The mandate of the CanmetMATERIALS (CMAT) is to develop and deploy technologies that will improve all aspects of producing and using value-added products derived from metals and minerals, including metal alloys, metallic composites, and other advanced materials. It also includes the development of technologies and materials that can be used in applications that will improve energy efficiency, reduce greenhouse gas emissions, and enhance the strength, durability, reliability, and safety of industrial and other products.
In July 2005, Natural Resources Canada (NRCan) announced the renewal of the CMAT and the eventual relocation of laboratory activities to a new facility constructed as part of the McMaster Innovation Park in Hamilton, Ontario. The goal was to situate CMAT in a new building that would meet current and future science program needs while containing costs to acceptable limits. In 2006, a total budget of $40 million was allocated by Treasury Board (TB) for one-time costs such as capital equipment and moving expenses for the relocation project, and in 2007 new on-going funding of $6 million per year was allocated for lease and building operating costs (including scientific program costs). If additional funding is required to complete the construction and relocation of the laboratory, beyond the funding allocated by Treasury Board, NRCan would be responsible for securing the funds internally.
At the time of the audit, CMAT was well into its most significant and transformative change over its 66-year history. In 2010, most employees and equipment had moved from the historic laboratory on Booth Street in Ottawa into a new state-of-the art facility in Hamilton, Ontario promoting and supporting research and development in advanced materials and innovative processing and thus enabling Canada to become more competitive on the global market.
The audit of the CMAT relocation was approved by the Deputy Minister as part of the 2011-2013 Risk-Based Audit Plan.
The overall objective of this audit was to provide reasonable assurance that the CANMET relocation has appropriate management controls in place.
The scope of the audit included all plans, activities, and spending from fiscal year 2007/08 to March 2012 as it related to the total budget of $40 million allocated by Treasury Board (TB) for one-time costs, such as capital equipment and moving expenses, for the CMAT laboratory relocation.
The audit did not examine how the relocation options were identified and appraised or the impact of the relocation on CMAT’s business.
The CMAT relocation project was found to be in compliance with the approved plans and with project management requirements as set out in the project plan, procedures, and agreements. These documents served to define detailed tasks to be accomplished, as well as financial controls, collaborations, and performance measurement and reporting arrangements.
The project had well defined objectives within an overall accountability framework. In transferring work, resources, assets and records, the audit team noted that CMAT successfully minimized the disruption of service during the relocation and was essentially on time and on budget.
AREAS FOR IMPROVEMENT
Control weaknesses were found with respect to asset management. In addition, while the audit team noted that CMAT has control mechanisms in place to stay within budget, CMAT should document its formal acquisition plan with major milestones, firm commitments, and intended delivery dates to ensure the acquisition of outstanding essential laboratory equipment.
AUDIT CONCLUSION AND OPINION
The audit results provide reasonable assurance that the CMAT relocation activities are in compliance with the TB approved plans, the project has appropriate management controls in place and that CMAT is employing sound project management principles and practices.
In my opinion, the management of the CMAT Materials relocation has no material weaknesses related to governance processes. There is a moderate risk exposure related to asset management and a minor risk exposure with respect to the acquisition of outstanding essential laboratory equipment that CMAT meets its strategic objectives.
STATEMENT OF ASSURANCE
In my professional judgment as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report. The opinion is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed on with management. The opinion is applicable only to the entity examined.
Christian Asselin, CA, CMA, CFE
Chief Audit Executive
TABLE OF CONTENTS
- EXECUTIVE SUMMARY
- FINDINGS AND RECOMMENDATIONS
- APPENDIX A – AUDIT OBJECTIVES AND CRITERIA
- APPENDIX B – STANDARD RISK TYPES AND AUDIT RATINGS
- APPENDIX C – RELOCATION PROJECT PERFORMANCE MEASUREMENTS
In July 2005 Natural Resources Canada (NRCan) announced the renewal of the CMAT and the eventual relocation of laboratory activities to a new facility constructed as part of the McMaster Innovation Park in Hamilton, Ontario. The goal was to situate CMAT in a new building that would meet science program needs while promoting sustainable Footnote 1 Platinum facility and containing costs to acceptable limits. In 2006, a total budget of $40 million was allocated for one-time costs such as capital equipment and moving expenses for the relocation project. If additional funding is required to complete the construction and relocation of the laboratory, beyond the funding allocated by Treasury Board, NRCan would be responsible for securing the funds internally.
