Concept Approval and Business Case - Department of Treasury

Strategic Asset Management FrameworkThe challenge at the business case stage is to remain flexible in terms of theprocurement method, while ensuring that Cabinet is provided with sound adviceon the potential way (or ways) ahead. For example, in order to provide suchadvice, it would be appropriate to conduct an initial PPP value driver analysis forproposals that are likely to cost $50 million or more. This would help to clarifywhether the nature and scale of the investment might be attractive to the marketas a PPP prospect, and in particular, the potential for innovation and appropriaterisk allocation to achieve a value for money outcome.FinanceFinance planning is also distinct from the business case. Consideration ofpotential finance arrangements should only be made after the merits of the casehave been established. This is to ensure that a proposal is supported due to itsstrengths and relative merit in relation to Government policy and service deliveryobjectives, rather than simply because access to finance can be secured.The finance advice should identify the range of sources that may be feasible –whether through the investment of State budget funds, or a joint fundingarrangement with the private sector, or with Commonwealth sources (such as forinfrastructure, health, hospitals and education). For each feasible source, therelative levels of debt should be made clear across the full life of the proposedasset – rather than on a start-up or capital cost basis alone.It is important to emphasise that regardless of the type of finance sourceenvisaged, any finance proposals received, and any analysis and planning by anagency, must be prepared in consultation with the DTF, particularly whenco-investment and financial risk-sharing by the State is involved.The final decision on the most appropriate source of finance for a major proposalshould be taken (after the costs and risks have been confirmed, based on thePDP).14Exposure Draft – December 2010