Develop

Stage 1 – Develop is the initial stage of the Capital Framework. It involves activities that are designed to help answer the key questions of this stage:

What problems or opportunities exist?

What benefits would result from addressing them?

How should Government address or realise them?

The diagram below highlights the activities that the Project Team need to undertake in Stage 1.

Stage 1 of the Capital Framework

Overview of the Capital Framework and the key questions, activities and documents of each stage. The Early Presentation of the Project, Investment Logic Map, scope, risk and delivery discussions, and tier assessment all sit within Stage 1 - Develop of the Capital Framework and help to answer the key questions of this stage: "What problems or opportunities exist? What benefits would result from addressing them? How should Government address or realise them?"

The subsections below outline further information on each activity that the Project Team must undertake for Stage 1 – Develop and provide links to more detailed guidelines. Project Teams are encouraged to undertake these processes as early as practicable, which may be prior to the Budget cycle.

A key principle of the Capital Framework is collaboration between key stakeholders. The Project Team should actively collaborate with other stakeholders throughout the entire Capital Framework, from Stage 1 – Develop through to Stage 5 – Measure.

Collaboration is a critical principle of the Capital Framework

To ensure successful project development, the Project Team must ensure that strong and continuous collaboration occurs with key stakeholders throughout the entire Capital Framework process. These key stakeholders should include MPC, FABG and ICA, as well as other Directorates or Agencies that may have an interest in the project (such as those responsible for or affected by its delivery or operations) or are responsible for interrelated projects. Collaboration will support:

  • More comprehensive and robust project development
  • A greater understanding of the project’s risks, uncertainties and challenges and any mitigation measures required
  • A greater understanding of the project’s opportunities to optimise its expected benefits
  • Early identification of project interdependences to reduce inefficiencies and manage interfaces appropriately
  • More seamless review and approval processes as key stakeholders have been involved throughout the process
  • A higher likelihood of project success.

Early Presentation of Project

The Early Presentation of Project (EPP) is a critical initial step of Stage 1 – Develop. It informs the subsequent activities of the stage. The Project Team should hold the EPP as early as possible during the initial stages of a project’s development. It is an early opportunity for the Project Team to provide information on a project to MPC, FABG and ICA through an informal discussion, receive guidance on the project’s development and initiate collaboration with other Government stakeholders. In this presentation, the Project Team should:

  • Present the outputs of initial activities undertaken by the Sponsoring Directorate, including preliminary views on the project’s Tier allocation
  • Seek guidance from MPC, FABG, and ICA to support the project’s development under the Capital Framework
  • For Programs and Precincts, discuss initial views on the approach to developing a Program Business Case or Precinct Business Case.

Although the EPP should involve initial discussions with MPC, FABG and ICA that align with the objectives above, the topics covered are at the discretion of the Project Team requesting the EPP. The EPP should be a platform for further discussions to occur through the Capital Framework process.

An EPP is mandatory for projects that the Project Team has identified as potentially Tier 1 or Tier 2. For other projects identified as potentially Tier 3, an EPP is recommended. Where feasible, Sponsoring Directorates should bundle proposed Tier 2 and, in particular, Tier 3 projects with similar characteristics into a single EPP.

The EPP Guidelines assist the Project Team in preparing for the EPP, as well as providing information on the logistics of organising an EPP and its recommended timing.

Investment Logic Map

Government makes investment decisions to resolve an identified problem or realise an identified opportunity. The production of an Investment Logic Map (ILM) supports Government in identifying and selecting the solution that best addresses the problem or opportunity identified and provides the most benefit to the community. This solution may involve a capital or non-capital investment. The process of producing an ILM requires the Project Team to identify and summarise the four core elements of an investment decision: problem/opportunity, benefit, strategic response and solution.

The Project Team is required to develop an ILM for Tier 1 and Tier 2 projects and is recommended to develop an ILM for Tier 3 projects. This process may involve one or more Investment Logic Workshops (ILWs) to bring together key stakeholders to pool knowledge in an informed and facilitated discussion. The Project Team is required to undertake an ILW for Tier 1 projects.

The Guidelines for producing an ILM include detailed information on what an ILM is, why the Sponsoring Directorate needs one, how to prepare an ILM and when the Project Team should prepare one.

Scope, risk and delivery model analysis

The Project Team and key stakeholders should undertake initial scope, risk and delivery model analysis through discussions conducted throughout Stage 1 – Develop. These analyses and discussions should occur alongside and inform the EPP and ILM and also should inform the Tier Assessment.

This activity should involve:

  • Discussion and consideration of the scope of the project, including information on what the scope of works and scope of services may involve (for more guidance, refer to the Project Scope Guidelines)
  • A preliminary assessment of the risk level of the project and the key risks involved in developing, delivering and operating the project. Although the Project Team is not required to develop a full Risk Register, it should, in discussion with key stakeholders, consider and identify the project’s key risks and understand the magnitude of each key risk’s impact (for more guidance on identifying the project’s level of risk, refer to the Tier Assessment Guidelines)
  • Initial analysis and discussions on the possible shortlisted delivery model options available for procuring the project (for more guidance on shortlisting delivery model options, refer to the Delivery Model Guidelines).

Although there is no stipulated requirement for these discussions before the commencement of Stage 2 – Prove, the Project Team should ensure that there is sufficient understanding of a project’s scope and risks for them to make an informed assessment of the project’s Tier allocation.

Tier Assessment

The Tier Assessment is a key output of Stage 1 – Develop, as it determines the level of analysis required to progress a project through Stage 2 – Prove. This assessment aims to ensure that the Project Team takes a robust approach to project analysis that is proportionate to the risk and capital cost of the project. The Project Team should assign the project’s Tier in accordance with the matrix shown in Figure 2 below.

Figure 2: Tier classification matrix

The tier classification matrix separates projects based on their cost and risk profiles into three tiers. Projects less than $25 million that are low or medium risk are classified as Tier 3 projects. Projects between $25 million and $100 million that are low or medium risk, or projects less than $25 million that are high risk are classified as Tier 2 projects. Projects that are over $100 million or projects that are between $25 million and $100 million and are high risk are classified as Tier 1 projects.

The Project Team should present the indicative Tier Assessment and rationale in the EPP for discussion with MPC, FABG and ICA. The Project Team should finalise the Tier Assessment prior to the completion of Stage 1 – Develop, revising the assessment if necessary during Stage 2 – Prove in consultation with MPC, FABG and ICA.

The Tier Assessment Guidelines include details on how to classify a project into each of the three Tiers and the mandatory reporting requirements for each Tier during Stage 2 – Prove.

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