At the time of the audit, the laboratory was well into its most significant and transformative change over its 66-year history. In 2010, employees and equipment had moved from the historic laboratory on Booth Street in Ottawa into a new state-of-the art facility in Hamilton, Ontario promoting and supporting research and development in advanced materials and innovative processing and thus enabling Canada to become more competitive on the global market.
CMAT research activities are aimed at finding materials-based solutions for Canada’s energy, transportation and metal manufacturing sectors, which support industries that employ more than 450,000 Canadians. To fulfill this objective, recruiting efforts are well underway to find approximately 23 people to fill the positions left vacant due to the relocation. As new hires continue to arrive, the lab will continue to grow into its role to better support the competitiveness of Canadian industry through its research and development on metals and alloys, metal composites, metal powders and enabling technologies — such as production, coating, and welding — for product manufacturing.
The laboratory’s relocation will also increase Canada’s technological capacity in critical areas of research for new materials. For instance, with its more modern equipment, CMAT will be able to focus its research on ecomaterials that have minimal impacts on the environment while maintaining business productivity. In addition, CMAT will continue to offer its full range of business support programs.
The overall objective of this audit is to provide reasonable assurance that the CMAT relocation has appropriate management controls in place. Specifically, the audit was developed to determine whether:
- CMAT relocation activities were in compliance with the TB approved plans and other relevant policies and procedures;
- CMAT has adequately managed the relocation funds by putting in place appropriate management practices and providing timely reports to oversight bodies; and
- CMAT has adequate practices in place to effectively and efficiently manage assets, partnerships and collaborations, communications with employees, and human resource workforce adjustments.
NRCan’s Corporate Risk Profile 2010-11 rated the risk associated with NRCan’s science activities and results as significant as they may not adequately target or address the key natural resource issues of tomorrow. The Relocation and rejuvenation of the CMAT Laboratory was intended to respond, in part, to this risk.
The audit of the CMAT relocation was rated as “High Audit Priority” and approved by the Deputy Minister as part of the 2011-2014 Risk-Based Audit Plan.
SCOPE AND METHODOLOGY
The scope of the audit included all plans, activities, and spending from fiscal year 2007/08 to March 2012 as it related to the total budget of $40 million allocated by Treasury Board (TB) for one-time costs, such as capital equipment and moving expenses, for the CMAT laboratory relocation.
The audit approach was based on Treasury Board guidelines on internal auditing and standards defined by the Institute of Internal Auditors (IIA) and included:
- review of relevant background documentation;
- interviews with key corporate and program personnel; and
- an examination of corporate records, program records, financial transactions and records, and supporting documentation (to determine if effective controls have been designed and implemented).
The audit did not examine how the relocation options were identified and appraised or, whether the decision to relocate and rejuvenate CMAT has resulted in overall achievement of the laboratory’s strategic business objectives.
The audit criteria used to assess the adequacy of the CMAT Relocation’s Management Control Framework were approved by CMAT prior to the commencement of the audit. Please refer to Appendix A for the audit criteria.
FINDINGS AND RECOMMENDATIONS
CMAT has adequately managed the relocation funds by establishing appropriate management practices and providing timely reports to oversight bodies. However there exists a minor risk with respect to the acquisition of outstanding essential laboratory equipment that CMAT meets its strategic objectives.
CMAT received from Treasury Board $40 million in funding for one-time costs related to the relocation project. The majority of this funding, $22.7 million, was for the purchase of new state-of-the-art equipment deemed essential in order to modernize CMAT and support advanced materials and innovative processing research and development activities. The remaining funding, $17.3 million, was designated for the new facility’s fit-up, project planning, human resources relocation, transition support, recruitment of replacement personnel, contingency funding, and program disruption costs.
During the planning phase of the relocation project, CMAT projected that relocation activities would disrupt laboratory programs and that, as a result, CMAT would incur program disruption costs of $8.47 million. However, because recruitment was slower than anticipated and since external revenues did not drop to the extent anticipated, CMAT’s operating deficit was substantially lower than originally projected over the course of the relocation. Only forty-five (45) employees elected to relocate to Hamilton leaving fifty-seven (57) positions vacant (of which all but 23 had been re-staffed at the time of the audit). At the time of the audit CMAT advised the audit team that the loss of revenue from science program disruption had been offset by the reduction in operating costs – leaving CMAT with an overall $6.4 million surplus of funds to achieve its relocation objectives. This, the audit team was advised, afforded CMAT the opportunity to make adjustments to its initial equipment purchasing decisions.
Initial decisions for the new laboratory’s equipment requirements were made at the time that CMAT was seeking funding from the Treasury Board – in fiscal year 2007-2008. Initial projections during this planning phase included a total of twenty-eight (28) items with an estimated cost of $22.7 million. However, as the relocation project progressed and, as circumstances permitted, a revised list of equipment was developed in consultation with Academia and Industry. As of March 2012, this list contained one hundred and ninety one (191) items with a total value of $31.3 millionFootnote 2 – $9.3 million above original estimates. The audit team examined the relocation project’s governance framework and found that it provided for performance monitoring and reporting and included the establishment of an Equipment Procurement Committee. This committee kept track and reported on equipment costs within each fiscal year including original budgets, revised estimates, actual bids, commitments and final payments. An on-going priority list of equipment purchases was established and used to coordinate overall equipment purchases. Decisions on equipment priority were made in consultation with scientists and CMAT management and required final approval by the Director General.
At the time of the audit, an essential piece of laboratory equipment had not yet been acquired as part of the relocation. Specifically, a rolling mill, which accounted for $4.9 million (12%) of the overall $40 million relocation budget, had not yet been acquired. This equipment was deemed to be an essential part the laboratory’s rejuvenation requirement. Sourcing decisions with respect to this equipment were being explored. The audit team was informed that CMAT was utilizing the existing unit at Booth Street in Ottawa as a contingency plan until a final decision is reached.
As of March 2012 CMAT had spent or committed a total of $27.6 million of the $40 million in funding received from Treasury Board for one-time costs related to the relocation project.
The audit team also noted that due to a slight delay (i.e. 6 months) in the completion of the new facility, CMAT was not able to fully occupy the facility until November 2010. CMAT, however, was able to secure swing space at a cost of $200,000 within the new facility between April 2010 and November 2010. This was to ensure continuity of its operations and to meet the needs of employees relocating during the summer months. As a result, CMAT was not required to make rental paymentsFootnote 3 until November 2010. This allowed CMAT to set aside an additional $3.6 million from its ongoing operating and maintenance budget. This funding does not form part of the $40 million relocation budget that is under examination, however it does provide CMAT with a source of funding in order to complete its relocation activities and equipment purchases. CMAT management also advised the audit team that research partners have provided additional $3.8 million from other sources for additional equipment.
Overall, the audit found that the control mechanisms to stay within budget were in place and working as intended. Specifically, the audit team noted that the CMAT senior management team meets weekly to review the current financial situation including updated projections on costs and delivery dates for all equipment being purchased, and other costs related to the relocation. The entire management team is briefed at least monthly in the Capital Review Management meeting. This meeting provides an update on the status of the capital plan, and also provides a forum for discussion of purchasing priorities.
Specialized engineering and other consultants are utilized as required to ensure that construction related issues are addressed in a practical and cost effective manner, and that costing is accurate. If actual costs exceed projected costs, CMAT has the option to delay some purchases until future years when funds can be obtained through external revenue generation. Carrying-forward and re-profiling funds earmarked for expenditures in previous years has enabled CANMET to move funds into the next two fiscal years to cover anticipated costs.
The audit team did note, however, that reconciling CMAT working budgets was challenging. This was due, in part, to the transition between the Sector’s Project Management Information System and the Departmental implementation of its new financial information management system, SAP, and, in part, as a result of the staff turnover due to the relocation.
As part of the audit, the audit team examined a statistical random sample of sixty (60) financial transactions related to the relocation activities to determine if CMAT has complied with the Financial Administration Act (FAA). Specifically, according to Section 34 of the FAA, before a payment is made for goods received or services received, the responsible departmental official must certify that the performance of work, the supply of goods, or the rendering of services were in accordance with the terms and conditions of the contract and that the price charged is in accordance with the contract, or in the absence of a contract, is reasonable. While the responsible departmental officials’ Section 34 certifications were evident, one (1) of the sixty (60) transactions examined were found to have no evidence on file that demonstrated the receipt of goods or services, for example a receipt, a bill of lading, a packing slip, an e-mail, or a note to file, as required by the TBS Directive on Accounts Verification. In addition, one transaction file could not be located by CMAT at the time of the audit. Ninety-eight percent (98%) of all transactions examined were found to be in compliance with the FAA Section 34 as well as NRCan and Treasury Board policies and related procedures.
RISK AND IMPACT
There is a minor risk exposure with respect to the acquisition of outstanding essential laboratory equipment that CMAT meets its strategic objectives.
This strategic risk is rated as minorFootnote 4 as control mechanisms are in place to stay within the budget.
1. The Director General of CMAT should document CMAT’s formal acquisition plan with major milestones, firm commitments, and intended delivery dates to ensure the acquisition of outstanding essential laboratory equipment in order to support the effective delivery of CMAT’s mandate.
MANAGEMENT ACTION PLAN AND TIME FRAME
CMAT’s management team has a plan for capital acquisition over the next two fiscal years that is currently articulated through project management documents and is tracked weekly through meetings with the Director General, Manager of Relocation Transition, Manager of Finance and Administration and Director of Operations. We do not see any difficulty in articulating this as an acquisition plan. Therefore CMAT will document its formal acquisition plan, including rationale, major milestones, firm commitments, and intended delivery dates.
Responsible Position: Director General, CANMET MATERIALS.
Timing: June 2012
ASSET AND RECORDS MANAGEMENT
A physical count of CMAT assets prior to the relocation to Hamilton did not occur as required by NRCan policy and an asset reconciliation report had not been finalized at the time of the audit.
According to NRCan policy, custodian managers must ensure that a physical count of their assets takes place when a move or re-organization occursFootnote 5. The last physical count of CMAT assets, prior to the relocation, had occurred in 1999. It was recognized by Management that the data with respect to asset inventories, kept electronically within a Departmental database, was most likely out of date and did not accurately reflect current CMAT asset holdings. Although a physical count was conducted as part of the move, it occurred only after the relocation of assets had been realized, contrary to NRCan policy.
In November 2008, CMAT Management made the decision to identify assets that were to be moved to Hamilton and with the advice of the Shared Services Office Asset Management Team leaving the remaining assets in Ottawa to be counted at a later date and declared surplus. The audit team was advised that this was as a result of a lack of resources available on the part of the Shared Services Office Asset Management Team (SSOAMT) to actually conduct the count prior to the move. It was not until September 2011 that the SSOAMT conducted the physical count of CMAT assets and updated the Departmental database to reflect current CMAT asset holdings.
At the time of the audit, a preliminary reconciliation had been completed by the SSOAMT showing that forty-seven (47) non-capital assets and two hundred and thirty-three capital assets (233) with a depreciated net book value of $50,000 and $659,000 respectively were unaccounted for. These forty-seven (47) non-capital assets and the two hundred and thirty-three capital assets (233) had historical costs of $657,000 and $18.9 million respectively, accounting for nine percent (9%) of CMAT’s Asset Account net book valueFootnote 6 and two percent (2%) of NRCan’s overall net book value of assets. It was also noted that these assets had an overall average of remaining useful life of 10 years. As a physical count had not been completed prior to the move, the audit team was unable to determine if the status of these assets was a direct result of the out dated data against which the count was performed or was as a result of the relocation.
