Options Analysis

A Business Case is required to progress an investment through the Capital Framework process. It is the core component of Stage 2 – Prove (shown in the diagram below). Within the Business Case, the Project Team is required to undertake an Options Analysis to determine a recommended project option.

The Capital Framework process

Overview of the Capital Framework and the key questions, activities and documents of each stage. The Business Case (for a project, program or a precinct) sits within Stage 2 - Prove of the Capital Framework and helps to 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?"

Tier requirements

For Tier 1 and Tier 2 projects, the Project Team is required to identify the project options and undertake an Economic Appraisal, Financial Analysis and Wellbeing Impact Assessment on all project options to identify a recommended project option. For Tier 1 projects, the Project Team must also undertake an analysis of the project’s staging.

For Tier 3 projects, the Project Team is only required to define the Base Case, identify the project options and perform Multi-Criteria Analysis (MCA) to determine the recommended project option.

Programs and Precincts

For Programs and Precincts, the Project Team must undertake the Options Analysis process outlined in these Guidelines. The Project Team is required to perform an analysis of the Program’s or Precinct’s staging, regardless of the Tier.

Purpose of this module

The purpose of this section is to provide guidance to the Project Team on how to undertake a robust, structured, objective and evidence-based Options Analysis process. This will ultimately determine the recommended project option that best addresses the problems or realises the opportunities identified in Stage 1 – Develop of the Capital Framework.

Objectives of Options Analysis

The primary purpose of the Options Analysis is to identify a recommended project option by assessing the possible project options and performing an objective assessment of each of their merits and disadvantages to determine the option that maximises value for money. The Project Team should not reject options based on personal preferences, perceived political difficulties or any other consideration that precludes their genuine consideration.

One of the key tools used to conduct Options Analysis is MCA. This decision-making tool uses a ‘non-monetary’ evaluation to compare options in a transparent and structured manner. MCA differentiates and evaluates options using a set of agreed assessment (or evaluation) criteria, with a relative importance assigned to each criterion. For more information on what an MCA is and how to undertake one, refer to the MCA Guidelines.

The Options Analysis is also supported by the results of the Economic Appraisal (including the Cost Benefit Analysis (CBA) and detailed MCA), Financial Analysis and the Wellbeing Impact Assessment.

Footnotes: