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DESIGNED FOR USE IN NSW GOVERNMENT CAPITAL PROJECTS

FINAL BUSINESS CASE

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NOTES ON THE TEMPLATEGeneral CommentsThis template, aligned with the NSW Treasury Business Case Guidelines (TPP 18-06), is specifically designed to communicate the underlying information required to inform the decision to proceed with a government investment.

This template forms part of a suite of documents to assist with the development of best practice business cases within NSW. Please ensure that this is the correct template to apply for your needs at this stage of the process.

The template is continually under development and will be improved over time. Check on the online business case portal before using this template to ensure that a more up-to-date version has not been developed.

The template should not be modified.

The document outline provides clear headings that should be followed in completing the development of the Final Business Case.

Any reference to Practitioner’s Notes is subject to the following disclaimer: the views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any agency of the NSW government.

Structure of Template The template provides the document outline to provide the necessary information and analysis to support an investment decision and approval to proceed with the project. The document outline provides clear headings that should be followed in completing the development of a document.

Information is provided under each report section heading (in text boxes an example of which is presented below) that provides commentary and guidance for drafting purposes and should be deleted when no longer required.

Purpose:Outlining the information that is required to be presented as part of this section of the business case.

Supporting material: Reference to material that may support the delivery of this section of the business case including practitioner

notes and general table/figure templates etc.

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DESIGNED FOR USE IN NSW GOVERNMENT CAPITAL PROJECTS Version 2: June 2019 1

FINAL BUSINESS CASE

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PURPOSE OF THE FINAL BUSINESS CASE REPORTBusiness cases are a critical element within the capital investment decision-making process for the NSW Government.

A business case is a documented proposal to meet the Government’s objectives that is used to inform an investment and/or policy decision. It contains analyses of the costs, benefits, risks and assumptions associated with various investment and policy options linked to policy or program outcomes and informs future implementation, monitoring and evaluation.

In practice, a business case is a management tool and a living document which is developed over time and reflects the priorities of investment stages – from determining there is a problem/need for investment through to refining the project options to final investment decision process.

Gate 0 Gate 1 Gate 2

Report requirements

INSW Gateway review process

Need/process Project Initiation Project shortlisting/refinement Investment Decision

Needs Confirmation Report Strategic Business Case Final Business Case**

Tiers 1, 2 & 3* Tiers 1 & 2* Tier 1INSW IIAF Project Tier

* Unless otherwise nominated for further reviews** Final Business Case is referred to in the Treasury Guidelines as the Detailed Business Case

The Final Business Case document is the third component/deliverable within the NSW Government capital expenditure process as defined in the Infrastructure NSW Gateway review process (i.e. Gate 2) as highlighted in the red box above. All work undertaken and presented within this template should be undertaken in accordance with Treasury’s NSW Government Business Case Guidelines (TPP18-06) and the NSW Government Guide to Cost-Benefit Analysis (TPP17-03).

The Final Business Case is the key document that justifies the project scope and investment as an appropriate and deliverable response to the established service need and which will maximise benefits at optimal cost. This document should provide decision makers with sufficient detail to make a determination on whether there is an underlying need of strategic value that requires a capital solution and an analysis that outlines which option is most suitable for capital investment.

It provides a justification for the program or project based on a detailed assessment of business needs, strategic alignment, overall project benefit(s) and how the project will be delivered, operated and managed.

The output of the Final Business Case is a clear understanding of the preferred project option.

The document should explain as clearly as possible to the non-specialist: The problem – what is the service need and why is further capital expenditure required? Why this problem is of strategic importance (i.e. alignment with Government objectives and/or policy)? What options have been considered and why the proposed option is preferred? What are the relative net benefits of the project option – for the users and the general community? How much will the project cost to the Government over its lifecycle? What risks should be considered and actively managed? What stakeholders should be taken into account and what the management strategy is for key stakeholders? How the department plans to construct and manage the asset?


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The Infrastructure NSW Investment Decision Gateway Review (Gate 2) will confirm that the Final Business Case has: Clearly defined the scope to respond to an evidenced based service need; Developed a robust cost plan, schedule and risk register; Developed a robust approach to procurement; Developed a delivery strategy; Clearly articulates the benefits to be delivered; and Confirmed resources to manage:

Governance Procurement activity Stakeholder engagement

A Cost-Benefit Analysis is required for the options being considered. The Treasury’s NSW Government Business Case Guidelines (TPP18-06) and the NSW Government Guide to Cost-Benefit Analysis (TPP17-03) should guide the options analysis to define the benefits sought, risk management, impacts and affordability assessment.

Infrastructure NSW’s Gateway Workbook Gate 2 Business Case should be referred to throughout the development of the Final Business Case.


