fmi 19 3:e National Office and Chapter News Features 9 Quantifying Financial Risk Michael Lionais 14...

Journalfmi igf

Sharing Best Practices in Managing Public Sector ResourcesSPRING/SUMMER 2008 VOLUME 19, NUMBER 3

Journalfmi**igf

Spring/Summer 2008 Volume 19, Number 3

The Financial ManagementInstitute of Canada

Managing Editor

Lyne Gélinas

Assistant Managing Editor

Rocky Dwyer

Editorial Board

Andrew FrancisAlan GilmoreBruce HirstWayne Job

Catherine MarierStacy Van Humbeck

Desktop Publisher

Ian Culbert

fmi**igf National Office Staff

Don SingerAnnie LorangerNancy Coelho

The fmi**igf journal is published three times a year bythe Financial Management Institute of Canada. Allrights reserved. Reproduction in whole, or in part, with-out written permission from the publisher is prohibited.Opinions expressed are not necessarily those of theFinancial Management Institute of Canada.

Publications Mail Agreement Number 40040265.

Return undeliverable Canadian addresses to:Circulation DepartmentFinancial Management Institute of Canada309 Cooper Street, Suite 503Ottawa, Ontario, K2P 0G5Telephone: 613-569-1158 Fax: 613-569-4532Email: [email protected] English section: www.fmi.ca WWW French section: www.igf.ca

Departments2 Message from the President6 From the Desk of the Managing Editor8 fmi**igf Board of Directors 2007-200849 National Office and Chapter News

Features9 Quantifying Financial Risk

Michael Lionais14 Investment Planning: The Next Challenge

Hendrik Siré17 Delivering Value: e-Payments in BC

Nicholas Krischanowsky and Maggie Skaarup21 The Public Sector and Universities: Complementarity and

InterdependencyFrançois Brouard

23 Reality Education – Where the Rubber Meets the Road!Rocky J. Dwyer

26 The Ethics Police EraAlan Gilmore

31 Seeking Vision: Financial Information Management SystemsBarb Hamdi

34 Effective Processes in Developing Sustainable Strategies in GovernmentSandra Klashinsky

40 Department and Agency Audit Committees – What’s Up DAAC?Marie-José Bourassa

42 The Importance of Standards in Public Procurement and the Fallacies ofthe Quick Fix

Kashef Majid45 The Ethic of Reciprocity: Treat Others as You Wish to be Treated

David J. Langlois

ColumnFrom Behind the Green Eyeshade

53 What Would Verdi Do In a Case Like This? – Yes Dearies, It is About Culture

Bruce Manion

For marketing opportunities, please contact Sean Downey, Verney Conference Management, 613-226-8317, [email protected]

Spring/Summer 2008 fmi**igf journal 1

Inside…

Ah! Life is beautiful… even morebeautiful when you are a member ofthis wonderful team and part of the

fmi*igf, such an amazing organization!This is already the third and last time

that we’ll be getting together via thefmi*igf journal. It would be a cliché to say“Ah! Time flew by” but to be honest, I haveto say “Ah! We may have achieved a lot, butthere is so much more to do”.

You may have noticed that my last mes-sage was on two pages. Ok, I get it … Markmake it short! I’ll do my best, but I can’tmake any promises.

There is something special about thismessage. As I write it, the PSMW 2008 inQuebec City has not yet taken place(recently, Quebec City suffered a great losswith the destruction of the Armoury byfire. This historic site, which witnessed thecreation of the first francophone regimentof our beautiful country Canada, held somany memories. I knew the Armoury quitewell as I spent time there during my servicewith the military reserve in Quebec City.).However, when you read this message, thesuccess of the PSMW will be part of thehistory of our organization. There arealready more than 400 registrations and Iam sure that the level of participation willbe exceptional. One thing is sure, the pro-gram and the quality of the speakers willmeasure up to the expected success of theevent. Special thanks to IGF Québec andits president Bertrand Carrier, to theOrganizing Committee and particularly toour two co-chairs, Serge Boisseau andJean L. Laporte. Thanks to all those whohave joined us to celebrate Quebec City,and its 400 years of history.

Another thing that makes this messageunusual is that it would normally be expect-ed that I give a full account of our manysuccesses over the last year. This is some-thing that I would rather do in my message

included in the fmi*igf Annual Report tobe published next fall. So I could stop righthere. Some may say “good!” and further-more my message would fit on one page …but I would rather give you a little previewof my list of this year’s many accomplish-ments.

We started the year with an ambitiousbusiness plan, especially considering that allour accomplishments depend mostly on thework of a very dedicated team of volun-teers. I would like to mention the follow-ing, which are not in any particular order:• Revitalization of our National Office –

Only last August, our Managing Direc-tor, Don Singer joined us, along withAnnie Loranger and Nancy Coelho. Wealso moved to a new location in the fall of2007.

• Review and update of several policies thatare key to the smooth operation offmi*igf affairs, particularly the PSMWSubmission Policy and the Policy on theInvestment Fund. The review of the Pol-icy on Awards and the establishment of anew position for National Speakers Liai-son should be completed by June.

• Comprehensive review of our by-laws –A proposal will be put forward at ourannual general meeting on June 9, 2008.

• Affiliation agreements – The affiliationagreement with the AGA has been final-ized and work is progressing on nationalagreements with CA/CGA/CMA. Dis-cussions are also underway with varioussponsors and universities.

• Legal protection of our trademark – Wehave taken the first steps toward the reg-istration of our organization’s trademark.

• We have subscribed a new liability insur-ance for the members of the Board(National and Chapters) as well as forour volunteers.

• Complete redesign of our website, whichwill be on-line by the end of the summer.

It will include a page for members only(that will grow quickly over the next fewyears and provide members with extravalue). Also, a new page will be accessibleby Board members and volunteers of allChapters. Everyone will then have accessto timely and up-to-date information,which will greatly reduce the administra-tive work at all levels. Finally, our newwebsite will have the capability to processon-line registrations and payments for allour events and membership fees and willhouse a comprehensive database. Andthis is only the beginning …

• PD Week – As many of you know bynow, we had to react quickly to theupcoming closing of the Ottawa Con-gress Centre. I invite you to join us at theHilton Lac-Leamy November 24–28,2008 (a new 5-day format), as well as in2009 and 2010. We will be back at thenew Ottawa Congress Centre in 2011.So, that’s it for now! More information

will be provided in the upcoming annualreport.

In closing, at the end of this mandate, Ipass the torch (and the president’s gavel) toMike Pestill, our new President. He inher-its a sound and prosperous organization,the result of the exceptional work of all pre-vious Presidents. I assure him of my fullcollaboration and I am sure you will too.

Thanks to all of you, and do not forget…Life is beautiful… **

Mark Huardfmi**igf National President

MESSAGE FROM THEpresident

2 fmi**igf journal Volume 19, No. 3

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The fmi,,igf journal is Canada’s lead-ing magazine for public sector profes-sionals involved in the field of publicsector financial management.

Its major articles, columns and newscover a broad range of governmentaccounting, auditing, and financialmanagement topics of concern to pro-fessionals.

fmi,,igf journal readers hold influen-tial positions in public accounting,and have responsibilities in a varietyof areas: financial management, infor-mation systems, administration andhuman resource management toname a few.

Its authors are individuals who holdsenior or experienced positions withingovernment and the private sector.These individuals share their experi-ence and expertise in areas of concernto professional public sector account-ants and managers with financialresponsibilities.

Virtually any topic of interest to thefinancially-oriented public sectorexecutive may be found in thefmi,,igf journal.

A non-profit organization, the fmi**igfhas opened 13 chapters across Canadain the past 40 years. Today, the fmi,,igfjournal enjoys a readership of morethan 2,000 professionals.

The organization hosts two annualnational conferences: PD Week basedin Ottawa and held in late November,and the Public Sector ManagementWorkshop which takes place in May orJune at a different location each year.

journal Alan G. Ross AwardThe Alan G. Ross Award for Writing Excellence is awarded annually to the individual(s) whocontribute the best article (feature or column) to the fmi,,igf journal during the year. If yourarticle is printed in the Winter, Spring or Fall 2008 issue, you will become eligible to receivethis award.

The fmi,,igf journal editorial team members look after, at a minimum, the subject areas fol-lowing their names:

Rocky Dwyer – Liaison with Academic Institutions - 613-996-4534Alan Gilmore – Audit - [email protected] Hirst – Federal Financial Management - 613-943-8763Wayne Job – Electronic Commerce and Information Technology - 613-952-9476Catherine Marier – Audit Management - External - 613-952-0213, ext. 5309Stacy Van Humbeck – Human Resources Management - 613-941-7166

These editors welcome timely and relevant articles from you. Feature articles are generally2,500 to 4,000 words. Other articles or input to a regular column are normally shorter (500to 2,500 words). Letters to the editor are also welcome.

Please address your correspondence to any of the team members or to Lyne Gélinas, Managing Editor: fmi,,igf journal

Financial Management Institute309 Cooper Street, Suite 503Ottawa, Ontario K2P 0G5

If you wish to be considered as a member of the editorial team of the journal, please writeto the Managing Editor, and indicate your area of expertise and the type of articles or col-umn to which you wish to coordinate or to which you would like to contribute on a rea-sonably continuing basis.

The recommended form of input is in Microsoft Word or WordPerfect formats. It is preferablethat the documents be in bilingual format. Graphics must be kept separate (not inserted into thetext). Advise what software was used to produce the graphic. The author’s photo and short biogra-phy are also requested.

The fmi**igf can no longer supply quantities of additional copies to readers. Reprints, how-ever, are available at a reasonable price. The minimum order is 50 copies.

fmi,,igf

The 2007

Alan G. Ross Award for Writing Excellence

was awarded to Dr. Peter Aucoin for his article entitled “After the Federal Accountability Act: Is the Accountability

Problem in the Government of Canada Fixed?“ published in the Winter 2007 issue of the fmi**igf journal.

Congratulations!

Ordre des CMA 2006_FMI Journal ANG _ 8,5 x 11 po._«Dernière chance»

www.cma-quebec.org • 1 800 650-ECMA

Imagine your career

with twice the recognition

CMA-MBAExecutive ProgramUniversité du Québec en Outaouais (in English and French)

École des sciences de la gestion de l’UQAM (in French)

CMAExecutive Program Concordia University

LAST CHANCE

This program begins in fall 2008.

Application deadline: July 31, 2008

Ilooked out the window as I started towrite this piece and noticed with disap-pointment the dark, dreary and rainy

weather; my gardening work will have towait until next week. Oh well! Not to bedeterred, I will take advantage of thischange in plans to write my editorial. Ihope you enjoy the wide variety of articlesin this issue.

Hendrik Siré, a long-standing contribu-tor to the journal and recipient of theAlan. G. Ross Award in 2006, provides asummary of the main requirements of thePolicy on Investment Planning, whichcame into effect on June 7, 2007, and somestrategies for meeting these requirements.

In his article entitled Quantifying Finan-cial Risks, Michael Lionais explains theprocess adopted by Agriculture and Agri-Food Canada that allows directors generalof finance to confirm to the Chief FinancialOfficer that the estimated costs of aninvestment project are reasonable, so thatthey can unhesitatingly justify a recommen-dation of financial approval.

Nicolas Krischanowsky and MaggieSkaarup provide an overview of the key ele-ments that allow the Banking/Cash Man-agement Branch of the British ColumbiaMinistry of Finance to offer its clients withvaluable and consistent e-commerce servic-es and to adapt to rapid technologicalchanges.

Marie-José Bourassa provides a progressreport on the activities involved in settingup audit committees over the past year.

Our loyal contributor Alan Gilmorewonders about the relevance and effective-ness of agencies and initiatives that areaimed at increasing the government’saccountability and ethics. Will they tacklethe source of the problems related to value

and ethics? Mr. Gilmore sets out the factsand provides information on the data avail-able for these agencies and initiatives. It isfor you to decide!

We are all familiar with the concept ofreality television. However, have you heardabout the concept of reality education?Rocky Dwyer provides an introduction tothis learning practice by explaining its char-acteristics and advantages.

In his message, the igf*fmi presidentoutlines the organization’s activities that areaimed at creating partnerships with the aca-demic community. It is in the context ofone of these activities that I met Mr.François Brouard, an associate professor inthe accounting group from the SprottSchool of Business at Carleton Universityin Ottawa. In his article, Mr. Brouardshows how the public sector and the uni-versity community would benefit fromworking together on those issues and prob-lems facing the public sector.

Sandra Klashinsky describes an effectivestep-by-step approach for developing sus-tainable strategies in government.

Kashef Majid describes the importance ofpublic procurement processes and the neg-ative consequences associated with choos-ing a quick fix.

David Langlois talks about the ethic ofreciprocity or the “Golden Rule,” which isbased on the principle of “treating others asyou would like to be treated.” Does theethic of reciprocity vary according to differ-ent philosophies and cultures, and how hasit changed over time? Mr. Langlois analyzesthis moral value by looking at differentwritten materials and considering his ownpersonal experiences.

Despite the efforts of the British Colum-bia government when implementing its

corporate accounting system and the manyinitiatives aimed at improving financialmanagement and simplifying businessprocesses, it finds itself once again with par-allel systems, old systems and employeeswho are still spending enormous amountsof time collecting departmental informa-tion. In order to solve this problem, theB.C. government has launched a projectthat aims to redefine the government’svision of financial management informa-tion systems. In order to build a solid foun-dation for this vision, the province hasstarted a consultation process with severalstakeholders and a comprehensive review ofdocumentation on the subject. Barb Handishares with us the results of this informa-tion review.

Bruce Manion provides us with his mosttwisted article since the beginning of hiscolumn. Follow along with his meanderinganalogy that compares the opera withaccounting and financial reports in a con-text of workforce diversity.

I would like to take this opportunity tothank the authors for their articles, featuresand news, as well as the members of the edi-torial board and all our contributors whomake the publication of this journal possi-ble. I count on you to continue providingour readers with a journal that meets theirexpectations. I encourage our readers tosend me comments and suggestions ofother subjects that we can explore.

Have fun gardening and enjoy the sum-mer!

FROM THE DESK OF THEmanaging editor

Lyne GélinasManaging Editor fmi**igf journal


HEADER fmi**igf Board of Directors 2007-2008Executive Committee Phone Fax EmailPresident Mark Huard, CGA (613) 946-4626 (613) 957-1782 [email protected]

Vice-President Mike Pestill, CMA (306) 787-9219 (306) 787-5830 [email protected]@sasktel.net

Secretary/Treasurer Kathryn Burlton, CGA (902) 464-2000, x2843 (902) 464-2238 [email protected] President Peter Wolters, CA (506) 453-8187 (506) 453-7154 [email protected] & Communications Derwin Banks (902) 432-5139 (902) 432-5586 [email protected] Marcel Boulianne (613) 946-4512 (613)277-3254 [email protected]

DirectorsEditor, fmi**igf Journal Lyne Gélinas, CGA (819) 956-6366 (819) 956-0123 [email protected] Editor, fmi**igf Journal Rocky Dwyer, PhD, CMA (613) 996-4534 (613 992-0528 [email protected] Week 2007 Chair Monique A. Arnold, CMA (613) 830-0383 [email protected] Week 2007 Vice Chair Alain Lesieur, CGA (613) 943-3849 (613) 944-9021 [email protected] 2008 Local Chair Serge Boisseau (418) 648-2488 (418) 648-4234 [email protected] 2008 National Chair Jean L. Laporte, FCGA (819) 994-8004 (819) 953-9648 [email protected] East Yvonne Samson, CA (506) 453-2110 (506) 453-7128 [email protected] Central France Labine, MPA/CMA (819) 994-5238 (819) 953-2158 [email protected] West Cheryle Boutilier, CMA (204) 983-6276 (204) 984-4253 [email protected] Director, Speaker Liaison Jean L. Laporte, FCGA (819) 994-8004 (819) 997-2239 [email protected]

Chapter PresidentsAlberta Lucia Stachurski, CMA (780) 460-4402 (780) 460-2039 [email protected] (Ottawa) Anik Lapointe, CGA (613) 957-0112 (613) 957-0160 [email protected] Christine Robichaud, CMA (506) 457-6886 (506) 457-4933 [email protected] Philip Green, CMA (902) 893-6309 (902) 895-7693 [email protected] Don Baril-Bissett (204) 983-0650 (204) 984-3407 [email protected]éal Johanne Pilon, CA (514) 873-1498 (514) 873-1212 [email protected] Richard Slee (416) 212-3006 (416) 325-8051 [email protected] Edward Island Andrew Burt, CMA (902) 566-8593 (902) 368-0411 [email protected]ébec Bertrand Carrier, CA (418) 691-5921 (418) 646-0991 [email protected] Rachel Ratch, CMA (306) 787-5654 (306) 787-7392 [email protected]. John’s John Martin, CA (709) 729-1412 (709) 729-2098 [email protected] Sarah Tobun, CGA (604) 664-9130 [email protected] Barbara E. Reuther, CGA (250) 356-1086 (250) 387-6073 [email protected]

fmi**igf National Office StaffManaging Director Don Singer (613) 569-1158 (613) 569-4532 [email protected] Assistant Annie Loranger (613) 569-1158 (613) 569-4532 [email protected] & Communications Coord. Nancy Coelho (613) 569-1158 (613) 569-4532 [email protected]

Marketing Contractor Sean Downey, VCM (613) 226-8317 (613) 722-7725 [email protected]

If you have not received your renewal information, contact yourlocal Chapter. Do not delay! There is an exciting year planned. Tobe eligible for preferred member rates, your membership must becurrent. Remember the benefits fmi**igf membership offers:• Networking opportunities with over 2,000 professionals in the

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The federal government’s Accounta-bility Act, combined with the Mod-ern Comptrollership initiative, have

necessitated a new approach to estimatingcosts for future expenditures. As CMAMichael Lionais explains, Agriculture andAgri-Food Canada has implemented a verysuccessful process to do just this.

Due to cost overruns across governmentin the 1990s, the Treasury Board of Canadainstituted an initiative called ModernComptrollership, which has evolved toinclude a requirement that Chief FinancialOfficers (CFO) of departments must per-sonally attest to the reasonableness of finan-cial information presented to the Govern-ment for decision-making. Recently, theGovernment passed the Accountability Act,which makes the Deputy Minister (seniorpublic servant) the Accounting Officer of agovernment department, thereby makingthis executive personally accountable forfinancial information presented to Govern-ment.

These changes underlined the need for anarms-length process by which CFOs canconfirm that cost estimates in business casesare reasonable before they are presented bythe Department. Agriculture and Agri-FoodCanada (AAFC), for instance, has adopted a

very successful arms-length process, whichwill be described in this article.

The validation processAll validations start with the expectation

that the cost estimate developed by theproject team is reasonable given the infor-mation available. The validation is carriedout to review the proposal for consistencyin applying departmental standards, and toensure conformity with the spirit or intentof applicable statutes and policies. An arms-length review process also ensures that allcost elements have been properly identifiedand considered. Through the risk assess-ment process and the use of simulated risk-adjusted costs, AAFC is able to develop astable planning figure for use by planningstaff in the development of longer-termstrategic considerations.

One of the main challenges in assessingfinancial risk is ensuring that the costs pre-sented are a reasonable estimate at a giventime in the approval process. The ultimateobjective in performing this analysis is toenable the Director General of Finance toprovide an objective recommendation tothe CFO as to whether financial attestationshould be provided with or without obser-vation.

Potential conflictsThere are well documented human

behavioural tendencies in management.Typically, research has indicated that man-agers are optimistic and tend to overesti-mate revenues, underestimate costs andthink short-term. These tendencies are usu-ally attributed to group think, bandwagoneffects and consequential behaviour whenone is committed to a project. This can beexacerbated in a government environmentthat is not constrained by profit. Addition-ally, there is usually a great deal of pressureto create programs for Canadians as quick-ly as possible for the lowest incrementalcost possible. As such, project managersoperate under the pressure of a cost ceilingand delivery deadlines.

Further, managers, in all industries, typi-cally pad their numbers to allow some con-tingency to address the uncertainty of theircost estimate. Despite this padding, costoverruns still occur routinely. In large part,this has to do with the quality of the finan-cial information used to build the cost esti-mate of a program under development.Typically, the program structure and deliv-ery mechanisms are refined as the fundingestimate is developed concurrently. As such,the funding proposal may not match per-

Michael LionaisMichael Lionais, CMA, joined the Department ofAgriculture and Agri-Food Canada as the Manager ofStrategic Costing after 20 years of military service.


Quantifying Financial RiskMichael Lionais

Table 1: Data integrity scale and categories

Data integrityconfidence level

Very low

Low

Medium

High

Very high

Appropriate contingencyranges

> 40%

31-40%

21-30%

11-20%

0-10%

Cost categorization

ROM

Indicative / ROM

Indicative

Sub / indicative

Substantive

Risk weight

Very substantial

Substantial

Significant

Insignificant

Very insignificant

Criticality

Vey substantial

Substantial

Significant

Insignificant

Very insignificant

fectly with the program design. Furthercompounding this issue is that the financialestimate will be based on the best informa-tion available, but the reliability of infor-mation underlying the financial estimateisn’t always identified. Rather, it’s usuallyassessed intuitively by the reader of thebusiness case.

To address these issues, Treasury Boardhas mandated CFOs to develop the “mostreasonable” estimate so that the most likelyproject costs can be identified to reduce thelikelihood of cost overruns. This is signifi-cant because cost overruns typically have tobe absorbed within a department’s assignedresources, which means that reduced servic-es (internal or external) or compensationmust be provided to Canadians should costoverruns occur. As a last resort, a depart-ment can request additional funding fromthe Government. Remember, it’s illegal toexceed the appropriation (budget) that Par-liament has assigned to a governmentdepartment and that by personally attestingto the reasonableness of the financial infor-mation the Deputy Minister and CFOassume a personal accountability to Parlia-ment.

Probabilistic modelThe probabilistic model is based on pro-

viding a reasonably independent assessmentof the quality of the information underly-ing the financial estimate. This is the foun-dation of the procedure because if the dataunderlying a decision is potentially flawed,executives need to factor this into theirdecision. Individuals preparing the costestimate aren’t in a position to provide anarms-length assessment of the validity ofthe data underlying the financial informa-tion as it is difficult to challenge a programthat you have been championing for thepreviously mentioned reasons. As such, thedata integrity assessment is the foundationof the model.

The model itself is derived from docu-mentation produced by the RAND insti-tute, NASA and the U.S. Department ofDefense (U.S. Naval Post Graduate Schooland Defence Acquisition University). Thedata integrity scale is similar to those in theNASA Cost Estimating Handbook, CostReadiness Levels (2004) and in a publishedarticle by the Association for the Advance-ment of Cost Estimating (R.B. Lorance and

R.V. Wending. “Basic Techniques for Ana-lyzing and Presentation of Cost Risk Analy-sis,” 1999).

The costing validation procedure startswith a check to ensure that all appropriatecost components have been included ineach cost element. If so, this is deemed tobe the most likely cost. If not, the cost ele-ment is adjusted as required to determinethe most likely cost. The data underlyingthe most likely cost estimate is fit againstthe data integrity scale in Table 1. Data iscategorized into three broad categories:rough order of magnitude (ROM), indica-tive or substantive. An appropriate contin-gency range has been assigned for each cat-egory. The analyst will make an assessmentof an appropriate contingency rating con-sidering the categorization of the costingdata, the type of costing information beingconsidered and the information providedby the Business Case sponsor to substanti-ate the cost estimate in the business case.

This is a subjective assessment however,it’s common in cost estimating techniques.All data integrity assessments are fully iden-tified, described and defended in the reportof the findings, which is factored into themanagerial approval process.

Figure 1 depicts a practical scale of howvarious cost data is rated from highest tolowest data quality. Again, with this infor-

mation a model is created which identifieslower, most likely and upper bounds foreach cost element. The lower boundaryrange is typically 20% of the appropriatecontingency range from the table above.This accounts for the tendency to overesti-mate revenue and underestimate costs.Also, a triangular distribution that isskewed to the right is typically used becausethe model’s purpose is to ascertain theuncertainty associated with the financialestimate, not to recreate the financial esti-mate itself. The distribution is skewed tothe right to account for the behaviouraltendencies previously identified.