The audit team selected a random statistical sample of fifty (50) assets from the most recent physical count of CMAT asset inventory of items moved to Hamilton to test for existence and determine whether adequate practices were in place by management for the relocation of assets. The relocation of capital assets was effectively controlled and 100% of the population sampled was located in the new CMAT facility.
The audit team sought to determine whether CMAT records were effectively and efficiently managed during relocation activities. Prior to the CMAT relocation to Hamilton, CMAT physical records were largely managed outside of the Metal and Minerals Sector Records Management System. As a result of the relocation, efforts were made to bring CMAT records management system in line with the overall Departmental records management system.
In March of 2007, CMAT began the transfer of dormant records to the Sector’s Records Office. Listings of all official files were captured in order to be able to meet Access to Information Requests and to ensure that personal information, business information and corporate/historical knowledge was protected and tracked throughout the move.
In early 2009 a plan was developed for the management and relocation of active records and library material. NRCan records management also began working with CMAT Communications to create a document of instruction for all employees. In October 2009 a bulletin was circulated and an all staff meeting was held to ensure CMAT records management system was consistent with the overall Departmental records management system.
Record holdings were inventoried and documented prior to their relocation. Records were shipped and protected according to their classification. They are now stored in the new Records Office in Hamilton.
RISK AND IMPACT
There is a moderate risk that without proper asset reconciliation, the CMAT Asset Account may be misstated and government property may be lost, stolen, or destroyed.
This compliance risk is rated as moderateFootnote 7 as a physical count of CMAT assets prior to their relocation to Hamilton did not occur as required by NRCan policy and an asset reconciliation report had not been finalized at the time of the audit.
2. The Director General of CMAT in collaboration with the Director of Shared Services Office, Asset Management Services, should finalize and sign the required reconciliation report and submit write-off forms if required, in order to ensure the accuracy of Departmental financial records.
MANAGEMENT ACTION PLAN AND TIME FRAME
The Director General of CanmetMATERIALS in collaboration with the Director of Shared Services Office, Asset Management Services, will finalize and sign the required reconciliation report.
CMAT notes that it has already accounted for all items that were on the Unaccounted Asset List that was sent to CMAT in April, 2012.
SSO Assets Management will perform the inventory exercise and reconciliation. SSO will finalize the asset management count and complete all related management actions by August 31, 2012. This timing will allow SSO to perform due diligence and accurate materiel management.
Formal asset disposal measures will be taken (e.g. submission of write-off forms) as necessary to maintain the Departmental financial records’ integrity. Specifically, the inventory reconciliation process will be comprehensive, addressing all asset management life cycle stages for all of the items as part of the move. Such measures will ensure that the asset items within the physical custody of CanmetMATERIALS are properly recorded and reported.
Responsible Position: The Director General of CMAT in collaboration with the Director of Shared Services Office, Asset Management Services
Timing: August 31, 2012
AUTHORITY, PLANS, POLICIES AND PROCEDURES
CMAT relocation activities were in compliance with the Treasury Board approved plans and other relevant policies and procedures. CMAT planned and carried out the relocation activities as a project in accordance with Government of Canada project management principles and practices. Although CMAT had encountered some relocation activities that required a higher than anticipated level of effort and funding the audit team found that the project was on time.
The audit team found that a governance framework had been established in accordance with the approved Treasury Board Submissions to ensure relocation was realized on time and on budget. Eleven (11) major committees were put in place and, key planning documents were developed such as a Project Charter; a Risk Management Plan, and, Project Management Procedures to guide relocation and renewal activities.
The audit team examined the Project Charter and determined that it was developed and signed in November 2007. It served as the framework for the relationship between NRCan and McMaster Innovation Park and defined the development of design requirements, funding, roles and responsibilities, along with direction for cost sharing of planning and construction activities. The audit team noted that the Project Charter required a lessons learned study to be conducted in the final phases of project which would be of benefit and of relevance to other government facility relocation initiatives.
A formal Risk Management Plan had been developed, which reflected the risk assessments of CMAT senior management and Project Coordination Team, as well as detailed controls and corresponding accountabilities, to effectively manage the risks identified. In developing the Risk Management Plan, CMAT was supported by a consultative process which included Risk Management Centre of Expertise (RMCE), Real Property Management, Human Resources, and Financial Management. The scope of the assessment included direct financial and human resource issues. The audit team did note, however, that while the Risk Management Plan was updated periodically up until March 2010, it was not formally used after this date. Rather, from this point forward, risks were monitored through the use of “Executive Dashboard” reports which were regularly communicated to senior management to provide the status of critical activities.
A Project Management Procedures document was developed to support project coordination and provided transparency to the entire project, minimizing areas of conflict and thus providing another level of assurance that the overall strategic objectives were being met – in particular the adherence to the principle of: “on time – on budget”. For example, the procedures outline the authorities to approve change orders within specific monetary thresholds. The audit team examined all project change order requests at the time of the audit and determined that NRCan’s total expenses related to change orders was $1.5 million, representing less than five percent of the total budget and within approved authorities.
The audit team also noted that CMAT encountered relocation activities that required a higher than anticipated level of effort and funding with respect to chemical relocation and disposal, equipment refurbishment, laboratory waste disposal, site remediation, specialized fit-up, building de-commissioning and training. The cost associated with these activities was $1.8 million. Of these costs $570,000 are to be spent over the 2012-2013 fiscal year and includes specialized fit-up of laboratory ventilation systems. Some activities had a lower than anticipated cost such as the relocation of employees and disruption costs.
CMAT had established fifteen (15) performance measurements in order to monitor relocation activities. These measurements provided details relating to expected outcomes and quantified targets. Monitoring against these measurements was being conducted through committee structures and the use of “Executive Dashboard” reports which were regularly provided to senior management to update the status of critical activities. Performance monitoring incorporated all functions surrounding the relocation activities including Health and Safety, Finance and Procurement, HR, Client Services, Project Management, Risk Management and IT concerns.
The Committees established for the relocation project included a Strategic Advisory Committee, Equipment Procurement Committee, and Relocation Steering Committee. The committees were designed to ensure that stakeholders were consulted and well informed to ensure that appropriate decisions surrounding equipment and other relocation activities were made and reported.
Performance monitoring occurred at the committee level and again at the senior management level, ensuring appropriate governance and oversight. At the time of the audit, CMAT management provided the audit team with status of the relocation activities measured against the fifteen (15) performance measurements which it had established at the beginning of the relocation. The audit team found that the project is on time and had fully met sixty-percent (60%) of its performance objectives and targets. The project was behind on thirteen percent (13%) of its targets and on course to complete the remaining twenty-seven percent (27%) within the intended timeframe. Please refer to Annex B for the status of each of the relocation project performance measurements.
Workforce Adjustment Activities
Recognizing the impact that such change could have on staff, a significant effort was put into human resource planning for the transition period and for the longer-term future. It was important not only to attract and retain staff, but also to provide for the needs of CMAT’s employees who would not relocate to Hamilton. Human Resources aspects were guided by the National Joint Council Relocation Directive and the Workforce Adjustment sections of Collective Agreements. Though the transition period was lengthy, it was successfully navigated with the support of senior management, the full engagement of the management team, and with the assistance of Corporate Services within Natural Resources Canada. CMAT developed a Human Resources plan which will facilitate the transition to “normal operations”. This plan was developed in compliance with relevant Workforce Adjustment activities, relocation directives.
Forty-five (45) employees elected to relocate to Hamilton and arrived before November 22, 2011. At the time of the audit, CMAT had recruited 34 employees and was actively recruiting to fill the remaining twenty-three (23) vacant positions, representing twenty-two percent (22% ) of CMAT’s workforce (i.e. 23/102).
