Prove

Stage 2 – Prove is the stage in the Capital Framework where the Project Team must develop the case for investment and the cost estimate, including a contingency allowance, for the project, Program or Precinct. It involves activities to help answer the key questions of this stage:

What is the recommended project option?

How well does it meet the service need, align with Government policy and optimise the balance between risk, benefits and cost?

What is the proposed scope, budget and timeline?

The diagram below the activities required by the Project Team in Stage 2.

Stage 2 of the Capital Framework

The subsections below outline further information on each activity that the Project Team must undertake for Stage 2 – Prove and provide links to more detailed guidelines.

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

Project Concept Brief

A Budget process may require a Project Concept Brief (PCB) for a project to be provided to FABG. The PCB is a key document that enables FABG to have a holistic view of and understand likely upcoming budget submissions. It summarises:

• The key features of the proposed project
• The need the project seeks to address
• The project’s scope and alignment with other strategies, policies, programs and projects
• At a high level and where available:
  • The project’s costs and benefits
  • The recommended delivery model
  • Information on the project’s governance structure and timeline.

Should PCB be required in a Budget process, specific advice and guidance will be provided by FABG. For further information on this please contact FABG representative.

Business Case

The Business Case is the core component of the project’s progression through Stage 2 of the Infrastructure Investment Lifecycle. The Business Case:

• Brings together information on the need for investment and the problem or opportunity the project addresses
• Presents detailed information on the project’s scope and risks
• Explores the benefits and costs of the project
• Summarises the results of the Wellbeing Impact Assessment under the Wellbeing Framework
• Outlines the proposed delivery model, governance structure, timeline and other relevant information.

In developing the Business Case, the Project Team should consider the process it will need to follow to gain Government approval of the Business Case. The subsections below provide a summary of the activities required by the Project Team in developing the Business Case.

Some, generally complex, projects require significant resources to undertake the front-end planning and due diligence work necessary to build a comprehensive Business Case. Directorates and Agencies may request funding to undertake these activities and progress a project potentially through part of Stage 1 and/or part or all of Stage 2 of the Capital Framework through a Business Case for Project Development Funding. Examples of these activities include:

• Undertaking a detailed feasibility study
• Developing a concept design and robust cost estimates
• Using experienced public servants or consultants to help writing the Business Case for the capital project.

The Project Team should use the separate template provided to develop a Business Case for Project Development Funding, which includes guidance on the information that is required to seek funding to progress the project through the Capital Framework.

Needs Analysis

The purpose of this section of the Business Case is to describe the case for investment.

The Project Team should refer to the ILM and provide evidence for the problems or opportunities they have identified in the ILM, as well as the benefits they identified that the project will realise if it addresses these problems or opportunities. The Project Team should provide a robust assessment of the need for investment and evidence to support any statements developed in the ILM and during the ILW, where relevant.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Strategic and Policy Alignment

The purpose of this section of the Business Case is to ensure the problems/opportunities that the project is to address/realise, and the benefits that it is to achieve, align with the overarching vision and strategy for the ACT, and to describe how the project complements or interacts with other projects. The Project Team should also present a summary of the Wellbeing Impact Assessment undertaken for the project, Program or Precinct against the Wellbeing Framework within this section.

The Wellbeing Framework ensures that the potential social and environmental impacts of a project can be identified to complement the outcomes of economic measures (such as Cost Benefit Analyses).

The Project Team must complete a Wellbeing Impact Assessment of the project under the Wellbeing Framework using the standard template. The Project Team must attach the Wellbeing Impact Assessment to the Business Case.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Options Analysis

The purpose of this section of the Business Case is to identify alternative initiatives or options that address the problems or opportunities identified in the ILM.

The Project Team should:

• Identify a realistic ‘do minimum’ Base Case
• Assess the strategic solutions identified in the ILM to select a recommended strategic solution (for Tier 3 projects, this is recommended rather than mandatory)
• Discuss and agree the relevant evaluation criteria
• Identify, analyse and assess the shortlisted project options for the recommended strategic solution
• Outline the recommended project option
• Consider the possible staging options for the project option (for Tier 2 and Tier 3 projects, this is recommended where relevant).

For Tier 1 and Tier 2 projects, the Project Team must undertake a Financial Analysis and an Economic Appraisal for all shortlisted project options to feed into the selection of a recommended project option as part of the Options Analysis.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Project Scope

The purpose of this section of the Business Case is to detail the scope of the recommended project option identified in the Options Analysis section of the Business Case and outline how it will address the identified need.

The Project Team should provide the background to the project, describe its vision and objectives and detail the scope of works and the scope of services for the project. The Project Team should provide a comprehensive overview of the project to ensure that it will address the problems or opportunities identified in the Needs Analysis section.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Risk Analysis

The purpose of this section of the Business Case is to describe the outcome of the Risk Analysis undertaken for the recommended project option (or for the shortlisted project options for Tier 1 projects), including the identification, assessment and allocation of project risks. For Tier 1 projects, the Project Team should include the key risks for each of the shortlisted project options where there are significant differences in risks between the options.

The Risk Analysis process is critical for all investments. The process identifies potential risk sources and risks, analyses their Likelihoods and Consequences (and hence their Impacts), devises and implements risk treatments, and determines an appropriate contingency allowance within the cost estimates to ensure the project is highly likely to achieve its procurement and service delivery goals within its allocated budget.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case. Additional detailed Guidelines on the steps to undertake as part of the Risk Analysis process are also available.

Delivery Model Analysis

This section of the Business Case presents an assessment of the applicable delivery models for the project and the process for identifying a recommended model.

The Delivery Model Analysis section includes details of the process the Project Team have undertaken to shortlist and compare delivery models, as well as a description of the process used to assess whether any packaging of separate works components is appropriate.