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Final Business CaseDESIGNED FOR USE IN NSW GOVERNMENT CAPITAL PROJECTS

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Document Information

PositionProject Name:

Senior Responsible Officer:

Agency Head:

Delivery Agency:

Gateway Review Process: INSW Strategic Options Review (Gate 2)

Document Version Control

Project specific document history

Version Amendment Amendment Date Amended by

Supporting Documentation

Project-specific documentation (other than this report)

Version Title Amendment Date Amended by


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CONTENTS1. Executive Summary....................................................................................................................... 82. Description of Problem, Service Need or Opportunity...............................................................92.1 Background..................................................................................................................................... 92.2 Description of Problem, Service Need or Opportunity.....................................................................92.3 Existing Level of Service................................................................................................................102.4 Consequences of Deferral.............................................................................................................102.5 Previous Studies............................................................................................................................ 11

3. Policy and Strategic Alignment..................................................................................................123.1 Policy Context................................................................................................................................ 123.2 Place Based Considerations..........................................................................................................123.3 Principles, Objectives and Critical Success Factors......................................................................133.4 Project Alignment with Principles, Objectives and Critical Success Factors..................................14

4. Project Options............................................................................................................................ 154.1 Description of Proposed Project....................................................................................................154.2 Related Projects and Decisions.....................................................................................................154.3 Impact and Integration with other Government Assets and Services.............................................164.4 Enabling or Ancillary Works...........................................................................................................164.5 Disruption Management................................................................................................................. 17

5. Cost and Funding........................................................................................................................ 185.1 Budget Request............................................................................................................................. 185.2 Proposed Funding......................................................................................................................... 185.3 Cost Planning, Contingency and Management (P90/50 real and outturn).....................................185.4 Ongoing Maintenance, Operating and Service Costs....................................................................195.5 Commercial Off-set ....................................................................................................................... 195.6 Cost Planning and Management....................................................................................................20

6. Value for Money Assessment.....................................................................................................216.1 Demand Assessment..................................................................................................................... 216.2 Final Cost Benefit Analysis............................................................................................................216.3 Value Management........................................................................................................................ 226.4 Financial Appraisal........................................................................................................................ 226.5 Financial Impact Statement...........................................................................................................23

7. Commercial Analysis.................................................................................................................. 247.1 Procurement and Delivery Strategy...............................................................................................24

8. Project Management.................................................................................................................... 268.1 Project Management, Program and Milestones.............................................................................268.2 Project Governance....................................................................................................................... 268.3 Asset Ownership and Management Plan.......................................................................................278.4 Stakeholder Management Plan......................................................................................................278.5 Project Risk Management..............................................................................................................288.6 Compliance.................................................................................................................................... 298.7 Change Management.................................................................................................................... 308.8 Benefits Realisation Plan...............................................................................................................308.9 Sustainability................................................................................................................................. 318.10 Post Implementation Plan..............................................................................................................318.11 Stakeholder Endorsement.............................................................................................................31


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1. EXECUTIVE SUMMARY

Purpose:Cover all high-level issues that would be presented in an Executive Director’s briefing. Clear, succinct summary of the service delivery requirement to be addressed Project objectives and alignment with government, departmental, and program strategic directions Project status including options to be explored further in next phase Commercial off-set opportunities to be explored further in the next phase Next steps in progressing project

If it is written well, the Executive Summary can be used as the main source of briefing material.

The approach would benefit from a more detailed description of why the project is needed including policy drivers, project objectives and the concepts behind the project. There should be a succinct compelling statement that supports the decision to invest and proceed with the project.

Supporting material: N/A.

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2. DESCRIPTION OF PROBLEM, SERVICE NEED OR OPPORTUNITY

2.1 Background

Purpose:This section is available to inform an unfamiliar reader of important background or historical information, outside of description of the service need or the policy context, that will provide a level of context as to why this problem has been identified and being progressed.

At this stage of the evaluation process it is more important to provide succinct context of the relevant background information and references to supporting information.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 5 Step 13 Practitioner Note – Problem definition


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2.2 Description of Problem, Service Need or Opportunity

Purpose:This section is to describe the service needs, opportunity or requirement relevant to what the government is required to address and the reason for government intervention. It should highlight what the underlying problem is based on the current status of the asset/service (supply) and the current and future nature of customer/constituents needs (demand). This should be a succinct definition of the problem in which all future work on the project will be based.

The focus should be on government’s service delivery requirements, priorities, commitments and outcomes rather than focusing on the outputs, activities or solutions. This section should clearly answer the questions "Why is this project needed?" and “what is the direct outcome(s) of this project?” and/or what are the risks arising from the intervention?

For example: The service requirement is to provide 24-hour access to secondary level emergency department services for patients within the primary catchment area of the ABC Hospital.Rather than: The service requirement is for a new 20 cubicle purpose built state-of-the-art emergency department as directed by the Minister.

Generally, this will include key points on: Underlying drivers of service need Future demand of service need (i.e. demographic trends, utilisation, access) Current and future customer needs and base/desirable levels of services Service deficiencies Place-based outcomes Service model Operational or organisational efficiency Maintenance and operations. Capacity of asset to sustain service delivery Risks including what may impact the delivery of the project/government intervention and how these may be


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mitigated.

Summarise the section with a tabular presentation of the services to be provided within the development. Try to convey a sense of volume, scope and complexity.

Check that services needs are consistent with policy objectives and scope of project.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 4.2 Steps 1 and 2 Practitioner Note – Problem definition


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2.3 Existing Level of Service

Purpose:Some projects will benefit from a brief description of the conditions and limitations under which services are currently provided from.

It is important to note that this section is both current and forward looking in nature to take into account the likely impact on the asset/service with projected future demand levels.

The section will be particularly useful where the proposal involves rebuilding, relocating or refurbishing existing assets.

Where existing conditions are well described in supporting documentation (ege.g.: condition surveys) it may be sufficient to quote the major finding and reference the report in the Appendices.

Where not relevant (i.e. greenfield development project) this section can be omitted.

Supporting material: N/A

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2.4 Consequences of Deferral

Purpose:This section should highlight the risks that exist or would emerge in the future if the project does not proceed or is deferred.

For example, within a transport context the deferral of a project would most likely relate to increased levels of congestion, accidents and/or additional operational related costs.

This section should summarise the ‘base case’ under this heading, including the expenditure that would be needed ‘no matter what’ so that operations could continue as they are (i.e. do minimum investment scenario).



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2.5 Previous Studies

Purpose:This section should expand on the development process of the proposed solution (i.e. through the previous phases of the business case process) by describing the options considered and how the preferred option(s) was selected.

Summarise the project options considered, i.e. base option (do nothing) and other options. The benefits, dis-benefits, risks and costs associated with each option. Provide a justification for the option selected. Whilst there may have been many options at the beginning of the option selection process, your description of the options considered should be limited to the final 2 to 5 options.

Describe the Base Case in detail highlighting and, where possible, quantifying the deficiencies to be addressed ensuring that content here is consistent with letter sections.

Note for this section of the Business Case, further options analysis may not be required. It may merely be necessary to outline the decision trail to arrive at preferred option.



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3. POLICY AND STRATEGIC ALIGNMENT

3.1 Policy Context

Purpose:The policy context should briefly demonstrate how the proposal strategically aligns with the key policy directions, government priorities/outcomes and documents relevant to the project, including: State government (State outcomes, Financial statements, Cabinet endorsed strategies, Cabinet or ERC

decisions) Departmental (Departmental Plan, Published Departmental Strategies, Divisional funding strategies or

programs. Check for policy documents in other departments, divisions, regions or local bodies that might impact or interface with the project’s scope)

Regional (Consider policy decisions in related areas that may impact on project, particularly if recently funded) Agency (Consider current agency strategic planning) Federal Government

Identify any related projects that might need consideration within the project (i.e. a proceeding announcement of the project and/or other projects that shift demand/need onto this project). Any information presented here should be referenced to section 3.2.

All documents should refer to: INSW State Infrastructure Strategy Department of Planning, Industry and Environment – Sydney Metropolitan Plan Greater Sydney Commission – Strategy and District Plans

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 4.2 Step 3 Practitioner Notes: Alignment of business cases with government policy and strategy


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3.2 Place Based Considerations

Purpose:Specifically state whether the project in question is in response to a place based need, opportunity and/or constraint, as outlined in section 2 or alternatively a project which is intended to meet other needs in which needs to be designed and delivered in conjunction with other government place based plans.

While all projects need to take into account the impact that they have on their local surrounds and the value that they can deliver for people, not all projects have to be scoped and developed to solve all place-based problems within a particular area or precinct.

The vast majority of infrastructure projects will be solving a particular issue within a particular area, that whilst impacting the amenity of place, is not a complete solution in itself. It is important that projects remain true to their original need and context and should be scoped accordingly (i.e. as outlined within the Gate 0 Needs Confirmation Reporting process)

As a general rule, place-based projects and thus place based business cases in NSW should align to the directions outlined in strategies led by the Greater Sydney Commission, Department of Planning, Industry and


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Environment and Infrastructure NSW.

Practitioners should use this section to highlight how the project fits within the scope of place and relevant information and analysis presented throughout the business case report (i.e. how place was incorporated within the options development, cost benefit analysis etc.).

If the project in question is in fact a project that is not intended to solve a place based solution in itself but as part of a broader government response then the project team should merely reference the specific place based government planning document that is relevant. Furthermore, the project team should reference all interactions with the relevant NSW Government departments responsible for the delivery of these place based plans that were undertaken throughout the project development phase of the project to ensure that the project was designed to take into account and where possible optimise placed based outcomes.

Supporting material: Better Placed: Aligning Movement and Place (2019), Government Architect NSW Better Placed: An integrated design policy for the built environment of NSW (2017), Government Architect

NSW Practitioner Notes: Urban Design Practitioner Notes: Place based integrated land use and transport planning Practitioner Notes: Disruption management (planned) – transport network Practitioner Notes: Movement and place frameworks


3.3 Principles, Objectives and Critical Success Factors

Purpose:This section should summarise the primary project objectives, KPIs and principles of the project and how these will be managed going forward. Principles drive the actions in which the stakeholders will develop the project Objectives should outline the desired outcomes of the project KPI should outline the measurable benefits that the project will provide to the wider community

The objectives will be used extensively throughout the project – including briefings, summary documents, budget papers and communications – It is difficult to justify and support a project without clear objectives, so it is of great value to have these agreed at this early point of the project.

The principles and objectives should be: Focused on the key messages for the project Provide clear principles as to how the Department will manage and deliver this project Clearly state what the Department will achieve from the project Be short, precise, measurable and free of jargon Be able to be used to judge the success of the project Be able to be used as evaluation criteria for the project options to be assessed through this process.

This section could include in addition, statements of Vision, commitment, partnership or other less tangible objectives that will contribute to the project’s success.


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Supporting material: Practitioner Notes: Alignment of Business cases with government policy and strategy

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3.4 Project Alignment with Principles, Objectives and Critical Success Factors

Purpose:The purpose of this section is to document how the project objectives fit with or contribute to strategic objectives of the government, department, program or agency.

The strategic objectives will probably be identified within the policy directions identified within section 3.1.

It is important to have a critical view point of the alignment, and to provide quantitative measures if they are available.

The section should also detail and/or cross reference links with other capital plans. Particularly important is ranking on the strategy lists, Asset planning lists and Departmental/Divisional/Regional/Agency priorities.

The Strategic Objectives should be aligned to: Departmental Statements of Objectives INSW State Infrastructure Strategy State Outcomes

The KPIs and benefits identified in 3.2 should be aligned to State Programs and Program KPIs.

An example of the table form output that could be included within this section of the report is presented below:a. Align project objectives to state outcomes and other government priorities

Project objective Relevant state outcome/s

Relevant State outcome indicator/s

Other Government priorities, regulations or policies

12

b. Align project benefits and KPIs to State Programs and Program KPIs

Project objective Project benefit Relevant program Relevant program KPI12

Supporting material: Practitioner Notes: Alignment of business cases with government policy and strategy

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4. PROJECT OPTIONS

4.1 Description of Proposed Project

Purpose:This section should describe the project boundaries including what is “in scope” and “out of scope” and what exactly is to be delivered by the project. Outline why the project was chosen and how it will meet the project objectives. Be specific about what the Government will get for its money and why each significant component is needed.

This section should provide a final detailed account of each of the options including the engineering and design works that will drive the ultimate project design and delivery.

The following should be included in the project scope (at the relevant stage): Location of the project A ‘mud map’ and location map Quantifiable details of the project (e.g. length, number of lanes, speed constraints for a road project) Environmental constraints Relevant technical design standards including horizontal and vertical geometry, sight distance, shoulders, cut

and fill slopes, flooding, drainage etc Place based Urban and landscape design Utility adjustments Concept diagram and typical cross-section etc

The performance requirements and/or functional requirements should be as per the Objectives and Benefits table. All requirements must be capable of measurement.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 5 Step 9 Practitioner Notes: Place based integrated land use and transport planning

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4.2 Related Projects and Decisions

Purpose:This section should outline all inter-related government decisions and projects that are proposed and/or being progressed that would have a material impact on the operation and benefits associated with this project.

An example would be the development of an east coast high speed rail network and a proposed airport expansion

This section should express: the relationship between the projects the extent that the decisions will impact each project what work has been undertaken by the project team to ensure consistency of analysis and determine whether

the decisions/projects can co-exist and if applicable amplify the benefits How the investment decision of related projects can be coordinated to ensure an efficient and optimal decision


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by government

Supporting material: Practitioner Notes: Place based integrated land use and transport planning Practitioner Notes: Land use and demand impacts


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4.3 Impact and Integration with other Government Assets and Services

Purpose:This section must detail the impact of the new assets on all existing government assets and services.

Provide details of other works or projects in proximity or otherwise related to the proposed project which do not constitute part of the proposed scope of works. This may include works related to the project or other projects which fall near or adjoin the proposed project.



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4.4 Enabling or Ancillary Works

Purpose:This section should outline any known works that will be required to support the integration and ongoing operation of the new asset into the existing environment.

An example would be the construction of a new hospital requiring an upgrade to the immediate road network to support the hospital operations.

This section should express: the relationship between the project and the works what work has been undertaken by the project team to ensure consistency of analysis and determine why the

works are necessary to amplify the benefits How the investment decision of the works can be coordinated to ensure an efficient and optimal decision by

government



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4.5 Disruption Management

Purpose:This section should outline all feasible impacts to current government assets, services and the wider community (including but not limited to, local businesses, residents and sensitive user groups) as a result of the construction of the proposed project.

This section should reference both the risk and stakeholder analysis to determine what are the major risks and their impact on specific groups, with particular reference to direct financial impacts that are foreseeable to local businesses through the construction period and the risks associated with failing to deliver the project to program.

This section should also present the relevant stakeholder communication and construction management strategies that will be in place to reduce the cost of disruption through the construction phase of the project, including: Phasing project construction Time of day of operations Site management Provision of access and other related services Temporary assistance/mitigation works/services Compensation if required

At the Final Business Case phase this section should be expand on the work undertaken within the strategic business case with the outcomes of stakeholder consultation and initial estimates of compensation requirements based on these discussions.

Supporting material: Practitioner Notes: Disruption management (planned) – transport network


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5. COST AND FUNDING

5.1 Budget Request

Purpose:This section should outline the headline capital investment sought by the Department to support the development of the proposed project.

This should reference the likely net financial impact of the project, taking into account all revenue and other capital sources.

This should be based on a P90 outturn cost estimate basis.



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5.2 Proposed Funding

Purpose:This section, building off section 5.1, should reference all of the proposed funding sources to meet the capital and operational costs likely to be incurred as a result of the investment.

This will include capital and operation costs (at a P90 outturn cost basis) and revenues including investment being sought, O&M from other sources, foregone expenditure and other contributions (including but not limited to private sector funding sources).

Supporting material: Practitioner Notes: Funding analysis Practitioner Notes: Costings


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5.3 Cost Planning, Contingency and Management (P90/50 real and outturn)

Purpose:This section will report the total cost of their proposals and outline how they arrived at their cost estimates (detailed workings). It should be clear what works the cost estimate includes, how it was derived, and whether any contingency and inflation have been included.

The build-up of costs will usually be done by a suitably qualified cost estimator although cost estimates may use actual quotes. The cost build-up should include: Base cost rates Quantities


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Contractor margins Project management margins Contingency Direct financial costs to government as a result of disruption.

Applicants should report capital costs in two ways: On non-escalated basis (i.e. without inflation) to inform the cost benefit assessment On a nominal basis (i.e. with inflation) to inform funding and affordability assessment.

The assumed inflation rate(s) and its basis should be reported with all cost estimates should be exclusive of GST.

Supporting material: Practitioner Notes: Costings


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5.4 Ongoing Maintenance, Operating and Service Costs

Purpose:To inform the value for money and affordability assessment over the life of the service, Agencies should disclose all ongoing costs associated with their proposal. These ongoing costs may include: Operating costs Maintenance costs Repair costs Asset renewal and replacement costs.

In some instances, the proposal may realise cost savings or revenues. These cashflows should be identified separately to allow an assessment of the net change in costs over the life of the proposal.


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5.5 Commercial Off-set

Purpose:This section should document potential opportunities to offset the cost of the project with returns from urban development activity. It is important to demonstrate that the requirements to achieve State outcomes are documented and understood. Commercial and planning risks should be documented including market-dependent and time-dependent risks. Note that if a project incorporates a commercial off-set opportunity and the agency is seeking to engage the market to determine the commercial value and viability then the INSW Commercial Off-set Framework should be referred to in progressing the project.

This section should also consider private sector contributions to support the funding allocation for the project. It is important that this analysis takes into account previous like analysis undertaken by government and as directed by senior government officials.


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Supporting material: INSW Commercial Off-set Framework and use the templates.


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5.6 Cost Planning and Management

Purpose:This section addresses how costs will be identified, analysed, planned and managed throughout the investment lifecycle, including: Cost Planning Management Contingency Management Milestone Payments.

This section addresses how costs will be identified, analysed, planned and managed throughout the investment lifecycle.

This section addresses how contingency will be managed, such as: the amount of contingency the basis for the amount of contingency allowed how contingency is linked to the Risk Plan who “owns” the contingency and how it is to be released and reported on

Notwithstanding that this Business Case is intended to support a development project, include a table highlighting separately, for an indicative (e.g. thirty year) period ongoing asset maintenance and operating costs.



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6. VALUE FOR MONEY ASSESSMENT

6.1 Demand Assessment

Purpose:This section should present an assessment of the number of persons and metrics that are anticipated to directly change as a result of the project.

For example, a transport project will include vehicle numbers, hours travelled, and vehicle kilometres travelled.

It is important to note what form of demand analysis was undertaken, the underlying assumptions, where the information was sourced and what guidelines were applied.

Supporting material: Practitioner Notes: Transport Modelling Practitioner Notes: Transport Land Use and Demand Impacts Practitioner Notes: Place Based - Integrated Land Use and Transport Planning

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6.2 Final Cost Benefit Analysis

Purpose:This section should present a full/final economic cost benefit analysis to determine whether a proposal will deliver value for money. This analysis should be built off what was undertaken as part of the strategic business case.

Cost benefit analysis seeks to assess the economic, social and environmental benefits and costs over the lifetime of a proposal. In doing so, cost benefit analysis goes beyond just considering the direct effects, financial effects or effects on one party, to considering all impacts on the wellbeing of the entire society or community. It involves a systematic approach to assessing the gains and losses of a proposal, emphasising to the maximum extent possible, the monetary value of these gains and losses. It assists decision makers in: Identifying options that deliver net benefits Allowing different options to be compared Ensuring that all impacts on all parties are considered Valuing costs and benefits incurred or accrued at different points in time

Stage 2 CBA is applied to a short list of options which includes the same steps and principles as the Stage 1 CBA but may be conducted using complete/final information on costs, benefits and risks.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 5 Step 14 and 15 TPP17-03 NSW Government Guide to Cost-Benefit Analysis Practitioner Notes: Economic Evaluations


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6.3 Value Management

Purpose:This section can include other forms of analysis to determine the economic and wider social, environmental and community benefits of each of the proposed options. This analysis should be built off what was undertaken as part of the strategic business case.

