Part 4: Effectiveness in carrying out projects and programmes

Canterbury Earthquake Recovery Authority: Assessing its effectiveness and efficiency.

4.1
As well as its co-ordination and leadership role, CERA was responsible for carrying out projects and programmes.

4.2
In this Part, we assess how effectively CERA carried out three of the main programmes it was responsible for. These were:

the demolition of buildings in the CBD;
the Crown's offer to purchase residential properties in the Red Zones (and management of cleared Red Zones); and
the 13 Anchor Projects that were part of the Christchurch Central Recovery Plan.

Summary of our findings

4.3
CERA managed the demolition programme in the CBD effectively. It made good use of its powers, and established processes early on that enabled the recovery of costs for demolitions from the building owners. CERA also managed the implementation of the policies for the Red Zones mostly effectively. However, there were loose management controls for the procurement of services for clearing and managing some of the Red Zones, which created the potential for fraudulent activities.

4.4
CERA's work on Anchor Projects in the CBD was carried out by a separate business unit called the Christchurch Central Development Unit (CCDU). CCDU began its work well by commissioning the central city blueprint and getting projects under way. Some of the Anchor Projects progressed well but most suffered from delays. CCDU would have benefited from stronger commercial expertise. It did not take an effective programme approach to delivering the Anchor Projects it was responsible for.

4.5
Stakeholders and external reports of CCDU found that its role was not clear. Although part of CERA, CCDU operated independently. In 2012, we noted that CCDU staff reported separately to the Minister. This caused confusion among stakeholders (in government, the private sector, and the community) about leadership, governance, and accountability.

Demolition programme for the central business district

4.6
CERA led the programme of demolitions in the CBD effectively. It began this programme during the emergency phase of the recovery, when CERA was still being set up as a public entity. Staff worked effectively to establish systems and processes to enable the demolitions to take place quickly, and then to recover costs from property owners. Once the emergency phase was over, CERA did not revise or adapt its procurement processes or its systems to find opportunities to realise better value for money.

4.7
The September 2010 earthquake damaged many buildings in the CBD, but the damage from the February 2011 earthquake was considerably worse. A number of factors contributed to this, including the type of buildings, the geology of the Christchurch area, and the nature of the earthquakes. By December 2011, more than 1200 central city buildings had been identified as requiring demolition.²⁷

4.8
Demolitions were initiated by the Ministry of Civil Defence, and then taken over by CERA.²⁸ Making the CBD safe for rebuilding and recovery was a priority for CERA because it was about the re-establishment of conditions for investment, business activity, and employment.²⁹

4.9
A cordon surrounding most of the CBD was established soon after the February 2011 earthquake. The use of a cordon was a significant decision that would have important effects on the progress of the demolitions and of the recovery process in central Christchurch:

The cordon displaced 50,000 central city jobs, raised questions about (and provided new opportunities for) the long-term viability of downtown, influenced the number and practice of building demolitions, and affected debris management; despite being associated with substantial losses, the cordon was commonly viewed as necessary, and provided some benefits in facilitating recovery.³⁰

4.10
The Act authorised CERA to carry out demolition work on dangerous buildings and to then invoice the owners for the cost of demolition.³¹ CERA could decide which buildings would be demolished and was enabled to act as a contractor. Building owners could decide whether to make their own arrangements or to allow CERA to conduct the demolition. This arrangement benefited owners who did not have the means, know-how, or negotiating power to make their own arrangements.³² CERA managed about 40% of building demolitions, and also monitored demolitions that were being managed by property owners.³³ In total, CERA spent $117 million on building demolitions.

4.11
In the emergency phase, CERA was effective in expediting the central city demolitions and creating an effective process to recover costs from building owners. The demolitions team established a procurement process that managed probity but also allowed for the necessary pace of activity.

4.12
The demolitions team had to balance the need to act quickly with the need to plan ahead. The team worked out a waste recovery strategy, established a block-by-block approach to work efficiently, and had good construction planning. By 30 June 2014, all properties in the CBD had been demolished or made safe.³⁴

4.13
CERA recovered the costs of demolitions from building owners or their insurance companies. By 30 June 2014, CERA had recovered about 88% of these costs.³⁵ CERA did not report on the percentage of costs recovered from demolitions in 2015 or 2016.

Managing central city demolitions as the emergency phase ended

4.14
Because of the need to take down dangerous buildings, CERA acted quickly. Some of its procurement for demolitions was at a higher cost than would be the case in normal, business-as-usual circumstances.

4.15
The demolitions team was not well integrated with the rest of CERA. It worked separately from the rest of the organisation and had many of its own systems, processes, and controls. This was appropriate during the emergency phase of the recovery because the priority was to make the CBD safe. However, as the recovery moved out of the emergency phase, the arrangements for demolitions needed to be better integrated with CERA's policies and procedures.

4.16
In 2012, an internal audit concluded that by September 2012, CERA needed to evolve its tendering and procurement for demolitions into more business-as-usual processes. The audit report stated that many of the processes to administer the demolitions programme, including procurement processes, needed improvement. The audit report stated:

CERA's tendering and contracting processes still show examples of Civil Defence days where outcomes were needed to be achieved quickly. Pace is still an important aspect that CERA needs to continue to deliver on. There are processes that could be improved that will not impact on pace, but will strengthen the control environment and manage reputation risk.

4.17
CERA's Audit and Risk Committee found that CERA's back office struggled to keep up with the pace of the demolitions team. This meant that some of the procurement was not as well controlled as it needed to be after the emergency phase, and that delegations became unclear.

Performance against measures and targets for the central city demolitions

4.18
By 2014, CERA had completed all of the 1544 demolitions it had planned to do by that date.³⁶ In 2015, CERA reported against two new measures in demolition. These were the demolition of all necessary central city buildings in Anchor Project precincts so that construction could go ahead as scheduled, and the demolition of all remaining central city buildings in Anchor Project precincts. Neither of these targets were met, although CERA reported that the demolition of the remaining buildings on designated land in the central city was progressing well.³⁷

Purchasing and managing properties in the Red Zones

4.19
The earthquakes caused severe damage to land and homes in many residential areas of Christchurch, Waimakariri, and the Port Hills. There was extensive liquefaction, land slips, and other severe land damage. This destroyed thousands of homes, and left many other homes badly damaged. Underground infrastructure, such as water, storm water, and sewerage systems, was extensively damaged.

4.20
People living in these badly affected areas faced an uncertain future. The damage to infrastructure meant that the health and well-being of some communities were at risk, and the area-wide damage had profound psychological and emotional effects on many people.

4.21
In June 2011, Cabinet agreed that the Crown would offer to purchase insured properties in areas that had been zoned as "Red". The Red Zones were areas where there was such extensive land damage that it was unlikely that it could be rebuilt on for a prolonged period. The Crown offer was intended to provide certainty to people living in badly damaged areas, and also with a way to move forward with their lives. In September 2012, further offers for owners of uninsured properties, vacant land, and insured commercial properties were made.

4.22
CERA was responsible for carrying out the Crown's offer to buy properties in the Red Zones. This involved communicating the offer to residents in the Red Zones, purchasing nearly 8000 properties, clearing those properties, managing the cleared land, and recovering insurance from the land and properties in Crown ownership. In total, CERA spent about $1.7 billion on acquiring and managing the Red Zones.

4.23
The policy for the Crown to offer to purchase properties in the Red Zones in Christchurch, the Port Hills, and Kaiapoi was unprecedented. Our observations of CERA's role concerns its implementation of the Crown's offer to purchase properties, and its management of the Red Zones.

4.24
CERA was mostly effective in managing the policy. It ran the sale and purchase process well, cleared properties as effectively as it could have done, given the complexities arising from insurance claims, and took an effective approach to working with insurance companies to recover insurance from the Crown-owned properties. In a 2015 survey of property owners in the Red Zones, a majority found that the Crown's offer had provided them with certainty of outcome and the confidence to move forward. They also found the process simple and clear.³⁸

4.25
CERA made considerable efforts to communicate with the affected communities. It adapted its approach to communicating the Crown's offer to communities, but we note that the same survey found that a significant minority (22%) felt that they were not given the best available information to inform their decisions (see paragraph 4.42).

4.26
The clearance and management of Crown-acquired properties in the Red Zones in the flat lands of Christchurch did not have adequate management and financial controls for a time, particularly for the procurement and contract management of services to clear and manage the Red Zones. These weaknesses were later addressed after a report from CERA's Audit and Risk Committee to the senior leadership team.

4.27 The Crown's offer for uninsured, vacant, and insured commercial properties in the Red Zone was challenged in the courts. The Supreme Court, by a majority, ruled that a Statutory Recovery Plan should have been instituted, which would have included a process for public consultation about the Crown's offer to individual property owners. The Court ruled that "the offer to the ‘uninsured and uninsurable' owners of red zone properties was not lawful because the purposes of [the Act] had not been considered when making this decision".³⁹

4.28
In response to the Supreme Court ruling, a Recovery Plan was created and approved. This led to new offers being made to owners of uninsured residential properties, vacant land, and insured commercial properties in the Red Zones. The new offers were challenged in the courts in mid-2016, but were found to be lawfully made.

4.29
The Human Rights Commission has recently reported on the consequences and human rights implications of the Crown's offer for those who have chosen to remain living in the Red Zones.⁴⁰

Providing Cabinet with policy advice about area-wide land damage

4.30
CERA effectively gathered and analysed information to inform decisions about future land use in badly damaged residential areas in the greater Christchurch area.

4.31
The land damage was more severe in some residential areas than others. Extensive lateral spreading and liquefaction on the Canterbury flat lands badly damaged the local infrastructure, including roads and water networks. Residents of some properties on the Port Hills were at risk of collapsing cliffs, land slips, and falling rocks.⁴¹

4.32
CERA gathered extensive information on land damage, which it used as the basis for advice to the Minister and Cabinet on policy options for the future of badly damaged residential areas. Based on CERA's policy advice, the Government announced a package in 2011 to offer to buy insured residential properties in the Red Zones. In September 2012, further offers for owners of uninsured properties, vacant land, and insured commercial properties were announced. This was intended to provide certainty to homeowners in these areas.

4.33
Under the Government's package announced in 2011, residents in the Red Zones who owned insured residential property had two options:

Option 1: CERA, acting for the Government, buys the property at a price based on the most recent rating valuation for the land and improvements. The Crown takes over any insurance claims for the property.
Option 2: CERA, acting for the Government, buys the land portion of the property at a price based on the most recent rating valuation for the land. The Crown takes over the Earthquake Commission (EQC) claim for land damage only. These claims are managed by CERA. The owner retains the benefit of all insurance claims for damage to the house.⁴²

4.34
Eventually, there were 8060 Red Zone properties in greater Christchurch. By December 2015, the owners of 7720 of these properties had accepted the Crown's offer.⁴³ Of the settled properties, about two-thirds were under Option 2 and a third under Option 1. The Crown expects to recover about $335 million in insurance recoveries with land claims from EQC.⁴⁴

4.35
By April 2016, CERA reported that 98% of homeowners had accepted the Crown's offer.⁴⁵ In 2015, about 80% of the affected households felt that the offer had provided the certainty they needed. In hindsight, 66% of those who had accepted the offer felt confident they had made the right decision about the option they had taken.⁴⁶

Responding to feedback about communicating the Crown's offer

4.36
People living in Red Zones had difficult decisions to make. They needed to have a good understanding of their insurance policy and they needed to weigh up the different financial implications for each option, or whether to take an offer at all.

4.37
CERA had an important role in helping people to make decisions about the Crown's offer. They had to explain the offer in communities that were coming to terms with the effect of the earthquakes on their lives. The damage to people's homes and neighbourhoods meant that many of them were in very difficult circumstances.

4.38
Soon after the land zoning decisions, CERA's senior staff, including the Chief Executive, attended community meetings to provide information and answer questions about the Crown's offer. CERA also used mail drops, knocked on doors, and made telephone calls to affected property owners to explain the Crown's offer and zoning decisions.

4.39
CERA responded to feedback from the community about the way the meetings were run. We were told that the early meetings were not well organised and the community was not effectively engaged in managing the meetings or designing a communication strategy for affected communities. After feedback, CERA adapted its approach to ensure that the affected communities received information before the media and worked with Canterbury Communities' Earthquake Recovery Network (CanCERN) to refine their communication approach with affected communities.

4.40
CERA set up a contact centre to provide support to property owners and to help them understand the offer, their options, and the consequences of their decisions. The contact centre advised homeowners to seek legal advice on the options and undertake their own due diligence. The contact centre managed calls and information requests from property owners who had received the Crown's offer and led initiatives to proactively call everyone, and to ensure that particular groups, such as older people or others considered to be vulnerable, received the support they needed.⁴⁷

4.41
Two earthquake assistance centres were also established near the Red Zones. These centres, were staffed by CERA, insurers, local authorities, legal experts, earthquake support co-ordinators, and Canterbury Earthquake Temporary Accommodation Service staff. The centres were designed to be a "one-stop shop" of information and help for affected homeowners.⁴⁸ Although CERA did not measure the satisfaction of people who used these centres, we received positive comments about them in our interviews with stakeholders.

4.42
Evidence from the 2015 survey shows that most people were positive about the information they received about the Crown's offer. In that survey, 61% believed that they were provided with the best possible information at the time to help them make decisions about the Crown's offer. However, a significant minority (22%) disagreed with this statement. This shows that some people's experience of the Crown's offer was difficult, and despite the considerable efforts and resources CERA put in communicating with residents, more could have been done to support residents of the Red Zones.⁴⁹

Clearing and managing the Red Zones

4.43
Considering the challenging and unprecedented nature of the programme, CERA's management of the land that the Crown had acquired in the Red Zones was mostly effective. However, there were some weak controls in procurement and contract management.

4.44
CERA was responsible for the demolition and clearance of Crown-owned properties in the Red Zones. Demolition could start only after homeowners had accepted and land purchases were finalised. This led to sporadic demolitions and delays. In an effort to make demolition more efficient, CERA made arrangements for private insurers to be responsible for demolishing some of the properties. If a homeowner chose to take the Government's Option 1 offer, CERA would be responsible for the demolition of the property. If they chose Option 2, the private insurer would be responsible.

4.45
Consultants were contracted by CERA to produce a report outlining the potential interim land clearance treatment options for Crown-owned properties in the Red Zones.⁵⁰ This report outlined different treatment options for different areas, depending on what was appropriate. The preference was to turn cleared properties into grassland. Where this was not possible, alternative treatment options were considered, based on factors such as specific soil condition, location, drainage, and standing water.⁵¹

Performance measures about managing the Red Zone programme

4.46
Demolishing and clearing properties in the Red Zones was slower than expected, which made it difficult for CERA to meet its targets. The reasons for this varied but included slower rates of settlement, especially in the Port Hills Red Zone, the capacity of the demolitions industry, the discovery of archaeological sites, weather events, and the presence of asbestos. The state of the roads in the Port Hills in 2012/13 made it difficult, and in some instances impossible, to move large demolition machinery, which resulted in delays. Because of negotiations with insurers, demolishing and clearing properties was done individually rather than in blocks, which slowed progress,⁵² and a larger number of properties than expected were relocated rather than demolished.⁵³

4.47
CERA measured its performance in carrying out the policy for Red Zones according to the rate at which Crown-owned properties were cleared on the flat lands Red Zones and the Port Hills Red Zone. CERA aimed to clear all Crown-owned dwellings on the flat lands by 31 December 2014.⁵⁴ CERA did not meet this target, but by 30 June 2016, 99% of Crown-owned dwellings in the flat lands Red Zones were cleared.⁵⁵

4.48
CERA also aimed to clear 50% of Crown-owned dwellings in the Port Hills Red Zone by 30 June 2016. At 30 June 2015, CERA reported that it was on track to meet this target, with 30% of these properties cleared.⁵⁶ In December 2015, Land Information New Zealand (LINZ) inherited responsibility for the demolition and clearance of properties in the Port Hills Red Zone. In its 2016 annual report, LINZ reported that CERA's target of clearing at least 50% of Crown-owned dwellings had been achieved, with 313 properties cleared.⁵⁷

4.49
An independent quality review of the management of the Red Zones in the flat lands around the Avon River and the Eastern suburbs found weak procurement and contract management controls. These weak controls meant that there was the potential for fraudulent activities to occur. CERA strengthened its policies and controls for managing procurement in the Red Zones in response to the quality review.

Insurance recoveries from Crown-owned properties in the Red Zones

4.50
Under the insured options scheme, CERA had to deal with insurance recoveries in two ways. Under both options, CERA purchased the property owner's land. With Option 1, CERA purchased the land and improvements (such as buildings) at a cost based on the most recent rates valuation. CERA then took on the full claim for the property, which consisted of the house claim with the insurer and the land claim through EQC. This option was made more complex because many insurance policies were different. Under Option 2, CERA purchased the land only and homeowners dealt with their own house insurance policy with their insurer. These made up about two-thirds of settlements. Settlements have been further complicated by properties that were cross-lease and shared land.

4.51
In 2014, we reviewed CERA's systems and processes for recovering insurance on Crown-owned properties. We found that these were appropriate, but noted some risks because of a dependency on one member of staff with the necessary knowledge and expertise to work with insurance companies.

4.52
By June 2015, 77% of CERA's property insurance recoveries were complete.⁵⁸ The land recoveries were yet to start because EQC had prioritised settling the claims of private owners of properties outside of the Red Zones.

Effectiveness in project and programme management of the Christchurch Central Recovery Plan

4.53
In April 2012, the Minister announced the establishment of a new unit in CERA, the Christchurch Central Development Unit (CCDU). CCDU was responsible for delivering the Christchurch Central Recovery Plan and leading the work of public entities to co-ordinate rebuilding the CBD, including working with private investors.

4.54
CCDU was responsible for planning the recovery of the CBD, and for managing 13 Anchor Projects. CERA spent about $914 million on the Anchor Projects, which included acquiring the necessary land in the central city. CCDU was effective in leading the work to create the blueprint for the central city. It managed some projects effectively, but most projects fell behind schedule and CCDU was slow to take an overall programme approach to managing its central city projects.

4.55
When deciding on the structure and purpose of CCDU, officials provided advice to Cabinet that included drawing on the lessons from development initiatives and programmes overseas, including:

Solidere – the Lebanese Company for the Development and Reconstruction of Beirut Central District;
London Docklands Development Corporation; and
Lower Manhattan Development Corporation.

4.56
Cabinet considered four options for a development agency:

a delivery agency in CERA;
a separate Crown-owned company, with an independent governance and management structure;
a private company, commissioned by the Crown; and
giving responsibility to Canterbury local authorities and council-controlled organisations.

4.57
Cabinet decided to give CERA responsibility for leading the recovery of the CBD because it had existing statutory powers under the Act to gather and collate information, amend consenting processes, and to acquire and dispose of land.

4.58
After Christchurch City Council's "Share an Idea" initiative⁵⁹ and a draft recovery plan that the Council produced, CCDU took the lead role in drafting a detailed plan for the recovery of the CBD.

4.59
CERA commissioned design consultants to produce a blueprint for the future of the CBD in 90 days. The blueprint was approved by Cabinet in July 2012. The blueprint was used to create the Christchurch Central Recovery Plan, a statutory planning document that sets out the spatial master plan for the new central city. This included the concepts for 16 redevelopment projects (Anchor Projects), located in several "precincts" including Health, Innovation, Retail, and Justice and Emergency.

4.60
CERA's role in the implementation of the Christchurch Central Recovery Plan was to monitor the overall rebuild, encourage capital investment, and be responsible for the delivery of 13 Anchor Projects. The Anchor Projects that CERA was responsible for included:

the Stadium;
the Convention Centre;
the Metro Sports Facility;
the Bus Interchange;
Te Papa Ōtākaro/Avon River Precinct;
the Canterbury Earthquake Memorial; and
the City Frame (including the East, North, and South Frames).

Performance in delivering CERA-led Anchor Projects

4.61
Progress in delivering the CERA-led Anchor Projects varied. In 2015, the Bus Interchange was opened, to (a revised) time and to budget. Good progress had been made with the Te Papa Ōtākaro/Avon River Precinct. Major national retailers and government departments have made commitments to move back into the CBD. However, most of the original milestones for the Anchor Projects have slipped, and some Anchor Projects have been delayed or postponed.

4.62
The strategic acquisition of land in the CBD for the blueprint was considered by CERA's Audit and Risk Committee. It found that the blueprint had been prepared methodically, and that the land was mapped thoroughly and appropriately valued. In 2014, CERA met its target to have settled at least 60% of land acquisitions (61.8%).⁶⁰ In 2015, CERA reported that acquisition of land for Anchor Projects in the central city was substantially complete. Some acquisition was outstanding and CERA waited for confirmation of the timing for delivery for the stadium project.⁶¹ In April 2016, the land originally identified as required for the projects had been acquired. Additional land requirements were later identified and are now being sought for the Stadium Project and the South Frame Area.⁶²

4.63
Project and programme milestones were published in the blueprint for each of the Anchor Projects. These were updated annually and reported in the annual Budget documents, in CERA's annual reports, and on the CCDU website. In May 2015, revised completion dates were published.

4.64
Figure 14 compares the original completion dates under the Cost-Sharing Agreement for each Anchor Project with the revised completion dates (as at May 2015) as well as the project status at the time CERA was disestablished and the projects were transferred to Ōtākaro Limited.⁶³ It shows that most of the early milestones planned in 2013 were not achieved.

Figure 14
Delivery of Anchor Project milestones against forecast

	Cost Sharing Agreement completion date	Estimated completion date as at May 2015	Project status when CERA was disestablished (April 2016)
Bus Interchange	Quarter 3, 2014	Quarter 3, 2015	The Bus Interchange was fully operational.
Te Papa Ōtākaro/Avon River Precinct	Quarter 4, 2015	Quarter 4, 2016	A significant quantity of work had been completed, or was under construction. This included the delivery of the Margaret Mahy Playground. This project has suffered from delays because of contractual issues.
City Frame (East and South)	Quarter 1, 2015	Quarter 2, 2016	This project is divided into the South Frame and East Frame. The South Frame is largely on time and in budget. The East Frame, which is made up of the public realm and the residential precinct, was progressing according to the contract with Fletcher Residential.
Stadium	Quarter 2, 2017	Quarter 3, 2021	The Stadium project was put on hold.
Convention Centre	Quarter 1, 2017	Quarter 4, 2018	Negotiations about design and cost were still taking place with Plenary Conventions New Zealand. The Convention Centre was at this time planned to be operational by late 2019. Soon after CERA's disestablishment, it was mutually agreed that Plenary Conventions will no longer be part of the project.
Metro Sports Facility	Quarter 1, 2016	Quarter 1, 2020	CERA had completed the procurement of two contractors for early contractor involvement in late March 2016. The design phase was advancing.
Earthquake Memorial	Quarter 1, 2016	Quarter 1, 2017	The project was in the execution phase. Despite some deadlines having been missed, the project was on track to be delivered by the revised completion date.

4.65
In its 2014 annual report, CERA reported that final decisions on funding for Anchor Projects were yet to be made, resulting in delays in letting construction contracts.⁶⁴ This was the first year that CERA reported on the progress of the Anchor Projects it was responsible for. CERA met its performance standards for land acquisition, the construction of the Te Papa Ōtākaro/Avon River Precinct, and the construction of the Bus Interchange. The performance standards for starting construction of the Convention Centre, Metro Sports Facility, and the East Frame were not met.⁶⁵

4.66
The Treasury's monitoring of major projects consistently indicated that achieving the central city programme to time and budget was unlikely. The Treasury rated the programme as red, which indicated that the programme was high risk and had a "low delivery confidence rating".

4.67
In our interviews with former CCDU staff and stakeholders in the rebuild of the CBD, we repeatedly heard that the original milestones were overly ambitious and some targets were unrealistic. In learning and legacy reports, CERA staff have also acknowledged that some timelines were overly optimistic.⁶⁶

4.68
We acknowledge that communicating the central city blueprint, and the associated ambitious milestones, helped to signal the Crown's commitment to the rebuild of the CBD to investors. However, failing to meet its milestones and targets ultimately damaged stakeholder and community confidence in CERA's ability to deliver the Christchurch Central Recovery Plan.

Timeliness of arrangements for project and programme management

4.69
Independent quality assurance reviews of CERA's Anchor Projects, reviews by the Treasury's Major Projects Monitoring Unit, and our own reports show that at the individual project level, most of the Anchor Projects were appropriately governed and managed. For example, in 2015, we examined and reported on the governance arrangements for the Central Bus Interchange development. In our view, this project was effectively governed.⁶⁷

4.70
In response to recommendations from CERA's Audit and Risk Committee, a steering committee with an independent chairperson was established for each Anchor Project. This strengthened the governance of projects. Probity reviews of the Anchor Projects found that procurement processes were mostly in line with expectations, with no major issues identified in most projects.

Managing Anchor Projects as a coherent programme

4.71
Until 2014, CCDU managed the CERA-led Anchor Projects as a group of separate projects rather than a single programme. Good programme management of the projects is necessary for recognising interdependencies between the different projects and maximising efficiencies. Programme management is also important in situations such as the Canterbury recovery because of the need to manage limitations in the supply of labour and materials in the domestic construction market.

4.72
The Treasury's expectations for a programme business case are that it should provide unambiguous detail on what is to be delivered by whom, the resources required, when milestones will be reached, and at what cost.

4.73
CCDU did not begin the Anchor Projects with an adequate business case. A review in 2013 found that the existing draft programme business case required significant improvement. The business case was not clear enough about the structure and governance for delivering the plan, the boundaries between CERA and CCDU needed to be better defined, and more analysis was needed on the resources that would be required to deliver the programme.

4.74
A later review in October 2015 reported that there was still no approved programme business case for the Christchurch Central Recovery Plan and the Programme Support Office was just being established. We were told that this led to the draft business case being amended, and formally approved.

4.75
CERA's Audit and Risk Committee and the Treasury both raised concerns about the lack of adequate programme management of the Christchurch Central Recovery Plan. In 2014, CCDU began setting up a Programme Support Office, which became operational in early 2015. A Programme Steering Committee was also set up, with an independent chairperson. By the time CERA transferred responsibility for the Christchurch Central Recovery Plan to Ōtākaro, CERA's programme management had improved considerably.

4.76
The delays in establishing the Programme Support Office had a range of consequences for the effectiveness of CCDU. It meant that opportunities to sequence and prioritise construction in ways that could maximise efficiency and share labour were not well judged, and scarce skills (such as commercial skills) were not shared between projects as well as they might have been. It also meant that funding approvals and other decisions for Anchor Projects were made without due consideration of the effect on the scope and benefits of the overall programme.

4.77
In July 2015, the Transition Advisory Board, chaired by Dame Jenny Shipley, reported to the Minister that there needed to be a "step-change" to regain momentum in the central city that would "build confidence, deliver a real change in sentiment, attract potential investment and deliver streamlined compliance processes".⁶⁸

4.78
Stakeholders noted that CCDU would have benefited from stronger commercial capability. The Transition Advisory Board also noted that there was a need for more focus on commercial credibility, certainty, and discipline to deliver Anchor Projects and to enhance private sector confidence and development opportunities.

Effects of the governance model for the Christchurch Central Development Unit

4.79
CCDU had both a delivery and policy role. From our interviews with stakeholders and former senior staff of CERA, we found that this created a lack of clarity about the roles of CERA and CCDU. In 2012, we noted that the head of CCDU had reported directly to the Minister.⁶⁹ DPMC told us that this changed so that the head of CCDU reported to the head of CERA.

4.80
Reviews of CCDU by the Treasury, reports by external stakeholders such as the New Zealand Council for Infrastructure Development, and our interviews identified that many stakeholders had concerns about the governance model for the recovery and redevelopment of the CBD.

4.81
The 2013 annual review of the Act noted that interviewees had indicated a preference for an alternative governance model that would have a more commercial operation and be "arm's-length from CERA".⁷⁰ In 2014, the New Zealand Council for Infrastructure Development conducted a survey to gauge market sentiment about the progress of the recovery. The research showed a strong sentiment for a more commercial and independent organisation for the development of the CBD. Many of those involved in CERA, CCDU, and the wider recovery said that establishing CCDU as a separate entity with an independent board may have helped it to be more effective, in particular by separating policy advice from delivery.

4.82
In our view, the feedback from stakeholders about the problems with the governance of CCDU should have been responded to earlier, with a reconsideration of its role and governance structure. This would have enabled stronger engagement with developers, the community, and a strengthened focus on delivery.

Lessons for the future

4.83
In our view:

Governance arrangements need to be reviewed for each phase of the recovery and when activities change. This will ensure that governance arrangements are fit for purpose to deliver the recovery agency's outputs and outcomes in the most effective and efficient way.⁷¹ Particular attention needs be given to the clarity of role definition between the responsibilities of governance and management at both an organisational and project level.⁷²
To ensure that decisions are made at the right level, there needs to be an agreed process for making timely decisions about the recovery. For example, strategic decision-making should be separate from operational decision-making.
Skills and capabilities need to be regularly assessed during the different phases of the recovery so that the recovery agency has the right skills for the tasks at hand. It is important that a recovery agency has strong programme management and commercial skills, particularly in the reconstruction and regeneration phases of recovery.

27: Canterbury Earthquake Recovery Authority (2011), Briefing for the incoming Minister – December 2011, page 9.

28: Canterbury Earthquake Recovery Authority (2011), Draft recovery strategy for greater Christchurch – Mahere Haumanutanga o Waitaha, page 10.

29: Canterbury Earthquake Recovery Authority (2011), Draft recovery strategy for greater Christchurch – Mahere Haumanutanga o Waitaha, page 4, and Canterbury Earthquake Recovery Authority (2012), Recovery strategy for greater Christchurch, page 9.

30: Chang, S E, Taylor, J E, Elwood, K J, Seville, E, Brunsdon, D, and Gartner, M (2014), "Urban Disaster Recovery in Christchurch: The Central Business District Cordon and Other Critical Decisions", Earthquake Spectra, Vol. 30, No. 1, page 1.

31: Buddle Findlay (2011), Summary and Analysis of the Canterbury Earthquake Recovery Act.

32: Chang, S E, Taylor, J E, Elwood, K J, Seville, E, Brunsdon, D, and Gartner, M (2014), "Urban Disaster Recovery in Christchurch: The Central Business District Cordon and Other Critical Decisions", Earthquake Spectra, Vol. 30, No. 1, page 13.

33: Canterbury Earthquake Recovery Authority (2016), Demolitions and Operations: An overview of the CERA Operations Team, page 3, available at eqrecoverylearning.org.

34: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 59.

35: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 58.

36: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 59.

37: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended June 2015, page 22.

38: Nielsen (2016), Residential Red Zone Survey (of those who accepted the Crown Offer) 2015, pages 10-11.

39: Canterbury Earthquake Recovery Authority (2016), Land Zoning Policy and the Residential Red Zone: Responding to land damage and risk to life, page 11, available at eqrecoverylearning.org.

40: Human Rights Commission (2016), Staying in the red zones: Monitoring human rights in the Canterbury earthquake recovery.

41: Canterbury Earthquake Recovery Authority (2016), Land Zoning Policy and the Residential Red Zone: Responding to land damage and risk to life, page 3, available at eqrecoverylearning.org.

42: Office of the Auditor-General (2012), Roles, responsibilities, and funding of public entities after the Canterbury earthquakes, page 65.

43: Nielsen (2016), Residential Red Zone Survey (of those who accepted the Crown Offer) 2015, page 6.

44: Land Information New Zealand (2016), Annual Report 2015/16, page 98.

45: Canterbury Earthquake Recovery Authority (2016), Land Zoning Policy and the Residential Red Zone: Responding to land damage and risk to life, page 8, available at eqrecoverylearning.org.

46: Nielsen (2016), Residential Red Zone Survey (of those who accepted the Crown Offer) 2015, page 10.

47: Canterbury Earthquake Recovery Authority (2016), Land Zoning Policy and the Residential Red Zone: Responding to land damage and risk to life, page 14, available at eqrecoverylearning.org.

48: Canterbury Earthquake Recovery Authority (2016), Land Zoning Policy and the Residential Red Zone: Responding to land damage and risk to life, page 15, available at eqrecoverylearning.org.

49: Nielsen (2016), Residential Red Zone Survey (of those who accepted the Crown Offer) 2015, page 11.

50: Land Information New Zealand (2012), Residential red zone: Interim land clearance treatment methodology, page 4.

51: Land Information New Zealand (2012), Residential red zone: interim land clearance treatment methodology, page 26.

52: Canterbury Earthquake Recovery Authority (2013), Canterbury Earthquake Recovery Authority Annual Report 2013, page 64.

53: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended 30 June 2015, page 96.

54: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended 30 June 2015, page 24.

55: Department of the Prime Minister and Cabinet (2016), Annual Report for the year ended 30 June 2016, page 70.

56: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended 30 June 2015, page 24.

57: Land Information New Zealand (2016), Annual Report 2015/16, page 45.

58: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended 30 June 2015, page 95.

59: We discuss Christchurch City Council's "Share an Idea" initiative in our report: Office of the Auditor-General (2013), Learning from public entities' use of social media.

60: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 72.

61: Department of the Prime Minister and Cabinet (2015), Annual Report for the year ended 30 June 2015, page 98.

62: Department of the Prime Minister and Cabinet (2016), Annual Report for the year ended 30 June 2016, page 81.

63: Ōtākaro Limited is a new Crown company established to deliver key Anchor Projects and precincts in Christchurch.

64: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 21.

65: Canterbury Earthquake Recovery Authority (2014), Canterbury Earthquake Recovery Authority Annual Report 2014, page 25.

66: Canterbury Earthquake Recovery Authority (2016), Walking the Recovery Tightrope: Learning and insights from CERA, page 40, available at eqrecoverylearning.org.

67: Office of the Auditor-General (2015), Governance and accountability for three Christchurch rebuild projects.

68: Advisory Board on Transition to Long Term Recovery Arrangements (2015), First report to the Minister for Canterbury Earthquake Authority, page 10.

69: Office of the Auditor-General (2012), Roles, responsibilities, and funding of public entities after the Canterbury earthquakes, page 18.

70: Murdoch, S (2013), Annual review of the Canterbury Earthquake Recovery Act 2011 (August 2013), page 8.

71: We discuss adapting governance to support changing needs in our report: Office of the Auditor-General (2016), Reflections from our audits: Governance and accountability, page 38.

72: Office of the Auditor-General (2016), Reflections from our audits: Governance and accountability.