Project Management Institute

Initiatives of the Canadian Government in the Management of Projects

Management Systems

Administrative Policy Branch

Treasury Board Canada

Address to the Montreal Chapter of the Project Management Institute June 17, 1980

Introduction

I am pleased to be in Montreal and have the opportunity to speak to members of the Project Management Institute on a topic of mutual interest: the management of projects. While we tend to hear about the errors of government, we hear less often about the positive and innovative things it does to improve its operations. That is why I particularly appreciate being here tonight to talk about what the government has done and is doing to improve one of its major areas of endeavour: that of the management of government projects.

Over the past few years, the thrust of the Canadian government in managing its various undertakings has been toward greater effectiveness, efficiency, and economy. The object has been to ensure the most effective and efficient use of public funds as well as the maximum return to the taxpayer in terms of socio-economic benefits. To achieve this, the government has taken a number of important steps which I will attempt to describe in this paper.

First, I will give you an outline of the environment within which project management takes place in the government. It will provide an idea of the particular intricacies and complexities inherent in the management of projects in such a vast and multi-faceted organization as the federal government. This will be followed by a description of two government-wide studies conducted recently under the direction of the Treasury Board Secretariat — one on the management of major Crown projects and the other on project leadership. Then, developments to date will be examined under:

-management of projects: the policy on major Crown projects, and the aide-memoire on the management of projects;

-project leadership: the process for the provision and remuneration of major Crown project leaders, and the provisions of the aide-memoire relating to project leadership generally;

-control and evaluation: the reporting mechanism for major Crown projects, the cost control directives, and the audit criteria for capital acquisition projects; and

-departmental actions: Departments of National Defence, Public Works, Indian and Northern Affairs and Transport, the Correctional Service, the National Research Council, the Canadian International Development Agency, and the Public Service Commission.

Having covered these developments, I will consider potential future refinements by the government. Finally, I will provide concluding remarks on the federal government’s initiatives in managing its projects more effectively.

The Environment

Behind the makers of the law, its administrators and the courts, stands the Canadian constitution – the rules and principles which provide the basis for government. It provides the Canadian Parliament with the power to “make Laws for the Peace, Order and Good Government of Canada in relation to all Matters . . . not . .. assigned exclusively to the Legislatures of the Provinces.” These include: defence; regulation of trade and commerce; navigation and shipping; fisheries; money and banking; interprovincial and international steamships, ferries, railways, canals, and telegraphs; and any “works” declared by Parliament to be “for the general advantage of Canada.”

To carry out its many responsibilities, the federal government is organized by broad functional areas. These comprise three branches: the Legislature, the Judiciary, and the Executive. The Legislature of the Canadian government is Parliament. As the federal law-making body for our country, it consists of the elected House of Commons, the appointed Senate, and the Sovereign, represented by the Governor General (Figure 1). The Judiciary decides on disputes arising out of civil law in the courts, and punishes violations of the law. It consists of the Supreme Court of Canada, the Federal Court of Canada, the Canadian Judicial Council and the Court Martial Appeal Court. The Executive administers laws and provides national policy for the nation. It consists of the Prime Minister, Cabinet, the Ministers, the Privy Council, and Parliamentary Secretaries.

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(Figure 1)

The principal operative arm of government is the departments. Through them, the government manages its programs and delivers its services to the public. In total, there are at least 60 different departments, varying in size from fewer than 100 employees to over 50,000, with an overall population of about 266,000. They vary in organizational form from the classical department such as Agriculture, or External Affairs, to the ministry format of the Solicitor General’s Department, to departmental agencies like the Canadian International Development Agency.

These departments are under the direction and management of ministers and are the means through which they discharge mandates conferred on them by Parliament in departmental acts. Each departmental statute sets out a minister’s area of jurisdiction and prescribes responsibility for direction and management. Together with the other government-wide statutory and administrative instruments, such as the Financial Administration Act and the Public Service Employment Act, they comprise the complex framework within which government operations take place.

In terms of ensuring good overall management of government, the main central figure is the Treasury Board, a permanent Cabinet Committee of six ministers. It is supported by:

-the Secretariat: responsible for the review and analysis of proposed spending programs, for general administrative policy and management systems, and for government policies in the fields of personnel management and official languages; and

-the Office of the Comptroller General: responsible for financial management systems, administration and control, and for the closely related operational controls upon which an effective financial function depends. The latter include, in particular, performance measurement and program evaluation policies and practices.

