Investment Proposal Title

[Agency Logo]

[Agency Title]

[Investment Proposal Title]

Business Case

[Date] Approval

Name/Title Signature Date

Minister

Director General / Chief Executive Officer

Chief Finance Officer

Chief Information Officer

Contact Officer

Name/Title Email Phone

Version Control

Version Date Status/Action/Change Approved By

Draft 1

Draft 2

Final Executive Summary

This section outlines: the purpose of the investment; the pros and cons of the recommended and alternative options; the amount of funding sought; and the key approvals and next steps.

Clear advice is provided on: the business problem that would be addressed; the most cost effective investment option that would best serve the Government’s policy and an agency’s service delivery objectives; short-listed alternative options, should decisionmakers conclude that the first option does not have priority for investment at the levels of expenditure and risk proposed, or should future financial, economic or other capacity constraints preclude it; level of funding that should be allocated in each year of the State’s Asset Investment Program for the recommended option; and any significant asset improvements that are excluded from the proposal (such as new parking facilities for a building that is to be refurbished).

Examples of key approvals and next steps include: action to acquire a parcel of land for the asset as a matter of priority; and formal negotiations with stakeholders.

The advice is presented in summary, rather than argued. The information in the remainder of the business case provides the necessary justification. Statement of Purpose

Strategic Justification

This section demonstrates that the investment proposal has a strong business objective and high relative priority.

The main points of reference are the Government policies, demand drivers and projections, and the service delivery objectives and model in an agency’s strategic asset plan. The business case does not repeat the detail to be found in the plan – but a clear, direct link to the relevant elements is shown.

Question

What ranking does the proposal have in the list of highest priority investment items at the conclusion of the strategic asset plan?

3 Existing Assets

This section clarifies the weaknesses and strengths in an agency’s existing asset base and future service capacity that the investment proposal would address.

The point of reference is the Current Asset Review section in the strategic asset plan.

The advice covers the limitations and significant risks to service delivery caused by weaknesses in existing assets and related nonasset initiatives.

Concise reference is also made to any emerging changes in State or Commonwealth legislation or regulation that relate specifically to the investment proposal, for example, OH&S or asset design quality and maintenance standards.

The focus of the advice is not solely on weaknesses – it also identifies strengths that could be built upon to help address the gap.

Questions

Which of the highest priority service delivery gaps and risks would the proposal address?

What are the strengths of the existing assets (and nonasset initiatives) upon which future capacity could be built? Investment Proposal

This section provides a concise statement of the objectives and benefits, including the levels of improved functionality and performance that the investment proposal would aim to achieve.

The statement of benefits and the performance measures are focused on the broad investment proposal in an agency’s strategic asset plan (not on the alternative options that might be used to achieve it).

This is done in dot point form on a single page which lists for example, the percentage increase in a service per hour to the public, in the availability of the service and the speed at which an agency could respond.

The benefits statement is practical, with measurable performance indicators, for example to: improve emergency response times in a given suburb from thirty to twenty minutes; consolidate multiple, online public information sites to a central, easy access portal; increase positive stakeholder or user satisfaction feedback by X% in year one.

4 A wellconstructed statement builds on the strengths in an agency’s existing assets (as identified in the preceding section), establishes a clear requirement for the proposal (in the context of related proposals and approved projects) and clarifies the main aspects that would be outside the scope of the proposal.

Questions

How would the proposed investment help to meet the service delivery objectives, and form part of the service model in the strategic asset plan?

What practical impact would the proposal have in the particular community and among the other users who would benefit?

Why are each of the benefits and performance measures realistic and achievable? Options

Shortlist Description

This section describes each of the shortlisted options that are most likely to provide value for money in achieving the objectives, benefits and performance measures for the investment proposal.

In most cases, the shortlist will contain at least three options: continuation of the status quo: including the benefits, costs and risks inherent in this approach, for example for increased maintenance and staffing; first alternative: which would enable transition from the status quo to a satisfactory level of improved service – focused on the essential, highest priority objectives and benefits, rather than those that may be desirable or ideal; and

other alternatives: which would improve services to meet the highest levels of demand, and achieve all or most of the objectives and benefits of the investment proposal.

The shortlist may include a mix of current asset optimisation, nonasset initiatives and new investment, whether major or minor, as appropriate to the circumstances for the proposal.

The shortlist does not provide an argument for a single option by emphasising only its strengths and the weaknesses of the alternatives.

Sufficient, concise advice is provided to demonstrate that the highest ranked options that were excluded from the shortlist were rejected objectively, due to their weaker relative merit and value for money potential. The evidence for this is contained in the options analysis that underpins the business case. Further guidance is in the SAMF Options Analysis module.

5 Questions

To what extent would each shortlisted option address each of the highest priority service delivery objectives, benefits and gaps?

What are the main weaknesses, limitations and risks of each shortlisted option?

Why were the other options in the long list rejected, particularly those with highest ranking?

Value for Money Comparison

This section clarifies the parameters for each of the shortlisted options and compares their relative value for money potential.

The objective is to clarify the relative advantages and disadvantages of each option in terms of the scope and benefits that could be achieved, at a given cost and at the earliest time at manageable risk.

It is important to emphasise that the recommended option should be an outcome of this evaluation, not a favoured input.

What is the scope of each option?

Why is the scope appropriate and not excessive in addressing future service delivery demand drivers and projections?

