BusinessCaseTitleSubtitle

DepartmentTitle[Thisshouldbethepublicationtitlefortheinitiative,

ifitweretobefundedinthebudgetprocess.]

[Pleasenote:1. Thistemplatecanbeusedforbothcapitalandoutputproposalswith

modificationforoutputinitiativesasappropriate.2. Whencompletingthistemplateyoushouldrefertotheinvestment

lifecycleandhighvalue/highriskguidelinesandassociatedtechnicalguidelinesformoredetailedexplanations.

3. Theextentofdetailshouldbescaledtotherelativecomplexityoftheproposalandsomeareasmaynotberelevantforallproposals.

4. Theprojectoptionsanalysis(Section4)requiresaconsistentmethodologyappliedtoanalysisofoptionswithalevelofaccuracyconsistentwithconceptestimateataminimum.Theanalysisshouldbeevidencebasedanddefensiblewithestimatesofcapitalcosts,cashflowsandongoingoutputoroperatingcostssufficienttorobustlycompareoptions.

5. Therecommendedsolution(Section5)requiresadetailedcostbuildupwithsignificantrigorbasedonadesignbrieforprojectscopestatement.Accuracyofinformationinrelationtotherecommendedsolutionshouldbeatalevelofaccuracyconsistentwiththatofapreliminarydesignestimate.

6. Anytextincludedin[]isforguidanceonlyandshouldbedeleted.7. Forwardanycommentstoinvestment.matters@dtf.vic.gov.au]

Contents

Executivesummary..............................................................................................11. Part1Problem..........................................................................................2

1.1 Background........................................................................................................................21.2 Definitionoftheproblem..................................................................................................21.3 Evidenceoftheproblem....................................................................................................21.4 Timingconsiderations........................................................................................................21.5 Considerationofthebroadercontext...............................................................................3

2. Part2Benefits...........................................................................................42.1 Benefitstobedelivered.....................................................................................................42.2 ImportanceofthebenefitstoGovernment......................................................................42.3 Evidenceofbenefitdelivery..............................................................................................42.4 Interdependencies.............................................................................................................4

3. Part3Strategicresponse..........................................................................53.1 Methodandcriteria...........................................................................................................53.2 Strategicoptionsanalysis..................................................................................................53.3 Recommendedstrategicoption........................................................................................8

4. Part4Projectoptionsanalysis..................................................................94.1 Projectoptionsconsidered................................................................................................94.2 Stakeholderidentificationandconsultation.....................................................................94.3 Socialimpacts..................................................................................................................104.4 Environmentalimpacts....................................................................................................104.5 Economicimpacts............................................................................................................104.6 Overallevaluationofsocioeconomicandenvironmentalimpacts................................104.7 Financialanalysis.............................................................................................................114.8 Riskcomparison...............................................................................................................114.9 Integratedanalysisandoptionsranking..........................................................................11

5. Part5:Deliverabilityofrecommendedsolution.....................................145.1 Detailsofrecommendedsolution...................................................................................145.2 Commercialandfinancial................................................................................................145.3 Management...................................................................................................................175.4 Delivery17

AppendixA:BenefitManagementPlan.............................................................19AppendixB:Financialdatapresentation............................................................20AppendixC:Signoffchecklist............................................................................22

BusinessCaseTitleSubtitle 1

Executivesummary

[TheExecutiveSummaryisanessentialstandalonepartofafullbusinesscasehighlightingtheoverallstoryandkeypointsoftheFullBusinessCase.WhiletheExecutiveSummaryisthefirstsectionofthefullbusinesscase,itisoftenthelastareacompleted.ItshouldbeaclearandconciseplainEnglishoutlineofthewholeproposalandasaguidelessthan10pageslong.Includesummarytablesifappropriatee.g.toestablishcontext.TheExecutiveSummaryshould: Describetheinvestmentproposalinonetotwosentences.

Thisdetailedbusinesscaseseeksformalapprovaltoinvest$[xxx]millionin[20yy/yy]to.....(Thisshouldincludebothcapitalandoutputfactorsincludingongoingresourcingandexpectedoutcomes.)(Note:Thisdescriptionshouldserveasthesummarydescriptionrequiredforbudgetpublications.)

Statewhatdecisionmakersarebeingaskedtoconsiderordecideand,ifrelevant,anyrecenthistoryofconsiderationsuchasthestrategiccase.

