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Independent Review on Wellington Water's capital programme estimating and budget systems

The final report of the Wellington Water Board-commissioned independent review into an error that Wellington Water had made in the budgeting advice for our councils’ 2024-34 Long-Term Plans has been released. The review outlines a range of findings and recommendations to prevent similar errors from happening in the future. The Board has accepted the report and its findings. The Board will move with urgency to implement the recommendations from the review and we have immediately started work on developing an implementation plan.  

Background

In May 2024, the Board and Wellington Water’s shareholding councils were informed of an error in the budgeting advice we provided to councils for their Long-Term Plans. When undertaking this work, we did not correctly apply the corporate cost to parts of the capital programme for the first three years of delivery. The corporate cost is an essential charge that covers Wellington Water’s overhead costs, which includes project and corporate support.

The error has resulted in a gap of around $51M across a regional programme of $900M.

We acknowledge that this does not meet the expectations of our councils and communities and on 24 May 2024, we made a public apology for this error.

In response to this, the Board immediately decided to launch an independent review into the causes of the error, provide reassurance regarding the robustness of our ongoing budgeting systems and processes, and implement corrective actions to mitigate future risks.

The review took place in June 2024 and a final report and recommendation was provided to the Board and Wellington Water Committee in July 2024.

Terms of Reference for Report Review of Wellington Water capital programme estimating and budget systems (254KB PDF)

Final Report Review of Wellington Water capital programme estimating and budget systems  (782KB PDF)

Review findings

Review recommendations

Implementing the recommendations

Organisational Capability Plan 

To implement the Review recommendations, Wellington Water has developed an Organisational Capability Plan and supporting Gantt Chart, which provides a summary of activities: 

 

There are some things we will start immediately

  • Review of Wellington Water structure to ensure it has clear accountabilities and responsibilities and that it is relevant now and has the integrity to transition into a future operating model that will come with water reform.

  • Systems and processes: improvements that would strengthen data integrity, enable systems integration, improve reporting, and establish clearer accountabilities within relevant roles. Our conversations with shareholding councils have stressed the need for additional funding for corporate infrastructure, such as fit-for-purpose systems – some core systems are at ‘end-of-life’ stage or no longer fit for purpose.

  • Improving the resourcing of the Finance and Risk functions to fulfil its mandate and significantly strengthening these functions within the wider organisation.

  • Building our internal culture and improving leadership. This will involve rebuilding the trust and confidence of staff in the organisation’s senior leadership to give staff the confidence to do their jobs, and deal with challenges; realigning behaviours to the organisation’s values and being clear on expectations around individual behaviours and actions and returning to a “no blame” culture.

  • Realign Wellington Water’s budget planning cycle to start at the same time as or before any Annual Planning / Long-Term Planning process for councils.

  • Map key processes to deliver capital programmes for councils (particularly around the use of spreadsheets and data transfer) and update standard procedures for quality control to ensure the organisation has the right checks and balances in place. We will also ensure there is clarity on accountability and ownership of key processes.

  • Improving board oversight in all matters, including culture.

  • Undertake a deep dive review of the updated calculations for the corporate cost to ensure that councils and their communities can have certainty in the numbers and that we can properly assess the impact of this error and provide that information to councils.

Key documents

We will continue to keep our councils and the public up-to-date on our work to address the issues found in the review and implement its recommendations. Updates will be posted on this webpage. 

From time to time we may also issue media statements on this work. See below for our media releases and key documents.