Impact of increased scrutiny of High Value High Risk Projects

26 Jun 2014

This audit identified gaps and inconsistencies in Victoria's approach to identifying projects to be subject to High Value High Risk (HVHR) review, and the need for improved management of the process.


The Victorian government adopted the High Value High Risk (HVHR) process in late 2010 because of past cost overruns of over $2 billion attributed to inadequate management of project business cases and procurements. The process covers all public sector infrastructure and information and communications technology investments that are likely to draw on Budget funding and are over $100 million or assessed as high risk.

The goal of the HVHR process is to achieve more certainty in the delivery of intended benefits, in line with planned costs and time lines, through extra scrutiny by the Department of Treasury and Finance (DTF), together with additional Treasurer's approvals at key milestones covering the business case, procurement and monitoring after the procurement decision.

DTF's increased scrutiny through the HVHR process has made a difference to the quality of the business cases and procurements underpinning government's infrastructure investments. However, these improvements have not lifted practices so that they consistently and comprehensively meet DTF's better practice guidelines. This means government is still exposed to the risk that projects fail to deliver intended benefits on time and within approved budgets. A robust HVHR process is critical to effectively managing this risk.

DTF's scrutiny of HVHR projects was best in relation to project costs, time lines and agencies' approaches to risk management. The quality of scrutiny applied was more mixed for procurement, governance and project management and clearly inadequate when providing assurance about the expected project benefits. None of the business cases examined in the audit adequately justified the benefits of the respective projects.

The audit identified gaps and inconsistencies in DTF's approach to identifying projects to be subject to HVHR review, and the need for improved management of the process. In addition, DTF is yet to evaluate the impacts of the HVHR process on project outcomes.

The VicRoads RandL registration and licensing system project is the type of complex project that HVHR is meant to deal with and an example where significant negative deliverability risks have materialised. While the project commenced well before the HVHR process was introduced, it has been monitored through HVHR since late 2011. The government has now paused the project until February 2015. RandL is currently running at least 18 months late, has cost around $102 million and VicRoads has proposed additional expenditure of up to $135 million more than the approved budget of $158 million.

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