Civic Administration Building
Phone: (06) 871 5000
Fax: (06) 871 5100
A G E N D A
Monday, 11 June 2018
Civic Administration Building
Lyndon Road East
Chair: Mayor Hazlehurst
Councillors Barber, Dixon, Harvey, Heaps, Kerr, Lawson, Lyons, Nixon, O’Keefe, Poulain, Redstone, Schollum, Travers and Watkins
Chief Executive – Mr R McLeod
Mrs C Hunt (Extn 5634)
HASTINGS DISTRICT COUNCIL
Monday, 11 June 2018
Civic Administration Building
Lyndon Road East
A G E N D A
2. Apologies & Leave of Absence
At the close of the agenda no apologies had been received.
3. Seal Register – This will not be tabled for this meeting.
4. Conflict of Interest
Members need to be vigilant to stand aside from decision-making when a conflict arises between their role as a Member of the Council and any private or other external interest they might have. This note is provided as a reminder to Members to scan the agenda and assess their own private interests and identify where they may have a pecuniary or other conflict of interest, or where there may be perceptions of conflict of interest.
If a Member feels they do have a conflict of interest, they should publicly declare that at the start of the relevant item of business and withdraw from participating in the meeting. If a Member thinks they may have a conflict of interest, they can seek advice from the Chief Executive (preferably before the meeting).
It is noted that while Members can seek advice and discuss these matters, the final decision as to whether a conflict exists rests with the member.
5. Confirmation of Minutes – There are no minutes to confirm.
6. Water Change Programme - One Year Report 5
7. Additional Business Items
8. Extraordinary Business Items
File Ref: 18/524
MEETING DATE: Monday 11 June 2018
FROM: Chief Executive
SUBJECT: Water Change Programme - One Year Report
1.1 The purpose of this report is to provide Council with a review of implementation of the water change programme commenced in June 2017.
1.2 This update arises out of Capability and Capacity Review of Water Services commissioned by the Chief Executive following on from the Havelock North Water Contamination Event. The review was reported to Council in June 2017. The Council endorsed a series of actions proposed by the Chief Executive in response to review, including the establishment of a change programme aimed at implementing improvements identified by the review.
1.3 The Council requested the Chief Executive to report back on the change programme in June 2018. A detailed progress report was provided to Council in December 2017.
1.4 The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.The objective of this decision relevant to the purpose of Local Government is to provide a report to the Council on work to improve the Council’s organisational capability and capacity to provide good quality three waters infrastructure and services.
1.5 This report concludes by recommending that the “Water Change Programme – One Year Report” be received, and that the Council note the excellent progress made by the Change Programme Team.
2.1 In early 2017, following on from the Havelock North Water Contamination Event, the Chief Executive commissioned a Capability and Capacity Review of the Council’s Water Services activity. The review was conducted by a team comprising Bruce Robertson, independent consultant with expertise in risk management and assurance (and formerly Assistant Auditor General for Local Government), Ross Waugh, independent asset management consultant, and Neil Taylor, former Chief Executive of Napier City Council and Executive Project Advisor to the Chief Executive. The review findings and recommendations were reported to the Chief Executive and the Council in June 2017.
2.2 The review team made the following recommendations to the Chief Executive:
1. That the Chief Executive implement a change programme within the Water Services team to ensure the team is focussed on providing safe drinking water for the community and restoring community trust and confidence.
2. That areas of focus for the Water Services change programme include:
a. Resource planning and additional resource implementation.
b. Structural realignment and team re-envisioning based on functional and outcome based criteria.
c. Embedding practical risk management practice and tools.
d. Development of team relationships and culture, along with tools and practices to support this on an ongoing basis.
e. Consistent and effective development and implementation of information systems, management systems and core documentation.
f. Enhancement and development of relationships and networks with key partners and stakeholders, including:
· Drinking Water Assessors and the HBDHB
· Hawke’s Bay Regional Council
· Ngati Kahungunu Iwi Incorporated and other iwi/hapu groups as appropriate
· Water NZ and other industry stakeholders
· Relevant Government agencies
· Other water suppliers
g. Determining and implementing new operating environment appropriate monitoring, testing and documentation regimes.
h. Succession planning for key resources.
3. That the Chief Executive appoint a management group to lead the Water Services change programme, including an external Chair to ensure rigorous monitoring and reporting to the Chief Executive and completion on a timely basis.
4. That the Chief Executive report to the Council Risk and Audit Committee on Change Programme progress against each of the Review Finding Implication areas, with a six monthly report to Council, until the Change programme is fully completed and signed off.
5. That the Chief Executive commission a twelve-month external review to report on progress that has been made in the change programme. This report would include comment on implementation against the Finding Implication areas.
6. That a team culture development and employee engagement programme be urgently developed with the Water Services team to include a focus on moving from the current crisis mode of operation.
7. That enhanced support arrangements be put in place for the Water Services team and its leadership.
8. That the Chief Executive continue to accord highest priority and resourcing to work programmes, plans, system improvements and documentation required to ensure the safety of public water supplies.
2.3 In response to review findings and recommendations, the Chief Executive established a change programme aimed at implementing the desired improvements identified by the review. The change programme was mandated by the Chief Executive to address all of the findings and recommendations contained in the review report. The Council endorsed the series of actions proposed by the Chief Executive, and asked for regular reporting via the Risk and Audit Subcommittee.
2.4 The Council also requested the Chief Executive to report back on progress with the change programme in December 2017, and again at the conclusion of the initial change programme after one year (June 2018).
2.5 The Change Management Team established to lead the change programme comprised Garth Cowie as independent chairman, Jim Graham as independent technical advisor, and staff members Craig Thew, Brett Chapman and Neil Taylor. The team is supported by a change manager/programme manager, Rachel Landon, as well as a series of work streams carried out by a combination of internal staff and external advisors.
2.6 The Change Management Team reported to Council on its progress in December 2017. At that time, strong progress had been made on implementing the recommendations made by the review team. The Council received the report and noted the progress that had been made.
2.7 Regular reports have also been provided to the Risk and Audit Subcommittee.
2.8 When the programme was initiated and then again at the report to Council in December, staff advised that it was intended that the bulk of change programme work would be carried out over the one year period from June 2017 to June 2018. However, it was also noted that there would be items of work identified through the change programme that would continue after the change programme had been completed. These include changes to IT systems and implementation of some of the ongoing and longer term change measures designed during the change programme.
3.0 CURRENT SITUATION
3.1 The Change Management Team has worked on a programme of work derived from the Capability and Capacity Review report. The programme was divided across a number of work streams:
· Resourcing and Succession Planning
· Relationship and Network Development
· Systems Review and Development
· Process Review, Management Systems and Documentation
· Practical Risk Management
· Testing and Monitoring
· Culture and Employee Engagement
3.2 The Chairman of the Change Management Team has submitted, on behalf of the team, a report to the Chief Executive outlining the work completed on the change programme. A copy of the report is attached as Attachment 1.
3.3 As the report indicates, the Change Management Team has made substantive progress in addressing all of the recommendations and findings emerging from the Review Team’s report. A new structure has been put in place with significantly greater levels of resourcing added in areas that address points of concern identified in the review. Almost all of the recruitment associated with the restructure and increase in resourcing has been completed and staff are in place.
3.4 One issue identified through the change programme has been the lack of agreed provision for training of operational staff in the water industry in New Zealand. While this is an issue that various water services industry bodies and entities are seeking to address, the Council has had to take steps itself to develop the training it needs for the appropriate development of its own people. This is being done using external experts from New Zealand and overseas, and will hopefully provide a model that can be used by the wider industry in New Zealand.
3.5 Development of practical risk management approaches have been an area of major focus, with actions on a number of fronts. The development of Water Safety Plans has provided a specific focus on drinking water risk management initiatives. The Emergency Response Plan for drinking water is complete, noting that it is a “living document” that will be subject to ongoing updates from time to time. The corporate programme on risk management has seen the detailed application of the Bow-Tie risk control and mitigation methodology applied across water service. This has also dovetailed with a programme on enhancing risk management across the Asset Management Group, which has had Water Services as a key focus areas. The Risk Management Framework is substantially complete. The results of this work have significantly strengthened the alignment between the corporate risk strategy signed off by Council and the management and operational level actions and controls in place to ensure critical controls are identified and monitored and risks are managed.
3.6 Significant work has also been done in the review of systems, processes, management systems and documentation. As the Change Management Team report notes, a Business Management Plan has been “completed” and now exists as a live document for staff to use and update on an ongoing basis as improvements are made to systems and processes. A Contract Management Manual is also complete. Templates have been created for Operations and Management Manuals and the data gathering and completion of these has been built into the “business-as-usual” work programme. The Infrastructure Data system has been put in place, and ongoing work to ensure optimal use of the system identified. A range of other process, documentation and system improvements have been put in place or identified to be added to and ongoing “continuous improvement” stream of work. Overall, there is a more “fit-for-purpose” suite of systems, processes and documentation to support the water services team in planning and carrying out their work. This will ensure a much stronger focus on documenting the maintenance, asset management and risk management work being carried out.
3.7 As noted at the outset of the change management process, it was anticipated that while many system and process changes would be devised and fully implemented during the year of the project, there would be a number of improvements identified that would form part of a programme of work beyond the one year timeframe. This has proven to be the case. Work has been prioritised to ensure essential improvements have been made first. In line with good business practice, other improvements identified as desirable through the change programme have been built into the water services improvement work programme to be continued by the expanded leadership group in water services.
3.8 A key priority of the Change Management Programme was to develop the team culture within water services and engage employees. This priority emerged out of commentary by the Capability and Capacity Review team which found that the water team had been operating in “crisis mode” since the Havelock North water contamination event.
3.9 The Team Culture and Employee Engagement work stream was established to address this area of work. In the first phase, this involved priority setting and engagement work within the water services team as well as engagement of an organisational psychologist to work closely with and support individual team members and the team as a whole. The phase one report from the organisational psychologist noted strong relationships between team members and very desirable attitudes from staff – for instance, staff are thinking and talking about water quality openly and taking personal responsibility for improvement initiatives. These reports were backed up by interaction between the CMT and the wider water services team, including through the structure and resourcing workshop which engaged staff in shaping the design of the team. The organisational psychologist noted positive attitudes toward “change readiness” within the team, and strong relationships between team members. In the view of the CMT, the team moved out of “crisis mode” in the 2nd half of 2017 and is actively working on delivery of the Council’s water strategy and positioning itself to work in the new operating paradigm for the water industry.
3.10 Alongside ongoing organisational psychological support and staff engagement in change work streams, the 2nd phase of the work has involved leadership workshops to assist the expanded leadership group to chart a clear path for the future. Important in this has been integrating the new staff, skills and approaches brought into the team, with the people and strengths the organisation has retained. These workshops have had a strong team building impact, and have allowed the team to develop an agreed approach and plan to delivering Council’s LTP programme (with a specific emphasis on Council’s water strategy), and meeting regulatory, community and industry expectations that have emerged in the new operating environment for water services. Both the Chief Executive and the Chairman of the Change Management programme are satisfied that the “new” and the “old” are integrating well together in a fit for purpose team and approach.
3.11 The change programme has also seen increased focus on relationship and network enhancement. An analysis of priorities in needs in this area has allowed a deliberate approach to industry and stakeholder engagement to be undertaken. This has been given effect to by increased involvement with industry and regulatory networks regionally and nationally, and the building of deeper relationships with key stakeholders such as iwi and health authorities.
3.12 The change programme has also included a review of testing and monitoring regimes (particularly in relation to drinking water), based on expert advice provided by international water quality expert, Dr Deere, and appropriately experience staff and consultants. Relationships and requirements with laboratories and service providers have been reviewed and formalised, and capability within providers is being audited. Council’s water testing regime is also being refined based on guidance from Dr Deere to ensure it is fit for purpose ahead of requirements likely to emerge out of anticipated changes to the operating environment for drinking water.
3.13 Overall, the Change Management Team has led and completed significant work in addressing the recommendations of the Capability and Capacity Review. Significant changes have been implemented in all areas that set in place a new operating structure, resourcing model, approach and paradigm for the water services team. The Change Management Team reports that the Water Services Team has transitioned from ‘crisis mode’ through an intensive ‘change mode’ to a ‘new operating mode’.
3.14 The Change Management Team has signalled to the Chief Executive that the change programme is effectively complete. They have advised that the Chief Executive is in a position to sign off on the programme.
4.0 REVIEW BY CAPABILITY AND CAPACITY REVIEW TEAM
4.1 The Chief Executive asked the review team that undertook the Capability and Capacity Review to review and assess the work of the Change Management Team both at the six month point, and after 12 months.
4.2 Following on from their December 2017 review, Messrs Robertson and Waugh, assisted by Mr Taylor, have undertaken a further review of the change programme. This has included attendance at key Change Management Team meetings, a review of programme documentation and the suite of changes that have been implemented, and interviews with selected staff from across the three waters team.
4.3 A copy of the concluding report of the review team is attached as Attachment 2.
4.4 Of particular note, the review team has made the following comments in the course of their report in relation to the areas of improvement highlighted in the initial review:
“The Water Services Team is not in crisis and has progressed well beyond the previously observed crisis mode actions and behaviours.”
“The Water Services Team has restructured and is resourced with a significant increase in staff levels, expertise, skills and experience.”
“Science, compliance, risk management skills that meets Review Team expectations have been added in the restructure, appointment of new staff and use of external advisors.”
“Documentation, processes and standard operating procedures have been developed. Major documentation work has been completed in the past 12 months i.e. Water Safety Plans revised and updated. The Review Team notes ongoing commitment and workstreams in documentation and process improvement.”
“Water Services Team culture change is noted with a collegial problem solving approach and good communication paths that model appropriate modern management practice.”
“Significant effort, documentation and commitment to risk management has occurred over the past 12 months. This has been completed within the Hastings District Council corporate risk management framework, and has addressed strategic, tactical and operational risks within Water Services. There has been a high level of staff involvement and engagement in the development of risk management practices. Good development of supporting processes and documentation was also noted.”
“Significant improvement in internal and external relationships has been noted in the Water Change Management Committee internal monitoring and reporting over the past 12 months. Engagement has been sustained across technical, cultural, community and regulatory relationships and networks
“Significant improvements have been made in the use of technology, information systems, documentation, recording and reporting. Effective use is being made of internal business support services. Ongoing implementation and development is noted in this area.”
4.5 The Review Team noted that there are areas on ongoing work arising out of the change programme:
“The Review Team has noted that ongoing development is required of Water Services documentation, processes, operating procedures, risk management practices and risk portfolio mitigation and reporting. The Review Team noted that these ongoing development requirements have been planned, resources allocated, and incorporated into Water Services business development plans. This provides a level of confidence that required future implementation will be achieved.”
4.6 In relation to overall progress on implementation, the review team commented:
“The Review Team has observed that the Water Services Team (now the Three Waters Team) has been fully engaged in change over the past 12 months, and that there are significant positive changes with the team, that will be ongoing. This observation reflects very well on the professionalism and commitment of the Water Services Team.”
“The Review Team are satisfied that the Hastings District Council Chief Executive has fully implemented recommendations 1-8 of the Water Services Capability and Capacity Review (May 2017) via the Water Change Management Committee chaired by Garth Cowie, and by other associated actions.”
“The significant improvements that have been made across the recommended actions provide a good platform for continued meeting of Water Services objective to safely, efficiently and effectively operate and manage municipal water supply networks. Resulting from these improvements Hastings District Council is also well positioned to respond to any further legislative or regulatory changes that might be required as the Government responds to the recommendations of the Havelock North Water Inquiry.”
5.0 NEXT STEPS
5.1 Focus is now turning to ensuring the substantial change implemented and designed through the change programme is embedded and supported to flourish. Discussions between the Chief Executive, the Chairman of the Change Management Team and the Acting Chief Executive designate has identified that the ‘new operating mode’ should be supported further as changes are embedded and longer term and ongoing work initiatives arising out of the change programme are undertaken. To that end, a change monitoring initiative has been put in place. The Chairman of the Change Management Team will continue to play a role in overseeing this work, and will report regularly to the Acting Chief Executive.
6.0 CONCLUDING REMARKS
6.1 Work on the change programme on water services has progressed well. The areas of work identified by the Capability and Capacity Review have all been addressed. Significant changes have been implemented in all areas that set in place a new operating structure, resourcing model, approach and paradigm for the water services team. The Water Services team is viewed as having transitioned from ‘crisis mode’ through an intensive ‘change mode’ to a ‘new operating mode’.