Non-quantitative forms of economic analysis that could be incorporated within a business case including, multi criteria analysis and cost comparison analysis.

Forms of impacts that could be incorporated within this analysis could include but not limited to: Number of persons positively and negatively affected Number of sensitive user groups impacted Quantity of benefits to different user groups Place based, land and property related impacts Measurable environmental and emission impacts

Supporting material: Practitioner Notes: Value Management and Value Engineering

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6.4 Financial Appraisal

Purpose:In this section, Agencies are requested to evaluate the budget impact of the options from the applicant’s perspective. Its focus is on whether the projected revenues will cover the whole-of-life costs of the proposal. This analysis should be built off what was undertaken as part of the strategic business case.

For most proposals, the following cashflow projections are sufficient: Capital Cost, i.e. land, infrastructure construction, project management & design costs, ICT establishment

costs (purchase, installation/set up, systems testing and user acceptance testing costs) Recurrent Costs (operating & maintenance costs) Residual Costs (disposal of obsolete assets, site restoration, etc) Contingency (an allowance to cover a specified level of risk in project implementation) Benefits realisation review costs, where applicable Project cash flows including sources of funding Sensitivity of financial projections to key project risks and, Adequacy of the estimated investment cost and financial impact of alternative projects.

The intent of this section is to provide the outturn cost (with appropriate escalation) of this initiative incorporating overall project costs and whole of life maintenance and ongoing costs. Note guidelines for determining TCO and other measures will be provided as part of a separate guidance note related to the business case templates.

Present financial appraisal results similar to economic appraisal results above.

In financial appraisal, the discount rate should be the Weighted Average Cost of Capital (WACC). Economic Policy, Strategy and Planning will provide WACC on an annual basis reflecting changing debt-equity structure and risk profile in an asset portfolio basis.


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Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 5 Steps 16 & 17 Practitioner Notes: Financial Analysis

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6.5 Financial Impact Statement

RelevanceFrom the financial analysis highlight the net impact expenditure to the NSW Government.

Purpose:A Financial Impact Statement (FIS) should be prepared and submitted as part of the Final Business Case.

The purpose of the Financial Impact Statement is to provide a view of how each option will impact key financial measures in the future on both the entity’s budget and the Whole of Government (WoG) budget.

The FIS should include estimates of: expenditure required to meet the projected level of demand, while optimising efficiency revenue (if applicable) based on the approved forward budget capital expenditure funding sources, including appropriations impact on key financial metrics.

The FIS should also address projected budget growth, efficiency gains, revenue from compensable activity and other sources of income, and/or internal redistributions.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 5 Step 18 Practitioner Notes: Financial Analysis


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7. COMMERCIAL ANALYSIS

7.1 Procurement and Delivery Strategy

Purpose:The delivery strategy is a necessary input to the development of both the program and cashflow for the project through the development and delivery phases.

The delivery strategy will be informed by and must be compatible with any project constraints such as committed milestones and available funding profiles.

It is important to consider the effects of the delivery strategy on the project development and delivery as decisions made at each Gateway will establish the pathway for the project and are difficult to change without risking significant time and cost impacts on the project.

The Final Business Case is generally prepared at the end of the Concept Phase of project development. By this stage in the project cycle you would normally have a preferred concept design and estimate.

Commonly used Delivery Strategies that should be considered include: Construct Only Design & Construct ETI/ECI Alliance PPP or other private sector led initiative

The Final Business Case is generally prepared at the end of the Early Detailed Design of project development. By this stage in the project cycle you would normally have a preferred concept design and estimate.

The key considerations of the Delivery Strategy at this stage are: Actively deciding whether the detailed design will be completed separately to the construction procurement.

Once this decision is taken it may limit some of the future options. If the detailed design is to be included in the procurement model, then a reference design may be needed. The

timing and process steps necessary to prepare either the detailed design or a reference design should then be included in the overall delivery strategy.

Consider the available options for the procurement model. These may be different within your agency. Consider whether any Early Works packages such as Public Utility relocations, Geotechnical works, Site

Access or other enabling works are to be separated from the main procurement. It is noted that early works packages when managed effectively can assist in de-risking and fast tracking high delay risk components of the main procurement.

Consider the market appetite for the procurement model. Each model transfer risk to the delivery partner in different ways.

Consider the scale of the work in each package and whether there are suitable and available delivery partners in the proposed pre-qualification category. Smaller packages can be combined to achieve economies of scale and larger projects can be staged or divided to encourage multiple contractors.

Each delivery strategy should be project specific and the methodology proposed should be suited the individual project needs. Therefore, this section of the business case will vary considerably depending on the types of delivery models analysed and the preferred model (i.e. both in terms of its length, complexity and the form the analysis is presented).