Finally, to close the loop, there is the Auditor General, who is responsible for carrying out regular examination of government operations, in order to ensure that there is sufficient accounting for and control over public resources, that the funds appropriated by Parliament have been expended for the purpose intended, that the money has been expended with due regard for economy and efficiency, and that procedures are in place to measure and report the effectiveness of programs.

Government Reviews

Major Crown Projects

Within the environment just described, major Crown projects (i.e., any project exceeding $100,000,000 and others so designated) account for a very significant portion of the government’s expenditures, currently totalling about $17,500,000,000 over the next eight years or so. The range and diversity in the type of project encountered is considerable, e.g., the New Canadian Patrol Frigates, the Accommodation for Inmates across Canada, the Remote Manipulator System for the US Space Shuttle, the Modernization of Air Traffic Control Radars at Canadian Airports, and Place Guy Favreau in Montreal. Over the years, the approach followed in the management of these projects had taken many different forms, depending to some extent on the problems of the day, the nature of the project itself, and the departments involved. The degree of success achieved tended to vary according to the vantage point of the onlooker.

In July 1976, as a result of increasing concern being expressed with regard to the high cost of certain major Crown projects compared to initial expectations, a government-wide study of these projects was requested by the Treasury Board. The object was to develop an appreciation of the current state of major Crown projects in the federal government, and to establish the desirability and feasibility of developing a policy on the manner in which all such projects could be effectively executed.

In endeavouring to achieve meaningful results, the management of major Crown projects was examined in detail with key departments under the direction of the Treasury Board Secretariat. The participants included the Departments of Transport, National Defence, Public Works, Supply and Services, the Canada Post Office, and the Privy Council Office.

The findings were divided into a number of topics and dealt with such matters as definition of objectives, funding, contracting, accountability, staffing, and multiplicity of involvement. The issues that surfaced were chiefly related to planning and organization (from early planning to the completion of a project). The shortcomings identified included: lack of thorough analysis of options to fulfill a need; little consideration of socioeconomic benefits and risk assessment; incomplete project definition; lack of single point accountability; often cumbersome, complex, and varied project organizational structures; ill-defined responsibilities of project participants; and no established benchmark in the approval process against which the success of projects could be effectively evaluated upon completion.

In response to these issues, it was recommended: that “major Crown Project” and the main stages therein be defined; that the role of Cabinet and Treasury Board in such projects be described; that a lead authority and single point leadership be established for each project; that the role, authority, and responsibilities of a client with a requirement to be fulfilled and of those given the task of fulfilling that requirement (i.e., service agents and contractors) be defined; that the involvement of third party entities such as Industry, Trade and Commerce be determined; that the organization of such projects be described; that control and evaluation requirements be determined; and that the manner of seeking and granting project approval be defined.

The end product of this in-depth self-examination was the policy on major Crown projects addressed later in this paper.

Project Leaders

The findings of the above 1977 review of the management of major Crown projects pointed the way to necessary improvement on all fronts of this important area of endeavour, including project leadership. With the advent of the resulting new policy and guidelines, which address such questions as single point leadership, the interdepartmental organization of major Crown projects, and where the project leader is situated therein, a new frame of reference was created for the position occupied or to be occupied by these individuals.

In April 1978, the Treasury Board asked the Secretariat that a report be prepared for their review on the subject of qualified major Crown project leaders. As for the previous study, the question was examined with key departments under the direction of the Treasury Board Secretariat. The participants included the Departments of Supply and Services, Transport, Indian and Northern Affairs, Public Works, and Defence, the Privy Council Office, the Canadian International Development Agency, the Canada Post Office, and the Public Service Commission.

The main issues examined dealt with the requirements of the position of project leader and the candidate, the filling of the position, and the appraisal and compensation for such individuals. As a result, the main recommendations were that: a complete and accurate basic description of the position and qualifications be adopted for all project leaders of major Crown projects; a separate Project Leader Information Data Bank be established, administered, and vetted by the Senior Executive Staffing Programs of the Public Service Commission; the occupational category, group, level, and remuneration applicable to such positions be determined separately for each project as it arises; and the process also apply to the deputy project leaders.

Upon approval by the Treasury Board in March 1979, these recommendations were translated into a comprehensive policy document on the provision and remuneration of major Crown project leaders. It is one of the policy initiatives also covered in the next section.

Policy and System Developments

The reviews just covered set the stage for a new beginning in the government’s management of its multitude of projects. It led to a number of policy and system initiatives for improvements dealing with the management of projects, project leadership, and control and evaluation. Indeed, things would never be the same again for the public service manager.

Management of Projects

1. Major Crown Projects

In June 1978, based on the 1977 study covered earlier, new and comprehensive directives and guidelines were promulgated to departments by the Treasury Board on the management of major Crown projects.(l) Some of the more important aspects of this policy, which triggered a new era in the management of government projects, are summarized in the paragraphs that follow.

The government’s policy on major Crown projects, henceforth, is that all parties involved in such a project shall work jointly toward the achievement of the approved project objectives under the leadership of one authority, i.e., the lead authority, in conformity with existing legislated ministerial accountability. When more than one department is involved, generally the leadership will be vested in the department for which the funds have been appropriated to fulfill its program requirements, unless otherwise specifically approved early in the planning leading to the project.

The requirement for interorganizational involvement, cooperation and action, as well as the mobilization of qualified and experienced resources, is satisfied by means of a formal 2-tier matrix organization that functions throughout the planning for, and conduct of, a major

Crown project. This action-oriented organization consists of what we have called the Planning/Implementation Committee, responsible for the overall planning and conduct of the project, and a qualified and experienced team to carry out the details of planning or implementation as required (Figure 2). These teams and support staff may be co-located when deemed necessary.

The approval of a preferred option by the Treasury Board or Cabinet, following a comprehensive analysis of the options available, is considered through an Option Paper. This document provides a comprehensive description of the options assessed (e.g., if the need is for equipment: satellite, aircraft, vessel; if it is for facilities: bridge, tunnel, causeway) and their respective impacts. It also outlines the course of action expected to be pursued following approval of the preferred option.

The means of seeking the Treasury Board approval of a major Crown project on completion of the front-end planning is the Project Brief (program) submission. This document, developed by the lead authority in cooperation with the members of the Planning Committee, describes in detail, and in order of priority, all the objectives expected to be achieved and supported through the execution of the major Crown project; describes the basic units of work which need to be carried out, including a schedule and a budget for the project; describes the organization (i.e., the Implementation Committee and its project team) for the conduct of the major Crown project, and clearly states therein the role and degree of involvement of each participant; and identifies the individual designated as the “Project leader” (also Chairman of the Implementation Committee). Once the project is approved, the contents of the Project Brief governs the execution of the major Crown project and constitutes the only formal interorganizational project agreement, to be adhered to by all project participants.

image

(Figure 2)

The Treasury Board is kept informed of, and reviews, the progress of any major Crown project regularly: at least twice yearly and following each phase and stage, by means of a progress reporting mechanism that I will address shortly under a distinct heading.

Upon completion of a major Crown project, a post-project evaluation report is to be submitted to the Treasury Board by the Implementation Committee Chairman’s Minister. The report will convey precisely what was produced against the initial Treasury Board approved project objectives and what resources were required.

In brief, a comprehensive management system (Figure 3) and stringent requirements for the planning and implementation of major Crown projects are now an everyday reality which affects both central agencies and departments in terms of management capability, control, and accountability. The importance of this pace-setting endeavour has been stressed by the Auditor General; it has received significant support in the Lambert Commission’s report on financial management and accountability; and, more recently, it was used as a standard in the recommendations of the Malouf report on the Inquiry into the 21st Olympics in Montreal.

2. Non-Major Crown Projects

A logical extension to the policy on major Crown projects was the development of a management guide directed particularly to non-major Crown projects (under $ 100,000,000), which amount to about SI 0,000,000,000. This document(2) was issued in September 1979 as an aide-memoire for officers in departments and agencies of government engaged in the planning and implementation of government projects.

Using the basic concepts and principles found in the policy on major Crown projects discussed earlier, this document provides general principles and day-to-day guidance on the management of projects regardless of their scope and an overview of the various functions which need to be carried out for their effective conduct. This is done in terms of suggested practices.