Identifying the appropriate bounds is themost difficult part of the process andrequires collaboration with the team whodeveloped the case. It’s essential that thecontingency amounts imbedded in thefunding requirements identified by theproject sponsor be removed to preventoverstating the potential financial risk bydouble counting uncertainty. Once the basevalue is determined, the data sources fordetermining it are identified and matchedto the scale in Figure 2. This step can onlybe accomplished through discussion withthe team who developed the case. It is thefoundation for determining an appropriatecontingency range for the cost estimate. If,for some reason, the business case sponsor

QUANTIFYING FINANCIAL RISK


Figure 1: Practical scale for rating data quality

ROM

In

dica

tive

Subs

tant

ive

40+ %20-35%

5-15%Cost categories from highest to lowest data

integrity

Actual costs Signed contracts / tendering documents Parametric analysis Standard costs (actual number of unitsrequired) Manufacturer quotes Validated benchmarks

Consultant reports Like projects Quantity surveyor documents Industry standards / best practices / SMEs Benchmarks Average costs

Rough order of magnitude Wild guess

is game planning, there are other tech-niques that can be used to model the costs.One example is to have the sponsor identi-fy a cost for which there is only a 1 in 10chance that the actual cost will be lower,and then identify a cost for which there isonly a 10% chance that the actual cost willbe higher.

The model is then simulated using aMicrosoft Office Excel Add-In. SeveralExcel Add-Ins exist to enable the applica-tion of stochastic techniques to an Excelspreadsheet. Two examples of these ExcelAdd-ins are Crystal Ball and @risk. Themodel is run using Monte Carlo simulationto a 95% confidence level to determine theprobability of exceeding the identified costestimate and the amount of fundingrequired at a specific confidence interval.

For programs in which public funding isdisbursed to Canadians, a 95% confidenceinterval is used. A lower confidence inter-val, typically 80%, is used for internal pur-poses. The higher confidence interval isused for disbursements to Canadiansbecause the department must ensure thatit’s able to deliver on the Government’scommitments to Canadians; whereas, thedepartment is willing to accept more riskon internal decisions. This is because thedata sources underlying internal decisions

are typically more refined than the datasources supporting the financial estimate ofexternal programs.

ResultsTo demonstrate this technique, a simple

spreadsheet model is provided above (Fig-ure 2). This spreadsheet is an example of afictitious program in which the Govern-ment will provide $1,000 to each eligibleCanadian. In this case, based on StatisticsCanada data, it is anticipated that there willbe 60,000 eligible recipients. Using stan-dard cost metrics, it will cost $1,345,980for Direct Program Administration Costsand another $2,430,490 in Indirect Pro-gram Delivery Costs for a Total ProgramCost of $63,776,470.

In this model, tan squares are links orstandard ratios, yellow are data integrityfactors, green are assumptions and blue areforecasts. The key to the model are the dataintegrity factors. In order to better under-stand the model, several of the data integri-ty factors will be briefly expanded:• Amount: This amount is fixed — as

such, a data integrity factor of 0% isapplied;

• Number of claimants: This estimate isbased on Statistics Canada information,which is considered to be very good. As

such, the highest data integrity factor of5% is applied;

• Generic full-time salary: This estimate isconsidered to be a weak substantive esti-mate. As a result a data integrity factor of10% is applied;

• Training: This amount is based on abenchmark that is considered indicative,and a data integrity factor of 20% isapplied; and

• Travel: The number of trips and locationswere known, but the timing and dura-tion were not, so the estimate is consid-ered to be rough order of magnitude anda data integrity factor of 40% is applied.When the model is simulated, the distri-

bution in Figure 3 is produced.This distribution indicates that there is

an 85% likelihood that the identified fund-ing of $63,776,470 will be insufficient todeliver the program based on the dataintegrity assumptions modeled. Moreover,it indicates that there is a potential unfund-ed liability of $2,391,750 at the 95% con-fidence interval. This allows CFOs to studythe results to determine whether they arewilling to accept the indicated financialrisk. If so, the CFO is in a position to devel-op cash management strategies, as theamount of potential financial risk has beenquantified. The level of risk should be



Figure 2: Financial risk assessment model of a fictitious program

Cost element

Projected grant funding

Amount Number of claimants

Direct program delivery costs

Full-time equivalents Generic full-time salaryAllowances Employee benefit package Training Telecommunications Computers Travel Accomodations Other supplies and services Office furniture and equipment Total direct program delivery costs

Direct program costs

Total indirect program delivery costs

Total program costs

Cost driver

$ 1,000 60,000

15 $ 69,000$ 1,600 $ 13,800 $ 997 $ 100 $ 535 $ 1,050 $ 1,200 $ 1,000 $ 450

Data integrityfactor

0% 5%

10%10%0%

20%20% 20%40%20%10% 20%

Most likely

60,000

$ 69,000$ 1,600

$ 997$ 100 $ 535$ 1,050 $ 1,200 $ 1,000 $ 450

Lower bound

59,400

67,620 1,568

957 96

514966

1,152980432

Upperbound

63,000

75,9001,760

1,196 120642

1,4701,440 1,100

540

Assumption

$60,000

$ 69,000 $ 1,600

$ 997$ 100 $ 535$ 1,050 $ 1,200 $ 1,000 $ 450

Forecast

$60,000,000

$1,035,000 $ 24,000 $ 207,000 $ 14,955 $ 1,500 $ 8,025 $ 15,750 $ 18,000 $ 15,000 $ 6,750

Totals

$60,000,000

$ 1,345,980

$ 61,345,980

$ 2,430,490

$ 63,776,470

reassessed as the information underlying the financial estimate isimproved over time.

If the CFO isn’t willing to accept the financial risk as modeled,the simulation identifies the relative importance of the cost ele-ments from a risk perspective. The model shows which elementshave the most influence on the cost estimate. In this example, it isobvious that the number of eligible recipients presents the mostfinancial risk; yet the data integrity factor indicates the source of theestimate is considered high quality. Consequently, it is likely pro-hibitively expensive from both cost and time perspectives to refinethis source of data further.

However, within the direct program costs, the cost elements canbe broken down in a sensitivity chart (Figure 4) to determinewhether the data underlying the financial estimate can be improvedto reduce the financial risk associated with the program. Further-more, an estimate can be made of the cost of improving the dataintegrity to determine if the benefit of refining the information fur-ther outweighs the costs of doing so.

In this example, moving from generic to position-specific salaryestimates would address 99.5% of the uncertainty in the direct pro-gram cost category. This, in itself, shouldn’t be either an overly oner-ous or expensive process, and the reduced financial risk that wouldresult would likely be worthwhile.

The cost elements that represent the greatest financial risk can bespecifically identified and targeted to reduce the financial uncer-tainty associated with the data source used to create the financialestimate. As such, in the event that the CFO refuses to attest to thereasonableness of the financial estimate, the sponsoring executive isinformed of the reasons why and what specific cost elements needto be refined to reduce the financial risk to a more acceptable level.

Moreover, this analysis can serve as the basis for the development ofrisk mitigation strategies as the relative importance of the cost ele-ments from a financial perspective has been quantified.



0.04

0.03

0.02

0.01

0.00

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Dollars

Frequency

Total Program Costs

Figure 3: Probability distribution for total program costs of fictitious programPr

obab

ility

$64,000,000 $65,000,000 $66,000,000 $67,000,000

5% = $63,534,394

95% = $66,168,250

Figure 4: Sensitivity — total direct programdelivery costs

0.0% 30.0% 60.0% 90.0%

Generic full-time salary 99.5%

Travel 0.2%

Accomodations 0.1%

Training 0.1%

Allowances 0.0%

Computers 0.0%

Other supplies and services 0.0%

Office furniture and equipment 0.0%

Telecommunications 0.0%

Impact on businessThis procedure has been in place at

AAFC since October 2006. Several signifi-cant proposals have been reviewed, rangingin value from $100 million to $10 billion.In several instances, the funding requestedin the business case was adjusted (up anddown) following validation to reflect themost reasonable estimate of the cost impli-cations, considering the reliability of theinformation upon which the financial esti-mate is based. Cash management strategiesare also being developed to address thepotential unfunded liability of proposalsthat have been attested to as reasonable insituations in which the department is ableto accept the potential unfunded liability.

The procedure is reaping intangible ben-efits as well. Financial risk is being con-cretely considered in the development ofthe business case, whereas previously thistype of risk wasn’t necessarily a focus duringa proposal’s development. This has led tomore fiscally informed decision-making atAAFC. Also, by quantifying the financialrisk in proposals, the fiscal environment isstabilized, which permits executives tofocus on strategic outcomes rather thanurgent cash management issues. Thisincreased fiscal awareness increases thechances that the business case will beaccepted as proposed and reduces the likeli-hood that Treasury Board will imposefinancial terms and conditions on businesscases submitted.

In turn, increasing Treasury Board’s con-fidence in the stewardship of a governmentdepartment may lead it to increase theauthority delegated to the department,which will increase the department’s auton-omy and enable it to better serve Canadiansby allowing it to be more responsive toCanadians’ needs. Additionally, greater fis-cal stability in government departmentswill enable the Government to better proj-ect its financial situation, thereby facilitat-ing better governance of Canada.

ConclusionThe procedure described predicts the

chance of exceeding an identified budgetand quantifies the potential financial obli-gation between the identified project costand the predicted cost of the business caseat a specific confidence interval. Thisprocess is iterative; it can be updated as thequality of the data underlying the cost esti-mates is updated. This determination of thepotential unfunded liability supports theGovernment of Canada’s Modern Comp-trollership initiative and permits the CFOto make an informed attestation to theDeputy Minister of the department that thefinancial information presented is a reason-able estimate of the projected costs of thebusiness case at the time of the analysis.

In closing, the procedure itself:• is a scientific methodology based on

identified and defensible assumptions;• is scalable to fit information and time

available;• addresses the optimistic nature of pro-

gram managers;• provides a meaningful assessment of the

total cost implications of the businesscase and any potential unfunded liabilityassociated with the proposal;

• demonstrates due diligence as requiredunder Modern Comptrollership; and

• reduces executives’ reliance on intuition.This procedure was reviewed by a panel

of judges and deemed to be the best finan-cial application of the nominations receivedfor the inaugural 2007 Monte Carlo Simu-lation Award sponsored by Decisoneering, asubsidiary of Oracle, and the makers ofCrystal Ball. **

Article by Michael Lionais published in theAugust/September 2007 issue of CMAManagement magazine, reprinted withpermission of Certified ManagementAccountants of Canada.

ReferencesDRAFT Agriculture and Agri-Food Canada Costing

Handbook, October 2006 NASA Cost Estimating Handbook, “Cost Readiness

Levels”, NASA, 2004 (http://ceh.nasa.gov/ webhelpfiles/Cost_Readiness_Leves_(CRL)s.htm)

Randal B Lorance & Robert V. Wending, “Basic Tech-niques for Analyzing and Presentation of Cost RiskAnalysis”, AACE International Transactions, Asso-ciation for the Advancement of Cost Engineering,1999.



Federal government custodial depart-ments and agencies – the holders andmanagers of federal assets — are

being challenged to comply with the Treas-ury Board (TB) Policy on Investment Plan-ning, approved by TB Ministers in June2007. In the introduction to the on-lineversion of the Policy, it is stated, “This pol-icy is a significant change in how govern-ment carries out investment planning.” Theproposed four-year phase-in period – untilApril 1, 2011 – suggests complexity anddifficulty.

The eight-page Policy replaces the 1994Policy on Long-term Capital Plans and can besummarized in a strategic and pragmaticway. At its loftiest, the Policy is one of thecornerstones of the TB Policy Framework forthe Management of Assets and Acquired Serv-ices and requires that departments achievevalue for money and sound stewardship inand through investment planning. At itsmost pragmatic, the Policy requires thatdepartments submit an Investment Plan forthe approval of TB Ministers every threeyears. This investment plan will have a five-year investment horizon, and will have abroad scope, addressing an investment pro-gram funded from existing resources forexisting and new departmental assets andacquired services including and beyondowned assets, capital assets (as defined indepartmental financial statements), andassets funded through the department’s cap-ital vote. Departments must now systemati-cally address their investments in acquiredservices, these formal arrangements withoutside parties that support the achievementof departmental outputs and outcomes.

Consistent with the entire TB PolicyFramework for the Management of Assets andAcquired Services, this Policy places theaccountability for meeting investmentplanning requirements for the first timesquarely with the Deputy Ministers of theinvolved departments and agencies. The

Treasury Board Secretariat will use theInvestment Plan as a basis for assessing thedepartment’s investment planning capacity.Non-compliance with the policy and short-falls in planning capacity potentially lead toreduction in departmental expenditureauthorities and perhaps the loss of carry-forward authority for the department’s cap-ital vote; conversely, strengthening depart-mental investment capacity leads to theraising of these authorities.

The Five Know-wells and Do-wells ofInvestment Planning

The Policy gives strong indications of theapproaches and methods TB is expecting tosee for departments to achieve value formoney and sound stewardship throughinvestment planning:• Optimal asset portfolio characteristics:

The movement toward and maintenanceof an owned and accessed (through leas-ing and partnering for example) depart-mental asset portfolio with optimal char-acteristics, reflecting the “value” in valuefor money: essential, responsive andstrategically aligned; affordable, produc-tive and financially sustainable; safe,secure and compliant; supportive of theenvironment and sustainable develop-ment; protective of Canadian heritagewhere this is applicable; and reflective ofan appropriate balance of benefits,returns, and risks where non-federal par-ties are involved.

• Effective investment decision-making:The putting in place of governance struc-tures and processes, the data and infor-mation-gathering and analysis tasks thatenable departmental resources to be allo-cated to assets in a timely, consistent, andrational manner, from the perspective ofthe Department’s Management Report-ing and Results Structure (MRRS), andrepresenting the highest and best use ofscarce departmental resources.

• Effective departmental decision-sup-port tools: The availability to depart-mental investment planners and assetmanagers of frameworks, tools and tem-plates that strongly support excellentinvestment decision-making: these mayinclude integrated risk management, aswell as real property, material manage-ment and priority ranking frameworks;these may involve portfolio strategies andplans and state of the art project approvaltemplates; these may also involveapproaches and methods for regularlyassessing the evolving suitability and con-dition of the existing asset base.

• Demonstrable life cycle managementbest practices: the assurance that thedepartment is using a fundamentalunderstanding of the life cycle of theassets it is managing to craft strategiesand actions for protecting the value andusefulness of assets over their servicelives. For example, a well-defined plan-ning function at every stage of life cycle,as well as funding stability and sustain-ability over life cycle are important con-siderations in achieving value for moneyand sound stewardship.

• Performance measurement: the demon-strated capacity of the department toassess and document systematically thestate of its asset portfolio (namely its con-

Investment Planning: The Next Challenge

Hendrik Siré

Hendrik SiréHendrik Siré, MA, MBA, CMA, CMC, is a Partnerwith Goss Gilroy Inc., Management Consultants. Mr.Siré provides consulting services to the federal govern-ment in asset strategies, frameworks, policies and gov-ernance, long-term asset and investment planning,business case preparation and time value of moneyanalysis. Mr. Siré has assisted many federal institutionsprepare portfolio, long-term capital or investmentplans. Fully bilingual, he is an experienced facilitatorand trainer, developing and delivering workshops andtraining sessions to a variety of audiences. Prior tojoining Goss Gilroy, he held positions inSypher:Mueller International, Ports Canada and theCanadian International Development Agency.


INVESTMENT PLANNING


dition, suitability, compliance and finan-cial performance) and to monitor rou-tinely the results of its investments, fromthe perspectives of intended outcomes,scope, cost, timing and risks. Of course,the department is called upon to showthat it effectively uses performance dataand information to improve the alloca-tion of resources in pursuit of the opti-mal asset base. Departments will typical-ly harness information systems tostrengthen asset tracking and monitor-ing, to support optimal life cycle man-agement, and to optimize functionality,for example, in Service Desk operations.This brief summary of five key require-

ments of the Policy is, by design, incom-plete but illustrates well the “significantchange” reference in the opening quota-tion. With the scope of requirements asdescribed above, and with the challengesinvolved in implementation, one concludesthat it is unlikely that any one custodiantoday meets all requirements and that mostcustodians will incur significant effort to bein compliance by 2011.

Strategies for Compliance with theInvestment Planning Policy

The question is therefore raised, “Is therean optimal strategy to achieve timely com-pliance with this Policy?” It is too early togive a definitive answer, as TBS’s promisedsupporting Guide to Investment Planningremains to be issued at the time of submis-sion of this article. However, we may beginwith some tentative answers, which willevolve as more information is released andas additional best practices are documentedon the TBS website.

Strategy #1 is for the department todefine and communicate in a strategic waythe underlying messages raised by the Poli-cy Framework and the Policy on InvestmentPlanning. These messages include: Assetsare very important to the Government ofCanada and to the department, as they havestrategic, public policy, operational, finan-cial and risk implications; in the lastdecade, many initiatives have raised theimportance of assets and investments,including accrual accounting and the Man-agement Accountability Framework(MAF); the citizen and taxpayer requirethat the federal government manage itsroughly $100 billion in asset investments

very well. This ongoing longer-term shift infundamental assumptions and perceptionsmeans that departments will commit in asubstantive way to make the requiredchanges – and not just window-dress tomeet a perceived new “flavour of themonth”. In short, compliance will requirean enduring, substantive commitment.

Strategy #2 is to pick the “low hangingfruit”, namely those changes and adaptationsto governance and processes which can yieldsubstantial results without enormous levelsof effort. A “gap analysis” may help a depart-ment to identify the possibilities. For exam-ple, given the abundance of precedents, itmay be relatively easy for a custodian depart-ment to create a senior investment manage-ment committee with strong powers of rec-ommendation. It may also be possible to cre-ate a common, department-wide investmentproposal template and to develop a priority

ranking and risk mitigation framework forrating and scoring of intended projectimpacts. These essential integrative tools andprocesses provide the foundation uponwhich the remaining strategies can be built.

Strategy #3 is for the department todefine and develop its dominant conceptu-al framework for approaching investmentplanning. In this regard, departments canchoose between life cycle management, per-formance measurement, risk managementand strategic alignment, such as throughthe Departmental Management Reportingand Results Structure (MRRS). Of the fourpossibilities, risk management offers robustbenefits as the primary analytical lens, as itis essential that investments mitigate risksin moving toward the optimal asset basecharacteristics identified above. Risks canbe scaled from an asset portfolio perspec-tive, for example, by addressing the risks

associated with any systemic under-spend-ing, down to a specific investment perspec-tive, for example, by addressing the conse-quences of not proceeding with a specificinvestment. The Department’s CorporateRisk Profile offers a solid point of departureto asset and investment risk management.Furthermore, it may be possible to buildlife cycle management best practices andperformance measurement requirementsfrom the foundation laid by the asset andinvestment risk framework.

Strategy #4 is for the department todefine and develop its dominant processframework for approaching investmentplanning. To be sure, the fundamentalprocess remains the rolling up of individualinvestment proposals to constitute a multi-year spending plan, recognizing that in anyone year, there is investment spending onongoing projects as well as new starts.However, there is a strong case to integrateinvestment planning with broader depart-mental initiatives to put in place integratedbusiness planning. Through integratedbusiness planning, there is a greater assur-ance that investments are strategicallyaligned, that downstream implications ofinvestments on all parts of the organizationare identified, assessed and resolved, and

that investment governance is aligned withand supportive of broader resource gover-nance within the department.

Strategy #5 is for the department tomake the Investment Plan an annualrequirement, firmly integrated within thedepartmental annual planning and report-ing cycle. On an annual basis, based on rec-ommendations from the department’sinvestment management board, the seniormanagement committee of the departmentreviews the Investment Plan, decides theallocation of resources to investment out-comes, asset categories and projects, andreallocates resources according to risk-bene-fit and cost-benefit analyses. Through anactively engaged annual process, custodiandepartments are able to demonstrate asound and sustainable capacity to plan andimplement investment projects.

The touchstone of the implementationstrategy for this Policy is integration. Inte-gration is defined here as the process forbreaking down the silos within andbetween departments, silos that have con-strained the effective allocation ofresources, and the ability of government toachieve its long-term objectives withinexisting resources. Through integratedinvestment planning, resources flow more

freely to the departmental zones of greatestrisk and benefit, whether they be opera-tions, assets, or acquired services.

ConclusionsThe TB Policy on Investment Planning, as

a cornerstone of the TB Policy Frameworkfor the Management of Assets and AcquiredServices, offers many benefits to govern-ment, the taxpayer and the citizen. ThisPolicy has a clear ultimate purpose – theoptimization of departments’ asset portfo-lios through value for money and soundstewardship. At the same time, the primarychallenge of the Policy lies in departmentsfinding the right approach to implementa-tion given their individual circumstances,as unfocussed implementation runs therisks of being lengthy, onerous, and costly.Through the five key strategies proposedhere, implementation of this Policy can bemade timely and cost-effective for the vastmajority of federal government depart-ments. In conclusion, it is possible fordepartments to achieve a high degree ofcompliance by 2011 with the Policy onInvestment Planning, and to achieve thisobjective through a relative economy ofmeans. **

INVESTMENT PLANNING


We learn by taking actionWe deliver value by learningWe move forward by nurturing partnerships

The Banking/Cash ManagementBranch, Ministry of Finance isresponsible for procuring and

implementing banking services, managingbanking relationships, and overseeing themovement of funds for all revenue inflowsand payments made on behalf of theprovince. Over the past six years, we havealso become a catalyst for e-governmentservices in British Columbia. With ourpathfinder projects and partners, weadvanced our e-government services fromweb-presence to e-commerce, includingcredit card payments over the Internet.Along the way, we maintained close work-ing relationships with the GovernmentChief Information Officer’s (CIO) officeand the Information Technology commu-nity to ensure our clients’ aspirations fitwith government’s corporate e-servicedirection and technology capabilities.

Following are my reflections on how wedeliver business value to our clients on asustained basis, while adapting to fast-paced changes in technology.

The Right VisionIn the mid ‘90’s, while leading an elec-

tronic data interchange for the Ministry ofForests for collecting stumpage revenue, Irealized that electronic commerce andInternet technology was about to push gov-ernment into a fundamental shift in how itdelivered services – much more radical thanthe push-pull tug of war between central-ization and decentralization efforts of previ-ous decades. I wanted to be part of this e-commerce wave. This was an opportunityto experiment with new ideas and not fol-low the deep grooves of well-worn footpaths of planning and administration.Besides, I really had to understand the mys-

tery behind those clouds and lighteningbolts in the PowerPoint presentations of theday!

It wasn’t long before I had the good for-tune of returning to the Ministry ofFinance as Senior Manager, ElectronicBanking Services (EBS). My timing could-n’t have been better. Government wasunder fiscal pressure to cut budgets and waslooking for innovative ways to deliver serv-ices. All programs and related funding wasreassessed in the Core Review process. Par-adoxically, this was also a time of risingexpectations where the public was lookingfor better access to government services,similar to its experience with the retail andfinancial services sector.

After the Y2K angst, the promise ofemerging e-services technology, fiscalrestraint and growing public expectationfor service convenience created the perfectconditions for government to publiclyembrace an electronic service deliveryvision. Lagging behind this commitmentwas organizational readiness to kick it intohigh gear. Policies, strategies and technolo-gy foundations were still in the stages ofplanning and development. What at firstappeared to be a potential obstacle was, forus, an unexpected opportunity. We had theflexibility and the freedom to carve out anddevelop our niche business. At the time, noone really knew what to do with us!

From inception, my team members and Ideveloped a shared vision. We would lever-age e-payments as a catalyst for e-govern-ment. Drawn to the idea of e-governmentlike iron filings to a magnet, we venturedinto little-explored realms of Internet e-commerce. This aspiration came to us per-haps too readily. We had no idea what layahead. Looking back, it mirrored my earlyclimbing adventures in the Rockies, usuallylaunched with great enthusiasm, followedby the cold reality of fear, desperatemoments and, once retreat was not possi-

ble, absolute focus on the push for the sum-mit. At the moment, we needed an e-pay-ments strategy to make something happenand more importantly, we needed someclients, quickly!

Business StrategyStrategy was once described to me as hav-

ing a clear roadmap, similar to Dorothy’s“Yellow Brick Road” in the Wizard of Oz.Personally, I find it helpful to think of strat-egy as the preparation one makes beforelaunching into unfamiliar and hazardousterrain – like when I eventually decided toinform my wife of an art purchase, whichwas on our “too costly, do not buy” list. Thegallery owner no doubt wondered why ittook me three months to pick it up! How-ever, that’s a different story. For now, theartwork is intact.