6.2 The Change Management Team has signalled to the Chief Executive that the change programme is effectively complete. They have advised that the Chief Executive is in a position to sign off on the programme.
6.3 Discussions between the Chief Executive, the Chair of the Change Management Team and the Acting Chief Executive designate have identified that the ‘new operating mode’ should be supported further as changes are embedded and longer term and ongoing work initiatives arising out of the change programme are undertaken. To that end, a change monitoring initiative will be put in place. The Chairman of the Change Management Team will continue to play a role in overseeing this work.
6.4 The Capability and Capacity Review team has worked with the Change Management Team to assess progress. They have commented that they “are satisfied that the Hastings District Council Chief Executive has fully implemented recommendations 1-8 of the Water Services Capability and Capacity Review (May 2017) via the Water Change Management Committee chaired by Garth Cowie, and by other associated actions” and further that the “significant improvements that have been made across the recommended actions provide a good platform for continued meeting of Water Services objective to safely, efficiently and effectively operate and manage municipal water supply networks.”
6.5 In relation to overall progress, the Change Management Team Chairman specifically comments as follows:
“The Water Services Team has developed well over the last 12 months with a clear focus on the objectives that have been set by Council. The change programme has provided an opportunity for management and staff to drive improvement in key areas of priority identified through the capability and capacity review. A significant increase in staff capacity has been added to the organisation, systems and process improvements have been made or initiated, and risk management practices have been strengthened and aligned with Council approved approaches and priorities. In my view, the team have moved from “crisis mode” to a more controlled approach in line with the requirements of the emerging operating environment.
Council needs to remain aware there is a significant workload in this area which has the potential to create risks. The Team is now fully immersed in implementing Council’s water strategy, conducting business as usual in the emerging environment and continuing to implement improvements identified through the change programme. All of this work is necessary and additional resource has been provided by Council and the Chief Executive, however ongoing careful management and monitoring will be required along with ongoing support and clear decision making from Council, particularly given the final outcome of the Government’s regulatory response is unknown at the time of writing.
From a Change Management Team perspective, the outlook for the Water Services team and for Council’s capability and capacity in this area is positive. The cultural, systems and process changes made have produced a solid foundation for sustained delivery at a high level of quality. Staff from water services teams external to Council have begun to visit Hastings to look at the changes that are being made. The work that has been and is being done is of high quality, and those directly involved are to be congratulated on their effort and focus.”
6.6 Based on the foregoing material and analysis, the Chief Executive submits to Council that the change programme has been carried out effectively. The one year programme of works envisaged at the outset of the project is complete. Key change goals have been achieved. As predicted, an ongoing programme of continuous improvement initiatives has been put in place to build on the work done through the change programme.
A) That the report of the Chief Executive titled “Water Change Programme – One Year Report” dated 29/10/2015 be received.
B) That Council:
i) Note the comprehensive programme of change implemented in the three waters activity via the Change Management Programme; and
ii) Note that the Change Management Team has reported to the Chief Executive that the Change Management Programme is complete; and
iii) Note that the Capability and Capacity Review Team is satisfied that the Chief Executive has fully implemented the recommendations of the Water Services Capability and Capacity Review; and
iv) Record its thanks to the Change Management Team and the Capability and Capacity Review Team for their work in driving improvement in the Council’s capability and capacity across the three waters, and in drinking water safety in particular; and
v) Note that the Chief Executive has put in place a change monitoring initiative to ensure that the changes made are embedded and that the ongoing programme of improvement initiatives arising out of the change programme are undertaken at a high level of quality; and
vi) Further note that the Chairman of the Change Management Team will continue to play a role in overseeing the change monitoring initiative, and will report regularly to the Acting Chief Executive.
With the reasons for this decision being that the objective of the decision will contribute to meeting the current and future needs of communities for good quality local infrastructure and local public services in a way that is most cost-effective for households and business by:
· Improving and monitoring the capability of the organisation to deliver safe, sustainable and cost-effective water services.
Water Change Management
HDC Capability and Capacity Review Concluding Report 30 May 2018