IdentifyanyoverarchingcontextualfactorsForexamplespecifyiftheproposalisrelatedtoanelectioncommitmentandprovideabriefoverviewofhowtheproposalrelatestothatcommitment.Iftheproposalisextensionorsubsequentstageofanexistinginvestmentoutlinethepreviousfundingorcommitmentanditsimpacttodate.

Brieflyidentifythedifferentoptionsconsideredandasummaryoftheevaluationofthoseoptions(includingasummarisedoptionsrankingtable).

TheExecutiveSummaryneedstoconveythattheinvestmentproposal: meetsanimportantneed issupportedbystrongstrategicandpolicymerit; optimisesvalueformoneyfromawholeoflifeperspective;and isachievablei.e.itcanbedeliveredontimeandonbudgetandwillrealisetheintendedbenefits

itsetsouttoachieve.Whereaproposalfacesconsiderableuncertaintytheexecutivesummaryandbusinesscaseshouldconveyoptionstoflexiblydealwiththatuncertaintyratherthanlockinacompletesolutiontoosoon.AttheendoftheExecutiveSummary,insertupdatedInvestmentConceptBrief(includingInvestmentLogicMap)ifavailable.Providereferencetokeysupportingdocumentation.AddanykeydocumentsorextractstotheAppendixofthefullbusinesscase.]

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1. Part1 Problem

[Foroutputproposalsthefullbusinesscaseislikelytobethefirstpresentationoftheproposaltogovernment.Giventhis,theStage1:ConceptualiseguidelinemayassistincharacterisingtheproblemforthepurposeofthisPart.ForassetproposalsthisPartshouldrevisitandconfirmthecurrencyoftheanalysisoftheproblemintheearlierstrategicbusinesscase(strategicassessmentorpreliminarybusinesscase).Thiswillinvolverepresentingtheinformationfromthestrategicbusinesscase,reassessingitsvalidityandfurthersubstantiatingtheexistenceoftheproblemwithevidencewhereappropriate.Theintentistostrengthenthecasefortheproblem,andbrieflyoutlineanysignificantchangessincethestrategicbusinesscase.Rememberthataproblemcanincludeaserviceneed,issue,orlostopportunity.ForfurtherinformationonpopulatingthisPartforassetsubmissionsseetheStage2:Proveguideline.]

1.1 Background[Describethecontextandbackgroundnecessarytosetthescenetointroducetheproblemandbenefitsfromaddressingtheproblem.Outlinetheexistingservicerelatedoutputs,existingassetbaseandresourcecommitmentsincludinglapsingstatus.Thismightincludeadiscussionontheneedforgovernmentinterventionandroleofgovernment,currentservicefunding,servicedistributionandlevels,andunderlyingdriversofthoseservices.Thissectionmayalsointroduceprovidersandstakeholdersrelevanttotheproblem.]

1.2 Definitionoftheproblem[ExplaininplainEnglishandinlessthanonepagetheproblem(s)needingtobesolved.Presentthecauseofeachproblem,whoisaffected,andhowtheyareaffected.Describethenatureoftheproblemforexamplewhetheritisimmediate,transitory,ongoingorescalating.]

1.3 Evidenceoftheproblem[Providetheevidenceofboththecauseandeffectoftheproblem.Evidencemightinclude: demandforecastswithassumptions; keyperformanceindicators(KPIs)oncurrentperformancelevels;and/or facts/examplesoftheproblem.]

1.4 Timingconsiderations[Describewhytheproblemneedstobesolvedbygovernmentatthistime,notinganyconnectionstolongtermplanningdocuments.Explorewhethertheproblemissuitedtoastagedresponse.Explaintheimplicationsofdelayingaresponsetothedefinedproblemsuchas: physicalorcapacitylimitswillbereached significantreductionsinthelevelofservice(quality/quantity)willbeexperienced failuretomeetspecificgovernmentcommitmentsorlegislativerequirements requirementforurgentactionatadditionalcostduetoassetfailure,systemoverloadetc; leadtimeforinvestmenttobecomeoperational;and anycriticaldependencieswithrelatedservicerequirements.]

BusinessCaseTitleSubtitle 3

1.5 Considerationofthebroadercontext[Explainwhethersimilarneedsoropportunitiesexisteitherinsideoroutsideyourorganisationthatmightbeaddressedtogetherwiththisproposal.Forexample,benefitsofawidersectoralapproach,integrationopportunities,pilotstudiesinothersectorsthatmayimpactthetypeofresponse.]

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2. Part2 Benefits

[ForassetproposalsthisPartshouldrevisitandconfirmthecurrencyoftheanalysisofthebenefitsintheearlierstrategicbusinesscase(strategicassessmentorpreliminarybusinesscase).Thiswillinvolverepresentingtheinformationfromthestrategicbusinesscase,reassessingitsvalidityandfurthersubstantiatingtheevidenceofbenefitdeliverywhereappropriate.Theintentistostrengthenthecaseforthebenefits,andbrieflyoutlineanysignificantchangessincethestrategicbusinesscase.ForagenciesusingtheInvestmentManagementStandardtomapbenefits,notethatnotallbenefitsidentifiedaspartofaninvestmentlogicmappingprocesswillbesuitableforinclusioninaneconomicevaluationofaninvestmentproposal.Economicevaluationsfocusonwelfareimpactsonsocietyratherthanagencyspecificimpactsandtransferbenefits.Economicbenefitswhichwouldbesuitableforinclusionineconomicevaluationsaretypicallyspecific,tangible,andabletobemonetisedandcanbelinkedunambiguouslytoaninvestmentoractivity.DTFcanprovidecasebycaseguidancetoagenciesonthisissueasneeded.]

2.1 Benefitstobedelivered[Explainthekeybenefitsthatflowiftheproblemissolved.(Thesecanbedrawnfromtheinvestmentlogicmapandbenefitmapifavailable.)Listkeyhighleveleconomic,socialandenvironmentalbenefitstheinitiativewilldeliver.Anydisbenefitsornegativeconsequencesresultingfromaddressingtheproblemmustbeoutlinedclearly.]

2.2 ImportanceofthebenefitstoGovernment[Showhowthisinvestmentwillhelptoadvancethegovernmentand/ororganisationtomeetitsobjectives.Thismightincludereferencetothesizeandtimingofthosebenefits.Describehowthisinitiativeconnectstogovernmentprioritiesandthedepartmentscorporate,strategicandlongtermplanningdocuments.]

2.3 Evidenceofbenefitdelivery[Definethemeasuresandkeyperformanceindicatorsthatwillshowwhetherthebenefitshavebeendelivered.Thesebenefitsprovideevaluationcriteriaandobjectivesforthedevelopmentandselectionofinterventionsandoptions.Detailsofbaseline,interimandtargetmeasures,datesfortheKPIsandtheperson/positionresponsiblefordeliveringthebenefitsshouldbeincludedinanappendedbenefitmanagementplanorequivalent,whichhasbeenupdatedtoreflecttherecommendedoption.Referenceorincludethebenefitsmanagementmap.Whereappropriate(asanalternativetoaBenefitManagementPlan)anevaluationstrategy/frameworkshouldbeincludedorattached.]

2.4 Interdependencies[Identifykeyinterdependenciescriticaltobenefitdelivery.Forexamplerelianceonotherprojectsordecisions.Theseinterdependenciesmayrequirealevelofflexibilitytobebuiltintotheproposal.]

BusinessCaseTitleSubtitle 5

3. Part3 Strategicresponse

[ForassetproposalsthisPartshouldrevisitandconfirmthecurrencyoftheanalysisintheearlierstrategicbusinesscase.Thiswillinvolverepresentingtheinformationfromthestrategicbusinesscase,reassessingitsvalidityandfurthersubstantiatingtheevidence,feasibilityandassessmentofthestrategicoptionsanalysisprocess.Theintentistostrengthenthecaseforthepreferredstrategicresponse,andbrieflyoutlineanysignificantchangessincethestrategicbusinesscase.

3.1 Methodandcriteria[Outlinethemethodandcriteriausedtoselectthestrategicresponse.Criteriashouldincludetheextenttowhichinterventionswillachievetheproposedbenefitsandoffervalueformoney.Identifyassumptionsandconstraintsusedtoinformthedevelopmentofstrategicoptions.]

3.2 Strategicoptionsanalysis3.2.1 Strategicinterventions

[Explainthepotentialstrategicinterventions.Describeandprovideevidenceorreasoningastowhytheseinterventionsmighthaveanimpact.Thetablemaybeusedtooutlinestrategicinterventions.Noteitisnotmandatory.]StrategicInterventionsIntervention1Intervention2Intervention3Intervention4Intervention5Intervention6Intervention7Intervention8Intervention9Intervention10TableXSummaryofpotentialstrategicinterventions[Thenumberofstrategicinterventionsthatshouldbeconsidereddependsonthescaleandcomplexityoftheproblem/investment.]

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3.2.2 Strategicoptions[Explainhowthestrategicinterventionscanbepackagedintostrategicoptions.Thiscanbeimportedfromthepreliminarybusinesscase,providedthatongoingcurrencyofinformationhasbeenrevalidated.Thetablemaybeusedtooutlinestrategicinterventions.Noteitisnotmandatory.]

Strategicoptions Option1 Option2 Option3 Option4 Option5 Option6StrategicInterventions Intervention1 Intervention2 Intervention3 Intervention4 Intervention5 Intervention6 Intervention7 Intervention8 Intervention9 Intervention10

TableX:Strategicoptions[Listedinthelefthandcolumnsarestrategicinterventionsthatcouldrespondtotheidentifiedproblemanddelivertheexpectedbenefits(andtheirKPIs).Againstthelistedstrategicinterventions,aspreadofstrategicoptionsshouldbestructuredtoprovidegenuinealternativestrategicresponsestotheproblem.Theseareintherighthandcolumns.Shadeboxesandallocatepercentagestoshadedboxestoindicatetherelativeimportanceofeachspecificinterventionwithintheoption.Todecideontheimportanceofeachspecificinterventionwithintheoption,balancetwofactors:theimportanceoftheinterventionindevelopingtheKPIsandthelikelycost/effortinvolved.]

BusinessCaseTitleSubtitle 7

3.2.3 Rankingofstrategicoptions[Evaluatethestrategicoptionstodeterminetheproposedstrategicresponse.Thiscanbeimportedfromthepreliminarybusinesscase,providedthatongoingcurrencyofinformationhasbeenrevalidated.Provideevidencetosupportthishighlevelassessment.Thetablemaybeusedtooutlinestrategicinterventions.Noteitisnotmandatory]

Strategicoptions Option1 Option2 Option3 Option4 Option5 Option6 BenefitsPercentageoffullbenefittobedelivered 0% 0% 0% 0% 0% 0%Benefit1 % Benefit2 % Benefit3 % Cost Estimatedcapitalinvestmentcost(Range) $nmil$nmil $nmil$nmil $nmil$nmil $nmil$nmil $nmil$nmil $nmil$nmilEstimatedoperationalcosts(Range) $nmil$nmilpa $nmil$nmilpa $nmil$nmilpa $nmil$nmilpa $nmil$nmilpa $nmil$nmilpaTime(Range) mmmm mmmm mmmm mmmm mmmm mmmmRisksRisk1 Risk2 DisbenefitsDisbenefit1 Disbenefit2 Ranking13

TableX:Evaluationofstrategicoptions[Costshereareindicative/orderofmagnitudeanddonotneedtobepreciselycalculated,butneedtobereasonableestimateoflikelyfinancialimpactofeachoption.]

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3.3 Recommendedstrategicoption[Presenttherecommendedstrategicoption,summarisingtheresponseandtherationalebehinditsselection.Forexample,therecommendedoptionmayhavebeenselectedbecauseitprovidesalevelofflexibilityrequiredtodealwithuncertaintysurroundingtheproblem.]