Electronic Banking Services was clear onits vision, but needed to turn this into

Delivering Value: e-Payments in BC

Nicholas Krischanowsky and Maggie Skaarup

Nicholas KrischanowskyNicholas Krischanowsky is Director of the Bank-ing/Cash Management Branch, Ministry of Financein Victoria, BC. As Director, Nicholas is responsiblefor managing the Province’s annual cash flow of $100billion, negotiating banking agreements for theProvince and government agencies, and providing avariety of electronic payment solutions to ministryprograms. Nicholas is known as a champion of e-com-merce initiatives for the Province of British Columbia,supporting many initiatives that have been award win-ners and finalists in provincial and national competi-tions for electronic service delivery. He can be reachedat [email protected]

Maggie SkaarupMaggie Skaarup is the Manager, Business Planning inthe Banking/Cash Management Branch, ProvincialTreasury and was previously an Electronic BankingAnalyst in Electronic Banking Services. Prior to movingto Provincial Treasury, she held a variety of progressive-ly more senior positions in the Office of the Comptrol-ler General. As a member of a small team, Maggieplanned, organized and managed two national confer-ences for the Financial Management Institute of Cana-da in Victoria and Whistler, and was Project Directorfor Provincial Treasury’s ePayments Symposium. Shecan be reached at [email protected]


action and results. To help us stay oncourse, we adopted the following strategy:• Implement a shared, central payment

broker that would:– balance our reliance on internal and

private sector support;– be vendor neutral and allow the

Province to select the best-fit serviceproviders at any time; and

– have flexibility to meet unique clientneeds.

• Develop alliances with key governmentagencies, including the governmentCIO’s office to ensure we were going inthe same direction as the emerging e-gov-ernment strategy.

• Embark on a marketing and communica-tions campaign to engage new clients andto galvanize a broad base of support.

• Invest in, and insist on rigorous projectmanagement discipline to increase ourchances of sustained success.

• Deploy a series of pathfinder projects to:– get critical experience and learn about

e-services; and– achieve immediate results and establish

credibility in this new role.• Resolve all issues quickly and capitalize

on lessons learned.We were focused, had a small, highly

motivated and cohesive team, and wereeager to get on with the next adventure.Limited knowledge of what lay ahead was ablessing and perhaps another critical suc-cess factor. In many respects, this was theantithesis of traditional big projects, typi-fied by big budgets, a highly structured andhierarchical team model, and heavy relianceon well-tested and proven approaches. Weripped out the rear view mirror and focusedon the road ahead.

I am also convinced that another key toour success was the time spent looking at allissues and our calculated responses, whilealways supporting the vision. We were for-tunate to engage a service provider that waswilling to work closely with our team andclients to find new and creative solutions.This became our mindset, not a planningexercise.

The Right ProjectBeing an e-payment broker was not for

the faint of heart! To help stack the deck inour favour, we insisted on securing threepilot participants, not just one. This proved

to be a critical decision. In the end, onlyone client was ready and prepared to com-mit to pilot stage – the OneStop BusinessRegistry program.

OneStop is the integrated, automated“one-window” business registration andaddress change service available to everyoneoperating a business in British Columbia.Businesses for years have called for govern-ment at all levels to work together to reducered tape – OneStop reduces red tape bymaking it easier for BC businesses to regis-ter and maintain address information withpartnering federal, provincial and munici-pal agencies, and pay the associated fees bycredit card over the Internet.

Our role in this multi-agency initiativewas to provide an Internet credit card pay-ment facility. The project was launched inlate 2000 and successfully completed inearly summer 2001. Referred to as ourInternet Payments service, it providedOneStop with an on-line credit card pay-ment channel for real-time processing ofbusiness registration transactions.

For clients of OneStop, this initiativereduced the time and effort for businessesin BC to complete the various steps witheach department and agency involved withRegistration activity. This has been accom-plished by the www.bcbusinessregistry.caWeb site leading the client through all thenecessary steps and automatically linkingthem to, and from, the department andagency sites required to complete their reg-istration. Many transactions that used totake days or weeks to complete are nowinstantaneous.

The OneStop Project was unique in thatit had to be innovative in many areas. It hadto resolve complex back-office transactiontracking and reconciliation activities, as theprogram collected funds on behalf of mul-tiple government agencies. It also neededcommitment from over 50 partners, andtheir willingness to change businessprocesses and to pay for these changes. Andfinally, it had to live up to all the expecta-tions of the first-born, which it did veryadmirably by expanding its service offeringsand picking up awards along the way.

With this success, we cemented the ideaof a central payment broker as part of gov-ernment’s electronic commerce strategy.The basic concept was to establish Provin-cial Treasury as the central conduit for

Internet credit card payments received byvarious government agencies.

The Right Second ProjectOn the heels of a successful e-payment

implementation with OneStop BusinessRegistry, and as a result of our marketingand communications strategy, CrownLands Registry approached us that sameyear.

To provide a bit of background, theCrown Lands Registry maintains records ofCrown land in British Columbia. The Reg-istry records and tracks the sale, survey,license, access, return and restriction ofCrown land in BC. An access tool, referredto as GATOR, was built to make Crownland attribute information, documentimages, and eventually spatial (mapping)information available to commercial andindividual users over the Internet.

In the self-congratulatory heels of successwith OneStop, we met with the CrownLands team to introduce them to our Inter-net Payments service, and to quicklycement the deal. It was not to be our day.They were looking for an Internet creditcard payment facility that would register aclient once and process multiple payments,based on actual service usage. This wouldallow land surveyors to access Crown landinformation repeatedly while in the field,and process a total of all transactions at endof day on a company credit card.

Although we had previously developed asingle transaction online credit card processthat worked well for selling goods, it didnot have the capability to process multipleservice-related transactions by a single user.Another complexity was that Crown Landsneeded a payment process that authorizedthe client’s payment in advance of browsingand viewing Crown land database informa-tion and maps.

As I said earlier, “being an e-paymentbroker is not for the faint of heart!” For abrief moment, it seemed that defeat wassnatched from the jaws of victory. This wasonce again uncharted territory for us. Thisis where our excellent working relationshipwith a technical service provider paid divi-dends and delivered a recurring Internetcredit card payments model. In this sce-nario, the client’s payment information islinked to their login ID. As a result, eachtime a client logs in, the session’s activity is

E-PAYMENTS IN BC


recorded, and then summarized and billeddaily based on pre-registered paymentinformation.

In summary, the GATOR Internet Pay-ments project increased accessibility andaffordability of the Crown Lands databaseto a broader group of users with a “pay asyou go” option. This project was selected asone of 89 finalists for the DistinctionAwards 2002.

Open for BusinessWith two award-winning Internet Pay-

ment Projects under our belt, our confi-dence was sky-high, and our e-paymentsexpertise in government was gainingmomentum. After two years of learning onthe fly, it was time to take stock. We need-ed to further develop and deepen our learn-ing, and invest heavily in a more structuredproject management discipline, which wedid. We were now prepared to offer ourclients the following service guarantee:

Proven technology, reliable service providersTo manage risk, we worked only with

major financial institutions and serviceproviders with a solid performance recordin e-commerce.

On-time deliveryBy formally signing project charters with

our clients, we jointly commit to providingnecessary resources. One lesson we learnedearly on was to obtain signatures on thecharter from all key stakeholders and notsimply to rely on goodwill. Priorities canchange, but commitments are honoured.

Reasonable costBy procuring banking services centrally,

we are able to obtain the best market ratesfor government. By providing corporate e-payment services, we avoid duplicationcosts and manage risks more effectively.

We also wanted to sustain our growthand success by relying on the following coreprinciples as the foundation for our work:

Do the “right” projectThere is nothing more bittersweet than

successfully delivering the wrong project,like when one of my high school basketballteam members, not to be named, executeda beautiful shot and scored – against hisown team! The project initiation phase

determines project scope and direction,which has a big impact on probability ofproject success. Early engagement with ourclients is essential to clearly understandingtheir business, project objectives and con-straints, which in turn, helps us to definethe optimal business design and paymentsolution, thus avoiding the costs ofredesign.

Engage managementFor us this means executive sign-off on

project charters; active participation onsteering committees; and the ability tomake difficult decisions, particularly withlarge, complex projects with multiple stake-holders and competing interests. Thisengagement process is even more criticalwhen the success of an initiative requiressupport from a community of stakeholders,as in the case of our payments infrastruc-ture security initiatives.

Manage risks and plan for benefitsOne can attempt to minimize risks by

doing nothing, compared to accepting thevisible risks of undertaking business trans-formation. Inevitably, the “do nothing”approach results in limited options whenit’s time to act. Risk management and riskmitigation strategies are critical as it is diffi-cult to plan for zero risk.

We engage in a process with our clientsto identify all possible benefit opportuni-ties, and then look for rapid deployment ofsmaller and scaleable solutions to deliverimmediate business benefits. This allowsfor the phasing-in of future investmentsand benefits.

Use the right toolsIn addition to our project management

and business process review capabilities, weuse client satisfaction surveys, project close-out and post-implementation reviews to

E-PAYMENTS IN BC


National Bank of Canada is proud to contribute tothe development of the public sector in Canada byway of partnerships with the various levels ofgovernment and related organizations and companies.A team of professionals is available to offer you specialized services and develop made-to-measuresolutions for your needs.

You can reach our dedicated team at (514) 394-4378or via e-mail at [email protected]

OUR PARTNERS GO FURTHER

learn from each project experience. Thequestions we attempt to have answered are:Did we meet client expectations? Did theinitiative deliver anticipated benefits?

Collaborate to form powerful teamsBuy-in from team members and high

motivation to work together are critical tothe success of our projects. The challenge isto keep everyone focused on the deliver-able, and to capitalize on the differentstrengths, communication styles, and expe-rience of team members. This is, in mymind, the single most important ingredientto our success in implementing e-paymentsolutions.

Internet Payments: The Next GenerationAfter six years of expanding the reach of

Internet payments on our pilot paymentbroker, it was time to improve its capabili-ties. The limitation of the existing paymentbroker was that it required each subscriberto develop a back-office payment adminis-tration capability to reconcile credit cardtransactions. The next version of our Inter-net payments service, namely BC ExpressPay, would provide one payments back-office where each client would have accessto its transaction information from a cen-tral repository and would no longer have tobuild and maintain a separate administra-tion site. This move to a common andshared Internet payment service was a sig-nificant improvement over the currentmode, and will make it easier to expand andintegrate web-based payment services acrossmultiple levels of government.

Development of BC Express Pay com-menced in 2005 and a successful pilot waslaunched in March 2006 with the CriminalRecords Review Branch, Ministry of PublicSafety and Solicitor General. Their Web siteis http://www.pssg.gov.bc.ca/criminal-r e c o rd s - r e v i e w / p ro g r a m - i n f o r m a -tion/eservice.htm.

There are now five government clientsusing BC Express Pay, three programs indevelopment and scheduled for implemen-tation in the next three months, and eight-een clients of the original Internet Pay-

ments service scheduled to migrate to BCExpress Pay over the next eighteen months.

Needless to say, business is booming, andwe’re busier than ever!

The Right PolicyIf our early marketing efforts to secure

clients were akin to pushing a snowballuphill, we would soon find ourselves on thedownside of the hill with the acceleratingand growing snowball right behind us. Ourmantra of “grow the business” was replacedovernight with “keep up with the business,”reminding me of the Charlie Chaplin film“Modern Times,” where he is on a produc-tion assembly line and the conveyor beltaccelerates.

By early 2006, there was no clear direc-tive to provide the public with consistentelectronic payment options, including cred-it cards for government services. Thatchanged in the fall of 2006 when TreasuryBoard directed ministries and governmentagencies to accept electronic payments,including credit and debit cards for govern-ment services. This decision represents asignificant step forward in promoting a Cit-izen-Centered service delivery model, con-sistent with best practices in the private sec-tor. It solidified our role in providing min-istries with the necessary and best-fit e-pay-ment solutions. It also directed us to co-ordinate the adoption of electronic pay-ment channels across government.

Looking ForwardAlthough this article focuses on our

Internet Payments service, the Bank-ing/Cash Management Branch, Ministry ofFinance provides government clients with afull suite of best-fit e-payment solutionsincluding Point-of-Sale, Online Banking,Web Terminal, and the Pre-Authorized Pay-ments program.

Looking forward, our challenge will be tocontinue to play a leadership role in pro-viding e-payment solutions in light of:• accelerated demand for e-payment servic-

es;• the rate of change in payment technolo-

gies and service providers, and the need

to assess their suitability in a governmentsetting; and

• higher governance/security standards,including payment card industry stan-dards.We have been fortunate in working with

highly capable and motivated people acrossgovernment and in the private sector toadvance e-government and Citizen-Cen-tered services. Execution is the differencebetween ideas and success. In closing, I’dlike to leave you with the words of one ofthe world’s greatest daredevils in the pastdecades:

“There is nothing more difficult to take inhand, more perilous to conduct or more uncer-tain in its success than to take the lead in theintroduction of a new order of things.” “Any-body can jump a motorcycle. The troublebegins when you try to land it.”

Evel Knievel

AwardsThe following are a sampling of the

awards won by the Province of BC for e-commerce initiatives:• Mineral Titles Online – Service Excel-

lence, 2006 Premier’s Awards• Mineral Titles Online and Banking/Cash

Management Branch – Innovative Col-laboration, 2005 BC Technology Awards

• Single Business Number Project,OneStop Business Registry – WinnerMulti-Jurisdictional Projects, 2004 Pub-lic Sector BC Information TechnologyAwards

• Land Title Branch Electronic Filing Sys-tem – Winner Multi-Jurisdictional cate-gory, 2004 Public Sector InformationTechnology Awards

• Tantalis GATOR – OutstandingAchievement, 2002 Technology in Gov-ernment Week – Distinction Awards

• OneStop Business Registration – FinalistPublic Services and Democracy category,2001 Stockholm Challenge Award

• Medical Services Plan and Banking/CashManagement Branch – Finalist, ExcellentUse of Technology, 2001 Public ServiceAwards **

E-PAYMENTS IN BC


In certain fields, such as financialmanagement, the public sector anduniversities can be seen as two solitudes.

The two groups observe one another from adistance, without getting too close. Thesetwo solitudes – whether it be for fear of notmeasuring up or because of theirindifference – find it difficult to cometogether in order to mutually benefit fromeach other’s respective strengths. There areof course exceptions to the rule, and somuch the better. It would be better howeverif these collaborations were no longer theexception, but rather the rule.

This article aims to differentiate the twogroups (the public sector and universities)and three activities (practice, research andteaching), which are both complementaryand interdependent. By describing thecharacteristics of these groups andactivities, I hope to bring to light thepossibilities that arise through increasedcollaboration, and thereby help to speed upthe collaborative movement.

To illustrate this dynamic, Figure Ashows the relationships between the twogroups and the three activities. The twogroups are central, but they follow parallel– although sometimes opposing – paths.The activities form the three corners of atriangle at the centre of the dynamic.

Two distinct, yet non-homogenous,groups

Two distinct groups have been identifiedin this article: the public sector anduniversities. However, these groups are nothomogenous. We can make a comparisonwithin one single group and between thetwo groups, and thereby identify thedifferences and similarities between them.

There is no question that the publicsector is far from being a homogenousgroup. Note, for example, the three levels:federal, provincial and municipal. What ismore, there are various departments and

public agencies pursuing specific objectivesat each level. These departments deal with avery wide range of subject matters. Toillustrate this wide diversity in simpleterms, consider health, education, naturalresources, the economy, and foreign affairs.Some public agencies are to some extentindependent. The impressive size of someorganizations gives rise to challenges thatare proportional to their size. Otherorganizations are more modest in size andmust frequently apply the same rules as thelarger ones. The political dimension ofactions and decisions creates a specificdynamic in which decisions are sometimesinfluenced by elector perception. Themedia is much more interested in decisionsmade in the public sector than those madein a private company.

Universities are not a homogenous groupeither. They vary in size. They have accessto varying amounts of financial resources,depending on their location and provinceof origin. They offer programs that are

sometimes similar and sometimes different.Some universities only offer programs atthe undergraduate level, others have a moreglobal program offering that includes anadvanced curriculum, and some universitiesalso offer a medical program. The need toobtain accreditation through a professionalorganization (e.g. ordres comptables) or anindependent association (e.g. theAssociation to Advance Collegiate Schoolsof Business) adds pressure to theoperational activities of a managementschool.

The two groups also have some similarcharacteristics. They both depend on publicfunds. Despite a trend to obtain privatefunding – whether through sponsorship,donations or research contracts –universities obtain the lion’s share of theirfunding from the public sector.

Three specific activitiesThere is an interdependent relationship

between three activities of these two

The Public Sector and Universities:Complementarity and

InterdependencyFrançois Brouard

François BrouardFrançois Brouard, DBA, CA, is an associate professorin the accounting group at the Sprott School of Busi-ness, Carleton University, Ottawa, Canada. Françoisteaches taxation at the undergraduate level and finan-cial accounting and governance at the graduate level.He can be contacted at the following e-mail address:[email protected]. For more informationon his research interests and for various links to man-agement subjects, consult his Web site at the follow-ing address: http://sprott.carleton.ca/~fbrouard/.


Practice

Research Teaching

Public sector

Universities

Figure A -Practice-Research-Teaching Triangle

groups. These activities are as follows:practice, research, and teaching. The publicsector is more interested in practice,whereas universities are more interested inresearch and teaching. Each group,however, takes an interest in the othergroup’s main activities. The disparitybetween these activities is the subject of adebate in the university community thatopposes thoroughness and relevance.

When it comes to practice, there arevarious organizational practices that raisechallenges in many problematic areas. Weneed only think of sponsorship and theGomery Commission and theorganizational problems at the RoyalCanadian Mounted Police (RCMP) - toname only two examples that have madethe headlines - to realize that practice getsspecial attention.

Financial management is undoubtedly aset of issues that are of particular interest tofmi**igf members. Consider, for example,governance, accountability, theimplementation of new accountingstandards, and risk management. Financialmanagement is at the heart of strategic,tactical and operational decisions.

Change management represents anotherset of problems that are particularlyinteresting for members of the public

service. Faced with a constantly changingenvironment, public servants must dealwith the ubiquitous nature of thesechanges. Consider, for example, successionand relève, knowledge management andcorporate memory, informationtechnologies, crisis management,innovation, cultural diversity, tradeinternationalization, and the negotiation ofworking conditions.

As for research, it can be either basic orapplied. Research can be conducted byeither professors or students. In thiscontext, research can be seen as eitherpushing the boundaries of knowledge orresolving the practical problems facingorganizations.

With regards to teaching, there areprograms in both colleges and universities.At the university level, there are bachelor,certificate, masters and doctorate programs.In addition to these, there are also thecontinuing education programs. Forexample, like several other Canadianuniversities, the Sprott School of Businessat Carleton University in Ottawa offers thefull range of teaching services in themanagement field with its bachelorprograms (B.Com. and B.I.B.), an MBAwith several concentrations, and a Ph.D.

Complementarity and interdependencyGiven the interdependency that exists

between practice in the public sector andresearch and teaching in universities, itwould be advantageous for the twosolitudes to draw closer together. Thenature of each group ensures there iscomplementarity between them.Knowledge – whether through itsproduction, translation or transmission – isfundamental to the activities in a universityand is of significant interest to the publicsector.

This statement is both simple andcomplex. It is simple, because dialoguebetween the two groups should not be thatdifficult to achieve if there is a truewillingness to collaborate. This willingnesscould be achieved through frequentmeetings and discussions. It is alsocomplex, because the diverging interests ofboth the groups and the individualsinvolved makes it inherently difficult toachieve this collaboration. However,motivation can move mountains.

I would like to invite fmi**igf membersto contact me about any research questionsand issues they are facing, so that thesequestions and issues can be discussedwithin the context of a research projectlooking at practice. **

THE PUBLIC SECTOR AND UNIVERSITIES


Capital ChapterRequest for Nominations

This year we are again looking for energetic and motivated members to join us on the Capital Chapter Board of Directors. The Board can consist of up to 20 Directors who are voted in by our

regular members at our Annual General Meeting. A Director holds the position for a two year term.

The Annual General Meeting of the Capital Chapter will be held on Thursday, September 25, 2008.As a Director you will have the opportunity to work with an enthusiastic group of professionals and

participate in the management of the affairs of the Capital Chapter. If you are interested, or know someoneelse who is, please contact Philip Mostert at (613) 212-2892 or Gerry Leus at (613) 237-4095,

before September 1, 2008.

It has often been said that the school ofhard knocks creates a learning experience,which theoretical executive education will

never provide. Perhaps this explains theincreasing popularity of reality education,which has become mainstream for Fortune500, 100 and 50 companies executives, boardsof directors and even for middle of the roademployees. Reality education is now viewed asmore than an opportunity to get out of theoffice: these adventures create opportunitiesfor individuals to test their mettle; create orreconnect with the value of teamwork; and, anopportunity to use strategy skills in uniqueways. Although participants may enjoy greatsuccess in business, they come away with asense of accomplishment; and an increasedunderstanding of themselves and their might.

Reality education is premised on theunderlying philosophy that adventure pro-vides individuals with an opportunity to gobeyond a conceptual framework and dis-cussion to confront reality head on. Itforces individuals out of a passive role andinto proposing solutions to complex, real-world problems. Individuals learn by hav-ing concrete experiences and then interpret-ing these experiences.

The principle underlying the use of suchtraining is that participants learn betterthrough doing than through reading, hear-ing or observing. This principle of ‘Discov-ery Learning’ has become almost common-place in teaching and training. But in train-ing of any kind - with its focus on behav-ioural and attitudinal change - active learn-ing is by far the most effective method.

For the purposes of this paper, realityeducation is defined as: a structured activi-ty with a content or process learning objec-tive other than the completion of the activ-ity itself. In my opinion, the essential char-acteristics of a reality activity are:• There is a learning goal;• There is a high degree of interaction

between some or all of the participants;

• There are clear definitions of what typeof behaviour is and is not a proper part ofthe activity;

• The activity has a definite end-point orclosure; and

• In most cases there is a definite outcome.Of course, keep in mind that a function-

al approach ignores the equally importantfact that these activities are fun, which is tosay that carrying out the activity itself maybe motivating. The intrinsic reward in suchactivities, however, is something that theorganizers can use in making the trainingenjoyable as well as a useful experience. Butsuch activities do have particular functions:a training consultant who simply placesthem into a corporate training strategy forthe sake of it is not going to earn theinvolvement of participants or the respectof the manager that is footing the bill!

So why should an organization buy-intoor pay for such reality training? Try thesereasons on for size:

AnonymityLess outgoing members of the organiza-

tion have the opportunity to participate inan active way without it being obvious tothe others that they have made a decision todo so. This can be a confidence booster, andcan encourage later participation in the dis-cussion phase. In effect, participants active-ly involve themselves by choice rather thanby direction

DevelopmentalSince adventure activities differ in their

complexity and in their demands, a facilita-tor can select activities suitable not only tothe needs of the group but also to the devel-opment of their abilities.

ExperientialThe source of learning is what the partic-

ipants do rather than what they are told bythe facilitator. Since the activities are

action-based learning, memory of the learn-ing points continues into the future.

ExperimentationRather than talking about different ways

of doing things, reality activities offer anopportunity for participants to experienceskills in a somewhat controlled and relative-ly safe environment, and to try out differentoptions. You can learn from failure in acontrolled setting, rather than on-the-job,where mistakes or failures can be fatal.

FlexibilityReality activities offer the facilitator and

the organization the opportunity to varythe activity in accordance with the needs ofthe organization and, the group; somethingthat can often be difficult with more formaltraining methods. It also offers the organi-zation and the facilitator flexibility to pat-tern the approach while achieving thelearning objective.

Full ParticipationThe involvement of all group members

generally becomes the norm in reality activ-ities. In many other facilitator-centredactivities, the facilitator interacts with oneparticipant at a time, and this tends to bethe most dominant fraction of the partici-pants, whether in terms of cooperation orresistance. Adventure activities can be setup to require full (and often equal) partici-

Reality Education – Where theRubber Meets the Road!

Rocky J. Dwyer


Rocky J. Dwyer, PhD, CMARocky Dwyer is a Principal with the Chief ReviewServices, Department National Defence, Canada. Inaddition, he is a MBA faculty member with the Cen-tre of Innovative Management at Athabasca Universi-ty (Alberta, Canada); and, an adjunct professor withthe School of Philosophy at St. Paul University,Ottawa (Ontario, Canada). He has been associatedwith numerous other private and public sector organ-izations in examining, validating and consultantcapacities, in Canada, United States, South America,and the Russian Federation.

pation by each member. If each individualhas been seen to do something, then the lessvocal or socially skilled members will bemore encouraged to provide feedback bothin the later stages of debrief, and other ver-bal activities later in the event.

