Concept Approval and Business Case - Department of Treasury

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Strategic Asset Management FrameworkThe schedule should not be driven by a ‘desired’ date (such as for the publicopening of the facility); if such dates are unrealistic – because the advice toCabinet will not be robust, and schedule slippage will be inevitable. If desire,rather than reality, is the schedule driver, this should be made clear in thebusiness case, along with the consequent risks.The business case should make clear the logic for the schedule contingency forslippage. This should also be developed in terms specific to the particularinvestment option – for example, the number of heavy rain and storm days in thelocation in which the facility would be constructed. The schedule contingencyshould be benchmarked against public research which shows, for example,indicative timing in weeks for the design, documentation and completion ofprojects of a similar type, scale and total cost.ImplementationThe business case should be backed by detailed management and resourceplans for:• agency governance, including progress reports against performanceindicators;• project delivery;• risk mitigation;• stakeholder communication, and change management; and• through-life asset operation.The business case should identify any unintended negative consequences thatcould arise and how they will be avoided – for example, by providing adequateresources and supervision to ensure that frontline staff do not sacrifice servicequality in order to meet high targets (such as the number of enquiries addressedper hour).In particular, the business case must show how implementation risks experiencedby similar investment proposals in Western Australia and other jurisdictions will beaddressed. Reports by State, Federal and overseas auditors provide examples.12Exposure Draft – December 2010
Concept Approval and Business CaseProcurementProcurement planning is distinct from the business case. If Cabinet decides that aproposal should be supported, a separate, preliminary plan should be available toenable Cabinet to decide on the sort of procurement path or paths that would beappropriate, or should be explored further.The procurement plan should address the range of potential methods, to indicatewhether suitable strategies may include the traditional design and constructapproach, an alliance contract, early contractor involvement, or a public privatepartnership.The procurement plan should provide clear alternatives, and ensure that thegovernment is fully advised of the benefits and risks inherent in each. Based onthat advice, Cabinet may decide to pursue a higher risk procurement strategy inorder to achieve an early service delivery start-date, or it may opt for a moremanageable balance of schedule and risk.Informal consultation with industry should be held to help develop theprocurement plan. The interaction should be based on non-binding expressions ofinterest (not high cost tender work by companies). This will help clarify, forexample, the potential for a particular procurement approach to deliver the scopeof an investment option within the cost, risk and schedule parameters proposed toCabinet – as well as key issues including the likely contract type (whether fixedprice or cost plus).The procurement plan should also allow an early appreciation of the potential forsmart arrangements, including the bundling of related contracts by one agency oracross agencies, for which sufficient time will be needed to prepare.Overall, procurement planning must be robust at the business case stage –subject to refinement and finalisation in the context of the PDP. Sound planning atthe business case stage should help to ensure that the procurement aspects arenot rushed or left incomplete during the tendering process.Because the extent and timing of market interest are significant factors inselecting a procurement arrangement, the final decision should be made at theappropriate time, based on the more detailed work required later in support of aPDP.Exposure Draft – December 2010 13
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Concept Approval and Business Case - Department of Treasury

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