As a key output of this section, the Project Team should identify the recommended delivery model for the project (based on the recommended project option), with clear evidence presented to support reasons why they have selected this delivery model.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case. Additional detailed Guidelines are also available on possible delivery models, when to use them and their advantages and disadvantages.

Financial Analysis

The Financial Analysis section presents a summary of the costs, revenues, contingency and other financial analysis of the recommended project option (or all shortlisted project options for Tier 1 and Tier 2 projects). The Financial Analysis section assists the Project Team, MPC, FABG and ICA to understand the financial and funding implications of the project option(s), assess the value for money of the project option(s) and inform the decision on the best way to deliver the project (including staging and delivery model).

The Project Team should include a detailed analysis of whole-of-life cash-flows for projects that are likely to use an Integrated delivery model (such as a PPP). The Guidelines for Public Private Partnerships Guideline provides detailed analysis required for Integrated delivery models.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Economic Appraisal

The primary purpose of the Economic Appraisal is to identify and measure the economic, social and environmental costs and benefits of a project and to present them in both monetary (through a Cost Benefit Analysis) and qualitative terms (through a Multi-Criteria Analysis and distributional analysis). This format allows outcomes for translation of a range of options into comparable terms to facilitate evaluation and decision making. All shortlisted project options should be analysed (where relevant).

For Tier 3 projects, the Project Team should simply include a definition of the Base and Project Case(s) and describe the benefits that the project would be expected to generate and the costs of the project, quantifying benefits and costs where possible. These benefits and costs should be supported by evidence where available.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case. Additional detailed Guidelines are also available that describe the economic appraisal methodology the Project Team should use in developing the analysis.

Project Governance

The purpose of this section of the Business Case is to present the governance structure proposed by the Project Team to ensure the project achieves its objectives, outcomes and successful delivery. It is mandatory for projects in all three Tiers. However, for Tier 3 projects, the Project Team is only required to make a statement of the recommended governance structure for the project.

The Project Team should propose an effective Project Governance structure that provides a clear framework for decision making over the life of the project, and acts as an efficient communication mechanism between the Project Director, senior management and key stakeholders. The Project Team should outline the key bodies involved in governing the project and the roles and responsibilities of the individuals and governance groups within the governance structure.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case. Additional detailed Guidelines are also available on identifying a governance structure.

Stakeholder Engagement Plan

The purpose of this section of the Business Case is to ensure that there are established processes and tools for engaging with the community and key stakeholders.

This section is mandatory for Tier 1 and Tier 2 projects, as well as Tier 3 projects that the Project Team identified in Stage 1 – Develop of the Capital Framework as requiring additional stakeholder analysis. This section is optional for other Tier 3 projects.

The Project Team should outline the Stakeholder Engagement Plan and identify stakeholders who will be affected by the project, their analysis on how the project will affect these stakeholders and a communication strategy for consulting with these stakeholders. The Project Team should also outline the key messages for the project if it moves to announcement, procurement and delivery and how engagement will occur.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Advisor Engagement Plan

The purpose of this section of the Business Case is to identify the full range of advisors that the Project Team may require to progress the project through the Infrastructure Investment Lifecycle. External advisors can typically offer a wider commercial perspective and greater experience than that available within Government, particularly for Integrated delivery models.

This section is mandatory for Tier 1 projects and for any projects that the Project Team identified in Stage 1 – Develop of the Capital Framework as requiring specialist advisors. This section is recommended for Tier 2 projects.

The Project Team should outline the advisors they propose to use during the project’s procurement and implementation phases, and the rationale for engaging external advisors as opposed to using internal expertise within Government.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Timeline

The purpose of this section of the Business Case is to set out the project timeline and key milestones, and the assumptions underlying them, to support the Project Team in ensuring that the project is well managed and achieves its targets. In particular, this section should detail the timelines for the recommended project option identified in the Options Analysis.

The Project Team should describe the timeframe and responsibilities for the project’s targets and/or milestones. The Project Team should also confirm all the activities required to progress the project and identify the critical path activities throughout the Infrastructure Investment Lifecycle. This section should also consider the relevant approvals process that will be required for the Business Case and how this may affect subsequent timeframes.

For more information, the Project Team should refer to the Guidelines on developing this section of the Business Case.

Benefits Realisation Plan

The Government incurs expenditure, including investments in infrastructure capital projects, either to solve a problem or to take advantage of an opportunity, in order to realise benefits. The benefits management process is just as important as cost management within the Infrastructure Investment Lifecycle.

Benefits management goes to the heart of delivering projects successfully. If the Project Team dedicate appropriate time to benefits management early on in the project’s development, then it can shape clear project objectives based on an agreed understanding of stakeholder wants and needs. The Project Team can address issues that are crucial to the success of the project by focusing on rigorous benefits management from the start.⁠ (Footnote: See Guide for Effective Benefits Management in Major Projects, UK Infrastructure and Projects Authority, October 2017 )

Benefits realisation is a continuous process that runs through the full Infrastructure Investment Lifecycle. The Benefits Realisation Plan (BRP) is a key document separate to the Business Case that guides the ongoing process of identifying, measuring, monitoring and reporting on the project’s expected benefits and costs once the Business Case has been approved. The BRP should define key dates, the organisational role responsible for managing each identified benefit and how they will report the benefit. The Project Team should prepare the BRP alongside the Business Case to ensure that there is a clear plan for the realisation of the benefits outlined in the project’s Business Case (such as those identified in the Needs Analysis and Economic Appraisal). A BRP is mandatory for Tier 1 projects, and optional for Tier 2 and Tier 3 projects.

The BRP Guidelines include information on how to identify benefits, develop a BRP and then how to implement a BRP.  A template has been prepared for the Project Team to use as a guide to structure the BRP.