Group ResponsibilityReality activities give a group the oppor-

tunity to make decisions for itself, andreduce dependence upon the facilitator asthe source of responsibility. The facilitativerole of the facilitator remains vital, but thegroup will have to establish its own princi-ples and ways of abiding by them. In somecases (team building) this can be a majorobjective of the adventure activity. In otherwords it breaks down preconceptions ofwhat learning and training are.

MemorabilityPerhaps because each adventure activity

is unique in what it feels like to participate,reality activities tend to be memorable. Thiscreates an anchor that can help participantsrecall what was learned (though there is arisk that they will recall the adventure butnot the objective – such as when you recalla beer commercial but not what type ofbeer it advertised).

MotivationThe fun element of reality activities

ensures that participants are generally moti-vated to take a full part. This may troublesome groups of participants who dislike anyelement, which they consider to be an irrele-vant activity. The competitive edge that existsor which may be perceived in some realityactivities is no doubt a motivating factor.

Multiple RelevanceAlthough a facilitator will have a reason

for introducing a particular activity, it maywell be that participants will get somethingelse out of it. The open nature of realityactivities and their correct processingensures that what participants actually gainfrom the adventure activity is fully expressedeven if it is not what the facilitator andorganization intended them to learn.

Participant PayoffAlthough there may be perceived winners

in some of the activities, there is a payoff forall participants in terms of learning experi-

ence. It is also possible to organize theadventure in such a way that there is no stig-ma for those who do not fully participate.

Peer LearningArising from this is the fact that most of

the learning for a participant will comefrom peers. This is a useful point to be ableto make because it promotes networking,interdependence among participants and atendency not to see the facilitator as thesource of the answers. Such a modellingeffect can be very significant, and in thelong term can enable participants to con-siderably broaden their understanding ofwhat a learning event can be.

PhysicalityMost adventure activities operate by

making a problem or a skill into a physicalreality. Such a process can be a very power-ful way of putting people in touch withtheir own feelings and reactions. By locat-ing a problem or skill in their own physicalspace, participants are encouraged tobecome involved with it rather than treat-ing it at an abstract intellectual level. This isa key to self-awareness.

Process IssuesParticipants are more likely to be their

real selves in reality activities than in manyother sorts of training activities where theywill conform to a normal participant role.Whereas in reality activities, they will gen-erally react and interact as they do in reallife situations, which can itself be the sub-ject of discussion (process intervention) at alater stage in the adventure activity. This isparticularly important in team-buildingwork and any training where feelings areexamined.

Learning CurveCompared to non-manipulated experi-

ence the time frame of reality activities canbe compressed, and thus effect acceleratedlearning. This is an advantage of simulationlearning methods, of which adventureactivities can be seen as a special case.

PracticalityEven when it is not a simulation, reality

activities functionally represent some aspectof real life, thus making for ecological valid-ity – they examine the issues and skills of

everyday experience in the language thatexperience needs. A degree of reality isexperienced that might not be possible viaother training methods. The feeling evokedand many of the responses generated will bevery similar to those in real life, which is atthe heart of reality activity learning - pre-pare participants for real world. By stressingthese parallels between training and every-day situations, reality activities may help topromote the principles of continuous learn-ing with associated benefits for both theindividual and the workplace.

Learning CycleFrom a theoretical perspective, Kolb

(1994) and Honey and Mumford (1986)have independently developed a four-stagemodel of learning. They argue an effectivelearning event passes through all four of thestages of Action, Reflection, Theorizing andPlanning for future occurrences of the samesituation. While some facilitators contendthat reality activities appeal only to Activists- those people who have a high need for thefirst of these four stages – a well-designedand executed reality activity will cater to theneeds of all: the Activist (who needs to beinvolved in an activity to learn); the Reflec-tor (who needs to think about the experi-ence afterward); the Theorist (who needs tobe able to work out the details of anyunderlying principles); and, the Pragmatist(whose main concern is how to apply whathas been learned).

Risk TakingIt is possible for participants to take risks

in a relatively safe environment duringadventure activities. Although there is thepossibility of physical injury, in a controlledenvironment risks can be taken whichmight seem too formidable in an ordinaryenvironment.

Skill DevelopmentMany reality activities require a degree of

organization skill, which may not actuallybe the main objective of the activity. Thedevelopment of those skills, however, is anachievement that many participants andorganization will recognize and desire.

ConclusionA walk though history will show that

humans have been trying new ideas to see if

REALITY EDUCATION


they work. The benefits of reality educationjust described above can be attained notonly at the highest levels of an organizationbut at lower levels as well. Research sup-ports the notion that beneficial effectsresult from certain behaviours. Relation-ships have been found between classes ofbehaviour and organizational outcomes.When large variations in individual per-formance exist, there is a need to interveneto improve group functioning. As organiza-tions continue to devise strategies toimprove organizational excellence, theyhave broadened the scope of their search fornew approaches; they have turned increas-ingly to reality activities. **

ReferencesBurridge, Peter (2004) Do journey style outdoor edu-

cation programs lead to change? – What the partic-ipants think. Paper presented at the School of Out-door Education & Environment, InternationalOutdoor Education Research Conference, La TrobeUniversity Bendigo, Victoria: Australia.

McKenzie, Marcia. D. (2000) How are adventure edu-cation program outcomes achieved?: A review of lit-erature. Australian Journal of Outdoor Education,5 (1), 19-26.

Mumford, Alan. (1993) Developing Top Managers.Gower Publishing Company. Aldershot, Hants,England; Brookfield, VT: USA.

Mumford, Alan. (1995) Learning at the Top.McGraw-Hill, New York: NY: USA.

Mumford, Alan. (1995) Handbook of ManagementDevelopment, 2nd ed. Gower Publishing Compa-ny. Aldershot, Hants, England; Brookfield, VT:USA.

Rickinson, M., Dillon, J., Teamey, K., Morris, M.,Choi M. Y., Sanders, D., & Benefield, P. (2004,March) A review of research on outdoor learning.National Foundation for Educational Research andKing’s College London: UK.

REALITY EDUCATION


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The Federal Accountability Act createdsix new agents reporting to Parlia-ment on the conduct of the federal

bureaucracy. These agents joined eightexisting entities already charged with keep-ing tabs on various bureaucratic functions.Collectively, these agencies form a formida-ble oversight array. The impact of this extra-parliamentary apparatus and the accompa-nying central agency values and ethics ini-tiatives on government and the public serv-ice is unclear. Will the agencies and initia-tives demonstrably increase accountabilityand ethics in government? Do they addressthe root causes of the values and ethicsproblems in the federal government? Is itclear how they will prevent or mitigate val-ues and ethics problems in the future?

Most of the recent federal governmentvalues and ethics initiatives are a responseto a series of events characterized as “scan-dals” by the media and opposition politicalparties. The events include the SomaliaInquiry (1997), the Krever Inquiry intotainted blood (1997), the grants and con-tributions controversy in Human ResourcesDevelopment Canada (2000), overspend-ing on the Firearms Registry (2003) and thecontracting problems in the SponsorshipProgram (2003). To these events could beadded the misappropriation of funds fromthe RCMP Pension Fund in 2003 thatcame to full light in 2007. Associated withthem are allegations of improper spendingby the heads of the National Labour Rela-tions Board (1997), the Privacy Commis-sioner (2003) and the Office of the Correc-tional Investigator (2006) and allegations ofconflict of interest connected to “Shawini-gate” (1999). There is no doubt that theseevents raise serious questions aboutaccountability and ethics in government.

As a start to answering the questionsposed, this article identifies the various Par-liamentary agents, their budgets, and man-date, the key Treasury Board Secretariat

(TBS) and Canada Public Service Agency(CPSA) initiatives, and presents some ini-tial observations on their potential effec-tiveness.

The agents that have a direct impact onfederal government departments and agen-cies include the:• Office of the Auditor General of Canada

(1878)• Public Service Commission (1908)• Official Languages Commissioner

(1970)• Privacy Commissioner (1983)• Access to Information Commissioner

(1983)• Canadian Human Rights Commission

(1985)• Commissioner of the Environment and

Sustainable Development (1995)• Public Sector Integrity Commissioner

(2007)• Procurement Ombudsman (2007)

The agents that directly affect Parliamentand the political process are the:• Chief Electoral Officer (1920)• Conflict of Interest and Ethics Commis-

sioner (2007)• Commissioner of Lobbying (legislation

not yet proclaimed)• Parliamentary Budget Officer (2007)

In addition, the Office of the Director ofPublic Prosecutions was created in 2007.

The Federal Accountability Act also creat-ed the position of the Accounting Officer.The Act designated deputy ministers andheads of agencies as Accounting Officers.The position is a pale copy of its Britishmodel. (For a comparison of the Canadianand British Accounting Officer mandatesplease see my previous article “TheAccounting Officer: What are CanadiansGetting?” FMI Journal, Volume 18, No. 1,fall 2006.) The House of Commons Stand-ing Committee on Public Accounts (PAC)holds the position that the AccountingOfficer is accountable to the Committee. If

this is the case then the Accounting Officercould be considered a quasi-parliamentaryagent. However, the Privy Council Office’sposition is that the Federal AccountabilityAct simply enshrined existing practice, thatnothing has changed, and certainlyAccounting Officers are not accountable tothe PAC.

The spending and staffing plans of Par-liamentary agents for fiscal year 2008-09are summarized in Table 1. Based on avail-able information, the agents that directlyaffect the federal bureaucracy plan to haveover 2,100 full-time equivalent employeesand spend over $258 million in 2008-09.The Office of the Auditor General (OAG)and the Public Service Commission (PSC)have most of the resources. In 2007-08 theOAG forecasted that it would have 625full-time equivalent employees and spend$80.6 million. It planned to spend about$44 million on performance audits ofdepartments and agencies, $5 million onaudits of the financial statements of theGovernment of Canada, $24 million onfinancial audits of Crown corporations andterritorial governments, $4 million on spe-cial examinations of Crown corporations,and $2.2 million on sustainable develop-ment monitoring activities.1 In 2007-08,the PSC planned to spend about $29.8 mil-lion on its “oversight of integrity of staffingand political neutrality” program. This pro-gram involves examining whether organiza-tions have implemented PSC monitoring

The Ethics Police Era

Alan Gilmore


Alan GilmoreAlan Gilmore, Ph.D., is a former senior principal inthe Office of the Auditor General of Canada. He hasextensive experience with accountability and gover-nance frameworks, regulatory programs, and manage-ment control systems. He is professor of Public AffairsEthics at Saint Paul University, Ottawa, and he is anAssociate with the strategic policy and managementconsulting firm Sussex Circle. Comments on this arti-cle may be sent to [email protected].

and audit and the recommendations andconducting examinations of the publicservice staffing. Spending on this area isexpected to rise to $40.8 million in 2010-11.2

The mandates of the agents of Parlia-ment are summarized in Table 2. Asdescribed, these agencies have significantpowers and oversee almost every aspect ofactivities of the federal public service.In 2008–09, the OAG plans to report onthe findings of 29 performance auditswhich will be published up to four times ayear in reports of the Auditor General ofCanada and the Commissioner of the Envi-ronment and Sustainable Development toParliament. These audits impact on all sec-tors of government. For example, in 2008-09 the OAG will report in May 2008 onthe First Nations Child and Family Servic-es program, in November 2008 on the gov-ernance of small entities, and on contract-ing for services, and in February 2009 onthe Canada Revenue Agency’s efforts toensure compliance.3 In 2008-09, the PSCplans to “initiate a new audit cycle, includ-ing audits of large entities.”4

Another significant part of the array ofactivities to oversee ethics in the federalgovernment is the establishment of codes ofconduct for members of the House ofCommons, ministers and Governor-in-Council appointees, the public service, lob-byists and suppliers of goods and services tothe government. Table 3 summarizes keyelements of these codes. The Office of theConflict of Interest and Ethics Commis-

sioner, deputy ministers, and the CanadaPublic Service Agency, the Office of theRegistrar of Lobbyists (or the Commission-er of Lobbying), Public Works GovernmentServices Canada, and the Treasury Board ofCanada Secretariat (TBS) are responsiblefor the administration of these codes.

To add to these codes, the Public ServantsProtection Disclosure Act requires the Treas-ury Board to establish a new code of con-duct for the entire public sector that “willset out the values that should guide publicservants in their work and professional con-duct.” Further, it requires “chief executivesof federal departments and organizations toestablish their own codes that are consistentwith the Treasury Board code, but adaptedto the needs of their organizations.” ChiefExecutives are also required to designate asenior officer to be responsible for handlingdisclosures of organizational wrongdoingthat have been made within the departmentrather than to the Public Service IntegrityCommissioner.5

This apparatus of parliamentary agents,codes of conduct and internal and externaldisclosure regime for wrongdoing is supple-mented by TBS requirements built into itsManagement Accountability Framework(MAF) initiative. The MAF exercise estab-lished the Treasury Board’s “expectations ofsenior public service managers for goodpublic service management.”6 The MAF issupposed to provide an integrated model ofdifferent management initiatives, provide abasis for deputy ministers to ensure goodmanagement, and allow Treasury Board to

assess management performance. Depart-ments are rated on 10 elements using a fourcategory scale ranging from the lowest rat-ing, needs attention, to opportunity forimprovement, to acceptable, to the highestlevel, strong. One of the elements is publicservice values consisting of two areas: val-ues-based leadership and organizationalculture. The MAF process is now in RoundV (2007-08). For Round V, the Office ofPublic Service Values and Ethics (OPSVE)in the Canada Public Service Agency isusing a departmental self-assessmentapproach. Departments are rating them-selves by answering 10 questions substanti-ated by supporting facts and evidence. TheOPSVE reviews this information, consults,and then provides overall ratings.7

Preliminary ObservationsFor the most part, the commissions of

inquiry and the audits by the OAG of thekey “scandals” focused on the role of publicservants and violations of government regu-lations and policies. By the nature of itsmandate the examinations conducted bythe OAG totally focused on the role ofdepartments and their public servants. Themajor exception to this pattern was theSponsorship Commission of Inquiry whichfocused on the role of ministers and theiradvisors as well as public servants. Thefocus on the role of public servants notunsurprisingly resulted in recommenda-tions that called for changes in the internalworkings of government and more over-sight of the bureaucracy by external bodies,preferably by parliamentary agents. Theassumption behind these recommendationsis that the conduct of public servants was aroot cause of the “scandals.” Thus, fixingthe public service, especially the role andduties of senior public servants, with morerules and central agency direction, and par-ticularly, external oversight will cause themto act properly. Hence ,the establishment ofthe OAG, the PSC, the Access to Informa-tion and Privacy Commissioners, theHuman Rights Commission, the Procure-ment Ombudsman, and the Public ServiceIntegrity Commissioner.

Is this assumption valid? Or, is it theresult of most of the inquiries and all theOAG audits focusing on departments andthe role of public servants (implicitly thelevels below the deputy minister) rather

THE ETHICS POLICE ERA


Table 1. Summary of 2008-09 spending and staffing plans of Parliamentary Agents

Parliamentary Agent Planned Spending Planned Staffing ($ millions) (Full-time Equivalent Employees)

Office of the Auditor General, including the Commissioner of the Environment and Sustainable Development 79.2 625

Public Service Commission 99.6 1,030Commissioner of Official Languages 19.9 177.5Privacy Commissioner 19.0 150Access to Information Commissioner 9.6 90Human Rights Commission 20.6 190Public Sector Integrity Commissioner 6.55 41Procurement Ombudsman1 3.7 N/AChief Electoral Officer 110.5 388Conflict of Interest and Ethics

Commissioner N/A N/ACommissioner of Lobbying N/A N/AParliamentary Budget Officer2 2.5 N/ADirector Public Prosecutions 120.6 530

Source: Departmental Reports on Plans and Priorities 2007-08, http://www.tbs-sct.gc.ca1. PWGSC estimate for funding in 2007-08 2. Hill Times, March 31, 2008

than the role of the minister and their advi-sors? The role of ministers and advisors wasonly alluded to by the Somalia and Kreverinquiries, and avoided in the reports of theAuditor General. The impression left wasthat public servants were the problem.

A careful reading of the Krever reportplaces the responsibility for the tainted

blood scandal at the feet of the federal andprovincial ministers who failed to approve amuch needed blood fractionation facilitybecause several provinces wanted the eco-nomic benefits from such a plant to accrueto their province. Rather than give oneprovince a possible benefit, no facility wasbuilt. The result was that Canada had to

buy the needed blood components fromU.S. suppliers who obtained the bloodfrom groups at high risk of being infectedwith HIV/AIDS and hepatitis C.

Similarly, the Somalia Commission reportsummarizes the decisions made by ministersto rapidly deploy unready Canadian Forcesto a war torn country, but it was lower level



Table 2. Summary of mandates of Parliamentary Agents

Parliamentary Agent What They DoOffice of the Auditor General, • Performance audits of departments and agencies

including the Commissioner of • Performance audits of environment and sustainable development activitiesthe Environment and Sustainable • Audits of Nunavut, the Yukon, and the Northwest TerritoriesDevelopment • Audit of the Public Accounts of Canada

• Financial audits and Special Examinations of Crown corporations

Public Service Commission • Recruitment strategies and staffing practices implemented across the public service• Organizations have implemented PSC monitoring and audit recommendations• Enhanced risk-based oversight of the integrity of public service staffing• Staffing and assessment services

Commissioner of Official Languages • Reviews complaints and investigates• Conducts investigations on his own initiative• Evaluates the language performance of federal institutions and other organizations produces performance report cards• Where there is a high level of risk, he conducts in-depth audits• Intervenes in court cases, “judiciously” in major official languages issues, and in development of laws, regula-

tions and policies• Monitors implementation of the Official Language Act by federal institutions and other organizations.• Heightens Canadians’ awareness of the benefits of linguistic duality

Privacy Commissioner • Advocate for the privacy rights• Investigates complaints, conducts audits• Pursues court action

Access to Information (ATI) • Investigates complaintsCommissioner • Pursue judicial review in situations where there is an important principle of law

• Monitors the performance of federal institutions engaging in systemic or repeated breaches of the ATI Act

Canadian Human Rights Commission • Proactive and influential catalyst for moving forward on human rights issues, both nationally and internationally• Audits federally regulated employers• Investigates human rights complaints

Public Sector Integrity Commissioner • Establish a safe, confidential mechanism for public servants or members of the public to disclose potential wrong-doing in the public sector.

• Conducts investigations• Protects public servants from reprisal for making such disclosures or participating in investigations.

Procurement Ombudsman • Review procurement practices across government• Review complaints from suppliers

Chief Electoral Officer • Making sure that all voters have access to the electoral process; maintain National Register of Electors• Conduct federal electoral events such as:

– Register political parties, party leadership contestants– Administer controls on the financing sources and election expenses– Examine and disclose financial reports– Authorize payment of allowances to registered parties– Reimburse the election expenses according to Canada Elections Act– Appoint returning officers

Conflict of Interest and Ethics • Administer the Conflict of Interest Code for Members of the House of CommonsCommissioner

Commissioner of Lobbying* • Oversee the enforcement of the Lobbying Act• Establish a registry of lobbyists• Investigate alleged breaches of the Lobbying Act or of the Lobbyists’ Code of Conduct.

Parliamentary Budget Officer1 • Provide objective analysis to the Senate and House of Commons about the estimates of the government, the stateof the nation’s finances and trends in the national economy,

• Undertake research when requested by certain Parliamentary committees• Provide estimates of the costs of proposals contained in Bills introduced by members of Parliament other than in

their capacity as ministers

Director Public Prosecutions Prosecution of:• Drug ,organized crime and Criminal Code offences• Federal offences to protect the environment, natural resources, economic and social health• Charges under the Part II.1 of the Criminal Code (Terrorism), the Proceeds of Crime (Money Laundering) Terrorist

Financing Act, the Customs Act, the Excise Act, and the Excise Tax Act to combat trans-national crime and terrorism.

Source: Departmental Reports on Plans and Priorities 2007-08, http://www.tbs-sct.gc.ca1. Federal Accountability Act, Summary, http://www2.parl.gc.ca

officers and soldiers that faced court martial.Finally, a review of the events leading to

$1 billion HRDC grant and contributionprogram controversy indicates that therewere three major sources of the problem.The first major source was the programreview process of the mid-1990s which sig-nificantly reduced the ranks of middlemanagers in HRDC and throughout thegovernment by offering monetary retire-ment packages too good to turn down. Thisleft HRDC without the necessary manage-rial talent to supervise a new major grantsand contributions program which wasunder pressure from ministers to get themoney out as soon as possible. The secondsource of the problem was the delegation ofproject and funding approval authority torelatively junior inexperienced officers indecentralized regional offices without mid-dle management supervision. And, thethird source of the problem was the initia-tion of a “breaking barriers” policy jointly

sponsored by HRDC and the TBS that wasinterpreted as encouraging public servantsto focus on results with the implicit sugges-tion that no significant consequenceswould accrue if key financial controls wereignored or circumvented in the process. Inthe end, the brunt of the criticism and theconsequences for the problems were borneby assistant deputy ministers, a new deputyminister, and a minister who was not therewhen the program was initiated.

Will the expanded federal governmentvalues and ethics apparatus prevent or mit-igate these types of “scandals” in the future?Its effectiveness is questionable based on thetrack record of the existing Parliamentaryagents and central agency initiatives. Forexample, the OAG despite extensive auditsof Public Works Government ServicesCanada contracting in 1997 and 1999 didnot detect the problems in the SponsorshipProgram. And, while it reported on theproblems in the HRDC grants and contri-

butions program in October 2000, its April2000 report on HRDC’s service quality atthe local level concluded that HRDC had“made considerable progress in addressingservice quality.”

A second assumption is that a majorcause of problems is individual conflict ofinterest (COI) involving the gain of mone-tary or other benefits sometimes inexchange for preferential treatment of theparty offering the benefit; and, if it is madeclear what a COI is then difficulties will beavoided. This is seen as applying to minis-ters, their advisors and Governor in Coun-cil appointees as well as senior public ser-vants. The establishment of the codes issupposed to make it clear to the parties howto arrange and conduct their private affairsso as not to benefit or be perceived as ben-efiting from their public offices. However,the existing conflict of interest codes, theprovisions of the Financial AdministrationAct, and the Criminal Code should have



Table 3. Key elements of federal codes of conduct

Code of Conduct Key ElementsConflict of Interest Code for Members of the • Maintain public confidence and trust in the integrity of Members, and respect and House of Commons1 confidence in the House of Commons

• Demonstrate to the public that Members are held to standards that place the public interestahead of their private interests and to provide a transparent system by which the public mayjudge this to be the case;

• Provide guidance for Members on how to reconcile their private interests with their publicduties and functions

• Foster consensus among Members by establishing common standards and by providing themeans by which questions relating to proper conduct may be answered by an independent,non-partisan advisor.

Conflict of Interest Act1 Part 1: Conflict of Interest Rules • Don’t exercise official power to further private interest• Ministers, Secretaries of State and Parliamentary • Arrange private affairs to prevent conflict of interest

Secretaries • Don’t give preferential treatment to any person• Ministerial Staff and Ministerial Advisors • Don’t use confidential information for private purpose• Governor in Council Appointees and Ministerial • Don’t allow offers of outside employment to influence decisions

Appointees • Don’t accept gifts or advantages that would be reasonably seen as influencing a decision

Values and Ethics Code for the Public Service2 • Democratic, professional, ethical, and people values• Conflict of interest measures• Post-employment measures• Avenues of resolution for public servants who feel that their organization has breached the

Code

Lobbyist Code of Conduct3 • Conduct with integrity and honesty all relations with public office holders, clients, employ-ers, the public and other lobbyists

• Be open and frank about their lobbying activities, while respecting confidentiality.• Observe the highest professional and ethical standards, conform fully with not only the letter

but the spirit of the Lobbyists’ Code of Conduct, all relevant laws, including the LobbyistsRegistration Act and its regulations.

Code of Conduct for Procurement4 • Responsibilities of public servants under law and values and ethics code• Responsibilities of vendors, including respecting the responsibilities of pubic servants• Vendor complaints and procedural safeguards

Policy on the Prevention and Resolution of Harassment • Harassment in the workplace is unacceptable and will not be toleratedin the Workplace5

1. Office of the Conflict of Interest and Ethics Commissioner, http://www.parl.gc.ca/ciec-ccie2. Canada Public Service Agency, Values and Ethics Code for the Public Service, http://www.psagency-agencefp.gc.ca;3. Office of the Registrar of Lobbyists, http://www.orl-bdl.gc.ca4. Public Works Government Services Canada, Code of Conduct for Procurement, http://www.pwgsc.gc.ca5. Treasury Board of Canada Secretariat, Policy on the Prevention and Resolution of Harassment in the Workplace, http://www.tbs-sct.gc.ca

prevented the allegations of wrongdoingassociated with the heads of the NationalLabour Relations Board, the Office of thePrivacy Commissioner, the Office of theCorrectional Investigator and the Office ofthe Prime Minister. Given the track recordof the government relating to whistleblow-ers is it reasonable to expect that public ser-vants will place their faith in the new Pub-lic Servants Disclosure Protection Act and risktheir careers to report such wrongdoing?

A third assumption is that the more theoversight bodies are removed from directgovernment control the more rigourousthey will be in implementing their mandatesand as a result government will be more eth-ical. The establishment of the OAG and theother agents of Parliament reflect this think-ing. However, while there may be moreoversight bodies there are still few conse-quences for not complying with the codes ofconduct or legislation they oversee.

The Access to Information Act is a clearexample. The 2006-07 Annual Report ofthe Office of the Commissioner of Accessto Information reported that both the PrivyCouncil Office (PCO) and the Departmentof Justice (DOJ) received failing grades forhandling access to information requests in2004, 2005 and 2006. The Access to Infor-mation Commissioner held out some hopefor improvement by DOJ. However, heexpected that despite a modest workloadthe PCO would continue to be chronicallyunable to deal with ATI requests despiteassurances in 2005 to the Commissionerand the Standing Committee on Access toInformation, Privacy and Ethics that the

matter would be addressed. The Commis-sioner also reported a case under the head-ing the “PCO Made Me Do It” where theDepartment of Finance did not release doc-uments it should have released on theadvice of the PCO. What values and ethicsmessage does this type of conduct by thelead agency of the public service send toother departments and to public servants?

Lastly, let’s look at the TBS ManagementAccountability Framework process. What isthe evidence that it is effective? To date thehistory of public service management“reforms” is littered with initiatives thathave “underachieved and over-promised.”8

For example, the TBS initiated Program-Planning-Budgeting System (PPBS) in the1970s and Management By Objectives(MBO) in the 1980s involved a lot of paperwork and were unceremoniously discarded.While these initiatives do not appear tohave caused significant damage except fortheir high cost, time consumed and moralelowering effects, newer initiatives like the“breaking barriers” ideology can causemajor harm – witness the experience ofHRDC which led the “breaking barriers”effort. The MAF process was adopted with-out a full understanding of why the previ-ous management “reforms” did not work.

Clearly, the purpose of adding new Par-liamentary agents and adopting new man-agement programs is not to motivate publicservants to be more careful to leave a trailjustifying their actions or more creative incircumventing rules and regulationsbecause the pressures to get the job donehave not changed and the consequences for

not following the rules are insignificant. Ifthe pressures that lead to values and ethicsproblems and the correct means to preventthem have not been clearly identified, thenthe effectiveness of the expanded effort isquestionable from the start. Based on previ-ous experience, it is not clear how the newfederal government values and ethics initia-tives are designed to address the causes ofthe problems in Somalia, HRDC, the taint-ed blood supply, the Sponsorship Program,and the RCMP Pension Fund, or moreeffectively prevent wrongdoing by ministersor heads of agencies. What is needed is asystematic review of federal initiatives toensure that they are addressing the rootcauses of the ethics problems in govern-ment, that their cost and the work to meettheir demands is justified, and that there arereal consequences for not complying. **

Notes1. Office of the Auditor General, Report on Plans and

Priorities, 2008-09, Section III, SupplementaryInformation, Table 2, Financial and HumanResources and Subactivities, http://www.tbs-sct.gc.ca

2. Public Service Commission, Report on Plans andPriorities, 2008-09, Table 2: Departmental PlannedSpending and Full Time Equivalents,http://www.tbs-sct.gc.ca

3. Office of the Auditor General, op. cit., SectionIII—Supplementary Information

4. Public Service Commission, op. cit., Plans and Pri-orities, Priority II

5. Canada Public Service Agency, Overview of thePublic Servants Disclosure Protection Act,http://www.psagency-agencefp.gc.ca

6. Treasury Board of Canada Secretariat, ManagementAccountability Framework, www.tbs-sct.gc.ca

7. Ibid8. Lebow, R. and R. Spitzer, Accountability: Freedom

and Responsibility without Control, San Francisco,CA: Berrett-Koehler Publishers, Inc., 2002.




In 1978, the Auditor General for theProvince of British Columbia observedthat “in order to properly manage their

ministries, senior officials need adequatefinancial information.” Further, she noted“few ministries are using the Financial Man-agement Reporting System effectively. In atleast one ministry, a parallel system…has beendesigned and implemented. In other min-istries, systems have been set up, or are con-templated, to overcome the shortcomings of thepresent system. This clearly indicates a pressingneed for improvements in management infor-mation systems.”

Since 1978, we have seen huge and rapidchanges in technology, business processes,and financial management information sys-tems. Vast financial and human resourceshave been utilized to improve financialmanagement information, but there is stilla pressing need for improvement so thatdecision makers have the information thatthey need in order to make the best deci-sions possible. To complicate matters, thereare increased pressures to ensure that finan-cial transactions and information are com-pliant with rules that can be provincial,national or international in scope.

The Province of BC tackled some ofthese issues in the 1990’s by implementinga corporate accounting system (CAS). Itrequired a massive cross-government effortto work through countless business issues,but the system was successfully implement-ed and today provides the core informationfor financial reporting and the primarybasis from which the public accounts forthe province are produced. After imple-mentation, there have been constant effortsto improve our financial management envi-ronment. For example, i-procurement andcontinuous controls monitoring wereimplemented. These initiatives resulted in astreamlined business process, improved effi-ciencies and effectiveness as well asdecreased costs. In addition, a number of

alternate service delivery mechanisms forcorporate business processes were intro-duced.

Despite all of the changes that we havemade, BC still has parallel systems, specialsystems to meet unique business require-ments, legacy systems, and staff still workincredibly hard to gather corporate infor-mation. In many ways, we are still trying toobtain answers to the observations laid out30 years ago. Technology and business alsocontinue to change and we are seeing hugedrivers for further change, such as an agingworkforce, privacy issues, new technologyand security concerns.

The BC Ministry of Finance is taking aproactive position and has initiated a proj-ect to re-define a vision for financial man-agement information systems for the gov-ernment. The core provincial government iscomprised of a number of ministries thathave widely varying business lines fromsocial to resource based to infrastructure.Overlaying all of these business lines, areeconomic, social and environmental issuesthat need to be resolved. It is a complexenvironment, and it is challenging to findthe right blend of management tools, tech-nology tools, legislation, policies, proce-dures and systems to ensure that the deci-sion makers from the top to the bottom ofthe whole organization have the informa-tion that they need to make correct deci-sions.

The approach for financial managementinformation systems has changed over time:• At one time, it was suggested that a “one

size fits all” financial system could beimplemented and that it would meet themajority of business needs of the min-istries and government. This was metwith varying degrees of success, but onesystem simply cannot meet all of thevarying business needs. In BC, we stillsee add-on financial systems, spread-sheets and other manual systems that

provide information and business func-tionality for unique business lines.

• In some jurisdictions the approach was toimplement several financial managementinformation systems. One reason for thisapproach includes functionality that wasslightly different from one system to thenext and the organization benefited fromall of the products (although there wassome replication of functionality). Thechallenge is that information may bereplicated many times and accuracy inreporting depended on which data sourcewas used.Organizations, both public and private,

struggle today to ensure that the informa-tion that decision makers are using is thebest available information and that it iscomplete, relevant, accurate and timely.Significant progress has been made in BC atministry and program levels, but there arestill challenges from a corporate perspec-tive.

To ensure that we are using and gettingthe best information, the BC Ministry ofFinance is establishing a vision on a go for-ward basis for financial management infor-mation systems. Before articulating thatvision, an approach to help us get there wasadopted consisting of the following:1. Determine specific business issues facing

decision makers.2. Perform an extensive literature and

review of other jurisdictions.3. Review of the current state of financial

management information systems acrossgovernment.

4. Issue a Request for Information to thevendor community to enlist their help inhow they think the future will unfoldwith respect to financial information sys-tems.Key stakeholders, identified at the begin-

ning of the project, included people fromthe Office of the Comptroller General,Chief Information Office, the Corporate

Seeking Vision: FinancialInformation Management Systems

Barb Hamdi

Barb HamdiBarb Hamdi, CGA, BSc (Econ) is the Special Advisoron Strategy and Business/Financial Systems Integra-tion, Office of the Comptroller General, Ministry ofFinance, Victoria, BC. As part of this position, she isresponsible for leading the development of a strategyfor financial management information systems for thecore government. Barb was previously the SeniorFinancial Officer for a number of ministries and alsoled the legislation and policy for financial manage-ment. She has an extensive private and public sector background. Barb can be reached [email protected]

Accounting System office, senior financialand senior information manage-ment/technology officers, human resourcemanagement, program executives and thevendor community.

The remainder of this article will focuson the second item – the findings from theliterature and jurisdiction review. An exten-sive review of trade magazines, the internet,research groups such as the Gartner Groupand Forrester, and other jurisdictions wasconducted. The findings have beengrouped so that the ideas may suggestwhere the future for financial managementinformation systems lies.1. The role of financial management

must evolve from focussing on transac-tion processing to being a strategicadvisor. The focus here shifts fromassembling financial reports about pre-vious events to one of helping set thecourse for the future. While the report-ing aspect will continue to be impor-tant, it is vital that the financial expertsof the organization are helping toshape the future.

2. There is continuing pressure to ensureconsistency of financial and non-finan-cial information for decision-making.It is no longer sufficient to reviewfinancial information. There is grow-ing pressure to tie financial findingswith performance indicators. In addi-tion, information about programs,expectations and so on provides a morecomplete picture of how an organiza-tion is performing.

3. Master data management enables usersto view information in a consolidatedview. It is a disciplined process ofmerging disparate data from across theorganization to achieve consistency incommonly shared business informa-tion.

4. Shared services and/or outsourcingfunctions should be considered. Manyorganizations have implementedshared services/outsourcing forincreased functionality. While it is sug-gested that there are potential cost sav-ings in setting up a shared service oroutsourcing transactional types ofbusiness, the caution is that a positivecost/benefit analysis must support anychanges.

5. A close business relationship between

the Chief Financial Office, the ChiefInformation Officer, human resourcesexperts and the program/operationalmanagers must be developed and sus-tained. This will ensure that supportfunctions to the programs will beworking in a collaborative and inte-grated manner.

6. With rapid changes in financial stan-dards and technology, financial func-tions and systems must be positionedto implement new standards. Newstandards could include internationalreporting standards, changes to gener-ally accepted accounting principlesand any other standards that arise inreaction to business activities.

7. The focus on financial reporting isexpanding to include non-financialinformation and there is increasedpressure to have information availableon a real-time basis on the web.Organizations and individuals who areinterested in government’s results aremuch more sophisticated than in thepast. They also have the tools, skillsand capacity to analyse data on theirown and draw their own inferencesfrom the data. It will be a challenge toensure that information is accurate,complete and timely and available on areal-time basis.

8. Organizations will invest in businessprocess analytic tools. The industry ismoving very quickly to provide com-plete solutions that span traditionalEnterprise Reporting Systems (ERPs)to the business intelligence tools fordata analysis.

9. Reporting solutions will include dash-boards, scorecards, access to data, keyperformance indicators, mapping,charts and graphing. Extract, trans-form and load tools will obtain datafrom disparate sources (directly fromspreadsheets, external data stores, lega-cy systems, or ERP’s) so that businessintelligence tools can be employedthrough interactive interfaces by endusers.

10. Ultimately spreadsheet usage will bereduced. As the work is done to deter-mine the responsibility, ownership andsource of data, business intelligencetools will gradually take over the func-tionality provided by spreadsheets.

11. Service Oriented Architecture (SOA)essentially means using open data stan-dards. Proprietary data standards usedby the software providers in the pastwill disappear. SOA will enable trans-mission and receipt of transactionsbetween organizations without theneed for adapters and translators. Thiswork is already underway.

12. Network convergence will facilitate theuse of IP communications. A goodexample is consolidating telephoneservices. It provides one way for anorganization to use these services at alower cost.

13. Security will focus on authenticationand authorization.

14. Organizations will need to considerintegrating human capital manage-ment systems with financial applica-tions. This will enable the authoritiesand responsibilities attached to posi-tions to reside outside of the financialsystem. It should be a more effectiveway of managing these authorities forfinancial and other systems.

15. It is expected that there will be a con-tinuing drive to consolidate financialmanagement information systems.This is already taking place as vendorssuch as Oracle and SAP are acquiringbusinesses on a regular basis to providea full service solution from the ERPthrough to business intelligence offer-ings.

16. Where business lines within an organ-ization resist moving onto new solu-tions and wish to custom build ormaintain legacy solutions to meet busi-ness requirements, business casesshould be developed to support orrefute the course of action. Should itresult in a supportive case, then thatsystem should form part of the organi-zation’s basket of systems used to sup-port the organization’s business.

17. Mobile and wireless technology willcontinue to expand. The security issuesthat have prevented the active take upof this technology will be solved.Already, pilots are being run in thebanking industry where mobile devicesare encrypted and can be remotelydestroyed should they be stolen or getlost.

18. While environmental concerns and the


FINANCIAL INFORMATION MANAGEMENT SYSTEMS


need to respond to climate change areplaying an increased role in legislative,regulatory and public policy decisions,there was little in the literature reviewto suggest how this might impact thefuture of financial management infor-mation systems. “Green” initiatives forfinancial management informationsystems would most likely not beundertaken unless required by policyor mandate.

19. The challenge continues to find andhire qualified people into financialpositions. In addition, the competen-cies of people in financial positionsmay need to be enhanced as the focusexpands from the traditional account-ing (financial statement preparation,risk and control systems, etc) to onethat is forward looking and is provid-ing financial advice/expertise to the

program areas in achieving their goalsand performance obligations.

20. Organizational design has largely beenbased on the hierarchical structure thatwas originally designed circa 1900.Individuals were rewarded and valuedbased on the number of people theysupervised and for whom they wereresponsible. Today, the workforce ishighly educated and skilled and betterresults (employee satisfaction andachievement of program goals) may beachieved if a different organizationaldesign was implemented.

21. Sarbanes-Oxley has put an increasedfocus on internal control systems andas a result there is pressure to adoptstricter standards to ensure dataintegrity and compliance. This is ashift from trusted principles-basedrelationships. It is unknown what stan-

dards will be sufficient to enable assur-ance of compliance yet provide enoughfreedom for innovation and creativity.

It is interesting to note that while muchof this information is familiar, it does offerthe opportunity to reflect on the activitiesthat have already occurred inside theirorganization and what may need to be con-sidered as a new vision is assembled.

The next steps in the project are to inter-view program managers across governmentto determine their particular businessissues. Combining this information withthe literature/jurisdiction review, the ven-dor community input and a survey of ourcurrent financial information systems, wewill begin discussions with our financial,information management, human resourceand program management to restate thevision for financial management informa-tion systems in the BC government. **

FINANCIAL INFORMATION MANAGEMENT SYSTEMS

�• Management Consulting �• Internal Audit and Review �• Training, Facilitation and Learning Solutions�• Grants & Contributions �• Accounting and Tax Services�• Financial �• Evaluation �• Temporary Help Services�• Human Resources

Contact us:85 Victoria Street, Gatineau, QC J8X 2A3

(819) 772-0044 [email protected]

Our Management TeamPRESIDENT, Senior Partner, Pierre Samson, M.Sc., FCGADIRECTOR, Facilitation Training Services and Learning Solutions, Daniel St-Onge, B.CommDIRECTOR, Accounting and Tax Services, André Charbonneau, CGADIRECTOR, Financial Services, Daniel Charron, CMADIRECTOR, Audit Services, Gabriela Manoiu, M.ScDIRECTOR, Grants and Contributions, Mark Dillon, CA and David Cleary, CADIRECTOR, Client Services and Human Resources, Sylvie Samson

AdministrationPerron, Marilyn – Manager Administration servicesPerron, Nathalie – Administrative Assistant Charlebois, Amélie – Services Assistant

Our Services CoordinatorsInternal Auditing, Management Consulting & Evaluation, Pascale Tabatoni, BAA, M.Sc.Grants and Contributions, Rose Fatoumata Traoré, B.Sc.Accounting and Tax Services, Julie Chartrand Financial Services, Chantal LabergeFacilitation Training and Learning Solutions and Human Resources, Amélie St-Onge

Our ConsultantsMichael Andrecheck, CA, CIA Monique Eady, MBA, B.Comm Gregory Milanovich, BA Maude Bergeron, B.Sc. Mathieu Farley, CA, CPA Marcel Nolet, B.Soc.Sc., CGADiane Blondin Martin Glazer, CA Ted Pender, BAGuy Charbonneau, CA Jean-Pierre Godbout, BAA, CISA Louise Perron, CMA, MBA Gilles Charron, B. Adm., M.B.A. Pamela Grochot, CMA François Pion, CGA David Cleary, CA Guy Hotte, CGA Jerry Robbins B.Sc., M.EdAlain Daoust, CA Terrance Hunsley, Phd. Daniel Rosborough, BAARobert Darmody,CA Roger Keen, Ph.D., CGA Gérard Séguin, BAA, MPAJean-Guy Desgagné, L.L.L, MA. Soc. Frank Knight, M.Sc. Kathleen Simoneau, B.CommSylvain Dompierre, CGA Jean-Pierre Labelle, CMA Yves Talbot, B.Com., SPEC, ACC Luc Duciaume, BAA, CGA Robert Lalonde M.Sc.Com., FCGA Karen Walton, CAMichel Dupéré, B. Sc. CGA Pierre Lanthier, BA Claire Watier, MPAJean-Paul Dupont, CGA, MPA

Samson & Associates counts several specialists having in depth knowledge of the PSEA and the SMAF.They also have experience in the Audit and review of the SMAF and Staffing processes in several FederalDepartments and Agencies.


As the complexity of issues facing gov-ernment increases, public expecta-tions and desire for an integrated,

streamlined response also increases. However, inter-ministerial, collaborativeapproaches to developing strategies toresolve the identified issues are fraught withchallenge. Utilizing sustainable approachesto integrated decision-making within a silobased top down organization is complex.

Delineating processes and activities willassist decision makers within or thoseappointed by government in developingeffective, sustainable strategies to manageissues facing the organization.

To develop effective strategies, clearlyidentified processes are required. Bryson(1995) defines strategy as a “pattern of pur-poses, policies, programs, actions, decisionor resource allocations that define what anorganization is, what it does and why itdoes it” (p.32). Daft (2006) describes strat-egy as a “plan for interacting with the com-petitive environment to achieve organiza-tional goals” (p.23). Strengthening thestrategy development process within gov-ernment will support achievement of iden-tified outcomes and the desired end state.

To manage issues that impact govern-ment, increasingly multiple ministries needto be involved in developing workable andsuccessful solutions. In the following para-graphs essential key steps to effective strate-gic development are identified within thecontext of a project management approach.The processes focus on the strategic devel-opment phase up to the point of implemen-tation. The application of the resultingframework will strengthen the strategydevelopment process and optimize successin the resolution of complex issues requiringcoordinated responses within government.

Elements in strategic formulationThroughout the strategy development

phase the process is as critical as the prod-

uct (Apte, 2007). In considering theprocess and engaging stakeholders through-out the various steps of strategy develop-ment, increased awareness, capacity build-ing such as networking opportunities, effec-tive community implementation plans andincreased ownership of outcomes will beoptimized (Apte, 2007).

Applying a theoretical approach to strate-gic development helps to manage the chal-lenge of coordinating individual actionsand opinions by providing processes fororganizing discussions on issues and assist-ing in effective communication and eventu-al consensus on directions (Grant, 2005).Grant describes strategy formulation asinvolving stretch and resource leverage inachieving the long range goals, contributingto a sustainable competitive advantage aswell as ensuring a fit between internalresources and external opportunities.

In strategic development, it is importantto determine the relatedness and balancebetween emergence and design (Grant,2005). The complexity of issues to addresscorrelates to the emphasis on emergence indeveloping strategies as compared todesign, which is applied in those instanceswhere there is a higher degree of stakehold-er consensus and uniformity. The inter-relatedness of emergence and designinvolves a complex process of bottom-upand top-down decision-making (Grant,2005). Engaging in planned iterativeprocess will optimize success in the devel-opment and implementation of the strategy.

The steps outlined below will assist gov-ernment in developing strategies to managespecific issues and concerns impacting theorganization and ultimately stakeholders.Through the described framework forstrategic planning, resolution of issues canbe optimized. Engaging in a process toidentify and analyze issues facing the organ-ization will result in more politically accept-able, workable and sustainable solutions

(Bryson, 1995).To secure the approval and implementa-

tion of strategies, the following steps arerecommended within a project manage-ment approach:

Step 1: Identify the needTo assist in clearly identifying the issue

and developing a vision, an environmentalscan including analysis of previous studies,recommendations and stakeholder con-cerns should be completed (Bryson, 1995).This would also assist in clearly defining theneed for action and contribute to establish-ing realistic parameters for the project.

Step 2: Identifying the visionBased on the defined issue and need for

action, a vision should be established whichidentifies the preferred future state for gov-ernment and the province (Sexty, 2002a).

Step 3: Championing the projectFor the project to be successful, a cham-

pion needs to be identified (Bryson, 1995).The individual(s) should be within govern-ment and have strong leadership and abili-ty to influence others politically. Thisshould include, as a minimum, identifyingan MLA, Cabinet Minister or Deputy Min-ister to lead the project. The identificationof a champion is essential to the project'ssuccess.

Effective Processes in DevelopingSustainable Strategies in

GovernmentSandra Klashinsky

Sandra KlashinskySandra Klashinsky, MBA, is the Executive Director,Strategic Policy and Planning, Oil Sands SustainableDevelopment Secretariat with Alberta Treasury Board.Previously, she was responsible for managing provin-cial projects involving issue management and strategydevelopment through the Alberta Solicitor Generaland Public Security. Prior to this, Sandra led theprovincial review of the Child Welfare Act whichresulted in new and strengthened legislation to addressthe protection of children and adoption.

Step 4: Strategic planning processThe next step involves establishing and

clarifying the strategic planning process,including the vision, parameters, goals,resources, costs, timelines and project phas-es, deliverables and project structures fordecision-making e.g. deputy ministers part-nering committee (Grant, 2005; Apt, 2007;Bryson, 1995). These activities, includinginternal and external communicationstrategies, should be compiled into a proj-ect charter.

To assist in identifying how impacted orpartnering ministries can contribute to theproject goals, ministry mandates should bereviewed and linked to the vision, as illus-trated in Figure 1. At this stage, consistentwith Bryson and Alston (1996), the strate-gic planning process needs to begin withthe identification of linkages between theresources and capabilities of the organiza-tion and broad options being considered.Also, the identification of appropriate proj-ect structures are critical to the develop-ment of successful strategies as this will

enable the utilization of skilled and knowl-edgeable individuals to share informationabout resources, capabilities, opportunitiesand limitations of government and its envi-ronment.

Lastly within this step, a readiness assess-ment, as outlined in Table 1, should becompleted to ensure the organization is wellprepared to successfully manage the project(Bryson and Alston, 1996; MAPP, n.d.).

Step 5: SanctioningFollowing the establishment of a strategic

planning process the project charter shouldbe sanctioned by government e.g. deputyminister’s or Cabinet and Caucus.

Step 6: Literature reviewA literature review identifying best prac-

tices locally, provincially, nationally andinternationally should be completed toinform the strategic development process.The information gained through the litera-ture review could be another bridging pointbetween partnering ministries as well as

with stakeholders to share information anddiscuss the applicability to the projectvision and goals.

Step 7: Internal and external analysisThe next step involves an analysis of

internal and external factors through com-pleting an identifying the strengths, weak-nesses, opportunities and threats (SWOTanalysis) (Grant, 2005). This analysisincludes completing a scan of programs andservices provided through government aswell as the community. This informationwill be useful in understanding the limita-tions, resources, capabilities, opportunitiesand potential barriers within governmentand its environment.

As indicated by Bryson (1995), Fry andKilling (1989), Sexty (2002a) and Grant(2005), in developing strategies it is criticalto assess the organization’s external environ-ment as well as the internal capabilities,resources and strengths. Grant emphasizesthat strategy development must link thefirm’s goals, values, resources, capabilities,organizational structure and systems to itsexternal environment, including the eco-nomic, social, political and technologicalfactors that may influence the company’sdecisions and performance.

Step 8: Stakeholder planA stakeholder analysis should be com-

pleted and a plan developed to optimizeengagement of stakeholders including thepublic in identifying issues and concerns(Sexty, 2002b). This will also create buy-into the process and resulting strategies. Incompleting the stakeholder analysis, Sexty’s(2002b) model involving diagnosing thetypology of stakeholders may be applied(see Table 2 & Figure 2). The models areapplicable to government as it involvesassessing stakeholders based on the poten-tial to threaten or support the strategy. Italso includes developing methods to man-age concerns and issues that will help min-imize the potential for negative impacts onthe direction being pursued by the organi-zation.

In developing the stakeholder consulta-tion plan, it is critical to identify the antic-ipated outcomes that will be achieved byengaging stakeholders. If the intent is toseek stakeholder feedback and use theinformation in developing policy direc-


EFFECTIVE PROCESSES IN DEVELOPING SUSTAINABLE STRATEGIES IN GOVERNMENT

Ministries

Project VisionReview mandates & identify

linkages to vision

Figure 1.

Table 1: Readiness Assessment Worksheet

Critical Elements Yes NoProcess has strong sponsors � �Process has effective champions � �Support outweighs opposition � �Key resources are budgeted � �Core participants are interested/available � �There is general agreement on purpose and outcomes � �There is general agreement on how to proceed � �Scope of planning effort is reasonable � �Staff and technical support have been identified � �

Desired Elements Yes NoPurpose and benefits are well-understood � �Participants understand strategic planning � �All needed resources are in place � �Outside technical assistance has been lined up � �Participation and organizational structure are clear � �Roles and responsibilities are clear � �A planning process has been specified � �Time frames have been specified in the workplan � �A strategic planning proposal has been drafted � �

From “Readiness assessment worksheet,” MAPP: Mobilizing for action through partnership and plan-ning retrieved May 5, 2007 from http://mapp.naccho.org/ofsapd/ofsapd_ws_ra.asp

tions, then this should be identified andconsidered in identifying the role stake-holders should play in the process. In thisinstance, consistent with Arnstein (1969),the involvement by stakeholders shouldmove from participation to increased part-nerships and responsibility to achieve theintended results (see Figure 3). The identi-fication of outcomes that the organizationis expected to achieve through the engage-ment of stakeholders will also assist in man-aging stakeholder expectations and ensurethat the type of involvement is reflective ofthe outcome anticipated. Clarification ofoutcomes will assist in aligning activitypoints of differentiation for involvement tothe project goals (Dwyer, 2004).

The development of the stakeholder con-sultation plan will increase transparency in

the strategic development process throughidentifying and mapping different ways thepublic and stakeholders can becomeinvolved throughout the project (Arnstein,1969). In addition, the stakeholder planshould be evaluated on an ongoing basis toidentify new points of differentiation forinvolvement, thus ensuring engagementthroughout the process (Dwyer, 2004).

Consistent with Bryson and Alston(1996), it is also recommended that politi-cal support and sponsorship be cultivatedby key decision makers throughout thedevelopment of proposed changes. Thiswould involve individual invitations toMLAs to meet with government representa-tives to further discuss any concerns orissues. This strategy would also provide anopportunity to increase awareness of the

proposed changes with MLAs and manageany issues or concerns prior to submissionof the final strategies for approval withingovernment.

Step 9: PrinciplesPrior to government engaging in the

decision-making process involved in strate-gy development, principles must be devel-oped (Osborne and Gaebler, 1992, as citedin Bryson, 1995). This should occur fol-lowing the stakeholder consultation processto allow for the information obtainedthrough the process to be considered andused in developing the principles.

Step 10: Identifying issuesBased on the SWOT analysis, a scan of

programs and services, and stakeholderconsultations, it is recommended that theissues be further identified and refined(Bryson, 1995). Leadership is critical in thisstep to avoid stakeholders or individualministries advocating for individual posi-tions and interests (Clark and Kentz,2006). Timing is also a consideration interms of the length of time each issue willbe debated. Sufficient time must be allottedto discuss relevant information while main-taining momentum in progressing throughall the information (Clark and Kentz,2006). The process of identifying issuesinvolves comparing the programs and serv-ices offered through government and thecommunity to the literature review andissues identified by stakeholders. Based onan analysis of this information, gaps in serv-ice delivery would be identified and issuesfurther clarified.

The litmus test for strategic issues dis-played in Table 3 should be applied to allissues to identify and separate those that areoperational from those that have strategicimplications (Bryson, 1995). This processwill also assist in prioritizing the issues fac-



Table 2: Factors Affecting Stakeholders Potential for Threat and Cooperation

Key area applied to stakeholder Increases or decreases Increases or decreases stakeholders potential stakeholders potential

for threat for cooperationControls key resources needed by the organization Increases IncreasesNo control over resources Decreases EitherMore powerful than organization Increases EitherAs powerful as organization Either EitherLess powerful than organization Decreases IncreasesLikely to take action which supports the organization Decreases IncreasesLikely to take non-supportive action towards the

organization Increases DecreasesUnlikely to take any action Decreases DecreasesLikely to form coalition with other stakeholders Increases EitherLikely to form coalition with organization Decreases IncreasesUnlikely to form any coalition Decreases Decreases

From “Approaches to understanding stakeholder relations,” by R. Sexty, 2002b, retrieved November1st, 2006 from MBA BSES-604 AU Digital Reading Room.

Figure 2. Diagnostic typology of organizational stakeholders

Stakeholders potential for threat to the organizationHigh Low

Stakeholders High Mixed blessing stakeholder Supportive stakeholderpotential for Strategy – Collaborate Strategy – Involvecooperation with the Low Non-supportive stakeholder Marginal stakeholderorganization Strategy - Defend Strategy – Monitor

From “Approaches to understanding stakeholder relations,” by R. Sexty, 2002b, retrieved November1st, 2006 from MBA BSES-604 - AU Digital Reading Room.

Figure 3. Degrees of marginalization and participation

Non-participation Degrees of tokenism Degrees of citizen power

(1) (2) (3) (4) (5) (6) (7) (8) Manipulation Therapy Informing Consultation Placation Partnership Delegated Power Citizen Control

From “Future in their hands. Strategies for making a people’s plan,” by T. Apte, 2007, Futures, 39(5), p. 600, retrieved April 22, 2007 fromhttp://fk9vb2mp3t.search.serialssolutions.com/directLink?&atitle=Future%20in%20their%20hands!%20Strategies%20for%20making%20a%20people’s%20plan*&author=Tejaswini%20Apte&issn=00163287&title=Futures&volume=39&issue=5&date=20070601&spage=597&id=doi:&sid=ProQ_ss&genre=article&lang=enFrom “A ladder of citizen participation,” by S. Arnstein,1969, p. 2, retrieved April 2, 2007 from http://lithgow-schmidt.dk/sherry-arnstein/ladder-of-citizen-participation.html

ing the organization.Following this process, the identified

issues should be ranked in terms of priority(Bryson1995). Ranking of the issues shouldreflect the organization’s weaknesses andthreats as per the SWOT analysis. Facilitat-ing a process among partnering ministriesto share information and knowledge anddiscuss the resources and capabilities of thegovernment, will assist in clearly articulat-ing issues, ensuring they are realistic andincreasing buy-in among government min-istries.

Step 11: OptionsBased on the issues, strategic options to

resolve the identified concerns and issuesshould be generated (Bryson, 1995). Theinformation identified from the SWOTanalysis should be used to inform the strate-gic planning process. Specifically, strategiesshould be developed based on the fitbetween the strengths and opportunities, aswell as strategies to overcome weaknesses toprepare for potential opportunities(QuickMBA, 2007). Also, considerationsfor change generated by the stakeholdersshould also be used to develop ideas andfurther identify opportunities to achievethe project goals. Utilizing stakeholderfeedback in the development of strategic

options reinforces Arnsteins (1969) modelreflected in Figure 3 which involves usingthe information to influence decisions andincrease ownership and responsibilityamong stakeholders for the outcomes.

The organization’s culture also needs tobe considered in developing the strategies(Bryson and Alston, 1996). The strategyshould be aligned with the organization’sculture to avoid the culture constrainingthe development of the direction and influ-encing the available options (Bryson andAlston, 1996).

If there is conflict between the cultureand the strategy, then steps need to be takento address the issues and build the culturenecessary to support the strategic plan(Clark and Kentz, 2006).

In developing strategies, an analysisshould be completed to ensure the optionsare based on the previously agreed uponprinciples. In addition, the following crite-ria for successful strategies should beapplied to each option (Byson, 1995; Fryand Killing, 1989):• The identified issue is directly linked to

the strategy;• The strategy is technically workable and

flexible and fits with the external oppor-tunities and threats in the environmentand internal resources and capabilities;

• Organizational changes including struc-ture, systems, staffing and culture havebeen identified to ensure successfulimplementation;

• The strategy will be politically acceptableto stakeholders and management;

• The strategy is legal, ethical and moral,and

• It is consistent with the government’s val-ues, culture and philosophy.The review of the criteria will ensure that

the strategy accounts for the resources andcapabilities required for a successful imple-mentation. Also, it will contribute to thestrategic options being realistic, coordinat-ed with provincial and community-basedstrategies and aligned with government andstakeholder needs.

To support ministries from moving fromsilo-based decision-making and delivery ofservices to a more integrated, cross-ministrysustainable approach and strengthen link-ages to the project goals. Opportunities forfurther collaboration should be identifiedand built upon as displayed in Figure 4. Indeveloping the strategies, linkages with thepartnering ministry mandates should beidentified as well as opportunities to breakdown the silo based processes within gov-ernment and move towards a more coordi-nated approach. Also, to strengthen the



Table 3: Litmus Test for Strategic Issues

Issue:_________________________________________________ Issue is � operational; � Strategic

Operational Strategic

Is the issue on government’s agenda? No Yes

Is the issue on the Deputy Minister’s agenda? No Yes

When will the issue challenge the organization? Right now Next year In the next year or so

How broad of an impact will the issues have on the organization? Single unit Entire organization

How large is the financial risk/opportunity? Minor Moderate Major(5% of budget) (10-15%) (Over 15%)

Will strategies for issue resolution require:New programs or services? No YesSignificant changes in legislation? No Yes Significant staff expansion? No Yes

How apparent is the best approach for issue resolution? Obvious, Broad parameters, Wide openready to implement few details

What is the lowest level of management that can decide how to deal with the issue? Line staff, supervisor Division head Executive and/or Minister

What are the probable consequences of not addressing the issue? Inconvenience, Significant service Major long term service

inefficiency disruption disruption

How many other departments are impacted by the issue and must be involved in resolution? None 1-3 4 or more

From Strategic Planning for Public and Nonprofit Organizations: A guide to strengthening and sustaining organizational achievement (p. 175), by Bryson,J., 1995, San Francisco: Jossey-Bass Publishers.

process and ensure options are realistic,program experts from the partnering min-istries should be brought in to share infor-mation and knowledge pertaining to theoptions and directions being considered.

Step 12: Risk analysisA risk analysis of the strategic options

should be completed including developingmitigating strategies to manage or eliminatethe risks (Bryson, 1995). This process willassist in prioritizing and choosing thestrategies that will form the recommenda-tions.

Step 13: Cost-benefit analysisA cost-benefit analysis of options should

also be completed (Bryson, 1995). This willassist in prioritizing and choosing thestrategic options that should be pursued.

Step 14: Criteria for successFollowing the risk analysis and cost-

benefit analysis, Byson (1995) and Fry andKilling’s (1989) criteria should be appliedagain to all strategic options to ensure that

the strategy will be successfully implement-ed Specifically, this includes identifyingwhether or not each strategy meets the fol-lowing criteria:• The identified issue is addressed;• Technically workable, flexible and fits

with the external opportunities andthreats in the environment and internalresources and capabilities;

• Organizational changes including struc-ture, systems, staffing and culture havebeen identified to ensure successfulimplementation;

• Politically acceptable to stakeholders andmanagement;

• Legal, ethical and moral, and• Consistent with the government’s values,

culture and philosophy.By applying the above criteria, strategies

that may be more successful than others canbe identified. This will assist preparing forthe next step which involves prioritizing thestrategies.

Step 15: Prioritizing and selecting strategiesTo assist in deciding which options to

pursue, the strategic options need to be pri-oritized and selected (Bryson, 1995). Thisprocess should be based on steps 12, 13 and14, which include the risk analysis, cost-benefit analysis and whether or not the cri-teria for successful implementation weremet. To assist in prioritizing the strategies,the information should be summarized asexemplified in Table 4.

Upon prioritizing the options, theapproach identified by Sorkin, Ferris andHudak (1984, as cited in Bryson, 1995)should be applied. This would involve plot-ting and measuring the options against dif-ficulty in implementing and fiscal benefitsas reflected in Figure 5, the decision matrix.This would assist in identifying thoseoptions that are strategically important andwhich options should be pursued. Forexample, based on Figure 5, strategy Bshould be pursued over A as it is easier toimplement and has higher fiscal benefits.

Step 16: Political strategyConsistent with Apte (2007), an addi-

tional strategy should be developed to opti-mize political support within government.This may involve engaging stakeholders toobtain their support for the directions;ensuring that the identified issues areaddressed politically or encouraging leadCabinet Ministers to discuss the strategicrecommendations with their colleagues tofurther address any issues or concerns.

Step 17: TargetsUpon choosing the strategies to be pur-

sued, targets and measurable outcomesshould be established. This will assist inlinking the vision and goals to specific endpoints as well as monitoring the progressiontoward the achievement of the goals (Clarkand Kentz, 2006).

Step 18: Implementing and monitoringLastly, the implementation and evalua-

tion/monitoring plan should be developedto optimize success in achieving the intend-ed outcomes.

ConclusionThe literature identified a number of key

processes that contribute to effective strate-gy development including Byson andAlston’s (1996) elements, Sexty’s (2002b)approaches to understanding stakeholder



Silo based decision-making processes within ministries

Project Vision Identify linkages between ministry mandates and project vision

Identify cross-ministry strategies and opportunities for coordination and integration of ministry mandates to achieve project goals

Figure 4. Ministry mandates and linkage to strategies

Table 4: Prioritizing Strategic Options

Strategy Risk Cost-benefit analysis Criteria met(high, med, low)

A High High cost; low benefit YesB Low High benefit; low cost Yes


and Sorkin, Ferris and Hudak’s (1984, ascited in Bryson, 1995) process for prioriti-zation of options. These approaches allinclude activities that can be applied toeffective strategic development processeswithin government. Within the steps andprocesses, a number of activities are alsodiscussed that are critical to strategy formu-lation including an assessment of the inter-nal and external processes as well as a planto effectively engage stakeholders through-out the project. Effective planning empha-sizes the importance of facilitating supportand buy-in from internal and externalstakeholders (Clark and Kentz, 2006).Without stakeholder support or involve-ment in the process, implementation can be

difficult and will likely be unsuccessful(Clark and Kentz, 2006).

Developing sustainable strategies to man-age complex, inter-related issues requires asolid framework that clearly delineatesprocesses that will facilitate buy-in withingovernment and externally with stakehold-ers. The steps and processes outlined willassist in ensuring that the resulting strate-gies fit with the resources and capabilities ofthe organization and its environment. **

ReferencesApte, T. (2007). Future in their hands. Strategies for

making a people’s plan. Futures 39(5), 597-613.Retrieved on April 22, 2007 fromhttp://fk9vb2mp3t.search.serialssolutions.com/directLink?&atitle=Future%20in%20their%20hands!% 2 0 S t r a t e g i e s % 2 0 f o r % 2 0 m a k i n g %

20a%20people’s%20plan*&author=Tejaswini%20Apte&ISSN=00163287&title=Futures&vvolume=39&issue=5&date=20070601&spage=597&id=doi:&Sid=ProQ_ss&genre=article&Lang=en

Arnstein, S. (1969). A ladder of citizen participation.Retrieved April 2, 2007 from http://lithgow-schmidt.dk/sherry-arnstein/ladder-of-citizen-par-ticipation.html

Bryson, J. (1995). Strategic Planning for Public andNonprofit Organizations: A guide to strengtheningand sustaining organizational achievement. San Fran-scisco: Jossey-Bass Publishers.

Bryson, J. & Alson, F. (1996). Creating and Imple-menting Your Strategic Plan: A workbook for publicand non-profit organizations. San Franscisco: Jossey-Bass Publishers.

Clark, C and Krentz, S. (2006). Avoiding the pitfalls ofstrategic planning. Healthcare Financial Management,60(11), 62-68. Retrieved April 25th, 2007 fromhttp://0-proquest.umi.com.aupac.lib.athabascau.ca/pqdweb?index=2&did=1160410121&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1178592201&clientId=12302

Daft, R. (2006). Essentials in Organization Theory andDesign. Ontario: Nelson, Thomson Ltd.

Dwyer, R. (2004). Utilizing points of differentiationto enhance competitiveness and growth: Somethoughts for consideration. Performance Measure-ment and Metrics, 5(2), 66-71. Retrieved fromemail with R.J. Dwyer on February 19th, 2007.

Fry, J. & Killing, P. (1989). Vision-check. BusinessQuarterly, 54 (2), 64-69. Retrieved February 19,2007 from ABI/Inform database on the WorldWide Web http://0-proquest.umi.com.aupac.lib.athabascau.ca/pqdweb?index=0&did=38913412 1 & S r c h M o d e = 1 & s i d = 3 & F m t = 1 0 &VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1171916206&clientId=12302

Grant, M. (2005). Contemporary Strategy Analysis(Fifth Edition). Oxford: BlackWell Publishing.

MAPP. (n.d.). Mobilizing for action through planningand partnership. Readiness assessment worksheet.Retrieved May 5, 2007 fromhttp://mapp.naccho.org/ofsapd/ofsapd_ws_ra.asp

Quick MBA. (2007). SWOT analysis. Retrieved April10, 2007 from http://www.quickmba.com/ strategy/swot/

Sexty, R. (2002a). Social responsibilities and strategicmanagement. Retrieved November 1st, 2006 fromMBA BSES-604 - AU Digital Reading Room.

Sexty, R. (2002b). Approaches to understanding stake-holder relations. Retrieved November 1st, 2006from MBA BSES-604 - AU Digital Reading Room.


High

Difficulty Implementing Strategy

Low

Strategy A

Strategy B

Low High

Fiscal Benefits of Implementation

Figure 5. Decision matrix


Colleagues,I last wrote on the topic of departmental

audit committees (DACs) about one yearago – under the headline “Open Mind –Right Attitude”. A lot has transpired sinceand I want to share with you some of thedevelopments and things that are on thehorizon. One small change – we are nowreferring to DAACs to properly representthat these are Department and AgencyAudit Committees.

Open Mind – Right AttitudeThe Treasury Board of Canada has

appointed in the last 11 months, 53 mem-bers who now sit on the audit committeesof 19 departments and agencies. By thissummer, we anticipate that more than 50%of the large departments and agencies willhave appointed their members.

These members come from various back-grounds and all have stellar credentials.Most DAACs have three external membersand, collectively, each committee brings arich mix of experience and expertise: publicsector knowledge, business acumen, gover-nance know-how, subject matter expertiseof specific departments or agencies, andfinancial expertise through a professionalaccounting designation.

It has been a privilege to meet and engagewith these new members, whether at auditcommittee meetings, learning events or intargeted consultations where they con-tribute to shaping the journey. Why is that?Because they are here to offer the best ofwho they are and they bring an open-mindto the evolutionary process that character-izes the arrival of audit committees in thefederal public administration.

So…What are the DAACs Up to?Let’s be practical. The first year in the life

of any newly appointed director or com-mittee member is one that is full of learn-ing: getting to know the business, the

issues, the people. DAAC members are nodifferent. Getting one’s mind around thecomplexities and risks of the department oragency, in addition to discharging an over-sight mandate, is no small task – all this inapproximately 20 days of effort per year.Also adding to the mix is the fact that theaudit committee itself is a new entity: mostmembers are meeting each other for thefirst time and they have to get their owndynamics going, working with the manage-ment team and the Deputy Minister onestablishing a clear understanding of theirmandate and how they will interact as inde-pendent advisors.

Are we making progress? Well, as willattest many CAEs (Chief Audit Execu-tives), SFOs and Deputy Ministers, mem-bers are certainly asking all the right ques-tions. DAACs are making an impact, and Iquote:

“The DAAC is reviewing the accountabili-ty reports in our organization and is provid-ing valuable advice. We are already planningfor what these reports will look like and con-tain next year.” -CAE

“The arrival of the DAAC and the involve-ment of the CAE and CFO in the selectionprocess have provided the opportunity todevelop a relationship between the SFO andthe CAE that I believe we would never havedeveloped otherwise.” - CFO

“I have to admit that I was not initially soldon the idea of independent members …butnow I have to say that the new Audit Com-mittee is providing me with much more valuethan I ever envisaged”. – Deputy Minister

“We have had a great discussion with theOffice of the Auditor General, a discussionthat was intense and helpful for us, and forthem.” – DAAC Member

The clock is tickingThe 3-year transition period built into

the Treasury Board Policy on Internal Auditto allow departments and agencies ampletime to meet the new requirements –including the establishment of an inde-pendent audit committee – will come to anend on March 31, 2009.

Between this summer and March 312009, my team and I will engage theremaining half of departments and agenciesto assist them in defining their particularneeds and then finding, interviewing andrecommending for appointment the rightmix of approximately 100 accomplishedindividuals who will fit the bill.

Challenging? Yes. Impossible? Most cer-tainly not. We’ve come a long way since thejourney began. We’ve built a solid team,fine-tuned our operations, and honed ourmatch-making skills; all this contributingto a shorter tighter cycle. But above all, it isgood old word of mouth which has beenour greatest momentum builder. I am nowa firm believer of the “If you build it, theywill come” mantra. Once we startedrecruiting well-known and highly respectedindividuals, their peers became aware andinterested. And once departments andagencies began sharing their positiveDAAC experiences, well, you get the pic-ture…

Taking it to the next levelLet’s face it, the new independent over-

sight ushers a cultural shift: new work, newprocesses, new conversations, new behav-iours. This means that, to be successful, the

Department and Agency AuditCommittees – What’s Up DAAC?

Marie-José Bourassa

Marie-José BourassaMarie-José Bourassa is the Executive Director of theAudit Committee Recruitment and DevelopmentSecretariat in the Office of the Comptroller General ofCanada. She is a Chartered Accountant and holds aMasters Degree in Applied Human Sciences.


DAAC initiative needs the engagement andsupport of all DAAC stakeholders, especial-ly in the early stages when we are learningabout DAACs and shaping their imple-mentation. In the last few months, we havebeen working on two parallel streams tofacilitate engagement, learning and shap-ing. The first one, aimed at DAAC mem-bers through a series of workshops and con-sultations, seeks to provide context andexpectations but mostly to engage membersin discovering and creating the essence ofDAACs in practice. The DAAC membershave shown their appetite to form a com-munity of practice where they can discussemerging questions, challenges and bestpractices. We will be supporting them inmaking this a reality.

The second stream seeks to engage peo-ple in departments and agencies who will

be interacting with the DAAC. Theseinclude predominantly the CAEs and theSFOs, as management representatives onthe DAACs, as well as those establishing theDAAC Secretariat function.

The engagement is facilitated by theholding of discussion fora, targeted learningevents, and partnering with stakeholders toexplore, solve, create and operationalize (it’sa work in progress, you can tell). Have wecovered all the bases? No; in transition, rela-tionships and timing are everything. We area small group of dedicated professionalsmoving at a clip pace, leading when need-ed, and taking the lead from the emergingculture, also when needed.

In the end, engagement is achievedthrough open, ongoing multi-way commu-nications. While we still don’t have all theanswers, we are very much enjoying the

ride…and the company. The CAEs, SFOs,Deputy Ministers, DAAC Secretariat staff,and audit committee members believe inthe DAAC initiative and we thank them forworking with us in making the difficult, yetdefining, first steps.