Would any shortfalls in scope be material to the success of the proposal?

What broad design standards would be applied for each investment option and what value for money would result?

Which options provide the best opportunities to promote interagency efficiency, for example through the shared use or development of existing or future information technology systems or support?

Why should the status quo not continue – why do the costs and risks of this option outweigh the benefits relative to other options?

Existing Asset Optimisation

Which options make best use of existing assets?

Do any of the options waste or duplicate existing assets?

Why would the most cost effective way ahead not be to invest solely in sustaining current assets?

6 NonAsset Initiatives

Which options make best use of current or new nonasset initiatives?

Why would the most cost effective way ahead not be solely to invest in nonasset initiatives?

Benefits

What are the top three, practical benefits that would be achieved by each option in terms of service delivery, stakeholder expectations and the efficiency of the public service?

Why are the top benefits worth the price that would be paid to achieve them?

Cost/Contingency

What are the top five cost drivers for each option?

What are the operating costs?

What are the best and worst case total cost estimates (including the contingency element, calibrated to address the risks)?

How much would costs have to increase before the option would no longer provide value for money?

Schedule

When would each option start to deliver services – based on a realistic appraisal of the scope and risks involved?

Which option offers the best balance between early, substantial benefits realisation and prudent planning and implementation?

How would the schedule enable a gradual, incremental approach to achieving the benefits – as distinct from a big bang, high risk approach?

Risk Mitigation

What are the major risks faced by each option, in terms of: delivery on time, cost and schedule; benefits realisation; and overall value for money – including, for example, risks from stakeholder opposition, land assembly approvals, the complexity of the technology involved, or the lack of workforce skills and numbers?

What action would be taken to address each major risk?

What unintended negative consequences could arise, and how would they be avoided or minimised?

7 After taking risk mitigation into account, what overall risk rating should be allocated to each option (high, medium, low) and why? Procurement

This section identifies the range of potential procurement models that are more likely to achieve value for money for the State.

The advice is based on the findings of a preliminary procurement options analysis workshop among senior officers with experience in the procurement and delivery of similar projects. The development of a detailed procurement plan, conduct of an informal market sounding, and/or release of a formal invitation for Expressions of Interest are not required at this stage.

Key questions include:

What are the likely strengths, weaknesses, benefits and risks of the alternative procurement methods (whether design and construct, early contractor involvement or PPP)?

What is the potential for project bundling across related projects within the agency’s future asset investment portfolio?

What is the potential for collaborative planning with other agencies to achieve procurement efficiencies – if there is none, or only limited opportunity, why is this so?

8 Finance

This section identifies the range of potential financing options that are more likely to achieve value for money for the State.

The advice is based on the findings of discussions among senior officers in an agency and Treasury with experience in the financing of similar projects. The advocacy of a preferred financing arrangement without advice on the alternatives is not acceptable.

Key questions include:

Which potential options would be attractive from the State’s and an agency’s perspective – whether through an outright purchase, lease, rental, private funding, joint government funding or a combined arrangement?

What would be the likely extent of the financial exposure, coinvestment and risk share borne by the State under each arrangement?

What would be the indicative net debt impact on the agency and the State’s finances?

Does Treasury support the proposed set of arrangements? Recommendations

This section recommends the best and alternative options, and the next steps to ensure that significant implementation issues are addressed.

Implementation issues include: the governance and accountability system that would be established in an agency (and with related agencies); and any resource or capacity constraints for which detailed planning and corrective action should start soon to ensure that an agency can deliver the investment option as proposed.

Options

Which of the shortlisted options is the recommended one, and why?

Which are the next best, alternative options, and why do they offer less value for money than the recommended one?

What level of funding should be allocated in the State’s four-year Asset Investment Program to cover the recommended option (as shown at Appendix A)?

9 Implementation

Governance/Accountability

What governance and accountability arrangements would the agency apply to ensure successful implementation, including the:

timing for regular progress and benefit realisation reports; and the

internal and other agency officers and committees that will be involved, and the timing and value that will be added?

Resources/Agency Capacity

Which options are safely within, and which are beyond the capacity of the agency to deliver through the use of existing experience, skills and resources?

What additional resources would the agency need to develop and implement each option, and how would these be obtained?

Planning and Delivery

What would be the scope, cost and timing of the project definition work?

What key approvals would be required (for example, to commence land acquisitions or formal negotiations with stakeholders)?

Exit Points

What would be the exit strategy for each option if things start to go significantly wrong?

What would be the reasons for using an exit point and the benefits, costs and negative impact of doing so?

What would be the recovery strategy and next steps after an exit point is used?

10 Appendix A: Total Financial Impact

1. Proposal Title:

a. Type: [e.g. new asset; upgrade; asset disposal?]

b. Location: [latitude/longitude]

2. Financing Method: [e.g. private sector; agency borrowing; Commonwealth]

3. Net Debt Impact:

4. Planning Funds for Business Case Required?

5. Total initial estimate:

Year [Budget] [FE 1] [FE 2] [FE 3] [insert relevant]

Initial Project Cashflows

Capital Cost

Less Other Funding

Consolidated Account Estimate

Recurrent Impact

Asset Maintenance

Depreciation

Borrowing Costs

FTE Costs

Sub-Total

Less: Existing Funding

Less: Revenue

Net Recurrent Impact