The document addresses the essential functions of project management: planning, organization, conduct, and control. Each function is in turn broken down into sequential activities which need to be considered for the effective management of projects from the identification of a need to the complete implementation of the output required. The intent is to assist departments and agencies in ensuring that for all projects:

-there is early participation of all concerned, with their respective roles being clearly defined, understood, and accepted;

-the front-end planning is thorough, including the consideration of possible options and the potential socio-economic benefits to be derived;

-the approval of a project and the necessary resources is based on, and supported by, accurate and complete data on the objectives to be achieved, the activities and tasks to be carried out and their scheduling, the budget, the organization for the project, and the options examined;

-there are proper control and administrative procedures in place during implementation; and -there is provision for an evaluation after completion of the project.

(Figure 3)

With respect to the approval of capital projects not designated major Crown projects, a separate document(3) on the subject was issued by the Treasury Board in 1978. It addresses: the two mechanisms by which the Treasury Board may approve capital programs — namely, Program Forecast submissions and individual project submissions; amendments; and the information required in program submissions generally. The document also informs departments and agencies of the authority which the Treasury Board has delegated to them for the approval of these projects.

Project Leadership

1. Major Crown Projects

As noted in the previous section, the outcome of the 1978 study of the question was a policy dealing with the provision and remuneration of project leaders for major Crown projects.(4) It was approved by the Treasury Board and issued to departments in September 1979.

The policy is designed to assist deputy heads in filling project leader positions with the best persons available and at a remuneration commensurate with the size, complexity and profile of major projects, in a timely and expeditious manner. The process described addresses the following elements, which must be considered before filling such positions: identification; classification; sourcing; selection; appointment; mode of employment; and remuneration. The coordination of the process and the question of training and development are also dealt with.

Probably the single most important aspect of this policy, however, is a basic description of the position and qualifications for a major Crown project leader. Indeed, this is the cornerstone for an effective identification, selection, and remuneration of qualified project leaders.

The position description recognizes the new frame of reference created by the policy on the management of major Crown projects as it relates to project planning, organization, control, and execution. The requirements for decision making, contacts, and supervision by the project leader are also defined. As for the qualifications, these are discussed under such headings as education, language, experience, knowledge, abilities and personal suitability. In this regard, the policy document underlines the need for high leadership qualities, proven management experience, initiative, creative thinking, balanced technical and management know-how, and effective interpersonal relationships.

As the management literature abounds with what is felt to be the perfect description of this type of person, the Canadian government did not attempt to re-invent the wheel. However, it was felt necessary that all the important elements be brought together in one document and, more importantly, into the complex and diversified context of the federal government.

2. Non-Major Crown Projects

With regard to non-major Crown projects, the aide-memoire also addresses the question of leadership — but mainly in terms of responsibilities. These cover the conduct and control of a project. The aide-memoire emphasizes the need for the project leader to become involved in the process as early as possible during the planning leading to the project. It also highlights the necessity to have the authority of the project leader clearly defined from the outset of the project.

Control and Evaluation

1. Major Crown Projects Reporting

A more recent initiative of the government involved the introduction of a uniform reporting system for major Crown projects.(5) Based on a requirement of the policy on major Crown projects, this government-wide mechanism will keep the Treasury Board informed of the progress being made by each major Crown project against originally approved time, cost, performance, and socio-economic objectives.

With this system, developed in consultation with DND, DOT, DPW, CPO, INA and CIDA, a progress report (Figure 4) is to be sent to the Treasury Board at least twice a year for each major Crown project. The first report is due not more than six months after approval of a project and the information requirement has been kept to a minimum. After consideration by the Ministers, it is kept in their respective “Projects Book” until replaced by the next report.

These periodic reports provide the Treasury Board with timely basic management information on all major Crown projects, to assist in strategic decision-making generally and, in particular, with operational decisions associated with the review of program and contract submissions, and specific problems arising during the projects.

2. Cost Control Directives

Notwithstanding the gradual process of improvement that was occurring in management systems, the previous government saw the need to deal very directly with the serious problem of cost overruns still evident on all sizes and types of projects. Therefore, in July of 1979 a new Treasury Board policy was announced which included special measures to emphasize control and accountability for federally funded projects.(6)

The cost control policy sets out a series of directives by Ministers of the Treasury Board which state firstly that for each project requiring Treasury Board approval a project leader shall be appointed, answerable to the deputy head of the department for achieving the planned results within budget. The policy further states that submissions for retroactive approvals would not be entertained. The directives which follow amplify concerns about the occurrence of cost overruns and set out the responsibilities of client departments and contracting authorities. This is then followed by directives regarding accountability, cost estimates, and contract submissions. The policy also introduces the concept of penalties for cost overruns, of an amount up to twice the total overruns, that may be levied against the responsible department.

(Figure 4)

image

In order to complete this policy, additional cost control directives(7) were published in July 1981. This document identifies measures to be taken in order to deal with some remaining causes of cost overruns as confirmed through a recent survey of government projects. Basically aimed at improving the reliability of project cost estimates, the new directives will therefore deal with such aspects as classes of estimates, inflation, currency exchange, and approval by stages. These directives will also call for an annual report to Treasury Board Canada on all projects over $500,000, except for major Crown projects whose reporting is governed by a separate directive.

3. Capital Projects Audit Criteria

Another important action, which demonstrates the ongoing concern of the Canadian government with respect to the quality of its management practices, is the SPICE value-for-money auditing project initiated by the Auditor General in 1977. SPICE is an acronym for Study of Procedures in Cost Effectiveness and has as its objectives: “to compile information on the state of the art of management control systems in the public sector, in terms of economy, efficiency and effectiveness; and to assess and report on existing procedures for planning, measuring and controlling activities in Canada’s public service (in the interest of economy, efficiency and effectiveness).”

At the heart of the investigative methodology being developed through this type of exercise has been an evolving set of “audit criteria” based on the standards of management that Parliament can reasonably expect from the government. In the case of the capital acquisitions, the following criteria were developed:

-responsbiility and accountability should be clearly defined and communicated;

-requests for funds should be supported by accurate and complete documentation, including:

-a proper analysis of needs,

-a clear statement of objectives and intended effects,

-an impartial assessment of alternatives,

-realistic capital cost estimates, and

-an analysis of life-cycle costs;

-final approval should be based on full information;

-project implementation should be properly controlled; and

-completed projects should be reviewed.

In addition to improving the quality and cost-effectiveness of value-for-money audits, these criteria will definitely encourage further adoption (and active use) of recognized management practices in government. Furthermore, coupled with good project reporting systems and post-project evaluations, this type of audit is also very useful in providing the manager with arm’s length objective feedback on operations.

Departmental Actions

To this point I have focused attention on the efforts of central government bodies to improve the management of federal projects. It would be incomplete and unfair to departments and agencies, however, to leave out reference to their initiatives in this regard. For instance, the Department of National Defence has developed and is providing internally a three-week project management course within the context of the Defence Program Management System. It has also developed a comprehensive system of managing defence projects of all sizes. The Department of Public Works also has a detailed delivery system for its construction projects that covers all phases from inception to commissioning of the facility. Other departments and agencies that have, to varying degrees of detail, project systems include Transport, Indian and Northern Affairs, the Correctional Service, the National Research Council, and the Canadian International Development Agency. The Public Service Commission also provides a one-week course on the subject of project management.

The initiatives taken by line departments and agencies are at a level of detail greater than those of central government agencies. Their systems and procedures are developed to meet specific departmental requirements and, as such, complement the government-wide systems discussed earlier.

The Future

Refinements

Further potential refinements are being given some consideration. One such potential refinement could comprise the establishment in Treasury Board of a formal dedicated focal point (at least) for all major Crown projects. The object would be to further rationalize the efforts being expended in Treasury Board, and to facilitate its tasks as well as departments’, in meeting the requirements of the current directives and guidelines on the subject. Another measure for refining the management of projects generally would consist of developing guidelines for the analysis of the risks associated with projects and for a more complete identification of their socioeconomic benefits.

On a shorter term basis, a document has been published (August 1981) by the Treasury Board (Office of the Comptroller General) that will provide departments and agencies with recommended general specifications for departmental project monitoring and reporting systems.^) The ensuing departmental systems are intended to provide:

-the ability to control, account for, and eventually charge for all resources spent, according to the stages of the project delivery system;

-the ability to monitor the time, cost and performance objectives of projects;

-financial information to control and manage at all levels the funds appropriated for the project;

-physical progress information on work accomplished to give an early indication of potential schedule delays or slippage and to forecast manpower requirements to meet operational commitments;

-an early warning of cost overruns and underruns; and

-an historical record of actual costs for each completed stage of each project to assist in developing budgets and standards for future projects.