Partnerships, Collaborations, and Communications
CMAT had effectively managed partnerships and collaboration. Specifically, partnerships and collaborations were established in support of CMAT strategic direction. For example, internal service agreements were established for shared services in order to ensure continuity of administrative obligations and required practices within NRCan. External collaborative agreements were in place, including five collaborative agreements with academic partners such as; Mohawk College, University of Waterloo, McMaster University, the University of Alberta and the University of Calgary. An industry agreement was also in place with a private sector company.
CMAT had developed and implemented a communication plan to ensure that all stakeholders were kept apprised of relocation activities. The planning for aspects related to the CMAT relocation was coordinated through several relocation committees. One of these committees was the Relocation Communications Committee which worked to keep staff up-to-date on the status of the relocation. An internal website was created as a central repository for material previously distributed to employees (including HR-related Web pages, Frequently Asked Questions, links to external-to-government organizations in Hamilton and surrounding areas, presentations made at meetings, and CMAT Relocation Update newsletters).
Occupational Health and Safety
CMAT had implemented a formalized framework for the management of CMAT Occupational Health and Safety program and was in compliance with NRCan policy, the Canada Labour Code, Part II and its regulations, as well as Treasury Board policies, standards and procedures.
The audit team also determined that Departmental Security staff had participated in the planning and design phase of the new CMAT facility, as required by NRCan’s Security policy. However, the timing of their involvement was not prior to the project implementation as prescribed by the policy. As such, security specifications initially developed by an outside contractor required modifications in order to meet NRCan site specific security requirements.
The Building Emergency Organization (BEO) and Building Emergency Response Plans had been established and are being maintained at the new CMAT, in accordance with requirements of the Canada Labour Code, Part II and as required by NRCan’s Security policy.
RISK AND IMPACT
There is a risk that NRCan could lose valuable information for future NRCan facility relocation initiatives, if a lessons-learned study is not performed as required by the Project Charter within the final phases of the project.
This compliance risk is rated as minorFootnote 8as a lessons-learned study is required by the Project Charter, as part of the final phases of the relocation and renewal project, in order that NRCan may benefit from the experience of its Project Leaders and leverage process improvements.
3. The DG of CMAT should formally document, in a shared Departmental repository, a lessons-learned study as part of the final phases of the relocation and renewal project as required by the Project Charter, in order that NRCan may benefit from the experience of its Project Leaders and leverage process improvements.
MANAGEMENT ACTION PLAN AND TIME FRAME
The planned final date for completion of the whole project is 2014. The Director General of CanmetMATERIALS will formally document, in a shared Departmental repository, a lessons-learned study as part of the final phases of the relocation and renewal project.
Two remaining objectives will be met but with a longer time frame than originally planned. This includes the recruitment exercise; which was challenging because of the effort required to recruit elite scientists. The majority of recruitment actions are in progress; we have four remaining research scientist positions that will require special effort to locate the needed expertise.
The other objective is final completion of the building. The planned date for final building completion has been extended to facilitate commissioning and installation of new equipment, whose facility requirements were not fully known when the building was initially designed. The process of building completion is managed through weekly meetings between CanmetMATERIALS management and McMaster Innovation Park (MIP) management. MIP has engaged a competent project manager to track all remaining deficiencies, including the requirements for new equipment.
Responsible Position: The Director General of CMAT
Timing: December 2012
APPENDIX A – AUDIT OBJECTIVES AND CRITERIA
|Audit Objectives||Audit Criteria|
|1. To determine whether CANMET relocation activities are in adherence with the approved TB submission including plans and other relevant policies and procedures.||1.1 CANMET has executed its relocation in compliance with TB approved plans and authority and in line with overall strategic direction.
1.2 Determine if CANMET developed an HR plan which is in compliance with relevant WFA relocation directives, and allows for successful transition to “normal operations”.
1.3 Determine if CANMET Relocation plans and activities comply with relevant TB and departmental policies.
|2. To determine whether CANMET has adequately managed the relocation funds by putting in place appropriate management practices and providing timely reports to oversight bodies.||2.1 To determine whether CANMET has effectively managed its budget and available funding and reported it according to relevant financial requirements.|
|3. To determine whether CANMET has adequate practices to effectively and efficiently manage old and new assets, partnerships and collaborations, communications with employees and human resource workforce adjustments.||3.1 To determine if CANMET can demonstrate that it has managed its assets in a manner that considers the life cycle approach (assets, real property, facilities and buildings and scientific equipment).
3.2 To determine if CANMET has effectively managed the project relocation activities, partnerships and collaborations to achieve its strategic direction (defined clear objectives, responsibilities and measures aligned with relocation plan and monitored to be within time budget.)
APPENDIX B – STANDARD RISK TYPES AND AUDIT RATINGS
Standard Risk Types
Our standard risk types are classified based on the COSOFootnote 9Internal Control-Integrated Framework as follows:
Strategy – High-level goals, aligned with and supporting the Department's mission.
Operations – Effective and efficient use of resources.
Monitoring – Accurate assessments or evaluation of activities.
Reporting – Reliability of operational and financial reporting.
Compliance – Compliance with applicable laws, regulations, policies and procedures.
Standard Audit Risk Ratings
Audit findings are rated as follows:
Major: A key control does not exist, is poorly designed or is not operating as intended and the related risk is potentially significant. The objective to which the control relates is unlikely to be achieved. Corrective action is needed to ensure controls are cost effective and/or objectives are achieved.
Moderate: A key control does not exist, is poorly designed or is not operating as intended and the related risk is more than inconsequential. However, a compensating control exists. Corrective action is needed to avoid sole reliance on compensating controls and/or ensure controls are cost effective.
Minor: A weakness in the design and/or operation of a non-key process control. Ability to achieve process objectives is unlikely to be impacted. Corrective action is suggested to ensure controls are cost effective.
APPENDIX C – RELOCATION PROJECT PERFORMANCE MEASUREMENTS
|Measures specific to management of the relocation project|
|Measures to demonstrate whether the relocation of MTL to MIP in Hamilton is managed effectively|
|If the relocation to Hamilton is effectively managed, NRCan expects the following|
|Item||Outcome||Targets||Status - December 2011|
|1.1||Relocation project costs are contained within predictions||1.1.1||Differential of final project costs are within 10% of predicted costs in TB submission for authority to enter into a lease agreement.||One-Time Costs: On track:|
|1.2||Risk Management Plan is implemented||1.2.1||90% of controls are implemented according to risk management plan. There are 117 controls; 90% equals 105.||Met|
|1.3||Program disruption is minimized||1.3.1||Revenues generated year over year are not less than 80% of predicted revenues.||On track|
|1.3.2||80% of research projects are completed according to plan when potential disruption is accounted for.||On track|
|1.3.3||100% of NDT personnel are certified compared with usual expectations independent of relocation.||Met|
|1.3.4||80% of scientific equipment is purchased, installed and meets performance specification within predicted timelines.||Met|
|1.4||Transfer occurs in a timely fashion||1.4.1||Date of availability of building for occupancy within two months of predicted, as at construction commencement.||Met|
|1.4.2||90% of scientific equipment has been delivered within 12 months of building availability.||Met|
|1.4.3||90% of relocating employees have arrived within 12 months of building availability.||Met|
|1.5||Employees are effectively supported||1.5.1||80% of non-relocating employees find alternate employment within twelve months of commencing a job search.||Met|
|1.5.2||80% of relocating employees are able to move their families within nine months of new building occupancy availability.||Met|
|1.5.3||Scientific and technical staff are recruited in a timely fashion; within 12 months of departure of non-relocating employees who would have undertaken essential work.||Not met|
|1.6||Technical goals for building construction are met||1.6.1||New building is LEED Platinum certified.||On track|
|1.6.2||Operating costs for new building are within 10% of estimates provided by McMaster Innovation Park, at the commencement of construction.||Not Met|
|1.6.3||MTL employees are satisfied with their new working environment.||Met|
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