Agenda of Assurance, Risk and Finance Committee Meeting

	Authorising Body	Mayor/Council
	Status	Standing Committee
COUNCIL COMMITTEE	Title	Assurance, Risk and Finance Committee Terms of Reference
	Approval Date	19 December 2019
	Responsible Officer	Chief Executive

Purpose

The purpose of the Assurance, Risk and Finance Committee (the Committee) is to assist and advise the Governing Body in discharging its responsibility and ownership of finance, risk and internal control.

The Committee will review the effectiveness of the following aspects:

· The robustness of financial management practices;

· The integrity and appropriateness of internal and external reports and accountability arrangements;

· The robustness of the risk management framework;

· The robustness of internal controls and the internal audit framework;

· Compliance with applicable laws, regulations, standards and best practice guidelines;

· The establishment and maintenance of controls to safeguard the Council’s financial and non-financial assets;

· Data governance framework

To perform his or her role effectively, each Committee member must develop and maintain

his or her skills and knowledge, including an understanding of the Committee’s responsibilities, and of the Council’s business, operations and risks.

Membership

The Council will determine the membership of the Assurance, Risk and Finance Committee including at least one independent appointment with suitable financial and risk management knowledge and experience.

The Assurance, Risk and Finance Committee will comprise of at least five elected members (one of which will be the chairperson), and one independent appointed member.

Mayor Carter

John Vujcich – Chairperson

Bruce Robertson – Deputy Chairperson and Independent Member of the Committee

Moko Tepania

Mate Radich

Kelly Stratford

Ann Court

Mike Edmonds

Adele Gardner

Non-appointed councillors may attend meetings with speaking rights, but not voting rights.

Quorum

The quorum at a meeting of the Assurance, Risk and Finance Committee is 4 members.

Frequency of Meetings

The Assurance, Risk and Finance Committee shall meet every 6 weeks, but may be cancelled if there is no business.

Power to Delegate

The Assurance, Risk and Finance Committee may not delegate any of its responsibilities, duties or powers.

Committees Responsibilities

The Committees responsibilities are described below:

Financial systems and performance of the Council

· Review the Council’s financial and non-financial performance against the Long Term Plan and Annual Plan

· Review Council quarterly financial statements and draft Annual Report

Far North Holdings Limited (FNHL)

· Recommend to Council the approval of statement of intent and Annual Report (s67 LGA)

· Receive 6 monthly report on operations (s66 LGA)

· Receive quarterly financial statements

· Recommend appointment of directors of FNHL

Risk Management

· Review appropriateness of Council’s risk management framework and associated procedures for effective risk identification, evaluation and treatment

· Receive and review risk management dashboard reports

· Provide input, annually, into the setting of the risk management programme of work

· Receive updates on current litigation and legal liabilities

Internal Audit and Controls

· Review whether management has in place a current and comprehensive internal audit framework

· Receive and review the internal audit dashboard reports

· Provide input, annually, into the setting of the internal audit programme of work

· Review whether there are appropriate processes and systems in place to identify and investigate fraudulent behaviour

The Committee will manage Council’s relationship with external auditor.

The Committee will approve applications to declare land abandoned and any other such matters under the Rating Act.

Rules and Procedures

Council’s Standing Orders and Code of Conduct apply to all the committee’s meetings.

Annual reporting

The Chair of the Committee will submit a written report to the Chief Executive on an annual basis. The review will summarise the activities of the Committee and how it has contributed to the Council’s governance and strategic objectives. The Chief Executive will place the report on the next available agenda of the governing body.

ASSURANCE, RISK AND FINANCE COMMITTEE - MEMBERS REGISTER OF INTERESTS

Name	Responsibility (i.e. Chairperson etc)	Declaration of Interests	Nature of Potential Interest	Member's Proposed Management Plan
Hon John Carter QSO	Board Member of the Local Government Protection Programme	Board Member of the Local Government Protection Program
Hon John Carter QSO	Carter Family Trust
John Vujcich (Chair)	Board Member	Pioneer Village	Matters relating to funding and assets	Declare interest and abstain
	Director	Waitukupata Forest Ltd	Potential for council activity to directly affect its assets	Declare interest and abstain
	Director	Rural Service Solutions Ltd	Matters where council regulatory function impact of company services	Declare interest and abstain
	Director	Kaikohe (Rau Marama) Community Trust	Potential funder	Declare interest and abstain
	Partner	MJ & EMJ Vujcich	Matters where council regulatory function impacts on partnership owned assets	Declare interest and abstain
	Member	Kaikohe Rotary Club	Potential funder, or impact on Rotary projects	Declare interest and abstain
	Member	New Zealand Institute of Directors	Potential provider of training to Council	Declare a Conflict of Interest
	Member	Institute of IT Professionals	Unlikely, but possible provider of services to Council	Declare a Conflict of Interest
Bruce Robertson (Deputy)	No Form Received
Deputy Mayor Ann Court	Waipapa Business Association	Member		Case by case
	Warren Pattinson Limited	Shareholder	Building company. FNDC is a regulator and enforcer	Case by case
	Kerikeri Irrigation	Supplies my water		No
	Top Energy	Supplies my power		No other interest greater than the publics
	District Licensing	N/A	N/A	N/A
	Top Energy Consumer Trust	Trustee	Crossover in regulatory functions, consenting economic development and contracts such as street lighting.	Declare interest and abstain from voting.
	Ann Court Trust	Private	Private	N/A
	Waipapa Rotary	Honorary member	Potential community funding submitter	Declare interest and abstain from voting.
	Properties on Onekura Road, Waipapa	Owner Shareholder	Any proposed FNDC Capital works or policy change which may have a direct impact (positive/adverse)	Declare interest and abstain from voting.
	Property on Daroux Dr, Waipapa	Financial interest	Any proposed FNDC Capital works or policy change which may have a direct impact (positive/adverse)	Declare interest and abstain from voting.
	Flowers and gifts	Ratepayer 'Thankyou'	Bias/ Pre-determination?	Declare to Governance
	Coffee and food	Ratepayers sometimes 'shout' food and beverage	Bias or pre-determination	Case by case
	Staff	N/A	Suggestion of not being impartial or pre-determined!	Be professional, due diligence, weigh the evidence. Be thorough, thoughtful, considered impartial and balanced. Be fair.
	Warren Pattinson	My husband is a builder and may do work for Council staff		Case by case
Ann Court - Partner	Warren Pattinson Limited	Director	Building Company. FNDC is a regulator	Remain at arm’s length
	Air NZ	Shareholder	None	None
	Warren Pattinson Limited	Builder	FNDC is the consent authority, regulator and enforcer.	Apply arm’s length rules
	Property on Onekura Road, Waipapa	Owner	Any proposed FNDC capital work in the vicinity or rural plan change. Maybe a link to policy development.	Would not submit. Rest on a case by case basis.
Mate Radich	No form received
Kelly Stratford	KS Bookkeeping and Administration	Business Owner, provides book keeping, administration and development of environmental management plans	None perceived	Step aside from decisions that arise, that may have conflicts
	Waikare Marae Trustees	Trustee	Maybe perceived conflicts	Case by case basis
	Bay of Islands College	Parent Elected Trustee	None perceived	If there was a conflict, I will step aside from decision making
	Karetu School	Parent Elected Trustee	None perceived	If there was a conflict, I will step aside from decision making
	Māori title land – Moerewa and Waikare	Beneficiary and husband is a shareholder	None perceived	If there was a conflict, I will step aside from decision making
	Sister is employed by Far North District Council			Will not discuss work/governance mattes that are confidential
	Gifts - food and beverages	Residents and ratepayers may ‘shout’ food and beverage	Perceived bias or predetermination	Case by case basis
Kelly Stratford - Partner	Chef and Barista	Opua Store	None perceived
Kelly Stratford - Partner	Māori title land – Moerewa	Shareholder	None perceived	If there was a conflict of interest, I would step aside from decision making
Moko Tepania	Teacher	Te Kura Kaupapa Māori o Kaikohe.	Potential Council funding that will benefit my place of employment.	Declare a perceived conflict
	Chairperson	Te Reo o Te Tai Tokerau Trust.	Potential Council funding for events that this trust runs.	Declare a perceived conflict
	Tribal Member	Te Rūnanga o Te Rarawa	As a descendent of Te Rarawa I could have a perceived conflict of interest in Te Rarawa Council relations.	Declare a perceived conflict
	Tribal Member	Te Rūnanga o Whaingaroa	As a descendent of Te Rūnanga o Whaingaroa I could have a perceived conflict of interest in Te Rūnanga o Whaingaroa Council relations.	Declare a perceived conflict
	Tribal Member	Kahukuraariki Trust Board	As a descendent of Kahukuraariki Trust Board I could have a perceived conflict of interest in Kahukuraariki Trust Board Council relations.	Declare a perceived conflict
	Tribal Member	Te Rūnanga ā-Iwi o Ngāpuhi	As a descendent of Te Rūnanga ā-Iwi o Ngāpuhi I could have a perceived conflict of interest in Te Rūnanga ā-Iwi o Ngāpuhi Council relations.	Declare a perceived conflict
Mike Edmonds	Chair	Kaikohe Mechanical and Historic Trust	Council Funding	Decide at the time
Mike Edmonds	Committee member	Kaikohe Rugby Football and Sports Club	Council Funding	Withdraw and abstain