These specifications are intended to complement the Treasury Board policy on the management of major Crown projects and aide-memoire on the mangement of projects generally.

Implementation

Within the very large and complex organization that is the federal government, implementation of its initiatives to date has been a gradual and laborious process. To ensure present momentum and be effective, however, it will need the continued support of the Treasury Board and a sustained follow-up effort by the Secretariat – the two factors crucial to the overall success of the government initiatives. This is no different from the private sector, where success often (if not always) depends on support from the very top.

It is equally important, given that systems need to be operated by competent people with the necessary expertise in order to be effective and efficient, that effort be increasingly focused on developing and training those involved in the management of government projects. This is particularly cirtical or important for those who will, one day, have to take leadership of such projects.

Government Undertakings

As with most countries, the Canadian government is faced with future economic problems and social problems demanding the mobilization and organization of extensive resources. For example, energy programs are the latest in the series of propositions for major Crown projects. The significant funding required must be well organized and controlled to maintain proper stewardship of the public purse. In this regard, there is no doubt that the effective management of projects is one key to the successful accomplishment of Canada’s national goals.

Conclusion

The conduct of the government’s business is supported by a very large number of projects. These in turn affect a multitude of different industries, domestic and foreign, including high technology organizations; involve regional, Canadian, and international concerns and issues; comprise very complicated financing and offset arrangements; require the participation of many and diverse departments, central agencies, and contractors; and necessitate a multiplicity of management and technical skills. They also trigger criticisms or concern from various sectors of the economy including other levels of government, and often impact very significantly on the economy, with industrial benefits equalling or surpassing the project costs themselves.

In order to improve the management of those projects, the government has taken a profound inward look at itself and, unlike physicians who are said to be unable to cure themselves, has diagnosed the problems and developed appropriate solutions. This was accomplished through pragmatic in-depth self-examination, by relying entirely on internal skills comprised of a blend of private and public expertise.

The resulting initiatives taken by the government constitute an impressive systematic move on its part to address the basic issues affecting the good management of its projects. In fact, I do not know any other country in the world that has done so much in this area over any period of time. These policies and systems have required a fundamental shift in thinking on the part of public service managers, which can only lead to more effective management of projects in the Government of Canada.

Such fundamental changes in the government philosophy will undoubtedly have a significant impact on the private sector. Since the major thrust of the new approach in managing projects is directly linked to the achievement of national goals, I am confident that this impact will be very positive. However, as is the case in any large scale changes, institigated by the government or otherwise, there will be a transition period, during which some people might be mystified and frustrated by new requirements which stem from these recent policies and systems. I feel that the existence in government of a clear and logical management system which is well documented in policy directives available to the public will lighten the acquisition environment and minimize any potential misunderstandings. Furthermore, the Canadian industrial society, by being given a greater opportunity to participate in the provision of information, alternatives and innovative ideas, will have a greater involvement and a better sense of participation in the achievements of national goals in the best interest of all Canadians.

While implementation of the policy initiatives is still in progress and experiencing normal growing pains, the tightness of this new approach will lead to a more responsible and accountable management of the public funds entrusted to the government by the Canadian people. Irrespective of whether we are in a period of restraint or not, in the longer term this new approach should respond more effectively to the needs of Canada and enhance the effectiveness and efficiency of the government’s services to the public.

Directives and Guidelines dealing with the Management of Government Projects

1. Chapter 140 of the Administrative Policy Manual: Management of major projects.

2. Chapter 145 of the Administrative Policy Manual: Management of projects – Aide-m6moire.

3. Treasury Board Circular Letter 1978-46: Approval of Capital Projects.

4. Chapter 141 of the Administrative Policy Manual: Leaders of major projects.

5. Treasury Board Circular Letter 1980-24: Management of Major Crown Projects – Progress Reporting.

6. Chapter 148 of the Administrative Policy Manual: Cost control of projects.

7. Treasury Board Circular Letter 1981-26: Amplification of Policy on Cost Control of Projects.

8. Chapter 310, Specifications for Departmental Systems: Project Monitoring and Reporting Systems.


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