Measuring and documenting the performance of investment planning and investments.
  • Reviewing the effectiveness of the investment planning and decision-making structure (process, accountabilities, etc.) on an ongoing basis, consistent with the department's risk-based audit planning.
  • Monitoring of the implementation of departmental investment plans, and of approvals and resource allocation decisions.
  • Reflecting the relevant investment planning decisions in the report on plans and priorities.

4.2.1 Risk Management[15]

Effective risk management for investment planning supports the achievement of the investment planning objectives, outcomes, outputs and activities and helps to avoid setbacks and undesired deviations. Each risk is analyzed, considering the likelihood of occurrence and the estimated impact if it transpires, as a basis for determining how it should be managed.

The following is an example of a key risk area that could be identified as a challenge to achieving the outcomes of the Investment Planning process:

Outcome

Risk

Likelihood

Impact

Assessment

Mitigation

Investment Planning - Clear and Effective Governance Structure

High - Turnover in senior management positions

High

High

High

Succession planning and knowledge transfer (clearly documented information for retaining corporate knowledge)

4.2.2 Internal Audit

Deputy heads are responsible for ensuring that effectiveness of the investment planning process is reviewed on an ongoing basis. Furthermore, the investment planning process must be consistent with the department's risk-based audit planning and the Treasury Board Policy on Internal Audit[16].

5. Inquiries

Please direct enquiries about this policy instrument to the organizational unit in your department responsible for this subject matter. For interpretation of this policy instrument, the responsible organizational unit should contact: TBS Public Enquiries.


Annex A - Example: table of investments

Projects

Investment Type

Costs
($,000s)

Real Property Strategy

HR Strategy

Included in IT Plan

Procurement Strategy
For major contracts ($,000)[**]

Exceeds departmental/
PWGSC contracting authority limit

PCRA

Fiscal Years

907 - New Case Management System

45,000

No

Yes

Yes

1. Software: 10,000 competitive RFP, PWGSC
2. Professional Services: 30,000
Competitive RFP, PWGSC

1.No
2.Yes

Level 4

2007 - 2015

908 - Contaminated Sites

30,000

Yes

No

No

Construction: 28,000
Competitive RFP, PWGSC

Yes

Level 3

2007 - 2012

909 - Health Claims Processing

60,000

No

No

Yes

Professional Services: 50,000
Competitive RFP, PWGSC

Yes

Level 2

2008 - 2009

[**] Further direction regarding procurement planning information to be included in the investment plan will be provided in future guidance.

Assets

Investment Type

Costs
($,000s)

Real Property Strategy

HR Strategy

Included in IT Plan

Procurement Strategy[**]

Exceeds departmental/PWGSC contracting authority

PCRA

Fiscal Years

1 - Fleet Purchase

5,000

No

No

No

Multiple call-ups PWGSC Standing Offers

No

N/A

2007 - 2009

2 - Machinery and Equipment

2,500

No

No

No

No

unknown

N/A

2008 - 2009

3 - Informatics

850

No

No

Yes

Multiple contracts, PWGSC Supply Arrangements

No

N/A

2007 - 2011

4 - Facility

3,000

Yes

Yes

No

Competitive RFP

Yes

N/A

2009 - 2010

[**] Idem.

Acquired Services

Investment Type

Costs
($,000s)

Real Property Strategy

HR Strategy

Included in IT Plan

Procurement Strategy[**]

Exceeds departmental/ PWGSC contracting authority

PCRA

Fiscal Years

505 - Training

450

No

Yes

No

CSPS and commercial

No

N/A

2007 - 2012

507 - Records Management

800

No

No

Yes

Sole Source (IP rights)

Yes

N/A

2007 - 2012

507 - Call Centre

1,500

Yes

Yes

Yes

Competitive RFP

No

N/A

2009 - 2012

[**] Further guidance regarding procurement planning information to be included in the plan will be provided in future.

Annex B - Resources

Footnotes

Date Modified: