6. 240823~1
North Ayrshire Council · 23 August 2024
Back to Ayrshire Economic Partnership Board — 23 August 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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AYRSHIRE ECONOMIC PARTNERSHIP BOARD MEETING – 23 AUGUST 2024 REPORT BY HEAD OF ECONOMIC GROWTH EAST AYRSHIRE COUNCIL SUBJECT: AYRSHIRE GROWTH DEAL – PROGRAMME RISK REGISTER UPDATE – JUNE 2024 PURPOSE OF REPORT 1. To advise the Ayrshire Economic Partnership Board (AEPB) members on the update for the AGD Programme Risk Register. RECOMMENDATIONS 2. Agree the content of the report and recommend approval to the Ayrshire Economic Joint Committee (AEJC) to: (i) Note the proposed adaptation of presentation style to meet Scottish Government quarterly reporting templates; and (ii) Approve the updated Programme Risk Register dated June 2024. BACKGROUND 3. The AGD Programme Risk Register is a key tool in which to monitor and evaluate potential risks associated with the development and delivery of the programme. The AEJC (dated 26 June 2023) approved the quarterly review and reporting of the AGD Programme Risk Register as a separate item on future AEPB and AEJC meetings. 4. It should be noted that the top scoring programme and project risks are reported to the Chief Executives Group, Steering Group, AEPB and AEJC on a regular basis via the sharing of the AGD Programme’s Monthly Reports. MAIN REPORT 5. The PMO regularly reviews the Programme Risk Register in line with the recommendations of the AEJC. This has included reviewing the nature of the risks, their RAG status/scoring, and the mitigation measures used to manage the potential risks identified. The review covers the majority of Q4 2022/23 from February to March 2024 and Q1 2024/25 (from April to June 2024) and reflects comments received from the AGD S95 Officer, the
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Steering Group and both Governments. 6. The updated Programme Risk Register is set out in Appendix 1 attached to this report. The opportunity has also been taken to renumber the Risks following the review. There are no changes proposed to 11 of the current 19 risks on the Risk Register. 7. There have been changes proposed to 7 of the current risks and the introduction of a new risk as follows: Number Risk AGDRISK03 Introduction of a new Risk: • AGDRISK03 - Failure to drawdown full yearly allocated AGD funding as per Grant Offer Letter AGDRISK’s 04; 18 and 19 Amendment in the nature of the risks being monitored so they now consider: • AGDRISK04 - Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement; • AGDRISK18 - Failure to ensure AGD projects working towards net zero ambitions as set by SG/UKG; and • AGDRISK19 - Potential impact of macro events on the wider economy and economic prosperity of Ayrshire. AGDRISK’s 04, 05, 07, 08, 14, 15 and 18 Increase in risk scoring, whether in likelihood and/or in impact: • AGDRISK04 - Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement; • AGDRISK05 - Delays in development and approval of business cases; • AGDRISK07 - Failure to deliver community benefits from AGD; • AGDRISK08 - Failure to deliver individual projects within the AGD programme; • AGDRISK14 - Failure to attract commercial interest in AGD; • AGDRISK’s 01 and 02 Decrease in risk scoring, whether in likelihood and/or impact: • AGDRISK01 - Failure to achieve AGD programme objectives within agreed budget; and • AGDRISK02 – Failure to provide accurate projections for programme spend. From AGDRISK 04 onwards Renumber of risks categories to reflect new AGDRISK03
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8. The following risks have currently been identified as being ‘red’ in RAG status: Number Risk Action AGDRISK04 (formerly AGDRISK03) Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement Conclusions from the Programme Review will provide clarity on the delivery of Projects and the whole Programme. AGDRISK05 (formerly AGDRISK04) Delays in development and approval of business cases Conclusions from the Programme Review will provide clarity on the timelines and milestones for the development and approval of business cases. AGDRISK19 (formerly AGDRISK21) Potential impact of macro events on the wider economy and economic prosperity of Ayrshire Continued monitoring of external macro events and to plan where possible. 9. The updated mitigation measures associated with each risk are set out in Appendix 1. 10. Overall these changes have been undertaken in the context of the Programme Review and its emerging outcomes, which include the development of a more robust Programme that takes account of increased costs and the impact of this upon development and delivery of capital projects. There is a commitment to continue to review all Risk Registers including the Programme Risk Register to reflect changes in the Programme. It is therefore anticipated that further changes will be presented to future AEPBs. 11. Moving forward, the risks identified, especially those highlighted as ‘red’, are anticipated to start to be de-risked once the Programme Review has been agreed by the Government and key projects gain business case approval, thus allowing drawdown of funds from the Government and delivery on the ground. This includes projects for the Prestwick area that form the Aerospace and Space Programme of the Deal. 12. Changes in the programme risks and the application of mitigation measures are working their way into the draft Implementation Plan 2024/25 that includes an updated Financial Plan. This includes more realistic timelines being developed which seek to ensure the development of business cases and delivery by the end of the Programme. 13. The PMO are also reviewing the presentation of the Programme Risk Register so that it reflects more closely the Scottish Government’s quarterly template for reporting. The benefits of this are to ensure the transfer of information between formats and audiences are more efficient. This includes
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taking into account the differences between the AGD and Government’s RAG criteria. Note that the AGD RAG scoring will continue to be retained and used on a day to day basis. For example as illustrated below Source GREEN AMBER/GREEN AMBER/RED RED Scottish Government Guidance Successful delivery appears highly likely with regard to time, cost and quality and there are no major outstanding issues that at this stage appear to significantly threaten progress Successful delivery appears probable however attention will be needed in certain areas to ensure risks do not develop into major issues that will threaten delivery Successful delivery appears possible, but issues already exist that require serious attention. These appear resolvable at this stage, but further action is required Successful delivery is in serious doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed Source GREEN AMBER RED Ayrshire Growth Deal RAG Guidance Note with an AGD risk register score of between 0-3 with an AGD risk register score of between 4-9 with an AGD risk register score of between 10-14 with an AGD risk register score of between 15-25 14. In conclusion the Programme Risk Register provides an assessment of the challenges the programme continues to face. As noted the PMO are working across the partnership to conclude the Programme Review with details of the outcome (e.g. Executive Summary and Implementation Plan 2024/25) scheduled to be presented to Board members at the next meeting (23 August 2024). Once agreed subsequently by the AEJC (scheduled for 4 September 2024) the Programme Review will provide a baseline in which to ensure the delivery of projects, which will help mitigate the current ‘red’ risks wherever possible.
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IMPLICATIONS 15. The implications arising from this report are: Implications Yes No Paragraph number in report 1. Policy/Strategic Planning Yes Para 16-17 2.Governance/Legal Yes Para 19 3. Human Resources Yes Para 20 4. Equality and Fairer Scotland Duty Yes Para 21 5. Financial Yes Para 20 6. Risk Yes Whole paper 7. Community Wealth Building No 8. Net Zero No ALIGNMENT WITH SUSTAINABLE, INCLUSIVE GROWTH AMBITIONS 16. Inclusion is a key driver for the AGD business cases for projects demonstrate how they will reduce inequalities and tackle the inclusion challenges specific to Ayrshire. 17. The Risk Register provides the framework for reviewing the challenges the AGD needs to address and sets out the mitigation measures to be undertaken that include meeting the headline Deal objective of delivering inclusive growth. FINANCIAL IMPLICATIONS 18. It is accepted by the Ayrshire Councils and the Government that risks should be managed and mitigated where necessary in order to support the effective delivery of projects and the programme. LEGAL IMPLICATIONS 19. The legal implications arising from this report are covered through the Agreement between the three Ayrshire’s Councils and the revised Governance Document which was approved at the Joint Committee meeting on 8 December 2022. HUMAN RESOURCES IMPLICATIONS 20. There are no immediate human resource implications arising from this report. However for the risk associated with lack of resources in PMO to be addressed there could be human resource implications. EQUALITY IMPACT ASSESSMENT 21. There is no direct equalities impact relating to this report. Inclusion is a key driver for the AGD. Project leads will be required to complete an Equality Impact Assessment for their project and append to the associated business
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case. Project leads have received Equality Impact Assessment training organised by the Scottish Government. Project Leads are being encouraged by the PMO to link up as soon as possible with their Equalities Officer within their authority who will be able to assist with this matter. APPENDICES Appendix 1: Updated Risk Register – March 2024 Background Papers: Heads of Terms, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 8 March 2019 Deal Document, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 19 November 2020 Members requiring further information should contact: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk Implementation Officer: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk
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Appendix 1: UPDATED VERSION AYRSHIRE GROWTH DEAL UPDATED PROGRAMME RISK REGISTER (RISKS AND MITIGATIONS) – JUNE 2024 Note: includes amendments to the Risk Register to reflect review. Source GREEN AMBER/GREEN AMBER/RED RED Scottish Government Guidance Successful delivery appears highly likely with regard to time, cost and quality and there are no major outstanding issues that at this stage appear to significantly threaten progress Successful delivery appears probable however attention will be needed in certain areas to ensure risks do not develop into major issues that will threaten delivery Successful delivery appears possible, but issues already exist that require serious attention. These appear resolvable at this stage, but further action is required Successful delivery is in serious doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed Source GREEN AMBER RED Ayrshire Growth Deal RAG Guidance Note with an AGD risk register score of between 0-3 with an AGD risk register score of between 4-9 with an AGD risk register score of between 10-14 with an AGD risk register score of between 15-25 RISK (AGD RAG USED) Current Matrix and Score Proposed Matrix and Score Proposed Scottish Govt RAG Score MITIGATION AGDRISK01 Failure to achieve AGD programme objectives within agreed budget Scoring – 12 CHANGE to reflect Score 16 Score 12 AMBER/RED • The Regional Economic Joint Committee, Regional Economic Partnership, AGD Steering Group in place to monitor progress and to address any weaknesses or issues that could impact on overall delivery. • PMO ongoing monitoring and
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decrease in likelihood. evaluation of Deal and project objectives in order to address issues early. • Leading to potential to review of risks where evidence suggests insufficient funding to undertake and complete projects in line with expected outcomes. Internal governance include regular reviews undertaken by PMO with input from SROs, Project Leads and Chief Executives to ensure AGD programme objective are met. Where necessary reporting issues and potential solutions to the AEPB and AEJC e.g. Programme Review 23/24. AGDRISK02 Failure to provide accurate projections for programme spend Scoring – - 12 CHANGE – to reflect decrease in likelihood Score 16 Score 12 AMBER/RED • Issues will be escalated to CEOs, Regional Economic Partnership and Regional Economic Joint Committee as appropriate • Implementation Plan and Financial Plan updated annually with input from Project Leads, SROs and CEOs. Business Case process development supported and monitored on a monthly basis in order to achieve approval e.g. OBC and FBC, and then during delivery. PMO will regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales • OBCs/FBCs include an optimism bias
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factor as per Treasury Green Book and AGD Governance document • Inflationary factor addressed through project reviews e.g. re-scoping, phasing and reviewing costs and benefits AGDRISK03 (NEW) Failure to drawdown full yearly allocated AGD funding as per Grant Offer Letter Scoring – 9 NEW NEW Score 9 AMBER /GREEN • PMO regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales • Regular monitoring of project progress and projected drawdown of AGD allocated funds. Use of bi-annual returns (Feb return) informing the expected Grant Offer Letter • Monthly reporting to the Steering Group, SRO's AEPB/AEJC and the Government on in year drawdown profiles AGDRISK04 (formerly 3) Failure to drawdown full AGD funding by 2030 as per Tripartitie Agreement Scoring – - 20 CHANGE – to reflect increase in impact Score 16 Score 20 RED • PMO will regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales. This includes PMO working with Project Leads, SRO’s and S95’s to ensure projects can be realised and help with change processes where necessary; and undertaking effective communication with Governments to ensure projects Impact Likelihood
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can be realised • Annual review of Financial Plan and Implementation Plan undertaken. Noted that challenges continue to impact upon the development and delivery of the Aerospace and Space Programme. • Regular reporting to the Scottish Government in line with financial reporting requirements PMO support Project Leads achieve business case milestones in line with the current Implementation Plan, AGD Governance document and, Finance guidance • Pivot projects proactively where possible in line with need and opportunity, and in line with change management processes as defined by the AGD Governance • PMO manage internal procedures, financial controls and processes in place to mitigate this risk AGDRISK05 (formerly 4) Delays in development and approval of business cases Scoring – 20 CHANGE – to reflect increase in impact Score 16 Score 20 RED • Undertake focused engagement with SG and UKG in order to help ensure SBC, OBC and/or FBC comply with the Treasury Green Book and gain approval in line with AGD governance • PMO working closely with Project Leads and Policy Leads within UK and Scottish Governments to support business case development and approval to an agreed timeline. This
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includes exploring a streamlined change process (pre-FBC) particularly where budget constraints are sole driver of change. Note challenges continue to impact upon the development of business cases • Project Leads provided with Green Book business case training • Project Leads’ toolkit in place • Seek other partners to assist in developing business cases where capacity is low, skills align e.g. Ayrshire College and SE. AGDRISK06 (formerly 5) Failure to capture accurate baseline data Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER /GREEN • Project Leads required to establish appropriate economic, social and environmental baseline information in business cases • Establish and regularly review achievable outcomes, output and targets as part of the development and delivery of projects and realization of benefits in line with the Benefits Realisation Plan AGDRISK07 (formerly 6) Failure to deliver community benefits from AGD Scoring – 9 CHANGE – to reflect increase in likelihood Score 6 Score 9 AMBER /GREEN • PMO and procurement managers from the three Ayrshire Councils have developed a AGD Community Benefit Tracker, a single mechanism to monitor delivery of community benefits so that remedial action can be taken if required • Result from the AGD Community Benefits Tracker system will be
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analysed and reported to the Regional Economic Partnership and Regional Economic Joint • PMO working with Project Leads to develop consistent approach to embedding inclusive growth, equalities, clean growth, and community wealth building within business cases through the Annual Performance Report • Procurement working group has been established and operates in order to support delivery of community benefits which includes development of a Community Benefits Tracker and coordination of procurement approaches so they support the development and delivery of projects AGDRISK08 (formerly 7) Failure to deliver individual projects within the AGD programme Scoring – 12 CHANGE – to reflect increase in likelihood Score 8 PUT UP 1, STILL AMBER? Score 12 AMBER/RED • Regular dialogue/reporting around progress undertaken between PMO and Project Leads. Seek to identify issues early and raise with Senior Management and/or the Governments, AEPB and AEJC. Regular monitoring and reporting e.g. quarterly to the AEPB/AEJC, and monthly to AGD Steering Group and Project Boards. • Partners regularly review the AGD Benefits Realisation Plan every 12 months and report to the AEPB/AEJC. Current change management process incorporated in the AGD Governance
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document and regularly reviewed • Risk register in place for each project which is regularly reviewed via monthly reports, quarterly reports and when updating the Implementation Plan • Project risk registers included in business cases which are formally approved by government and AEJC • Management Information System in place and used to track progress of projects against key milestones, and reported via monthly and quarterly reports AGDRISK09 (formerly 8) Inadequate recognition of interdependencies and/or knock-on impacts between parts of the programme leading to issues with delivery and/or lost opportunities. Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER /GREEN • Programme meetings take place regularly between PMO, Project Leads and partners to ensure interdependencies are recognised and considered; and incorporated in approved business cases • PMO working closely with project leads to ensure interdependencies are fully articulated within the project business cases and for the programme as a whole. • All forms of interdependencies are monitored and managed to help enable the development and delivery of all Deal projects AGDRISK010 (formerly 9) Lack of resource within partner organisations to deliver projects in line with Score 9 Score 9 AMBER /GREEN • Formal approvals of Councils’ resources are now in place for AGD projects • Each Council has appointed staff
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AGD programme Scoring – 9 NO CHANGE IN SCORING and/or consultants to support project development and delivery • Each project currently has a Project Lead in place • Partners including SE are providing additional resource to relevant projects • Resources committed to the delivery of the programme, with further discussions underway to explore how to deliver the recently approved Regional Economic Strategy • Other funding streams is being explored to support ongoing revenue costs • Anticipated revenue streams will be subject to constant review through the monitoring procedures in place for AGD AGDRISK11 (formerly 10) Lack of resources in PMO Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER/ GREEN • A permanent PMO structure is in place with recruitment now completed. • The PMO is being supported by colleagues in each of the Councils in a number of work streams • PMO undertaking a review of capacity and skill sets in response to the changing requirements on staff that form the Office AGDRISK12 (formerly 11) Inadequate governance arrangements to support AGD delivery Score 6 Score 6 AMBER/ GREEN • In accordance with AGD governance, AEPB and AEJC has been formed and regular meetings are in place • Scottish Government’s financial reporting requirements have been
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Scoring - 6 NO CHANGE IN SCORING implemented in the AGD Governance document and Financial guidance • Partner agreement between EAC, as Accountable Body for the Deal, and North and South Ayrshire Councils has been drawn up and terms agreed • Partners working together with both Governments to keep under review the AGD Benefits Realisation Plan • Current change management process in place and subject to regular review with input from the Governments and Partners AGD is standing item on CEOs’ meeting agenda AGDRISK13 (formerly 12) Monitoring & Evaluation Framework is not sufficiently defined Score – 6 NO CHANGE IN SCORING Score 6 Score 6 AMBER/ GREEN PMO undertaking ongoing review of the overarching Monitoring and Evaluation Framework for the Deal. This will ensure acceptable M&E arrangements. AGDRISK14 (formerly 13) Failure to attract commercial interest in AGD Scoring – 12 CHANGE – to reflect increase in likelihood Score 8 Score 12 AMBER/RED • Following conclusion of the Programme Review commitment to develop with communications and economic development teams, a market campaign, subject to resources. This will form part of Communication Plan and will target potential investors Communications