As a result of the passing of the FederalAccountability Act, Deputy Heads arerequired to establish an Audit Committeewith a majority of members from outsidethe federal public administration. The roleof the Department and Agency AuditCommittee (DAAC) is to provide theDeputy Head with independent and objec-tive advice and guidance on the adequacy ofthe department’s risk, control and account-ability processes. DAAC members areexpected to provide challenging andinformed input and to support the DeputyHead as Accounting Officer. **

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When embarking on the journey ofprocuring the work of contrac-tors, it is reasonable to expect a

time of arrival – that is the time which onecan expect for the procurement process tobe completed. Imagine how frustrating itmust be (as a program officer or a procure-ment specialist) to see the amount of timethe procurement process takes to continual-ly increase. Based on the handful of timesthe Program Officer has had to go throughthe procurement process, a set of standardsas to how long the process should take hasdeveloped. The Program Office may haveone set standard in mind, i.e. last time thistook three months so it should take threemonths this time as well. Then, the Pro-gram Officer realizes that the process maytake six months or longer. An obvious reac-tion is to point fingers and push for a“quick-fix” solution such as a faster process.Pursuing a time reduction strategy, howev-er may not actually increase the overallvalue of the procurement process. In thefollowing article, the importance of stan-dards will be discussed along with a warn-ing to managers of implementing a “quick-fix” solution to the problem.

The existence of standards in a supplychain process, such as public procurement,has been well espoused (see Anderson, Daly,and Johnson 1999). Standards are used toact as a signal of quality and as a tool tobenchmark between ideal progress and actu-al progress. From the perspective of a pro-ducer, standards allow an organization toexamine the different stages of the processand determine where discrepancies may existbetween the ideal (the standard) and theactual, then make changes in order to movetowards the ideal. The importance of main-taining and meeting consistent standards cannot be understated. Having a standard andthen working towards it can create both effi-ciency within the process and greater overallbenefit in terms of output produced.

In an exploratory study done for this arti-cle, the author found the presence of bothexplicit and implicit procurement standardsfor Federal Departments and Agencies.Explicit standards are those that are formal-ized within departments while implicitstandards are those that are estimated basedon previous experience or on perceptions asto how long the process should take. Forexample, even if the Program Officer hasgone through the procurement processbefore, he/she may extrapolate that becausehis/her project is a priority the procurementprocess could be expedited. This authorfound that implicit standards are muchmore prevalent within procurement areagroups within Federal Departments andAgencies than explicit standards and thusthe discussion within this article will focuson those standards which are implicit.

It should be noted that in the followingpaper the discussion of standards reflectsactual performance as well. The argumentis that standards (implicit) are based on per-formance thus, if performance is good,standards will be high. For example, if ithad taken three months to complete a pro-curement process in one fiscal year then thestandard for the next fiscal year would bethree months as well.

The average public procurement processcan involve numerous stages, such as thedevelopment of a Statement of Work, thedevelopment of evaluation criteria, publish-ing the RFP, evaluating bids, and so forthuntil the contract is established. Delays atany number of stages will undoubtedlyimpact the entire process, and following thefindings of the Gomery Inquiry and thesubsequent Way Forward Initiativedesigned to ensure greater transparency inPublic Sector Procurement within theCanadian Federal Government, the publicprocurement process continues to evolve incomplexity more than any set of standardscan keep pace with. As a result of increased

transparency and accountability, the pro-curement process has become more com-plex. What this has led to, is a set of stan-dards that continues to decrease, as the timeneeded to complete the process increases.This translates into the inevitable conflictbetween cost and time. To resolve this con-flict, pressure is placed on the staff todecrease the process time hence, resultingin the use of “quick fix” solution such as lessscrutiny when reviewing materials. Howev-er, as will be demonstrated, a faster processmay not actually provide greater overallvalue.

In the following section, the author dis-plays a simple model illustrating the cost offailing to maintain consistent standards andproposes solutions to maintain consistencyin standards relating to the procurementprocess based on the work of Hart, Shleifer,& Vishnay (1997).

Decreasing standards indicates that moretime and effort is being put into the pro-curement process, which then creates loweroverall value (the concept of having to domore to achieve the same product you hadachieved earlier). Let’s say that the initialcost of the procurement is represented byC(1) – this is fixed cost of operating anytype of procurement process. The variablecost of the procurement process is repre-sented by C(e), where C(e) equals the costsassociated with each different procurementrequest (such as the amount of money allo-cated and the energies of procurementresources, as well as program resources). Asthe need for greater transparency increases,the complexity of the procurement processalso increases and ultimately the variablecost of procurement, by adding more pro-cedures and increasing the amount of costand energy expelled by resources. This rela-tionship will be represented by Tr * C(e).For the sake of simplicity B(1) will be usedto indicate the aggregate benefits of theprocurement process and OB will be used

The Importance of Standards inPublic Procurement and the

Fallacies of the Quick FixKashef Majid

Kashef MajidKashef is a Research Analyst with RFP Solutions; a pri-vate sector firm that works exclusively with its govern-ment clients to plan and implement procurementstrategies, develop written statements of work and eval-uation criteria, and provides Fairness Monitoring andadvisory services to support the bid evaluation process.You can reach Kashef at [email protected]


to indicate overall benefits.The equation for the line indicating the

variability of procurement standards is asfollows, with the relationship between vari-ables illustrated in Figure 1:

Equation 1: OB = B(1) –C1 – TR*C(e)

At first glance, there would appear to bea number of solutions to increasing theoverall benefit of the procurement process.

One common fallacy is for practitioners toapply a “quick-fix”, which entails some typeof measure to speed up the process in orderto adhere to the standards. In the followingsection, the present paper will discuss thecosts of pursuing a strategy that focusessolely on decreasing the amount of time theprocess takes.

An inherent problem with pursuing atime focused strategy is the subsequenttrade-off in quality that may result.

Decreases in quality within the procure-ment process may lead to a solicitation thatdoes not receive any bids, or the selection ofa less than optimal bidder, a CITT chal-lenge, or worse. All of the consequences ofneglecting quality within the process havethe potential to offset any benefits a fasterprocess would provide. To illustrate, con-sider the following:

Benefit = B(1) – b(e) + β(i)Cost = C(1) – c(e)

where e & i denote effort devoted to thecost innovation and quality innovation,respectively, c(e) ≥ 0 is the reduction in costcorresponding to the cost innovation; b(e)≥ 0 is the reduction in quality correspon-ding to the cost innovation; and β(i) ≥ 0 isthe quality increase net of costs from thequality innovation. Thus, if one were to fol-low the strategy of increasing standards byfocusing on reducing times, only the linearequation would be as follows:

Equation 2: Overall Benefit = B(1) – b(e)+ β(i) – C(1) – TR*C(e)

STANDARDS IN PUBLIC PROCUREMENT

Figure 1 - Decreasing Standards

Time to completion

OverallBenefit of Procurement

sdradnatSssecorPDecreasing (time to completion increasing)

Increasing Cost and Energy

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Notice that the reduction in quality b(e)negatively impacts the Overall Benefit andthus may actually reduce any benefits to theprocurement that they set forth to achieve.A more optimal alternative would be tofocus on achieving time improvement whilemaintaining quality improvements, asopposed to sacrificing one for the other. If atime reduction can be achieved along witha quality improvement, the revised equa-tion would be as follows:

Equation 3: Overall Benefit = B(1) + b(e)+ β(i) – C(1) – TR*C(e)

It is worth noting that b(e) is now indi-cated as an improvement in quality, includ-ing the benefits that can be accrued fromthe innovation. Under Equation 3 above,the standards have the potential to be lessvariable and create a higher overall benefitthan under the current situation illustratedin Figure 1. A comparison of the two sce-narios is illustrated in Figure 2 above.

By focusing on improving both time andquality, the standards have less variance and

this ultimately improves the overall benefitof the procurement process.

A detailed discussion of the methods bywhich one could achieve both improve-ment in terms of time and in terms of qual-ity in the public procurement process arebeyond the scope of this article, but mayinclude a standardization of the elementswithin the process and the amalgamation ofprocedures. However, if one is looking formethods by which to decrease the timestandards while maintaining consistentstandards of quality in a supply chain thenone need not look further than the evolu-tion of mass production supply chain,arrangements. Mass production supplychain arrangements are built on standardi-zation, which ensures a consistent productin as short a time as possible. It would benaïve to believe that the public procure-ment process can become a mass produc-tion supply chain similar to computer hard-ware or automobile assembly; however, itwould be equally naïve to ignore the lessonsof standardization that the examples pro-vide. Standardizing certain procedures

would allow the contracting authority astrong reference point as to the length oftime by which those processes would takeand thus produce less variability. The stan-dardization of procedures would also enablethe procurement process to maintain cer-tain levels of consistency and hence, qualityand overall value. Again, a detailed discus-sion is beyond the scope of this article, butthis author hopes to stimulate further dis-cussion on the topic of standards within thepublic procurement process. To this end,the author invites readers for comments orfeedback which may advance the work ofthis article.

In summary, the present article has exam-ined the importance of standards andexplored the costs of declining standards aswell as the perils of focusing on a quick fixsolution such as emphasizing a reduction intime. It is vitally important that managersset standards that are both attainable andhave little variance so that optimal benefitscan be realized. Upon setting attainablestandards, managers and administratorsalike would be wise to focus on improvingthe quality of the output as well as decreas-ing the time of the process if they are toenhance the overall benefit of the procure-ment process. **

ReferencesHart, O., A. Shleifer, and R.W. Vishny (1997), “The

Proper Scope of Government Theory and an Appli-cation to Prisons” The Quarterly Journal of Econom-ics, 112, 4, 1127-1161.

Anderson, S. W., J. Daly, and M. Johnson (1999),“Why Firms Seek ISO 9000 Certification: Regula-tory Compliance or Competitive Advantage?” Pro-duction and Operations Management, 8, 1, 28-43.

STANDARDS IN PUBLIC PROCUREMENT

Figure 2 - Decreasing Comparison of Standards

Time to Completion

OverallBenefit of ProcurementProcess Cost and

Energy Saved

Improved Standards based on time and quality innovation


Many cultures contain as a funda-mental tenet the idea that thebest way to live your life is to

treat other people as you yourself wouldwish to be treated. If you expect fair treat-ment, treat others fairly. If you expect kind-ness, treat others kindly.

Is this naïve?What about the fanatic who believes that

by committing suicide they will inherit aneternal life? Is it then acceptable that theykill others before they in turn die? Or theperson who wants to be whipped and beat-en into submission? Is it then acceptablethat they whip and beat others?

Perhaps these examples are too extreme.What about the person who, without thepermission or knowledge of their employer,makes personal photocopies on the officephotocopier? Are they stealing resourcesfrom their employer? Is the employer thenjustified in firing them? Or the person whois bidding on a contract, and who offers afew tickets to a sporting event to the indi-vidual who will decide who is awarded thecontract.

Are all of these persons treating others asthey would expect to be treated?

Moreover, what are ethics? Are they acomposite group of rules and morals whichset out and define “what” good people do?For example, in Canada it is unethical (andillegal) to bribe. It is ethical to be honest –but is it unethical to be dishonest? Mostpeople would consider it dishonest to com-mit fraud, but not consider it dishonest tosay “no” when asked: “Does this make melook fat?”

Who defines ethics? Many would say that“society” establishes norms of acceptablebehaviour. The norms of this behaviour arethen defined as ethics. It is however thesame society that defines deviance, andwhat is deviant here in Canada is not nec-essarily deviant elsewhere: for example bak-sheesh and bribes are not only acceptable in

many parts of the world, they are expected.If ethics are defined by the society from

which they come, are they riddled with thatsame society’s bias and beliefs? If we look toJudeo-Christian-Muslim societies, with aset of beliefs dating back to Moses for theroots, if not before, do they espouse thesame ethics? Are the ethics of those whoidentify with a Jewish community similarto those who would call themselves Chris-tian, or those who identify with the Muslimcommunity? What about the North Amer-ican First Nations? Are the ethics of a tribebiased towards a member of that tribe?

These are difficult questions.The rules by which we, as Canadians, live

are based on ethics. We can see that at theheart of “do not kill” is an ethic about tak-ing life. It is not ethical to commit murder.We might say that “do unto others as youwould have them do unto you” is exempli-fied in “thou shalt love thy neighbour asthyself ”: this as an ethic is espoused bymost known civilizations in the world.

We teach ethics in the home, in our reli-gious institutions (whatever they might be),on our streets, and in our playgrounds. Bythe time we are young children, our ethicalframework is well established. As the Jesuitmaxim says: “Give me a child until he isseven, and I will give you the man.” We, all ofus, are well-formed in our thinking far earlierthan we would ourselves believe. It is anunusual youngster who thinks about ethics.Most of them probably couldn’t even definethe word. But they could tell you what isright and wrong and their understanding ofit. They could explain what being greedy is,and how they feel when someone doesn’tshare. They understand intolerance, faith,looks, languages, and mode of dress. Theyunderstand the consequences of not mindingtheir own business. They understand apathy(“but who cares”). They have an inherentsense that they prosper when all take respon-sibility for their actions.

So, this paper examines the ethic of reci-procity. It offers observations from theauthor’s personal experience into howethics and their interpretation are at thesame time both different and similar incountries with widely varied backgrounds.It cannot answer to all, but it perhaps willraise some questions in the mind of thereader. There might even be some insight.

Ethics as core beliefs“…a succession of generations or languages orreligions constitutes no progress unless someideal present at the beginning is transmitted tothe end and reaches a better expression there;… Retentiveness … is … progress.”

George Santayana, 1905

Ethics are core beliefs. As Santayana says,if our core beliefs remain constant overtime, then what surrounds the core will alsoremain constant.

The environment of ethics did not justspring into being. It was there before ourparents and our grandparents. We are aproduct of our environment and any studyof ethics cannot be looked at without tak-ing that environment into consideration.We do so at our peril.

Our understanding of ethics emanatesfrom, and is coloured by, our family of ori-gin, our culture, our personal history, oureducation, our work, and our experiences.So what we think, believe and say aboutethics must be put into that context.

Ethics do not change. This is neither a“modern” nor an “ancient” argument. Whatwas ethical 100 years ago is ethical today.What was ethical five thousand years ago isethical today. Even though we cannot knowwhat occurred earlier than 5,000 years ago(because we have no written records), I do notbelieve those ethics we know of from 5,000years ago sprang into being from a void.

The earliest written records known to ustoday are based on teachings and mores

The Ethic of Reciprocity:Treat Others as You Wish to be Treated

David J. Langlois

from earlier times. We have no proof ofthose earlier teachings and mores so wemust trust that this is what has happened.

We may base this belief on several things.First, the world’s major religions contain

a fundamental belief that individuals areinherently good.

Second, people normally act in a waythat promotes the well-being of all.

Finally, there is broad agreement that bydoing good, the individual will flourish andlive.

Many of the world’s religions, culturesand societies have in their fundamentalbeliefs the ethic of reciprocity. My researchfound these as examples:11

This list is fairly representative of most ofthe world. Consequently, it is not surpris-ing that fundamental ethics are similar inother countries as they are here in Canada.Also, based on my experience of workingacross Canada, in all the Provinces and Ter-ritories (save Nunavut), I believe that evenhere in Canada, ethics means similar thingsto all peoples.

But, and this is where the distinctionmust arise, it does not necessarily mean thatpeople act on their ethics in the same man-ner. It is how we act that is important.Character is what you are in the dark, orwhat you do when you think no one islooking. Roman generals who returned

from successful campaigns were given a tri-umphal march through the streets of Rome.Standing behind them in the chariot was aslave whose task was to whisper in the ear ofthe general: “You are only a man.” Most ofus do not have such a person to remind usof who we are.

Ethics as reciprocityIn my experience, the fundamental of the

ethic of reciprocity is sincerity, candour,truthfulness, the keeping of promises, andtransparency. In my dealings with personsfrom all sorts of backgrounds, in both thepublic and private sectors, with senior man-agers, with Ministers, DMs, ADMs, and


THE ETHIC OF RECIPROCITY

Ancient Egyptian “Do for one who may do for you, that you may cause him thus to do.” The Tale of the Eloquent Peasant,109 - 110 Translated by R.B. Parkinson

Baha’i World Faith “And if thin eyes be turned towards justice, choose thou for thy neighbour that which thou choosiest forthyself.” Epistle to the Son of the Wolf

Brahmanism / Hinduism “This is the sum of duty: Do naught unto others which would cause you pain if done to you”.Mahabharata, 5:1517

Buddhism “Hurt not others in ways that you yourself would find hurtful.” Udana-Varga 5:18

Christianity “Therefore all things whatsoever ye would that men should do to you, do ye even so to them.” Matthew7:12, Holy Bible

Confucianism “Tse-kung asked, ‘Is there one word that can serve as a principle of conduct for life?’ Confucius replied,‘It is the word ’shu’ — reciprocity. Do not impose on others what you yourself do not desire.’” Doctrineof the Mean 13.3

Humanism “Don’t do things you wouldn’t want to have done to you.” British Humanist Society

Islam “Not one of you is a believer until he loves for his brother what he loves for himself” Fourth Hadith ofan-Nawawi 13

Jainism “In happiness and suffering, in joy and grief, we should regard all creatures as we regard our own self.”Lord Mahavira, 24th Tirthankara

Judaism “What is hateful to you; do not to your fellow man. This is the law: all the rest is commentary.” Talmud,Shabbat 31a

Native American Spirituality “All things are our relatives; what we do to everything, we do to ourselves. All is really One.” Black Elk

Roman Pagan Religion “The law imprinted on the hearts of all men is to love the members of society as themselves.”

Shinto “The heart of the person before you is a mirror. See there your own form.”

Sikhism “Don’t create enmity with anyone as God is within everyone.” Guru Arjan Devji 259

Sufism “The basis of Sufism is consideration of the hearts and feelings of others. If you haven’t the will togladden someone’s heart, then at least beware lest you hurt someone’s heart, for on our path, no sinexists but this.” Dr. Javad Nurbakhsh, Master of the Nimatullahi Sufi Order

Taoism “Regard your neighbour’s gain as your own gain, and your neighbour’s loss as your own loss.” T’ai ShangKan Ying P’ien

Unitarian “We affirm and promote respect for the interdependent of all existence of which we are a part.” Unitarianprinciples

Wicca “An it harm no one, do what thou wilt.”

Yoruba (Nigeria) “One going to take a pointed stick to pinch a baby bird should first try it on himself to feel how it hurts.”

Zoroastrianism “That nature alone is good which refrains from doing unto another whatsoever is not good for itself”.Dadistan-i-dinik 94:5

Directors General, with Senators and MPs,with CEOs and company Presidents, I havefound those who were sincere, candid,truthful and transparent were by far theones with whom I felt most comfortable,and whom I believed and trusted. I amalways intrigued at my reactions when Ibelieve that someone I am speaking to isdissembling, or being economical with thetruth, or is withholding facts about a situa-tion. I can sense their hesitancy and uneasealmost immediately, and I have found thisto be true throughout the world, no matterwhere I have worked, and no matter whatlanguage they spoke.

It is as if we humans are “hardwired” tosense trust; that without needing to thinkabout it we are in most situations able tobelieve that the person with whom we areinteracting is sincere and is not going tocause us harm. I also believe that we areequally able to sense dishonesty and implic-itly “see” through dissembling statements.There is a lot that has been written aboutthis, by persons far more knowledgeablethan I. It seems there is a lot of proof, bothhistorical and empirical, that explains whywe trust, or mistrust, others.

Confucius is recorded as saying that oneword sufficed to guide one’s conductthrough life: “reciprocity”. He speaks of anideal person, who he defines as follows:• One who acts before he speaks and after-

wards speaks according to his actions;• One who realizes that what he seeks is in

himself;• One who is dignified, but does not wran-

gle; who is sociable, but not partisan.In my professional and private life, those

who I have found myself having the mostrespect for demonstrated these values. Theyhad a quality about them that allowed meto feel comfortable in their presence. Theywere accepting of me and my foibles.

What does this have to do with ethics?Let me give you some practical examples.Our western-European roots, and our

North American context, do not give usomnipotent insight, nor does it allow us tocriticize how others interact. The culturesof Canada, and the world, are different andif we enter into them believing that,because we understand the small world ofour experience we consequently understandother worlds of equally small experience, we

will bring only grief to ourselves, and tothose with whom we interact.

If we accommodate and understand, wewill resolve and mitigate much. If we donot pay attention to this we will cause diffi-culties.

For example, let us speak of corruption.In my experience corruption existsthroughout the world, in all countries andplaces. It is not limited to those placeswhich are “foreign” to Canada for it existshere also, but in some ways in Canada it ismore subtle. Corruption comes in manyforms and guises and is not always blatant.In one country where I had been working,I was at the airport and the airline employ-ee at the check-in counter asked to look atmy passport and said: “Where is your policeexit visa? You need a police exit visa beforeyou may leave the country.” I gather I waslooking a little perplexed because my coun-try host, who was standing at my side,asked to look at my passport, flippedthrough a few pages and handed my pass-port back to the airline employee saying: “Ithink if you look at page 10 you will findthe appropriate stamp.” The airline employ-ee took one look at page 10 and suddenlyall was OK. He said: “When you go toimmigration, please go to line 8.” As we leftthe counter, I commented to my countryhost that I did not have a police exit visa,and he said: “But you did have a $50 dollarbill at page 10.” He had inserted, withoutmy seeing, money into my passport beforehanding it back to the airline employee.

In Canada, in my experience, corruptiondoes not usually involve money. It is moresubtle. A friend of mine wanted to add alarge addition to his house. The small townwhere he lived had strict guidelines as to thesize and style of housing in his area, espe-cially when it came to renovations. He wentto the town planning department and wastold that his proposed addition was not inconformance with the town bylaws. How-ever, about a year later the addition to hishouse was complete and we were invitedover to see what he had done. I asked aboutthe lack of permission and building permitand was told that “a friend of a friend of acousin” had arranged for the appropriateindividual to issue the building permit.Unlike my example of the foreign countryabove, no money had changed hands, butthe issue of corruption was there all the

same.In one of my assignments in the Middle

East, the World Bank was evaluating theprocess under which it would lend $500million dollars to a country. The moneywas to be used for four or five principalprojects, water, education, health, etc., butit was well understood by all partiesinvolved that a substantial sum would beused to buy several Toyota 4x4 SUV’s for“transportation”. Upon arrival, these truckswould all be consumed by the Ministerinvolved and his entourage. In the discus-sions we had with the Minister and his staff(who were all members of his immediatefamily or his tribe), the subject of the truckswas never raised. But in off-line conversa-tion amongst the Minister’s staff it was thesubject of much debate, especially as towhich model of SUV would be ordered,and with which options.

Was this corruption? Was it bribery?From a Canadian point-of-view, this is cor-ruption. In our ethics, you are not allowedto take personal gain from your employ-ment. You are paid to do a job, and yourpay is sufficient to allow you to live in asuitable manner. But in this country ofwhich I speak, it was expected that beingnear the Minister, in both proximity andworking environment, entitled you to ben-efits, such as a new truck every now andthen. For most of them, this was a familyrelationship and the wealthy uncle was dol-ing out benefices. Moreover, for almost allof them the salary they received for theirwork was insufficient to allow them to liveas they did. Exercising an option to gainextra money or to obtain material was theonly way to survive.

Another example from Canada. Early inhis working life (in the mid-1970’s) Ted wasthe manager of a fairly large informationsystems group. The company he worked fordecided to buy and implement softwarethat would greatly impact the way it con-ducted its business – it was a “bet the farm”transformation and if it failed the companywould not be viable and more than 5,000people would be out of work.

A large part of the implementationinvolved the installation of two very largecomputers in two locations about 2,000 kmapart, in two countries. The computercompany salesman (and at that time he wasa man) spent a lot of time “selling”. From




Ted’s memory, this involved many lunches,several dinners for himself and his wife, acouple of weekends at the salesman’s cot-tage skiing, sailing on the salesman’s yacht,together with the consumption of whatseems to him today as an incredible amountof alcohol.

The computer company won the con-tract and the salesman became a million-aire. Ted was never asked about any “bene-fits” he received, in fact he was promoted toa Vice-Presidential position and the imple-mentation was a success.

Was this ethical? Was it corruption? Wasit right?

Put in the same position today, Ted sayshe would act very differently. But at thetime, and in those circumstances, it was“normal” behaviour and was not consideredcorruption. It was expected that a salesper-son would wine and dine his client. It wasexpected that a business lunch would lastfor two or three hours and be conductedover several martinis. Was this unethical? InCanada today, especially in the public sec-tor, such behaviour would open the publicservant to much criticism. But in the pri-vate sector in Canada, and in many placesin the world, actions such as this are notseen as unusual, and are normal behaviourtoday.

What about the issue of speaking thetruth?

Truth is a fundamental ethic. It engen-ders trust in the person listening. In Cana-da, when I say I will do something it is theexpectation of the listener that I will do it.But in other parts of the world, it may bethat the person saying those words has nosuch intent, or has no idea whether or notwhat they say will happen, will in fact hap-pen.

To give you some idea of this, let us exam-ine the phrase: “God willing.” Now, words,especially familiar and friendly words, arefraught with danger. The words you usemay be familiar to you, but the context inwhich they are used is not necessarily thesame context as that which you understand.Within the first few hours of my first visit toa middle eastern country I had heard thewords “In ša Allāh” ,(�للا ءاش نإ) meaning

“If it is God’s will”, used several times.Later, I was to come to understand that thisis used as both a request that somethingoccur, and as a request that something doesnot occur. For example, if asked whether itwould be possible to meet with someone,the answer “In ša Allāh” could mean “Yes,I will arrange it”, or “No, it will not hap-pen.” As the asker of that question, youwould only know the true answer when theact occurred, or did not. From a Canadiancultural point-of-view, if you do not appre-ciate the subtlety and nuance of theresponse you are hearing, then you couldbecome quite frustrated with the seeminglack of action. I quickly learned, whengiven the response of “In ša Allāh”, to say“is that Inshallah yes, or Inshallah no?” oreven “Inshallah, I really have no idea.” Clar-ifying what the speaker means is mandato-ry, else misunderstandings will occur.

In this example, and from an ethicalpoint-of-view, as a Canadian, I am trying tobe honest and straight-forward and deter-mine an answer to my question. From myhost’s point-of-view he is being equallyhonest, straight-forward and ethical inreplying to it as best he can. He answers inthis way because his cultural backgroundand his religion teach him that he trulydoes not know what will happen tomorrow,or in the next hour, or in the next minute.And so in all truthfulness he can say “IfGod wills it” and be satisfied with thatresponse. For me to see his response as dis-sembling is not to understand his culture.And if I continue down that path of mis-understanding the end result is unfair to usboth.

ReciprocityTo come back to my thesis, the ethic is

what is right, has not changed over time,but what we perceive to be right, maychange over time.

There have been many studies on ourability to perceive subtle change. Whenfaced with change over an extended periodof time, it is difficult, if not impossible, formost of us to detect small incrementalchange in something with which we arefamiliar. However, when we remove our-

selves from the immediacy of the situation,take stock and examine what has happened,we are able to see the change at its grossestlevel. For example, the growth of a tree inour yard. During a season we may notnotice its growth, but over several years wesuddenly realize it is providing shade wherenone was before.

I believe it is the same with ethics. Thefundamental ethic is to do unto others asyou would have them do unto you. Unfor-tunately, we may find ourselves in a situa-tion where small changes to this ethic creepinto our lives, unawares. We pay no atten-tion to this. It becomes comfortable, famil-iar and acceptable. We see a person treatingsomeone else badly, but we do not say any-thing, for fear of being accused of interfer-ence. We see our co-worker taking time off,and claiming sick leave. But we know theywere out of town that day. We take homepens and paper for our children for schoolsupplies, and we believe we are justified inthe theft. The list is endless. But at somepoint the change will be so large as to causeus to suddenly stop and wonder why we arein the situation we are in.

At the end of World War II, a GermanLutheran churchman, Pastor MartinNiemöller, wrote the following:

In Germany, they came first for theCommunists,

And I didn’t speak up because I wasn’t aCommunist;

And then they came for the trade unionists,And I didn’t speak up because I wasn’t a

trade unionist;And then they came for the Jews,And I didn’t speak up because I wasn’t a Jew;And then . . . they came for me . . .And by that time there was no one left to

speak up.

Let us hope that our ethics do not allowthis to happen again. **

Reference1. The Ethic of Reciprocity, Aine MacDermot,

http://vine.demesnes.net/tag/reciprocity/, url linkin effect as of February 2008


FREDERICTON CHAPTERnewsfmi*igf Fredericton was pleased to host aluncheon event on January 24th, 2008 fea-turing Ciara McKenna, Outreach Coordi-nator with Canada Revenue Agency. Sheprovided a brief overview of the changes forthe 2007 Income Tax and Benefit returnform.

We also hosted a well attended Profes-sional Development ½ day session on Feb-ruary 21, 2008. The presenter for this eventwas Gail Mitchell. As the President and owner of Arc Performance Inc.(www.ArcPerformance.ca), Gail helpsorganizations plan and execute successfulchange. Gail spoke about how to learn proj-ect basics and how to manage projects effec-tively. We would like to take this opportu-nity to thank CMA New Brunswick, whosponsored the healthy break during thisevent.

Each year, as a membership appreciationaward, we draw a prize of a $1,000 value tohelp a member defray the costs of attendingthe Public Sector Management Workshop.This year’s winner was Jean-Bernard Guig-nard, from Business New Brunswick. Con-gratulations to Jean-Bernard, and we hopehe will enjoy the experience of attendingPSMW in Québec.

The remaining events for this yearinclude a luncheon on April 24, 2008 withCarl Duivenvoorden, who will talk aboutAl Gore’s message on the global climate cri-sis, and our annual year-end event on May28, 2008. A presentation on Self Sufficien-cy will be given by Brian Dick, DeputyMinister of Business New Brunswick, andit will be followed by our General Meeting,during which the Board for 2008/09 will beelected. Following the meeting, memberswill be able to relax and enjoy a nice din-ner. **

HALIFAX CHAPTERnewsThe Halifax Chapter held our first event of2008 with a look towards the future. Threespeakers provided a morning workshop onthe theme ‘Future Outlook – EconomicDevelopment – Halifax and Regionally’.Mr. Jim Donovan, began the morning witha review of the Halifax Regional Municipal-ity’s Economic Development Strategy. Hewas followed by Halifax consultant, JimFrost who outlined the case for the AtlanticGateway. Mr. Chris Bryant completed themorning, with an overview of the Provin-cial economic strategy and outlook. Allthree speakers were very interesting andprovided an informative and encouragingassessment of future possibilities and direc-tions.

The next and final event planned for the2007-08 year will be a Provincial budgetsession in May with the Deputy Minister ofFinance planning to speak. Our annualmeeting will be held at the same time.

Our Board has been very active this yearwith a number of planning meetings held,and a larger than usual number of Boardmembers able to attend the Atlantic chap-ters meeting held in Halifax. Our thanks to2007-08 Board members for their activeinvolvement. **


NATIONAL OFFICE AND CHAPTER NEWS

Shelley Pelkey, CMA New Brunswick, Gail Mitchell, Arc Performance and Christine Robichaud,President – fmi*igf Fredericton Chapter

From left to right Corey Cochrane, Speaker Jim Donovan, Cathy Macdonald and Speaker Jim Frost.

NATIONAL OFFICEnewsThe three person team at fmi*igf NationalOffice continues to support President MarkHuard and the twenty-six person Board inthe delivery of the program defined by theBoard last summer. Managing DirectorDon Singer accompanied Vice-PresidentMike Pestill on a mission to meet with theAssociation of Government Accountants inWashington and further develop our part-nership arrangement with the Americanequivalent of the Financial ManagementInstitute. Don also assisted PartnershipDirector Marcel Boulianne in exploringother partnership opportunities with cor-porate and educational institutions; thegoal of this partnership development is tosearch for collaborative business relation-ships that can benefit fmi*igf members.Marketing and Communications Coordi-nator Nancy Coelho devoted much of herenergy to creating a site map and plan forthe new and enhanced fmi*igf website thatwill be the platform of knowledge andinformation reference for members as wellas our Chapter and National Boards ofDirectors. In a parallel effort to the creationof the new web site, Nancy has been work-ing with consultants and Chapter represen-tatives to lay the foundation for our new online membership and event registration sys-tem that many fmi*igf Chapters will sub-

scribe to later this summer to facilitate theirbusiness operations. In addition to her reg-ular office administration duties, AnnieLoranger was the author of the first fmi*igfCommunity Report, a new organizationinitiative to report highlights of your orga-nization’s activities, accomplishments andchallenges on a timely and reader–friendlybasis. All National office team membersalso have active roles in the planning of Pro-fessional Development Week 2008 inGatineau, Quebec. **

ONTARIO CHAPTERnewsThe Ontario Chapter of the FinancialManagement Institute of Canada held asuccessful Professional Development dayon Shared Services on February 20, 2008,at the University of Toronto, with 110 par-ticipants, including webcast participants inPeterborough, Sudbury, Sault Ste. Marie,Kingston, PEI and Guelph. Shared Servicesis an approach applied by large organiza-tions around the world to improve the flowand quality of internal support services.

The program included:David Hallett Associate Deputy Minis-

ter Ontario Shared Services (OSS), Min-istry of Government Services who reportedthat OSS currently delivers strategic advice,controllership and back office transactional

support in four areas:1. Financial Services2. Human Resources3. Supply Chain Management4. Enterprise Services

As a result, OSS enabled $200 million inrevenues, cost savings and cost structureflexibility by end of fiscal 2007 – 2008.David listed some of OSS’ recent achieve-ments:• Courier Selection• Office Supplies• Expenses• Electronic Pay Stubs• Drug Benefit Cards• Revenue Management.

OSS’ Operational results are quiteimpressive, such as a 14% increase in pay-roll transactions with a 9% reduction in perunit cost; 42% increase in A/P paymentswith a reduction per unit cost of 27%, anda 41% increase in agent productivity with acorresponding decrease of 40% in incidentcosts.

David outlined that the next major stepforward is to link the back office with thefront office by partnering with ServiceOntario.

Jean L. Laporte, FCGA, Director Gen-eral, Corporate Services, TransportationSafety Board of Canada started with arefreshing comparison between “sharedservices” and “common services”, and wasfrank with his assessment of shared services:• Mandatory services• Provided by a monopoly service provider• With potentially inherent conflicts as the

service provider could also double-up as apolicy authority

• No real leverage (incentives or penalties)• No off ramps or options

Jean reported that shared services in thefederal government is not new and thatsome small agencies and larger departmentshave been using shared services for manyyears. However, barriers remain in place forshared services to be fully implementedacross the government. These barriersinclude lack of political support, lack ofleadership, lack of start-up funding, resist-ance to change and legislative barriers.However, there is recognition that sharedservices are the way to go:• the Government wants us to act as an

enterprise;• smaller agencies can no longer sustain the



From left to right: Laura Beasley, Speaker Chris Bryant and JD MacCulloch

full range of corporate services on theirown;

• there are real benefits to be realized; and• no organization can survive on its own in

today’s world.Ken Jones, Partner, Pricewaterhouse-

Coopers LLP, one of fmi*igf Ontario’sfavourite speakers, talked about the emerg-ing trends for shared services. Four func-tions appear to be standardizing: Finance,HR, Payroll & Supply Chain, and manyprovincial and state governments globallyhave moved to shared services.

While Shared Services are internal, Kenemphasized that it should be implementedlike the “O” word: Outsourcing, which:• drives greater management attention;• leads to a greater degree of due diligence

efforts;• greater focus on change management;• greater focus on establishing a practical

SLA / BPA;• More focus on clear accountabilities,

especially for issues• greater focus on establishing an effective

governance process; and• greater focus on relationship manage-

ment.Ken also discussed three challenges for

shared services: Chargebacks, Performancemeasures and Benefits realization.

Ursula Goldenberg, Chief FinancialOfficer of Plexxus joined us from theBroader Public Sector. She began with anintroduction about Plexxus, whose missionstatement is “to relentlessly seek out oppor-tunities to provide leading edge businesssupport solutions to Ontario’s healthcaresector (12 Ontario Hospitals) that increasefunds available for investment in directpatient care.” She next explained thatPlexxus implemented shared services in twophases:• Phase 1 (April 2006): Supply Chain serv-

ices (strategic sourcing, contract manage-ment, logistics)

• Phase 2 (April 2008): Finance andAccounting Services, Payroll and HRServices and a full roll-out of integratedtechnology solutions.Ms. Goldenberg concluded with the

Plexxus business model:• purchase price improvement savings

(PPIS) model;• building trust with Plexxus and across

Member hospitals;

• market understanding and support ofPlexxus model;

• major transformation;• managing the change both within

Plexxus and the hospitals; and• priority of Plexxus mandate given other

Member priorities.The day also included an interactive

workshop where participants were asked:“Where is your organization and where dowe want to be?” Participants were able tolearn about the challenges and successesother jurisdictions experienced with sharedservices.

fmi*igf Ontario will continue to use ourwell received format for its next excitingprofessional development event, focussingon Modernization of Financial Manage-ment, to be held on June 18, 2008 inToronto.

In the meantime, the fmi*igf OntarioBoard of Directors has been activelyrecruiting for the following Board posi-tions:• President• Secretary• Treasurer• Director, Liaison, Municipalities• Director, Liaison, Broader Public Sector• Director, Liaison, Professional Organiza-

tionsThere has been some considerable inter-

est and fmi*igf Ontario is looking forwardto the fresh and innovative ideas these new-comers will bring. **

QUEBEC CHAPTERnewsOn January 23, 2008, fmi*igf Quebecreceived Mr. Bernard Landry, politician,professor and lawyer. No less than 497 per-sons came to hear one of Quebec’s formerPremiers. This eloquent speaker knew howto captivate the crowd when he talkedabout the worldwide evolution of theProvince of Quebec. This event was heldunder Mr. Richard Gagnon’s (administra-tor) responsibility. The summary of hisconference is available on the FMI Quebecpage at www.igfquebec.com.

fmi*igf Quebec also had the honour ofwelcoming Mr. Jacques Lacoursière, themost visible of Quebec historians. Mr.

Lacoursière is also the author of severalpublications. He had prepared for us a veryspecial conference where he recounted earlyhistory of public servant employment inthe Province of Quebec.

By the time this Journal will be pub-lished, the 2008 Public Sector ManagementWorkshop (PSMW) will have been heldfrom June 8 to 10, 2008. This year’s themeis Celebrate Quebec: 400 years of history.

For those of you who will have partici-pated, we hope you enjoyed the workshop;and for those of you who did not attend, weinvite you to visit our site to find out aboutthe 2008-2009 program which will beavailable in September.

The entire Quebec fmi*igf Board ofDirectors sincerely thanks you for your par-ticipation and wishes you to make the mostof the summer that is just around the cor-ner. **

Renée Brassard, Administrator

VANCOUVER CHAPTERnewsThe Vancouver Chapter had a very excitingstart to 2008! We had some excellent eventsin the first three months of the year.

On January 17, 2008 Gail Stephens,Chief Executive Officer of the BritishColumbia Pension Corporation presentedon the topic of “Legacy Through Leader-ship”. Gail’s presentation on leadership pro-vided insight into the characteristics ofgreat leaders. She shared her practical expe-rience of how leadership can translate intoremarkable business results.

fmi*igf Vancouver Chapter held itsannual Professional Development Day onFebruary 20, 2008 at the Vancouver Club.Established in 1889, the Vancouver Club isdesignated as an “A” class heritage buildingby the City of Vancouver. Not only doesthe Club provide a prestigious home for itsmembers in the heart of the business dis-trict, but it was also an auspicious locationto hold the Vancouver Chapter’s mostimportant event of the year. The day start-ed with a presentation by Pat Keller, Presi-dent of CGA BC. He provided an updateof CGA BC along with an overview of thenew BC budget. Next, Bernie Geiger from





the Comptroller General’s Office presentedon the topic of “Financial ManagementPolicy Framework and the Office of theComptroller General of Canada”. In theafternoon, Internationally AccreditedSpeaker and Professional Registered Parlia-mentarian, John Noonan facilitated a com-munication skills workshop titled, “Pre-senting with Impact”.

On Friday March 14, 2008, HonourableColin Hansen, Minister of EconomicDevelopment and Minister Responsible forthe Asia Pacific Initiative and the Olympicsprovided fmi*igf with an overview of theBC economy and a progress report on the2010 Olympics. Carey Dillen, Director,Financial Services VANOC and Jeff Gar-rad, Chief Financial Officer, BC Olympicand Paralympic Winter Games Secretariat,Government of BC also presented to thegroup and then addressed questions as apanel.

The Vancouver Chapter will be holdingtheir final event before the summer at theend of May.

It has been an extremely successful yearfor the Chapter and this is in no small partdue to the dedicated volunteers which wehave on the Board. They put in countlesshours on behalf of our members and theeffort shows in the quality of events wehave been able to put on. A big thank youto our board members Sarah Tobun,Arthur MacKenzie, Sundeep Cheema,Connie Ng, Maricar Bains, Karen Hall,Shirley Fung, Hardeep Kainth, MonaLuke, Jaskiran Hayer, and Rosalinda Lat-tanzio.

We would also be remiss if we did notthank our fantastic event sponsors this year- the Certified General Accountants of BC(CGA BC) and the Certified ManagementAccountants of BC (CMA BC). Their sup-port for our events this year has beeninvaluable and we look forward to workingwith them again in future. **

From left to right: Bernie Geiger, Office of the Comptroller General, Pat Keller, President of CGA-BCand Vancouver Chapter Vice-President, Arthur Mackenzie

From left to right:Vancouver Chapter Vice-President, Arthur Mackenzie, the Honourable ColinHansen and President, Sarah Tobun


Hello and happy spring after a long,snowy winter. My latest musingsare the product of a recent change

in jobs as well as the usual convoluted jour-neys down my twisted neuro-pathways. Forthose who find me somewhat vague andunfocused at the best of times, please turnimmediately to the ubiquitous financialmanagement theory article. For those wholike to let their minds wander outside thenarrow confines of their usual daily subjectmatter, please read on…and good luck withthis one.

As mentioned previously, I have recentlychanged jobs within the great institutionthat is the Public Service of Canada.Throughout my career, I have always foundthat making the transition into a new organ-ization always runs headlong into a fairlystark realization: that organizational cultureis real, it matters and, if not handled cor-rectly can be a life-and-death type experi-ence for your career. While I was making myown transition into a much larger and morecomplex organization this Spring, I was alsostruck by two more insights that havemerged with the previous one to form avague notion that I felt worthy of some ink.

The first, and most banal, was the coverof the Winter 2008 edition of the fmi*igfjournal. It showed a picture of Quebec Cityand made reference to the fmi*igf ’s PublicSector Management Workshop being heldthere this year in line with the city’s cele-bration of its four-hundredth birthday.Having lived in Quebec City and havingbeen involved in some of the activities sur-rounding its 400th anniversary, I am quiteaware of the historical and cultural signifi-cance of this city in North America.

The second was a very recent talk that Iattended where a senior business leader wasspeaking about the need to develop flexibleapproaches to workplace management. Herstated goals in this pursuit was to capitalizeon the diversity of the workforce, at a time

when the labour market is seeing some veryprofound changes, and to remain as a highperforming organization. Her basic premisewas that organizational culture and work-flows must be adaptable and flexible in orderto accommodate a breadth and depth ofdiversity that we have simply not seen before.

While many of us think of diversity inthe traditional sense of inclusion of minor-ity groups into the workforce, which is stilla very significant factor that organizationsmust consider and have effective strategiesand processes to achieve, the other elementof diversity that came out loud and clearwas the idea of generational diversity. As theworld’s population grows older, we willlikely see a basic shift away from the currenttrend of entering the workforce in yourearly-to-late twenties and retirement inyour mid-to-late fifties. The net resultwould be an extension of the ‘work family’from approximately three generations tofour. The statistics used by the speaker inquestion were that her workforce has abirth-year range from 1922 to 1990. Yes, Iknow dear super-numerate colleagues; thismeans employees from 18 to 86!

Imagine the cultural divide between folksborn before the Great Depression and thosebrought up on MTV and the Internet andwireless world? Imagine even further theimpact of Generation X’s and GenerationY’s running amok in our rules-bound hier-archical organizations, challenging authori-ty and established cultural norms. It simplyboggles the mind! Well, at least it boggledmy little mind. That got me wonderingabout the things that I (and my dear editor)hold dear and want to express in the 1,500words of this column. What I mean by thatof course is how does this relate to financialmanagement, more specifically accounting,and even more specifically where the futureof accounting is going?

To come to some method for my mad-ness, I had to think about some pretty basic

things that I perceive to be universal truthsfor accounting, and, taken to the extreme,financial reporting. For you see, in myultra-simplistic way of looking at things,the basis of good accounting and financialreporting is uniformity and standardiza-tion. They bring complex realities and theirevolution through time down to common,understandable and fully comparable ele-ments that, if all works out according toplan, will lead a diversity of readers to thesame conclusions about the state of healthof an entity under study. Even more impor-tantly, these statements are based on simplerules that allow people to check up on theirveracity by means of a standard and repeat-able verification, audit.

It is really important to point out at thistime that accounting and financial report-ing are still in evolution. One key trait ofthis evolution however is even greater stan-dardization and commonality in light of thepost- ENRON reality and the pressure toensure homogeneity across internationalboundaries, as evidenced by the move toIFR adoption across the globe.

So what does this have to do with orga-nizational culture? Patience dear readers; allwill be revealed!

Well, to be perfectly frank, I do not seehow the notion of exploding organizationalculture, or more specifically organizationalculture in massive transition due to tremen-dous stressors such as diversity and quan-tum shifts in labour market dynamics actu-ally align. That is precisely my point. Imag-ine the stress that these forces put on thesimple bean counter who only wants to

What Would Verdi Do In a CaseLike This? – Yes Dearies, It is

About CultureBruce Manion

FROM BEHIND THE GREEN EYESHADE

Bruce ManionMr. Manion was born in Ottawa, Ontario in 1959and graduated from the University of Ottawa with aBachelor of Commerce degree. He was accepted intothe Society of Management Accountants of Ontarioin 1986. He has recently been appointed Chief Finan-cial Officer at Human Resources and Social Develop-ment Canada.


make everything nice, neat and the same,when everything around him is screamingto cater to diversity, individuality and theparadigm of uniqueness. Whoa Nelly, I feela huge insight coming on!!!!

This is where rational thought usuallytakes over and I come down from my flightof fancy and get real, as it were. But not thistime, I just keep soaring higher. I soon hadquasi post-apocalyptic visions of modernorganizations where formal structure wascompletely obliterated and everything butprofits was virtual. Then there were themighty keepers of the Great Sameness, theholders of the sacred code…the accountants.

Okay, now is probably the perfect timefor me to come thumping down to earthbefore I hurt any chance I have at sanity andavoid being committed to an institution forthe true nut-jobs that are secretly in leagueto have accountants take over the world.

Deep breath Bruce, find your HappyPlace!

That’s when it hit me: Opera. No, I saidopera, not Oprah, even though the two

sometimes leave me scratching my head.Maybe my little escape from reality aboutthe perceived, and possibly chaotic, diver-gence between the stayed and static blackart of accounting and the fluid diversity-centric organization of the future is betterexplained by another model. The model Ithought of was opera. Right up front, letme state that I am much more familiar withrock-operas than the classic kind, but I,have still sat through my share of classics,and by that, I am not making reference tothe classic Bugs Bunny cartoon thatrevolves around a lot of pieces from theBarber of Seville. I gotta admit though, thatone still cracks me up. But I digress. Any-one notice in the last two pieces that I amdoing that a lot less now? Thanks for notic-ing. I have been working really hard on this.

Anyway, classic opera is funny in that youcan listen to it in any language and you stillget the story and all of the emotion anddrama that goes with it. No really, it can bein French, Italian, German, even Japaneseand the subject matter can range from mag-

ical flutes to rodents with wings and every-one still gets the story. It is based on stan-dard elements and vocal arts that make iteven easier for audiences to make the tran-sition and derive common enjoyment outof the productions. And this has been apopular art form for hundreds of years!Starting to ring some bells, dear readers?

So maybe the standardization of account-ing and financial reporting is not the mortalenemy of the new generation Y organiza-tions. Maybe, like my dear old Quebec City,it is a comfort factor and an anchor in anotherwise turbulent environment. It doesnot change greatly and allows its consumersto discount away and interpret uniformly avery complex and increasingly diverse reality.

Food for thought as you sit on a patiosipping a cold one in Old Quebec, or any-where else this summer. I hope you have agreat summer and that you do not hear theFat Lady singing for you anytime soon.

Ciao for now. **

FROM BEHIND THE GREEN EYESHADE

613-731-7441 • 1-800-267-9750www.tri-graphic.com

613-731-8518www.delphidigital.com

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