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 6 Steps 19, 21 & 22 NSW Public Private Partnerships Guidelines (TPP17-07) NSW Government Procurement Policy Framework (July 2015) Practitioners Note: Delivery strategy


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8. PROJECT MANAGEMENT

8.1 Project Management, Program and Milestones

Purpose:This section of the business case should outline the required activities, resource timelines, project timelines and the major milestones of the project are highlighted as part of the project management plan/program. This section should also summarise the time and resourcing plan and the key milestones throughout the construction phase of the project.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 6 Steps 22 and 23


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8.2 Project Governance

Purpose:The governance arrangements should address: Who owns the proposal Who is responsible for the proposal outcomes Who is responsible for approving key decisions Who will manage the proposal How it will be resourced Who is responsible for monitoring the costs, benefits and risks

Agencies should demonstrate that the nominated personnel have the relevant experience and skills to deliver and manage the proposal. These personnel may change as the proposal transitions from planning to delivery and then to operations.

Governance arrangements should also include detail on what team and processes are in place to control and manage the proposal. The team should be of sufficient size to deliver as well as manage the proposal. The role of each individual in the team should be well defined with clear lines of reporting and delegations.

Typical project roles are outlined as follows but may vary based on the size and complexity of a project. For smaller proposals, some of these roles may not be required: Project Sponsor: Holds ultimate responsibility for the outcomes of the proposal. Project Manager: Is responsible for the delivery of the project and management of the project team. Project Team: Is responsible for developing and delivering the proposal. May contain a mix of specialist skills

made up of internal and external resources. Steering Committee: Provides senior management oversight of the proposal and advice on critical issues.

Generally, such a committee is in place for complex proposals and/or where multiple stakeholders have a major interest in the proposal.

Central Agency Assistance: Depending on the size and complexity of the proposal, the applicant may need assistance from other agencies such as the Department of Premier & Cabinet, Infrastructure NSW and Treasury.


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Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 6 Steps 22 and 23


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8.3 Asset Ownership and Management Plan

Purpose:This section should provide an asset register of the project detailing asset owner, operator and maintainer of all assets delivered through the project. This section should also identify assets that will be retired because of the project.

Supporting material: Practitioner Notes: Asset Management

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8.4 Stakeholder Management Plan

Purpose:In preparing the business case, the following should be considered to ensure that the project solutions satisfy customer needs and comply with product definitions based on evidence gathered on: Customer needs and requirements Relevant external stakeholder input, and Relevant internal stakeholder needs.

Describe the key stakeholders (internal and external) that will be affected and their relationship to the proposal: State the consultation already undertaken and the role that they played in determining and endorsing the

preferred option. Identify how stakeholder issues have been integrated into the service scope or why they have not been

included. Provide an overview of the likely impact of the preferred option on key stakeholders, andstakeholders and

outline their position in relation to the project. Identify how the relevant issues will be managed.

Where there are major impacts to stakeholders (e.g. Operations and Maintenance areas), their General Managers must be included as endorsers of the business case.

Key areas for consideration when completing the stakeholder management analysis and planning within the final business case phase include: What level of engagement has been undertaken with stakeholders (including end users and the community) in

the development of the preferred option and how have issues been addressed? What is the stakeholder management and engagement strategy for the procurement stage of the project and is

it comprehensive? How has intra- and inter-agency consultation resulted in the identification of opportunities to enhance the

outcomes of the preferred option?


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How have the views and concerns of stakeholders been incorporated into the development of the preferred option and procurement strategy?

How has the project benefited from early market engagement in the development of the preferred option or procurement strategy?

What is the market engagement and tenderer engagement approach for the procurement stage, is it robust and how will it enhance benefits and deliver innovation?

How has the market engagement and community stakeholder activity been coordinated with other relevant projects to mitigate communications/stakeholder fatigue as the project progresses?

How is the stakeholder engagement plan for the procurement and delivery resourced, coordinated across the delivery agency and reflected in the project’s current or future governance structure?

Supporting material: Practitioner Notes: Early Stakeholder ConsultationEngagement


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8.5 Project Risk Management

Purpose:This section documents how the risks were identified and assessed and how they will be managed throughout the proposal lifecycle. The purpose of this section is three-fold: To alert decision makers to any risks in the project that might be material to the decision making at this point,

or need to be resolved prior to a later decision Confirm to decision makers that a thorough process has evaluated all risks relevant to the stage of the project To ensure that a program of work is in place to address the major risks identified.

The identification of risks may be undertaken as a desktop exercise for a relatively straightforward proposal. For a more complex proposal, key risks may need to be determined through workshops and stakeholder interviews.

The section format should include a risk management plan in support of the preferred option in the Final Business Case. The major project risks identified should include: Scope Construction Financing Planning and approvals Legal Property acquisitions Utility relocation and adjustments Procurement Project management Stakeholder and communication Change management Sustainability (social, economic and environmental impacts).

Agencies will be expected to submit a risk management plan and a risk register with their business case. Ideally, the risk register will tie in with the proposal’s schedule (in terms of time contingency) and the proposal’s cost estimates (in terms of cost contingency). Planned mitigations and monitoring activities will need to be embedded in the proposal’s scope and governance/management arrangements.