Assurance, Risk and Finance Committee Meeting Agenda

21 October 2020

MINUTES OF Far North District Council
Assurance, Risk and Finance Committee Meeting
HELD VIRTUALLY VIA MICROSOFT TEAMS
ON Wednesday, 9 September 2020 AT 1.00 pm

PRESENT: Cr John Vujcich, Member Bruce Robertson, Mayor John Carter (HWTM), Deputy Mayor Ann Court, Cr Mate Radich, Cr Kelly Stratford, Cr Moko Tepania, Kaikohe-Hokianga Community Board Chairperson Mike Edmonds

IN ATTENDANCE: Cr Rachel Smith, Te Hiku Community Board Chairperson Adele Gardner

1 Karakia TimatAnga – Opening Prayer

Chair Vujcich declared the meeting open and commenced with a karakia timatanga.

2 Apologies and Declarations of Interest

Cr Tepania – left the meeting at 2:32 pm with prior approval from the Committee and Chair.

3 Deputation

No deputations received for this meeting.

4.1 Confirmation of Previous Minutes

Agenda item 4.1 document number A2942645, pages 12 - 15 refers.

Committee Resolution 2020/1

Moved: Cr Kelly Stratford

Seconded: Cr Moko Tepania

That the Assurance, Risk and Finance Committee confirms the minutes of the Assurance, Risk and Finance Committee meeting held 29 July 2020 as a true and correct record.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

Carried

5 Reports

5.1 Revenue Recovery report July 2020

Agenda item 5.1 document number A2940311, pages 16 - 20 refers.

Committee Resolution 2020/2

Moved: Mayor John Carter

Seconded: Member Bruce Robertson

That the Assurance, Risk and Finance Committee receive the report Revenue Recovery report July 2020.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

Carried

1:15 pm Cr Rachel Smith joined the meeting.

1:16 pm Member Adele Gardner joined the meeting.

6 Information Reports

6.1 Council Financial Report for the period ending 31 july 2020

Agenda item 6.1 document number A2943836, pages 21 - 33 refers.

Committee Resolution 2020/3

Moved: Cr Moko Tepania

Seconded: Mayor John Carter

That the Assurance, Risk and Finance Committee receive the report Council Financial Report for the Period Ending 31 July 2020.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

Carried

1:27 pm Cr Robertson left the virtual meeting and returned at 1:35 pm.

6.2 September Risk Management

Agenda item 6.2 document number A2937737, pages 34 - 47 refers.

Committee Recommendation

Moved: Cr Kelly Stratford

Seconded: Deputy Mayor Ann Court

That the Assurance, Risk and Finance Committee receive the report September Risk Management.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

carried 8/0

6.3 Internal Audit and Assurance Report

Agenda item 6.3 document number A2941620, pages 48 - 52 refers.

Committee Resolution 2020/4

Moved: Mayor John Carter

Seconded: Cr John Vujcich

That the Assurance, Risk and Finance Committee receive the Internal Audit and Assurance Report.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

Carried

6.4 Digital Information Services - Data Governance and IT Security

Agenda item 6.4 document number A2940942, pages 53 - 57 refers.

Committee Resolution 2020/5

Moved: Cr Moko Tepania

Seconded: Kaikohe-Hokianga Community Board Chairperson Mike Edmonds

That the Assurance, Risk and Finance Committee receive the report Digital Information Services - Data Governance and IT Security.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford, Moko Tepania and Mike Edmonds

Against: Nil

Carried

2:31 pm Trevor Rusling (NZ Audit) joined the meeting.

6.5 Level of Service KPI Quarter 4 Performance Report

Agenda item 6.5 document number A2939659, page 58 - 84 refers.

Committee Resolution 2020/6

Moved: Member Bruce Robertson

Seconded: Cr Kelly Stratford

That the Assurance, Risk and Finance Committee receive the report Level of Service KPI Quarter 4 Performance Report.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford and Mike Edmonds

Against: Nil

Carried

7 Resolution to Exclude the Public

Committee Resolution 2020/7

Moved: Cr John Vujcich

Seconded: Cr Kelly Stratford

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48 for the passing of this resolution
7.1 - Confirmation of Previous Minutes	s7(2)(h) - the withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities	s48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7
7.2 - Draft Annual Report for the year ended 30 June 2020	s7(2)(c)(ii) - the withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest s7(2)(f)(i) - free and frank expression of opinions by or between or to members or officers or employees of any local authority	s48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7
7.3 - FNDC Current Legal Action Potential Liability Claims	s7(2)(g) - the withholding of the information is necessary to maintain legal professional privilege	s48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court, Mate Radich, Kelly Stratford and Mike Edmonds

Against: Nil

carried

Confirmation of Information and Decisions in Open Meeting

Committee Resolution 2020/8

Moved: Cr Kelly Stratford

Seconded: Mayor John Carter

That Assurance, Risk and Finance Committee confirm that the information and decisions contained in the part of the meeting held with the public excluded is not to be restated in public meeting.

In Favour: Crs John Vujcich, John Carter, Bruce Robertson, Ann Court and Kelly Stratford

Against: Nil

Abstained: Cr Mike Edmonds

Carried

8 Karakia Whakamutunga – Closing Prayer

Cr Stratford closed the meeting with a karakia whakamutunga.

9 Meeting Close

The meeting closed at 3.34 pm

The minutes of this meeting will be confirmed at the Assurance, Risk and Finance Committee Meeting held on 21 October 2020.

...................................................

CHAIRPERSON

Assurance, Risk and Finance Committee Meeting Agenda

21 October 2020

5 Information Reports

5.1 2020-10-21 Revenue recovery report

File Number: A2962676

Author: Margriet Veenstra, Manager - Transaction Services

Authoriser: William J Taylor MBE, General Manager - Corporate Services

Purpose of the Report

The purpose of this report is to provide quarterly reporting to the Far North District Council Assurance, Risk, and Finance Committee.

Executive Summary

This is the second report for the financial year 2020/21 and provides information on action taken to collect the current and arrears balances for rates, water and sundry debt so far this year, and to provide information on how collection is tracking against targets.

Recommendation

That the Assurance, Risk and Finance Committee receive the report “2020-10-21 Revenue recovery report”.

Background

This document has been prepared to outline current and arrears balances for rates, water and Sundry debt as at 31 August 2020 and the actions taken by the debt management team for the collection of the General Title rates and water and sundry debt.

This information is part of the standing items reported to the Assurance, Risk and Finance Committee on a regular basis.

Discussion and Next Steps

The data provided is for General Title and Maori Freehold Land rates and water accounts with Sundry debtors shown in a separate table.

Key actions since the last report:

· Between the 24^th and 27^th of August, debt management contacted approximately 100 rate payers who missed the 1^st instalment only and were due to incur penalties.

· Between the 7^th and 16^th of September, they reviewed 256 accounts of properties with mortgages who have a payment arrangement in place and contact those who’s payments were no longer in line with rates easy pay.

· From the 17^th of September, they started contacting all rate payers who qualified for crisis rating relief and offer a suitable payment plan from the 1^st of October once the rating relief resolution expires.

We are also preparing for active recovery of arrears from the 1^st of October 2020.

· Proceed with accounts on hold for legal action for arrears with an external law firm.

· Policy for approval by Council of next actions post default judgment from the courts.

· Council legal team to commence legal proceedings for 10 accounts.

Additionally, to the above, we will also commence mortgage demand process for General Title properties. Section 62 of the Local Government (Rating) Act 2002 enables councils to recover unpaid previous year’s rates from the mortgagee if the property owner is in default.

· From the 1^st of November, councils can notify a bank, as mortgagee, that a property owner has not paid his or her previous years’ rates, and demand that the bank pay them instead.

· The bank must be given three months notice that the property owner is in default and after that period, councils can demand payment from the bank

· Final demand for payment must be issued and paid in the rating year the mortgage demand notice is sent.

· It is standard practice for the terms and conditions of property loans to include a reference to a bank's right to recover money from customers once the bank has paid the arrears. Typically, it will recover the money from the customer by debiting the amount to his or her account.

Debt management process for this rating year is as follows:

· Between the 1^st of October and the 20^th of October, debt management will proactively call owners of properties with only last year’s rates in arrears or a balance less than $1,000 to offer payment arrangements to avoid mortgage demand.

· Three months’ notice letter is sent to the banks and the owners of 300 properties with the highest arrears’ balances on the 20^th October 2020.

· Owners are invited to contact debt management to make payment arrangements to avoid final demand in three months.

· Payment arrangements must be in line with rates easy pay to clear the arrears and current rates.

· For those properties where no payment is received or payment arrangements have dishonoured, final demand for payment will be issued to the bank after the three months’ notice period has passed on the 20^th of January 2021.

· Debt management will proactively contact owners of all remaining properties between the 20^th of October and the 1^st of February 2021 to offer payment arrangements to avoid mortgage demand.

· Three months’ notice letter is sent to the banks and the owners of all remaining accounts with an arrears balance and without a payment arrangement by the 20^th of February 2021 with final demand to be issued on the 20^th of May 2021, if arrears have not been cleared or no payment arrangement has been made.

For the total number of General Title rates and water accounts marked as ‘Debt recovery action to commence’:

· These are properties where there is no mortgage, no payments have been received, and the owner has not contacted Council to discuss payment options.

· 27% of these accounts have arrears of more than 2 rating years.

o 70% of these accounts have received final demand letters from Council.

o FNDC legal team will commence registering the debt against these properties and commence filing for debt recovery through the courts.

o Debt management will send final demand letters to the remaining 30%.

· 73% is for accounts with up to two years rates arrears.

o Debt management to commence calling.

o If no contact is made, demand letters will be sent.

The total Sundry debtors aged debt balance has remained the same since the last report. Of the total debt, 40% is attributed to invoices raised for Resource Consents and 29% for Building Consents.

Discussions to reduce the resource consent debt commenced a few months ago. Key drivers to the debt are:

· Initial application fee is not enough to cover the average cost of a resource consent.

· This generally results in a high value final invoice when the resource consent is issued.

· Consent is issued on the day the invoice is raised, payment prior to issuing of the consent is not required.

The following actions have been agreed to reduce the current debt and further debt to be added.

· Fee review of initial application fee for resource consent and implementation of an increase at the start of the next rating year in line with current average costs.

· Implement interim invoicing at key stages of a resource application and stop the process if invoices are not paid by the due date.

· Add additional wording to the resource consent application confirmation letter to customers, to explain the payment process, requirements and responsibilities of the applicant.

· Request legal opinion from RMA specialist lawyer for Council to request payment prior to issuing consent as this is not a practice adopted by other councils.

· Workshop on the 14th October with debt management, resource consent team and district services administration to agree inter-departmental communications and processes.

The building consent debt has different key drivers as building consents do require payment prior to issuing. The debt is mainly for costs invoiced by Council for officer time and administration fees associated with notices to fix, refusal of building consent or code of compliance, warrant of fitness and tri-annual swimming pool inspections. A workshop will be held on the 14^th of October with the building team to review aged debt and identify any changes or improvements in processes that can be made to reduce future debt.

3) Financial Implications and Budgetary Provision

Provision is made annually for doubtful debts in relation to the arrears owed to Council. A higher provision for Maori Freehold land rates and water is made in comparison to General Title rates and water due to the difference in collection options available to Council.

Attachments

1. 2020-10-21 ARF Revenue recovery report attachment - A2962666 ⇩

Compliance schedule:

Full consideration has been given to the provisions of the Local Government Act 2002 S77 in relation to decision making, in particular:

1. A Local authority must, in the course of the decision-making process,

a) Seek to identify all reasonably practicable options for the achievement of the objective of a decision; and

b) Assess the options in terms of their advantages and disadvantages; and

c) If any of the options identified under paragraph (a) involves a significant decision in relation to land or a body of water, take into account the relationship of Māori and their culture and traditions with their ancestral land, water sites, waahi tapu, valued flora and fauna and other taonga.

2. This section is subject to Section 79 - Compliance with procedures in relation to decisions.

Compliance requirement	Staff assessment
State the level of significance (high or low) of the issue or proposal as determined by the Council’s Significance and Engagement Policy	Low
State the relevant Council policies (external or internal), legislation, and/or community outcomes (as stated in the LTP) that relate to this decision.	Local Government (Rating) Act 2002
State whether this issue or proposal has a District wide relevance and, if not, the ways in which the appropriate Community Board’s views have been sought.	District Wide
State the possible implications for Māori and how Māori have been provided with an opportunity to contribute to decision making if this decision is significant and relates to land and/or any body of water.	N/A
Identify persons likely to be affected by or have an interest in the matter, and how you have given consideration to their views or preferences (for example – youth, the aged and those with disabilities.	N/A
State the financial implications and where budgetary provisions have been made to support this decision.	Financial implications are included in the report
Chief Financial Officer review.	The Chief Financial Officer has reviewed this report

TENDER PANEL

Terms of Reference (May 2020)

Purpose

The Tender Panel is established to provide further governance and transparency to high value, high risk procurements.

The Tender Panel will assist the Chief Executive to undertake sound probity procedures in relation to procurement of goods and services necessary to deliver on the work programme and operations outlined in Far North District Council’s adopted Annual Plan.

The role of the panel will evolve in line with the implementation of the Strategic Procurement framework and Council’s ongoing maturity in the procurement space from transactional assessment against the policy/best practice to strategic pipeline planning and sustainable procurement practices.

Membership of the Tender Panel

· The following table identifies members of the Tender Panel: four core members and four voting members.

· Quorum is the Panel Chair plus 4 core members (preferred for consistency).

· A different General Manager will Chair the Tender Panel dependant on the agenda items and mitigation of any form of conflict of interests.

Tender Panel Chair
Will Taylor	General Manager – Corporate Services
Tender Panel Core Members
Janice Smith	Chief Financial Officer
George Swanepoel	In House Counsel
Glenn Rainham	Manager - Alliances
Jaime Dyhrberg	Manager Transformation Risk & Audit
Tender Panel (On a rotation basis)
Dr Dean Myburgh	General Manager – District Services
Darrell Sargent	General Manager – Strategic Policy and Planning
Andy Finch	General Manager – Infrastructure and Asset Management
Assist with the Coordination of the Tender Panel
Petrina Keane	Procurement Specialist
Administrator of the Tender Panel
Lisa Williams	Administrator District Administration

Relevant Contract Managers, Project Managers etc may as appropriate be invited to present their case / answer any questions the Tender Panel may have, but do not have any decision-making rights.

Frequency of meetings

The Tender Panel will ‘meet’ on a fortnightly basis, with a schedule of meetings to be circulated at least three months in advance.

Meeting attendance can be either via Teams, face to face or a hybrid scenario.

Documentation to be reviewed and approved will be circulated to the Tender Panel members at least three business days prior to the meeting.

Terms of Reference

The scope of the Tender Panel covers all financial and contractual commitments that Far North District Council is planning to enter to (or has entered into) regardless of the funding source.

The table below highlights the appropriate levels of authority to review / approve procurement plans, supplier selection recommendations and contract variations.

*Infrastructure Works**
Procurement Stage		Value		Tender Panel Endorsement		Approval
Procurement Plan		Up to $1,000,000		N/A		Relevant DFA
Procurement Plan		$1,000,000+		Yes		N/A
Supplier Selection Recommendation		Between $250,00 - $1,000,000		Yes		Relevant DFA
Supplier Selection Recommendation		Between $1,000,000 - $3,000,000		N/A		Infrastructure Committee
Supplier Selection Recommendation		$3,000,000+		N/A		Council
Contract Variations to existing contracts		Total contract and variation is less than $1,000,000		N/A		Relevant DFA
Contract Variations to existing contracts		Total contract and variation is between $1,000,000 and $3,000,000		N/A		Infrastructure Committee
Contract Variations to existing contracts		Total contract and variation is more than $3,000,000		N/A		Council
Other Works and Services
Procurement Stage	Value		Tender Panel Endorsement		Approval
Procurement Plan	Up to $1,000,000		N/A		Relevant DFA
Procurement Plan	$1,000,000+		Yes		N/A
Supplier Selection Recommendation	Up to $1,000,000		Yes		Relevant DFA
Supplier Selection Recommendation	$1,000,000+		N/A		Council
Contract Variations to existing contracts	Total contract and variation is less than $1,000,000		N/A		Relevant DFA
Contract Variations to existing contracts	Total contract and variation is more than $1,000,000		N/A		Council

* Definition of Infrastructure Works:

· Physical Works: Minor Asset Construction, Major Asset Construction

· Professional Services: Engineering Services, Planning Services, Investigation and Design Services

All Procurements that are deemed as being high-risk, high sensitivity or where Council's reputation is affected may be referred to the Tender Panel by the Chief Executive or a General Manager.

Procurement plans for the establishment of supplier panels will be referred to the Tender Panel with a recommendation to Council via the staff report.

[Note: The Infrastructure Committee Terms of Reference dated 9 April 2020 is attached as Appendix A which contain the responsibilities and financial delegations of the Infrastructure Committee.]

Role of the Tender Panel

The role of the Tender Panel is to:

· Be satisfied that the Far North District Council’s procurement policies, principles, strategies, objectives and all associated procedures are complied with.

· Be satisfied that sufficient Council funding is available for the proposed procurement.

· Receive, review and endorse the appropriate Procurement Plan prior to going to market.

· Receive and review the Supplier Recommendation Reports on completion of market exercise.

· Be satisfied that the successful tender achieves the best value for money and best outcome for the Far North District Council and its stakeholders.

· Be satisfied that commercial confidentiality is fully maintained as required by the procurement process.

· Advise of any conflicts of interest (perceived or otherwise) that may occur during the Tender Panel’s consideration of a matter and remove themselves from the process.

· Ensure the Tender Panel consistently remains neutral and fair.

In considering whether to approve an item or not the Tender Panel will address:

· Whether the funding has been approved appropriately.

· Whether the matter fits the stated business requirement.

· Whether a robust procurement process will be / has been followed.

· Whether the potential savings opportunity is suitably ambitious.

· Whether any risks associated with the matter fits with an acceptable risks profile.

· Whether any legal considerations are appropriately identified and mitigated.

· Any Social, Ethical or Environmental considerations.

Limitations

· It is not the role of the Tender Panel to question the need for the work.

· The Tender Panel is authorised to make recommendations to the Council of the preferred tenderer but does not itself have the authority to award the contract.

Actions and outcomes from the Tender Panel meetings will be reported and distributed to appropriate General Managers / Managers, Project Managers.

Decision Making

· Where all members do not agree on a decision, the Chair of the Tender Panel can ask that further information is provided or put the matter to a vote with a simple majority vote deciding the matter.

· Members of the Tender Panel do not have any voting rights if;

o They have interest, financial or otherwise, in the matter being decided; or

o It could be reasonably be perceived by others that they are ‘voting for their own project’.

Tender Panel is responsible for:

· Reviewing all submitted reports and agreeing to the recommendations or otherwise at the meeting, or if this is not possible, within an agreed short time period.

· Decision making and supporting the decision across the Far North District Council.

· Requesting reports for areas for concern.

· Quarterly reporting to the Assurance, Risk and Finance Committee on all procurements during the period.

The Chair of the Tender Panel is responsible for:

· Ensuring the efficient and timely running of the Tender Panel.

· Ensuring members give due consideration to the matters under discussion.

· Ensuring the minutes of the meeting accurately represents the discussion and decisions taken.

· Ensuring the Terms of Reference of the Panel are reviewed annually or earlier if required.

Assurance, Risk and Finance Committee Meeting Agenda

21 October 2020

5.4 Internal Audit and Assurance - October 2020

File Number: A2967061

Author: Celine Carlisle, Audit and Assurance Specialist

Authoriser: William J Taylor MBE, General Manager - Corporate Services

Purpose of the Report

To provide the Assurance, Risk and Finance Committee with an update on internal and external audits, and any associated recommendations.

Executive Summary

This report provides an update on internal and external audit recommendations recently completed, almost complete, underway or on hold. Since the last report on 20 August, progress has occurred, but no new recommendations have been completed.

Recommendation

That the Assurance, Risk and Finance Committee receive the Internal Audit and Assurance – October 2020 report.

Background

There are active plans in place to complete all outstanding recommendations.

Audit recommendations as at 1 October 2020:

ID	Audit Name	Title	Priority	Status	Description
23	Internal Audit – Information Security	External user access and authentication	Must do	Almost complete	Network logon account internal audit has been completed. Progress: IT team actioning audit findings.
28	Internal Audit – Information Security	Project Security Risks	Should do	Underway	Information security controls need to be factored into FNDC's project management framework to ensure associated risks are managed. Progress: The PMO are developing a checklist to ensure information security is maintained around project delivery, completion Dec 2020. The considerations around Information security will also be included in the general Project Management Framework training to all key staff / induction.
58	KPMG – Procurement	Spend monitoring	Should do	Underway	Implement quarterly procurement spend analysis.
59	KPMG – Procurement	Spend monitoring	Should do	Underway	As part of the spend analysis process, integrate category spend management on a periodic basis.
74	2017 Audit NZ Interim Annual Management Report	Legislative Compliance System	Should do	On hold	Audit NZ recommend a mechanism for monitoring compliance with legislative requirements is put in place as part of the Council’s overall risk management strategies. Stakeholder interviews have been completed. A range of possible solutions have been investigated. The next step is to procure a legislative compliance system and this will be considered in future budgets.
99	Contract Management Review	Set contract management guidelines	Must do	Underway	Focus is being placed on setting organisation wide contract management guidelines, encompassing the three main contractual areas: physical works, fixed term operational and maintenance, and goods and services. This encompasses the four contract stages: contract planning and development, contract execution, contract management and contract review/close-out. Progress: Work on developing a Contract Management Policy and Framework is progressing in readiness to do small testing and seek further input from others in October.
105	2018 Audit NZ Final Annual Management Report	Resource Management Deposits (Bonds)	Must do	Almost complete	When testing the liability balance related to resource management deposits, Audit NZ found some deposits in the listing were received 18 years ago. They recommended resource management deposits be reviewed and an assessment made as to whether they still meet the definition of a liability. If not, they should be released to revenue. The Compliance Team have undertaken analysis and site inspections to determine which bonds can be refunded. This work is nearing completion.
111	Three Waters Interim Alliance Agreement Review	Education of Alliance contracts and principles	Should do	Underway	Greater education provided for staff regarding expectations of an Alliance contract and understanding of the Alliance principles. Toolbox sessions are held regularly with Far North Waters. FNDC Asset Managers are going to be taken through the contract so they can get a clear understanding of how it works.
115	Three Waters Interim Alliance Agreement Review	Agree on Key Performance Indicators (KPI)	Should do	Underway	Agree on the KPI’s through the Alliance Management Team, including finance and contract performance, proactiveness and innovation, and co-developed Health and Safety. KPI’s to be agreed in 2020.
123	2019 Audit NZ Final Annual Management Report	Deferral of capital expenditure	Must do	Underway	Audit NZ recommend the Council give consideration to the impact of deferred capital expenditure on asset condition and any potential impact this may also have on Council’s asset valuations and impairment assessments for future reporting cycles. Council has commenced Programme Darwin which is aimed at addressing issues with asset management. Delivery of the capital programme being one of these issues. Council is reviewing the capital programme to ensure it is achievable from inception and limited to what can reasonably be delivered.
138	LGOIMA Compliance and Practice Report	Amend operational guidance on staff intranet to comply with LGOIMA	Must do	Almost complete	SLT approved the policy. Legal Services working with the Communications and IT teams to place it on the Intranet.
139	LGOIMA Compliance and Practice Report	Develop a Proactive Release policy	Must do	Almost complete	The Proactive Release Policy is nearing completion. As a result of the adoption of this policy, Legal Services will commence work on establishing the processes for proactive release of information, as well as how we manage publicly excluded items according to the policy guidelines. The Proactive Release Policy is complete and adopted. Progress: Working to establish procedure for proactive release of information.

Complete: 0

Almost complete: 4

Underway: 7

On hold: 1

Total: 12

Financial Implications and Budgetary Provision

This report is for information only.

Attachments

Nil

Assurance, Risk and Finance Committee Meeting Agenda

21 October 2020

5.5 Risk Management - October 2020

File Number: A2960017

Author: Tanya Reid, Business Improvement Specialist

Authoriser: William J Taylor MBE, General Manager - Corporate Services

Purpose of the Report

To provide a report on organisational risk management, emergent risk and scheduled risk progress reports for the organisation’s top risks.

No decision is required.

Executive Summary

Four emergent risks have been identified. The organisational risk of externally funded projects is the subject of a separate report to this meeting. The business continuity arrangements risk will be on the December agenda.

Risk progress updates are provided for four of the top organisational risks. Three of these risks have been assessed as no change to the residual risk score, and one reports an increased risk.

Progress on group risk continues.

Recommendation

That the Assurance, Risk and Finance Committee receive the Risk Management - October 2020 report.

Background

The top organisational risks are risks that may impact on Council achieving its vision, mission and community outcomes and are regularly reported to the Assurance, Risk and Finance Committee to ensure they are being appropriately managed. A number of these risks are subject to external influences which may affect effective council operations. The table below provides a risk snapshot of the Assurance, Risk and Finance Committee Organisational Risk Dashboard with inherent and residual risk scores as accepted by the Committee and the risk progress to the residual risk score as assessed by the risk subject matter experts.

Top organisational risk summary:						Key
						¯	Risk is decreasing.
						-	No change.
							Risk is increasing.
Risk #:	Risk title	Inherent risk score	Change to risk score	Residual risk score	Accountable Risk Governance			Responsible Risk Governance	Risk Progress Report Frequency (months)
ARF001	Climate Change	63	-	30	CEO			GMSPP	6
ARF002	BCA Status Risk	51	¯	18	CEO			GMDS	Monthly SLT/ARF/Council
ARF003	Health & Safety Vulnerabilities	46		34	CEO			Manager P&C	2
ARF004	Asset Management Risks	45	-	18	CEO			GMIAM	6
ARF005	Affordability Risk	45		26	CEO			GMSPP	6
ARF006	Project Priorities Deliveries Delays	45	-	14	CEO			GMIAM	2
ARF007	Compliance NRC Abatements	45	¯	18	CEO			GMIAM	6
ARF008	Civil Defence	42	¯	38	CEO			GMIAM	6
ARF009	Customer Service Delivery	39	-	22	CEO			Manager P&C	2
ARF010	Data Governance Risks	39		14	CEO			CEO	6
ARF011	Organisational Cohesion Risks	29	¯	14	CEO			CEO	6
ARF012	Contract Management Risks	39	-	14	CEO			GMIAM	2
ARF013	Drinking Water Resilience	39	Too early to assess.	ARF to agree level residual risk	CEO			GMIAM	3

A programme of deep dive workshops is planned for these risks. The first of two deep dive workshops for ARF005 Affordability risk has been completed, with the second workshop to be scheduled.

The Transformation and Assurance team continues to work with the organisation to refresh / establish Group risk registers, with treatment plans, and regular reviews.

Discussion and Next Steps

Emergent Risk:

Four emergent organisational risks have been identified:

1. The risk of externally funded shovel ready, economic stimulus employment opportunity projects due to the impact of the COVID-19 pandemic. This is subject to a report at the October 20 Assurance, Risk and Finance Committee meeting.

2. The financial and legal risks as a result of climate change. Timing of a report on this risk, to the Assurance, Risk and Finance Committee meeting, is to be determined.

3. District Services have proposed to escalate one of their top group risks for consideration of inclusion on the top organisational dashboard. It is proposed that this be included in the Assurance, Risk and Finance Committee risk workshop agenda.

4. The risk of not fit for purpose business continuity arrangements. This will be subject to a report at the December 20 Assurance, Risk and Finance Committee meeting.

Lessons learned and business continuity arrangements:

We have conducted a number of “lessons learned from the twin crises” workshops across the organisation to capture what we did well; what were the challenges we faced; and what should we do differently next time. As advised at the September Assurance, Risk and Finance Committee meeting the “lessons learned from our twin crises” report will be on the agenda for the December meeting. Lesson’s learned from the twin crises will be used to is inform the revision of our FNDC business continuity arrangements. These arrangements were last reviewed in August 2009.

Business continuity arrangements are about service delivery, how we will respond to an operational challenge. It involves the recovery or continuation of business activities in the event of any business disruption. The following graphic illustrates where business continuity fits within civil defence, crisis management and business as usual and what the goal of each of these is:

As we have recently experienced all organizations will, at some point, be faced with having to respond to an incident that may disrupt or threaten day-to-day operations. The goal of business continuity arrangements is to enable us to respond effectively to any such disruption. Business continuity arrangements are managed through activities such as scoping, risk evaluation, business continuity strategy, business continuity objectives, development planning, training, exercises, testing, reviewing and continual development.

At the end of 2019 Transformation & Assurance, as a part of their risk mandate, took on the ownership of our business continuity arrangements, previously the responsibility of the FNDC Civil Defence function.

Organisational risk progress reports:

Four risk progress reports, including high level treatment plan developments, are provided with highlights and analysis of risk progress below. More detail is available in the attached risk progress reports. ARF004 BCA Risk is reported separately by District Services. No additional reporting on organisational risks are required.

1. 2020 10 ARF003 Health Safety and Wellbeing Vulnerabilities Risk Progress Report: The inherent risk profile has been assessed as increased due to delays in the implementation of some of the proposed treatments; the ongoing COVID-19 pandemic; non-compliance with Work Safe regulations across our assets; and contractor incidents since the last reporting period.

2. 2020 10 ARF006 Projects Priorities Delivery Delays Risk Progress Report: The inherent risk profile has not changed as we currently do not have evidence that we have improved our baseline measurements. It is expected that we will have this evidence towards the end of this financial year.

3. 2020 10 ARF009 Customer Service Delivery Risk Progress Report: While FNDC has made good progress in addressing this risk, prior to the COVID-19 lockdown the customer satisfaction index had exceeded the targeted key performance indicator. The index was negatively impacted by the COVID-19 lockdown and is now recovering. Since lockdown survey response rates have also reduced impacting the reliability of the data. While the impact and likelihood of this risk has been assessed as improved from the last report, the risk impact is unchanged.

4. 2020 10 ARF012 Contract Management Risk Progress Report: The inherent risk profile has been assessed has not changed.

Group Risk

The Transformation and Assurance team continues to work through the organisation to establish and maintain Group Risk Registers.

Group risk registers will capture and maintain information on the identified risks and will be used to inform elected members. At the Top Organizational Risk Dashboard elected member workshop these risks will be reviewed, with escalation and de-escalation of risks onto the organisational dashboard as agreed.

Summary of Group Risk Registers:

Group Risk Register:	Number of identified risks:	Number of high impact/likelihood risks:	Commentary:
CEO Office	No risks have been identified.		Risk workshops are planned.
Corporate Services	35 departmental risks. No group risks have been identified.	Two departmental risks have an inherent risk score of 39 or greater.	Departmental and group risks to be completed. Follow up sessions have been completed.
District Services	19 risks, made up of 15 departmental risks and four group risks.	Three departmental and one group risk have an inherent risk score of 39 or greater.	Proposed escalation of their top group risk, at the ARF risk workshop, for consideration of inclusion on the top organisational dashboard.
Infrastructure and Asset Management	44 risks, made up of 17 departmental risks; 18 group risks; and one organisational risk.	Three departmental; four group risks; and one organisational risk have an inherent risk score of 35 or greater.	Follow up sessions have been completed.
Strategic Planning and Policy	Six risks, three organisational with the remaining unclassified.	One risk has an inherent risk score of 35.	Risk register progress has been put on hold due to workload.

Financial Implications and Budgetary Provision

At this stage no additional budgetary provision has been identified for the treatment plans.

Attachments

1. 2020 10 ARF003 Health Safety and Wellbeing Vulnerabilities Risk Progress Report - A2959890 ⇩

2. 2020 10 ARF006 Projects Priorities Delivery Delays Risk Progress Report - A2959891 ⇩

3. 2020 10 ARF009 Customer Service Delivery Risk Progress Report - A2959892 ⇩

4. 2020 10 ARF012 Contract Management Risk Progress Report - A2959893 ⇩

Assurance, Risk and Finance Committee Meeting Agenda

21 October 2020

5.6 Organisational Risk Assessment for Programme of Externally Funded Projects

File Number: A2970308

Author: Tanya Reid, Business Improvement Specialist

Authoriser: William J Taylor MBE, General Manager - Corporate Services

Purpose of the Report

To provide an assessment of the risk, to our organisation, of the externally funded ‘shovel ready’ projects that form part of the Government’s economic response to the COVID-19 pandemic. This report was prepared on the 28^th of September 2020 with review and input from the Strategic Leadership Team. No decision is required.

Executive Summary

FNDC, and the Far North District, have a unique opportunity to invest external funds into a number of projects as a part of the current government’s economic response to the COVID-19 pandemic. The goal of this funding is to provide economic stimulus and employment opportunity within the Far North District. With this opportunity there is some uncertainty on how this will impact our organisations objectives. Our goal, as an organisation, is to deliver the externally funded projects with minimum impact on day to day Council business; and maximum positive impact for our local communities.

This report provides a risk analysis to inform the Assurance, Risk and Finance Committee, in their governance role, with the steps we will take, as an organisation, to respond to this uncertainty.

Recommendation

That the Assurance, Risk and Finance Committee:

a) receive the Organisational Risk Assessment for Programme of Externally Funded Projects report; and

b) request regular risk progress reports on the Programme of Externally Funded Projects.

Background

The current COVID-19 pandemic has negatively impacted our nation and district. Nationally economic activity has fallen, nearly 50,000 New Zealanders have lost their jobs, businesses struggle to cope with lower earnings, and incomes are reduced. In this June quarter New Zealand took the largest single hit to the economy ever experienced. It is now expected that the economic scarring and restructuring will continue to occur over the coming few years. It is also worth noting that it is likely that the COVID-19 pandemic, and associated uncertainty, will be with us for the next couple of years.

As part of their response to the negative economic impact of the COVID-19 pandemic, Central Government have provided a number of infrastructure funds to help stimulate the economy. Council bid, and has won, funding for a programme of ‘shovel ready’ projects. These are ‘infrastructure projects/programmes that are ready for construction and could, if the Government deemed it appropriate, be deployed as part of a stimulatory package.’ These projects are also known as ‘ESEO’ (Economic Stimulus, Employment Opportunity) projects and for clarity will be referred to, within this report, as externally funded.

The characteristics of these externally funded projects are:

· that they are either wholly, or partially, externally funded

· may involve multiple funding streams

· with different funding requirements and conditions

· have multiple stakeholders, who may also be the project lead

· have short milestone timelines associated with the delivery of the projects the funding is intended for.

Additional complexities are:

· the potential for a change in government at the 19 October election,

· community dissonance and consultation.

A Programme Steering Group with Terms of Reference is being formed. The Programme Steering Group will meet four weekly to receive a brief report on each of the externally funded projects and to decide key legal and funding arrangements such as ownership of assets created.

As an organisation we already manage the uncertainty of a number of projects, due to their size, complexity and/or potential to impact the level of a core customer service(s).

Our goal, as an organisation, is to deliver these external funded projects with minimum impact on day to day Council business; and maximum positive impact for our local communities.

Funding and project analysis headlines:

· FNDC are the agreed lead (or co-lead) for nine of the externally funded projects, FNHL lead five.

· Currently two agreements (PGF roading priorities and Northland employment opportunities), with a total funding and project cost of $22.9 million, have been signed. FNDC is either the lead or co-lead for these two projects.

· Signed funding agreements are not in place for the $28.7 million funding for the remaining FNDC led projects.

· There are a wide range of projects (e.g. roads, animal shelters, sports hub, toilets, jetties) that have been bid on which will require a range of contractors (e.g. design, professional services, construction, materials) to complete the works.

· FNHL led project costs total $36.40 million with FNDC funding 50% of the total ($18.36 million). None of these projects, currently, have signed agreements. The majority are maritime projects e.g. jetties, boat ramp.

· There is a wide geographic spread of projects. Two FNHL projects are based in the Far North of our district at Unahi and Pukenui. This may limit their available pool of providers and means mostly there is little overlap of key stakeholders.

· Each project has a different consultation requirement. Some projects have been the subject of consultation and may only require targeted consultation, some will not require consultation and others involve projects which may be divisive. Each project will be subject to a consultation plan with consultation costs built into the project costs. An external project team role has been appointed to manage the consultation.

· FNDC’s default contract choice for construction projects is NZS:3910. A recognised gap in the NZS:3910 contract is our requirement to collect asset management information. FNDC manage this gap through the use of special conditions to ensure there is a mechanism to capture the required data. The detail Asset Managers require is captured in Council templates and the Council Engineering Standards and Guidelines.

Table 1 provides a ‘by project’ breakdown of the externally funded initiatives including agreement status, FNDC role, funding source and expected project cost.

Table 1: Externally funded projects, as at 14/09/20, with agreement status, FNDC role, funding source and expected project cost.

Project	Agreement status	FNDC role	External Funding $	Council Funding $	Total project $
PGF roading priorities	Agreement signed.	Lead	$20.7m		$20.7m
Northland employment opportunities	Agreement signed.	Co-lead as part of NTA	$2.2m		$2.2m
Te Hiku revitalisation C	Agreement pending.	Lead	$7m		$7m
Kerikeri domain	Agreement pending.	Lead	$3m		$3m
Kerikeri sports hub	Agreement pending.	Lead	$2m		$12m
Animal shelters	Agreement pending.	Lead	$1m		$2.7m
Flood upgrades?	Currently no further information other than the announcement.	NTA	$2m		$2m
Vest & tools applications SO far only Waitangi to Kerikeri Cycle track	Awaiting outcomes.	Community-led, FNDC may provide assistance	$0.93m		$930K
TIF applications: 1a. Waipapa Toilet Capacity Upgrade (Soakage Field) 1b. Waitangi Jetty Toilet Capacity Upgrade (BOI Yacht Club) 2. Pungaere Road Seal Extension 3.Cable Bay Carparks 4. Taipa Beach Pohutukawa Protection 5. Paihia Beach Toilet Enhancement (Outdoor Shower/Drainage) 6. Stone Store Lighting 7. Freedom Camping Operational Plan Study Grant 8. District Boat Ramp Operational Plan Study Grant	2. Pungaere – have agreement.	Lead	$9.3m $1.59m		$9.3m $1.59m
Innovating Streets	Applications submitted.		$1.58m TBA		$1.58m TBA
Te Haa o Te Ao	Agreement pending.	Lead	$0.5m		$1m
NAX	Agreement pending.	Contributor (FNHL Lead)	$ 5.59 m	$ 9.41m	$15m
Paihia waterfront	Agreement pending.	Contributor (FNHL Lead)	$ 8m	$ 5.8m	$13.8m
Lindvart Park	Agreement pending.	Contributor (Sportsville Lead)	$ 6m PGF	$ 2.1m	$9.21m
Pukenui jetty	Agreement pending.	Contributor (FNHL Lead)	$ 1m	$ 1.5m	$2.5m
Unahi jetty	Agreement pending.	Contributor (FNHL Lead)	$ 1m	$ 0.6m	$1.6m
Rangitane boat ramp	Agreement pending.	Contributor (FNHL Lead)	$ 2.45m	$ 1.05m	$3.5m
Mangonui waterfront	Agreement announced.		$ 1.5m	$1.3m	$2.8m
Three Waters reforms	Phase one agreed to.	Lead	$14m	*	*
TOTALS:			$91.34m	$21.76m	$100.71m

* Note: The Council funding and total project cost for Three Waters reforms is unknown.

Map of FNHL maritime projects:

Methodology

The risk management process consists of six sequential steps:

Step 1	What are we trying to achieve? The objective of this step is to understand our objective(s).
Step 2	What could affect us achieving our objectives? The objective of this step is to identify the risk (the uncertainty of achieving our objective(s).
Step 3	Which of these are the most important? The objective of this step is to prioritise the identified risks.
Step 4	What can we do about it? The objective of this step is to identify treatments appropriate to eliminate uncertainty, transfer uncertainty, modify exposure to the uncertainty; and/or control and manage the uncertainty.
Step 5	Do it! (implement) The objective of this step is to implement the agreed treatments.
Step 6	Did it work, what changed? This is the continuous improvement loop such as the Lessons Learned from our twin crises.

On 7 August 2020, a workshop was held with the Strategic Leadership Team to understand the organisational risks associated with the externally funded projects. The workshop stepped the participants through the first, and part of the second, of the six steps which form the risk management process, using our bespoke IDEATE methodology.

The first two steps are:

1. What are we trying to achieve (understand the externally funded projects programme) objective?

a. The Strategic Leadership Team agreed the goal, as an organisation, is to deliver these external funded projects with minimum impact on day to day Council business; and maximum positive impact for our local communities.

2. What could affect us achieving these objectives (identifying the uncertainty that matters)?

a. The issues and challenges identified at this workshop were then analysed to identify the uncertainty. The outcome was the identification of four risks to achieving the organisations goals.

The four externally funded project risks identified are:

1. Complexity of external funding

2. Funding gaps

3. Impact on rates

4. Disruptions

The full risk statements are:

	Because of ….	There is a chance that….	Leading to….
1 Complexity external funding	The high level of complexity of the externally funded FNDC led projects: · short timelines to complete CAPEX projects · multiple funding pots · multiple external parties/stakeholders involved · different funding requirements · different external parties can be leading the projects e.g. FNHL	Projects may not proceed, may be delayed or not completed.	Loss of funding; Reputational risk; Uncompleted projects; Legal / compliance disputes; Extended timelines; and/or Requirement for additional FNDC funding.
2 Funding gaps	Projects are not fully funded, or funding agreements are not honoured or able to be honoured by the legal entities who sign the funding agreements with Government.	Council may need to find additional funding to complete projects or projects may be abandoned.	Council’s reputational damage; Increased borrowing to fund; Funding re-allocated from planned work, so annual plan objectives are not met; Increase risk to Council of asset failures; and/or Council has white elephants on the books.
3 Impact on rates	Impact to long term rate payer funding requirements due to operational budget requirements / depreciation and upgrading of new assets.	There may be a need to increase rates to fund OPEX, depreciation and CAPEX requirements.	Additional costs to rate payers (as increased rates) impacting affordability across the district and negatively impacting current growth forecasts.
4 Disruptions	Disruption(s), out of our control (e.g. Drought / COVID-19), to agreed project timeline · disrupted supply chains; · shortages of required goods and services; and/or · need to halt the project as we are unable to work.	We may not be able to deliver to, or renegotiate, the agreed milestones.	Failure to deliver the project as project milestones that are linked to the funding payments are not achieved; or Additional cost to rate payers to complete the project

Analysis was then undertaken by the Manager - Major & Recovery Projects, the externally funded project lead, to understand the consequence and probability of the risk occurring as assessed against the risk matrix. To provide further objectivity senior management provided an independent review of the identified risks and scores, concluding step three.

Step four we reached out to the organisation subject matter experts to identify treatments to either eliminate uncertainty, transfer uncertainty, modify exposure to the uncertainty; and/or control and manage the uncertainty. These experts included the Manager - Major & Recovery Projects and senior management.

Step five will require the ongoing efforts of the treatment owners to ensure that the treatments are deployed, and that the treatment response strategy is effective. It is recommended that regular risk progress reporting is put in place to keep the Programme Steering Group, the Strategic Leadership Team and the Assurance, Risk and Finance Committee informed.

For clarity: Project risk has been excluded as these will be appropriately identified and managed through project management methodology. An example of an appropriate project risk register is provided in Table 3. It is also worth noting that while we speak about externally funded projects as a bundle of projects this is not a cohesive programme or portfolio of work as the scope of work within the projects is wide and varied, both from the perspectives of what will be delivered and where they will be delivered.

Discussion and Next Steps

These four risks are classified as organisational risks in the Operational/Financial category (whole of business view of FNDC performance including service delivery, risk, finance, environmental). Organisational risks may impact on Council achieving its vision, mission and community outcomes. Each of the risks has been assessed as medium impact and likely to occur.

A range of mitigations, treatments, have been developed to support the organisation to deliver the external funded projects with minimum impact on day to day Council business; and maximum positive impact for our local communities. These treatments have been selected as the most appropriate, balancing the efforts of each activity against the benefits derived.

The risk summary, including risk score and identified treatments:

#	Risk score	Because of ….	There is a chance that….	Leading to….	Treatments:
1 Complexity external funding	29	The high level of complexity of the externally funded FNDC led projects: · short timelines to complete CAPEX projects · multiple funding pots · multiple external parties/stakeholders involved · different funding requirements · different external parties can be leading the projects e.g. FNHL. Ref: IAMS045	Projects may not proceed, may be delayed or not completed.	Loss of funding; Reputational risk; Uncompleted projects; Legal / compliance disputes; Extended timelines; and/or Requirement for additional FNDC funding.	Central register capturing key governance and management information such as source of funding, conditions of funding, budget, then used to monitor and report spend against budget and funding milestones, reference Table 2 which provides an example of spend against budget with timetable for payments; Establish Programme Steering Group, with terms of reference (roles and responsibilities) supported by bespoke four tier governance structure for each of the externally funded projects, each with terms of reference. Reference Table 3; Utilise project management methodology with risk analysis. Reference Table 4; Appoint professionally qualified project managers; Develop and publish a procurement strategy as the guiding document. This will include, but is not limited to, market analysis, stakeholder expectations, policy matters, assessment of delivery options to inform the design stage; supported by individual procurement plans; Hold contractor engagement/information workshop re externally funded projects; Set up a separate team to deliver the externally funded projects with the appointment of external professionals in the following roles: legal; procurement; communication, reporting and stakeholder engagement role; project (information systems) programme manager; Stella appointed - project and contract management; Consistent consultation plan and process for all projects, consultation costs have been built into the projects and an external engagement role appointed; Follow Council process and policies with the exception to Council approved amendments to FNDC process i.e. an increase to the CEO delegated authority to approve professional services for externally funded projects and an to increase CEO delegated authority to award the externally funded contracts. Reference Table 5.
2 Funding gap	29	Projects are not fully funded, or funding agreements are not honoured or able to be honoured by the legal entities who sign the funding agreements with Government. Ref: IAMS046	Council may need to find additional funding to complete projects or projects may be abandoned.	Council’s reputational damage; Increased borrowing to fund; Funding re-allocated from planned work; so annual plan objectives are not met; Increase risk to Council of asset failures; and/or Council has white elephants on the books.	Review project funding commitments mid-September before further FNDC funds invested in developing the project; As the funding applicant understand Council’s obligations to funding providers; Crown and elected member engagement strategy; Establish funding agreements with these legal entities (those leading these projects). FNDC has a funding agreement template for where Council extend funding to separate legal entities e.g. Sports Northland Contract. project.
3 Impact on rates	25	Impact to long term rate payer funding requirements due to operational budget requirements / depreciation and upgrading of new assets. Ref: IAMS047	There may be a need to increase rates to fund OPEX, depreciation and CAPEX requirements.	Additional costs to rate payers (as increased rates) impacting affordability across the district and negatively impacting current growth forecasts.	Model financial implications to understand future operational requirements/costs, which includes costs to fund any community entity via a grant to manage an asset, including depreciation and renewal costs and their impact on rates; Model the economic benefits to the ratepayers, their ability to earn greater income in the future from these projects (affordability metric); Internal appointment of dedicated financial accountant.
4 Disruptions	21	Disruption(s), out of our control (e.g. Drought / COVID-19), to agreed project timeline · disrupted supply chains; · shortages of required goods and services; and/or · need to halt the project as we are unable to work. Ref: IAMS048	We may not be able to deliver to, or renegotiate, the agreed milestones.	Failure to deliver the project as project milestones that are linked to the funding payments are not achieved; or Additional cost to rate payers to complete the project.	Monitor external environment and modify project plans as required.; Follow H&S protocols.

Using the organisational risk impact and likelihood statements the inherent risks were assessed as follows:

Financial Risk

Customer Risk

Reputational Risk

Compliance/

Legal Risk

Health and Safety Risk

High - Intolerable

1, 2 ,3, 4

Medium

1,2

1, 2

Low- none

1, 2, 3

3, 4

1, 2, 3, 4

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

	Total Risk
High - Intolerable
Medium			1, 2, 3, 4
Low- none
	Unlikely	Probable	Will Happen

The risks are recorded in the IAMs Risk Register where Treatment owners and progress is also recorded. Progress on treatments varies from complete, underway, in place or not started:

#	Progress	Responsible	Treatment
1 Complexity external funding	Not started	David Clamp	Central register capturing key governance and management information such as source of funding, conditions of funding, budget, then used to monitor and report spend against budget and funding milestones. Reference Table 2 which provides an example of spend against budget with timetable for payments.
	Underway	David Clamp	Establish Programme Steering Group, with terms of reference (roles and responsibilities) supported by bespoke four tier governance structure for each of the externally funded projects, each with terms of reference. Reference Table 3.
	In place	David Clamp	Utilise project management methodology with risk analysis. Reference Table 4.
	In place	David Clamp	Appoint professionally qualified project managers.
	Underway	David Clamp	Develop and publish a procurement strategy as the guiding document. This will include, but is not limited to, market analysis, stakeholder expectations, policy matters, assessment of delivery options to inform the design stage; supported by individual procurement plans.
	Underway	David Clamp	Hold contractor engagement/information workshop re externally funded projects.
	In place	David Clamp	Set up a separate team to deliver the externally funded projects with the appointment of external professionals in the following roles: legal; procurement; communication, reporting and stakeholder engagement role; project (information systems) programme manager; Stella appointed - project and contract management.
	tbc	David Clamp	Consistent consultation plan and process for all projects, consultation costs have been built into the projects and an external engagement role appointed.
	Completed	Shaun Clarke	Follow Council process and policies with the exception to Council approved amendments to FNDC process i.e. an increase to the CEO delegated authority to approve professional services for externally funded projects and an to increase CEO delegated authority to award the externally funded contracts. Reference Table 5.
2 Funding gaps	Underway	David Clamp	Review project funding commitments mid-September before further FNDC funds invested in developing the project.
	Underway	The Programme Steering Group	As the funding applicant understand Council’s obligations to funding providers;
	Underway	CEO and Mayors Offices	Crown and elected member engagement strategy.
	Underway	The Programme Steering Group	Establish funding agreements with these legal entities (those leading these projects). FNDC has a funding agreement template for where Council extend funding to separate legal entities e.g. Sports Northland Contract. project.
3 Impact on rates	Underway	Janice Smith	Model financial implications to understand future Opex, depreciation and renewal costs and their impact on rates;
	Not started		Model the economic benefits to the ratepayers, their ability to earn greater income in the future from these projects (affordability metric);
	In place	David Clamp	Internal appointment of dedicated financial accountant.
4 Disruptions	Underway	David Clamp	Monitor external environment and modify project plans as required.
4 Disruptions	In place	David Clamp	Follow H&S protocols.

Foot Notes:

1. What is the benefit of the modelling treatment of both financial implications and economic benefits? These models would help Council to:

· Forecast economic activity in a way in which conclusions are logically related to assumptions;

· Propose Council policy to modify future Council activity to manage affordability;

· Present reasoned arguments to politically justify externally funded project decisions;

· Plan and allocate resources.

2. How will we assess current procurement and assessing supply chain risks?

One of the treatments is to develop and publish a procurement strategy as the guiding document. This will include, but is not limited to, market analysis, stakeholder expectations, policy matters, assessment of delivery options to inform the design stage; supported by individual procurement plans. It would be unusual if a procurement strategy did not assess current supply chain risk although any confidence in such an assessment, in the current COVID-19 pandemic situation, would be for the very short term view due to the rapidly changing environment we are now subject to.

3. What are the arrangements for strategic programme governance?

The CEO and Mayoral Offices are leading funding engagement with Government Officials.

Project progress reporting requirements, to Government, are structured into the funding agreements.

There is also a schedule of regular meetings and reporting up through the organisation:

· Regular (four-weekly cycle) reporting to the Programme Steering Group

· IAMs Monthly Report to the Infrastructure Committee

· Monthly report and presentation to the Strategic Leadership Team

· Monthly project steering group report

In addition, a number of treatments will impact strategic programme governance. One of the treatments is the deliberate forming of bespoke four tier governance structures for each externally funded project, with Terms of Reference. Each project working group includes Elected Members. This is to ensure that key stakeholders, as appropriate, are part of the governance model. Stakeholder engagement will be led by the dedicated communication, reporting and stakeholder engagement role for the externally funded projects.

It is also recommended that regular risk progress reporting is put in place to keep both the Strategic Leadership Team and the Assurance, Risk and Finance Committee informed.

4. This organisational risk assessment has focussed on uncertainty that matters, that is the achievement of the goals, as identified in the methodology as step one of the risk management process, that is the delivery of these external funded projects with minimum impact on day to day Council business; and maximum positive impact for our local communities. FNDC policies and process provide for management of day-to-day organisational risk e.g.:

· FNDC Policy provides for community engagement and governance arrangements for community-initiated projects.

· FNDC’s policies and procedures would be applied to manage ‘knock on effect on business as usual from staff being redeployed to externally funded programme or simply increased work volumes for other staff’.

· Where there is uncertainty round regulation and/or consenting, this will be managed as part of project risk.

Table 2: Example of spend against budget, timetable for payments.

Table 3: Strawman of bespoke four tier governance structure

Table 4: Example of a Stella project risk register

Table 5: Resolution approving agile procurement
7.6 Approval for an Agile Procurement Strategy at the 13/08/20 Council Meeting Agenda item 6.6 document number A2925358, pages 175 - 230 refers.
RESOLUTION 2020/1 Moved: Mayor John Carter Seconded: Deputy Mayor Ann Court That Council: a) delegate, to the Chief Executive Officer, the authority to Direct Award Professional Services contracts up to a value of $500,000 per contract for MBIE funded projects for a period of three years, effective 13 August 2020. b) delegate, to the Chief Executive Officer, the authority to award construction contracts for all MBIE funded projects for a period of three years, effective 13 August 2020. c) approve Agile Procurement Strategies for MBIE funded projects only, effective 13 August 2020. d) instruct the Chief Executive Officer to provide a quarterly information only report to the Council for MBIE funded procurement activity. e) review the efficiency and effectiveness of these strategies three years after approval. In Favour: Mayor John Carter, Deputy Mayor Ann Court, Crs David Clendon, Dave Collard, Felicity Foy, Mate Radich, Kelly Stratford, Moko Tepania and John Vujcich Against: Nil Abstained: Cr Rachel Smith Carried

Financial Implications and Budgetary Provision

At this stage no additional budgetary provision has been identified for the treatment plans.

Attachments

Nil

Unbudgeted Expenditure
*Expenditure over $100K approved by Council (in grey)

Unbudgeted Capital Works		Amount
Houhora WWTP	CAPEX New Works Contract Services	112,000
Structural works Kawakawa WTP	CAPEX New Works Contract Services	109,051
Hundertwasser toilet upgrade	CAPEX Renewal Works Contract Services	82,000
East Coast PS Bush Point Rd	CAPEX New Works Contract Services	49,942
East Coast PS Leslie Rd	CAPEX New Works Contract Services	38,000
60 Peninsula Parade Hihi Sewer Connection	CAPEX New Works Contract Services	22,387
Te Hononga CCTV - Hundertwasser	CAPEX New Works Contract Services	12,000
		425,380

TP Date	Name	Procurement Approach	Estimate $	Category	Tender Panel Decision	Outcome	Activity Closed	Successful Supplier
18 May 2020	Kaitaia Water Main Pipeline Physical Works Registration of Interest	First Stage Registration of Interest, Second Stage following on from the evaluation of the shortlisting a Request for Tender (inviting selected participants from the shortlisting)	$11.8 million	Physical Works	Endorsement to proceed with the Registration of Interest, approval sought from Council to publish the RFT	RFT closed on GETS on 25/09/2020 – following approval from Council to publish the RFT	To seek authorisation for contract award planned for 4 Nov 2020
17 June 2020	Dust Suppression District Wide 2020 -2022	Request for Tender, contract estimate exceeds $200,000 a request to deviate from an open tender to a closed tender i.e. to invite two specialised suppliers	$1,023,000 (prior to the time of tendering	Physical Works – roading	Chair and Tender Panel Core Members showed their hands unanimously in agreeance to proceed with the closed tender approach for the Summer Dust Suppression District Wide project.	Tender evaluation process has closed, and outcome of the competitive process is approved. Tenderers notified for the outcome.	September 2020	Gravel Lock Limited Award price of $984,543.64
20 July 2020	Infill Lighting Improvement Programme	Evaluation closed, seeking guidance following on from the supplier selection method (completion of supplier selection recommendation report). The contract was jointly tendered with WDC. Contract Manager sought guidance before seeking Council approval due to the value	The contract included two separable portions relevant to FNDC SP 3 - $1,123,299.12 and SP4 - $3,146,127.24	Physical Works	In reference to SP4 tendered price of $3,146,127.24 (excluding GST) approval to proceed shall not be given until FNDC has approved sufficient budget for this work in the 2021/2031 Far North District Council Long Term Plan. Further to seeking Council approval the preferred tenderer can be advised of the outcome as a preferred participant.	Council Resolution 2020/53 Approve Council entering into a back to back contractual agreement with Whangarei District Council for the sum of $1,123,299.12 (ex GST) for delivery of FNDC Separable Portion 3 within the WDC Contract 19017 for LED Streetlight Improvements – Northern Package (V Category). Subject to sufficient budget for this work being approved in the 2021/2031 FNDC LTP, the CEO is authorised to approve extension of the back to back contractual agreement with WDC for completion of Separable Portion 4 under the head contract and awarding to the preferred participant for the sum of $3,146,127.24 (plus any cost fluctuation increase permitted under the Conditions of Contract).	August 2020	McKay Ltd
17 Aug 2020	Physical Security /Vulnerability Assessment of FNDC Water/Wastewater Assets	Seeking endorsement of a direct award (single selection of a supplier)	$142,000	Professional Services	The Chair and Tender Panel Core Members were unanimously in agreement to proceed with the direct award.	Direct Award to WSP	Contract Period of five months	WSP
31 Aug 2020	Procurement Plan for 2020/2021 New Footpaths (Ti Hiku Ward, Kaikohe Hokianga, Bay of Islands Whangaroa Ward	To seek endorsement to proceed engineer’s estimate of the three tenders exceed $1 million	Ti Hiku - $420,750 Kaikohe – Hokianga $423,752 Bay of Islands – Whangaroa Ward - $381,186 $1,225,688	Physical Works – roading	Chair and Tender Panel Core Members were unanimously in agreeance to proceed with publishing three tenders (open market) with an overall estimated value of $1,225,688.	To be tendered

Council Financial Performance – Operational Expenditure

Council Financial Performance – Capital Expenditure