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Action Plan continues to be developed and updated, including a pipeline of project specific communications plans. Current private sector investment is below expected target for the agreed AGD. • Regular briefings with a range of stakeholders • Wider Ayrshire Economic Strategy is now approved by the AEJC and will ensure wider growth ambitions for Ayrshire are achieved. This will help support attracting greater investment into Ayrshire. AGDRISK15 (formerly 14) Programme not communicated effectively to stakeholders outwith Governance structure Scoring 12 NO CHANGE IN SCORING Score 12 Score 12 AMBER/RED • Communications Action Plan completed and regularly updated, in conjunction with communication teams. This includes reporting on past and future communication activity. AGD website launched and to be reviewed in conjunction with communications teams, in order to increase traffic and sharing of AGD information • AGD social media channels to be reviewed in conjunction with communications teams, with greater linkages made to activity related to the AGD and its progress • Regular briefings with a range of stakeholders via AGD programme update to the AEPB and AEJC • Communications Protocol in place and
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reviewed and updated annually, with activity regularly identified and delivered with the support of communication teams. • Resource within AGD to market and promote project activities and overall programme AGDRISK16 (formerly 15) Supply phasing within overall programme Scoring – 12 NO CHANGE IN SCORING Score 12 Score 12 AMBER/RED • PMO help facilitate and update Procurement teams of the AGD programme and relevant projects in terms of timescale for development and delivery. This includes how to manage expected peaks in programme activity and need for contracts to be advertised and managed. • PMO working with procurement in supporting the sharing of market intelligence and the phasing of development activity, this includes ensuring procurement leads sign off when updating Implementation Plans. AGDRISK17 (formerly 19) Loss of IT systems Scoring – 8 NO CHANGE IN SCORING Score 8 Score 8 AMBER /GREEN • PMO hosted by EAC and as such supported by IT recovery protocols and security systems of EAC to limit risk and mitigation measures • Corporate IT recovery protocol and security systems limit the risk and mitigation measures • Contingency Plan in place via EAC for the PMO, by SAC for the portal, and for the AGD teams across the three councils, by their respective employer
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(e.g. EAC, SAC, NAC) AGDRISK18 (formerly 20) Failure to ensure AGD projects working towards net zero ambitions as set by SG/UKG Scoring – 8 NO CHANGE IN SCORING Score 8 Score 8 AMBER /GREEN • PMO and Project Leads working with Scottish Government to ensure the Deal is aligned with Scotland’s transition to net zero carbon emissions by 2045 • UK and Scottish Governments developed carbon management guidance for the AGD, as well as other City Region and Growth Deals in Scotland, which will allow the carbon emissions impact of the programme and projects to be assessed then minimised. • Consideration to be given to the recent Scottish Government announcement on annual and interim targets for cutting greenhouse gases and impact upon projects contributing to net zero (April 24). • A carbon management process appropriate for each project has been put in place to ensure any carbon emissions impact is minimised via business case process • PMO working with both Governments to identify funding opportunities to support decarbonisation • PMO is working with both Governments to agree an overarching Monitoring and Evaluation Framework for the Deal
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AGDRISK19 (formerly 21) Potential impact of macro events on the wider economy and econmic propserity of Ayrshire Scoring – 16 NO CHANGE IN SCORING Score 16 Score 16 RED • Regular engagement with Project Leads to highlight any risks well in advance, so that the PMO can raise with Government, AEPB and AEJC as appropriate • Regular review via monthly reports of outputs and timelines for business cases at every stage of development in the light of external events • Continued monitoring of external environment and government relations • Regional Economic Strategy approved in early 2023 and be supported by an emerging action plan • AEJC provide voice for Ayrshire to press the case for government intervention investment • Seek to align incentives and other forms of assistance to complement the AGD and stimulate greater economic activity • Current change management process in place but under review • Regional Skills Investment Plan developed, with a focus on its implementation via Ayrshire Skills Group • Robust data analysis shared amongst key partners and stakeholders to reach common understanding of local economic conditions, leading to early identification of real threats and
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opportunities - Supported by proposed appointment of Glasgow Intelligence Unit to revise AGD economic model. • PMO co-ordinate evidence across Deals and submitted collective case via the Implementation Plan update to both governments setting out impact of increased costs or reduced the scope/outputs and time delivery if costs not met