This section documents how the risks were identified and assessed and how they will be managed throughout the


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proposal lifecycle.

Key areas for consideration when completing the risk analysis and planning within the Final Business Case phase include: What has been the formal risk management approachapproach, and does it remain appropriate for the

procurement stage of the project? Is there an active risk matrix that is comprehensive and robust, and how is this kept current? How has the development of the risk matrix involved all relevant stakeholders, including the asset

owner/operator? How do the major risks to project procurement and delivery affect the Final Business Case? How are the risks to on-budget completion of the project captured, have they been incorporated into the cost

plan and how will this be kept current? How have the risks to the on-time completion of the project been addressed through a sufficiently documented

and robust delivery program? How are regulatory or legislative risks identified and addressed in the procurement and delivery of the project? What is the commercial risk allocation for the project and is it realistic for the scale and complexity of the

project? How are the key risks to the realisation of benefits identified and how are they to be mitigated?

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 6 Step 26 TPP15-03 Internal Audit and Risk Management Policy TPP12-03b Risk Management toolkit for the NSW Public Sector Volume 1 – Guidelines for Agencies Practitioner Notes: Risk Management


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8.6 Compliance

Purpose:Business cases for the NSW Government are a critical element within the decision-making process. Fundamental to this decision makingdecision-making is for Government to properly understand the key relevant statutory obligations, policies and standards that apply both during delivery and service provision. A good practice business case should: Identify key statutory obligations, policies and standards to which the project must comply Identify key policies and standards that have been adopted Describe any particular benefits or costs that may apply as a result Demonstrate how compliance will be achieved and validated.

Supporting material: Practitioners Note – Compliance

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8.7 Change Management

Purpose:Change management is necessary to ensure that the Government are aware and have the necessary systems in place to manage the impacts, both positive and negative, that will result from the development of the project.

This section should provide a summary of the major features of the Change Management Plan that has been developed for the project.

Note that any analysis should seek to identify changes for: Direct users of the project/infrastructure/service Other stakeholders, including local residents External organisations and businesses, and Agency processes and structures.

Changes associated to these project stakeholders needs to be assessed for each of the (i) development, (ii) implementation and (iii) operation and maintenance stages.

This section of the Business Case should provide a brief discussion of the major changes only and management controls intended to address those changes. It should not simply be a copy of the Change Management Plan that has been developed.



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8.8 Benefits Realisation Plan

Purpose:This section should refer to the Benefits Management approach that has been developed for the project.

The objectives of the project include improving service levels and improving safety by reducing crash rates, key measurable benefits to be monitored, reported and analysed.

This section should outline the main benefits that are anticipated to be realised by the project (as analysed and determined through the business case process) and what systems are going to be put in place to monitor and report the actual findings.

An example of the types of post implementation benefit realisation studies could include a Post Completion Traffic Study for a road project. The Benefit realisation plan may state that it is compulsory for the agency to complete this study after traffic at the intersection normalises after the upgraded intersection is open to the public, typically within a year of completion and handover. The Project Manager will be responsible for arranging this study.

Supporting material: NSW Government Benefits Realisation Management Framework 2018 NSW Government Program Evaluation Guidelines (January 2016)


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8.9 Sustainability

Purpose:The NSW Government aspires to provide a world class sustainable transport system that meets customer expectations and optimises the economic development of the State. In doing this the Government is committed to managing the impact on the environment and operating in an environmentally sustainable manner. This includes the provision of government led capital projects and has an extensive sustainability frameworks and policies that all projects in the development pipeline must adhere to.

As such it is essential that all business cases reference all relevant and applicable NSW Government sustainability and environmental guidelines and ensure that they project in question is developed in accordance with them, including but not limited to management systems put in place to ensure that these policies are adhered to during the construction and operational phases of the asset.

Supporting material: Practitioner Notes: Environment and Sustainability

Practitioner Notes: Infrastructure Resilience


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8.10 Post Implementation Plan

Purpose:The purpose of a post implementation evaluation is to examine the outcome of a project including its progress (did benefits outweigh the final costs), timeframes and responsibilities in delivering the project that was defined.

The purpose of the evaluation plan is to establish the direction of the evaluation. The evaluation plan describes how the project will be monitored and evaluated, as well as how the evaluation results will be used for project improvement and decision making.

The scope of the evaluation as articulated in the evaluation plan will also help agencies understand the resources that will be needed for conducting the evaluation, including evaluation and technical expertise.

Supporting material: TPP18-06 NSW Government Business Case Guidelines Section 6 Step 27


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8.11 Stakeholder Endorsement

Purpose:Identify outcomes, owners and indicate support, or otherwise, for the proposal to proceed from stakeholders.

Supporting material: NA


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Note: This section should be no more than one pages in length, or presented in a table, with an endorsement sheet.

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Documents

Deep Dive - Infrastructure NSW : Home · Web viewThis section should provide an asset register of the project detailing asset owner, operator and maintainer of all assets delivered