BusinessCaseTitleSubtitle 9

4. Part4 Projectoptionsanalysis

[Accuracyofdatausedtocompareprojectoptionsshouldbesufficienttorobustlycompareoptions.Analysisofprojectoptionsrequiresalevelofaccuracyconsistentwithconceptestimates(ataminimum)ofcapitalcosts,cashflowsandongoingoutputoroperatingcosts.Aconceptestimateisanapproximationoftheprobablecostofaprogramorprojectbasedonavailableverifiableinformation.Thelevelofaccuracyusedtopresentestimatesshouldreflectthescaleandcomplexityoftheinvestment.Thelevelofanalysisshouldprovidesufficientinformationforaneffectivecomparisonoftheprojectoptionsandtodemonstratethatanadequaterangeofoptionshavebeenconsidered.Themethodologyusedshouldbeconsistentacrossalloptions.Indicativecostsshouldbesupportedbyevidenceanddefensible.Thetablesinthissectionareaguideonlyandshouldbeused,modifiedornotusedasappropriate.ProjectswhichareHVHRshouldprovidemoredetailedinformationtosupportassessmentofrobustness.Incharacterisingtheprojectoptionsandconsideringtheirimpacts,agenciesshouldaddresssustainabilityinvestmentopportunitiesofprojectoptions.Forexamplewheresignificantoperationalsavingscanbederivedthroughspecificapproaches.Thefocusshouldbetoidentifyupfrontsustainabilityinvestmentsinareasofneedandwhicharelikelytodeliveragoodinvestmentreturn.FurtherinformationFormoreinformationoncompletingthissectionseethe: Stage2:Proveguideline. Technicalguideline:SustainabilityinvestmentguidelinesforVictoriaspublicassets.]

4.1 Projectoptionsconsidered[Expandeachofthestrategicinterventionsincludedinthestrategicresponseintoseveralmoredetailedpotentialprojectoptions,includingabasecaseandatleastonemarketbasedsolution.Aimforamaximumofaroundfive.RefertotheStage2:Proveguidelineforanexplanationofthebasecaseandmarketbasedsolutions.DescribethemethodandrationaleusedtoselecttheprojectoptionsDescribeprojectoptions,including: scope assetandoutputoptions(orcombinations); atleastonemarketbasedsolutionwherepossible; potentialfor3rdpartyrevenues; criticalassumptionsorconstraints(orwindowsofopportunity)ofeachoption; outlineanyprojectoptionsconsideredbutnotevaluatedandstaterationalefornon

consideration;and atahighlevel,theextenttowhicheachofthefeasibleoptionsconformstoGovernmentand

relevantagencylegislation,policies,standardsandstrategies.]

4.2 Stakeholderidentificationandconsultation[Atabroadlevel,provideanoverviewofthelikelyrelativeimpactonkeystakeholdersofthevariousprojectoptions,andoutlinetheirpositioninrelationtotheproject.]

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4.3 Socialimpacts[Outlinethesocialimpactsandopportunitiesoftheproposalandidentifyanysignificantsocialissuesspecificallyrelevanttoparticularprojectoptions(i.e.differentiatingbetweentheprojectoptions).]

4.4 Environmentalimpacts[Provideahighleveloverviewoftherelativeenvironmentalimpactanalysisoftheoptionsincludingspecificactionsrequiredtomeetallrelevantlegislativerequirementsandidentifiedlikelycommunityconcerns.]

4.5 Economicimpacts[Provideahighleveloverviewofallsignificanteconomicimpactsandopportunitiesoftheoptions.Economicimpactsinthiscasereferstoimpactsonkeyeconomicvariables,suchasvalueadd,productivity,workforceparticipation,unemploymentandothers.Thiscouldbedoneinaqualitativemanner(e.g.bydescribingpossiblechangesandtheirlikelyorderofmagnitude),orthroughactualeconomicmodellingtocomeupwithrobustquantitativeestimates.Thelatershouldonlybedonewherethemagnitudeoftheprojectwarrantsthisadditionaleffort.ThereisawealthofdataavailablefromtheAustralianBureauofStatisticsandothersources,whichcanassistinthisendeavourparticularlywhenprovidingqualitativedescriptionsofpossibleimpacts.Wherethemagnitudeoftheprojectwarrantsprovidingquantitativeestimates,thenComputableGeneralEquilibrium(CGE)modellingisrecommended.Likeallmodelling,thisneedstobebasedonrobustassumptions/inputsthataretransparentinorderforittobeseenasreliable.]

4.6 Overallevaluationofsocioeconomicandenvironmentalimpacts[Theexpectedsocioeconomicandenvironmentalimpactsoftheprojectoptionsneedtobeassessedandconsolidatedwithinarobustframeworkthatappropriatelycapturesandweighstheseimpacts.TheassessmentofsocioeconomicandenvironmentalimpactsisveryimportantbecauseiteffectivelyoutlineswhattheGovernmentwouldbepurchasingforitsinvestment(intermsofthenetbenefitstosociety).Thepreferredmethodologyforintegratingsocial,economicandenvironmentalimpactsisacostbenefitanalysis(alsoknownasaneconomicevaluation).Thismaybecombinedwithamulticriteriaanalysisforimpactsthatareunsuitedtothecostbenefitanalysisframework,suchaswherebenefitsaredifficulttomonetise,.Thesetoolsshouldenableallkeyimpactstobecapturedintheassessment.]

4.6.1 Costbenefitanalysis(economicevaluation)[Identifywelfareimpactsonsociety,bothcostsandbenefits,foreachprojectoptiontheseimpactsincludebothmarketandnonmarketspecificimpactsintheareaspreviouslydescribedassocial,environmentalandeconomic.Describethemethodologytobeused;ingeneralthiswillbeanetpresentvalueassessmentatanaggregatelevelrelativetothebasecase.Quantifyandmonetisecostsandbenefitsatthelevelofaccuracyofconceptestimatetodevelopedconceptestimate.Notethatthelevelofaccuracyshouldbedeterminedbasedonthescaleandcomplexityofthisinvestment.Assumptionsshouldbeprovidedtojustifyestimatesused.Oncecostsandbenefitshavebeenestimated,agenciesshoulddiscountimpactsbacktopresentvaluesandranktheprojectoptions.Notedistributionalimpacts,whileanimportantfactorforgovernmentdecisionmaking,arenotincludedintheheadlineresults(e.g.thenetpresentvalue)oftheeconomicevaluation(whichaddresseswelfareimpactstosocietyasawhole).ForfurtherinformationoncompletingthispartseeStage2:Proveguideline.Outlinetheoutcomeoftheeconomicanalysis.]

BusinessCaseTitleSubtitle 11

4.7 Financialanalysis[Provideanestimateofthecapitalandwholelife(output)costsoftheprojectoptionsanddescribetheprocessbywhichtheestimatewasderived(e.g.workshop,previousproject).Costingsforthissectionofthefullbusinesscaseareatconceptestimatelevelataminimum,andnotextensivelydetailed,butshouldconsiderwholeoflifedifferencesbetweenoptionsoveranappropriateperiod.Theyneedtobeareasonableevidencebasedrealisticestimatesbutarenotintendedtobecomprehensivelyconstructedfromfirstprinciple.TheyneedtoprovidesufficientdetailtoallowtheNetPresentValue(NPV)comparisonofoptions.Theanalysisshouldallowdecisionmakerstoconsidertheoptionthatwilldeliverthebestoutcomesinlinewithgovernmentobjectives,includingBudgetconsiderations,andwillhaveademonstrableeffectonoutput/servicedeliveryperformance.]

4.8 Riskcomparison[Riskassessmenthereishighlevelandneedstobesufficienttoenablerelativecomparisonofoptions.Describeriskassessmentprocessfortheprojectoptionsanalysis,whichmayincludeariskworkshop.Risksidentifiedshouldconsiderthefinancial,economic,socialandenvironmentalanalyses.Provideasummaryofkeyriskswhicharecriticaltodifferentiatethesuccessoftheinvestmentinrelationtotheprojectoptionsconsidered.Significantuncertaintiesmaywarrantadifferentapproachtotheinvestmenttoincorporateflexibilitytomanagetheuncertainty.Toassistinidentifyingthekeyriskstoconsider,thefollowingisa(nonexhaustive)listofriskcategories:Changeinlaw/policy;commercial;commissioning;completion/construction;contractual;demand;economic;environmental;financial;implementation;investmentplanning;management;obsolescence;operations;organisational;political;privatesector;regulatorytechnological;residualvalue;upgrade.]

4.9 Integratedanalysisandoptionsranking[Thissectionsummarisesatahighleveltherelativemeritsoftheoptionsconsidered.Detailsinthissectionareexpectedtobeataconceptuallevelonly.Totheextentthatcosts,benefitsandriskshavebeenquantifiedandvaluedrobustly,thepreferredoptionistypicallytheonewiththehighest,riskadjusted,NPV.Astheheadlineresultoftheeconomicevaluationdoesnotincludedistributionalimpactsorwhereaprojectoptionhassignificantintangible(ornonmonetised)benefits,theseimpactscanoutweighthedifferenceinNPVbetweenalternativeoptions.Thiscanalterthechoiceofthepreferredoptionandthesetradeoffsneedtobeclarifiedfordecisionmakers.Multicriteriaanalysis(MCA)canbeausefultooltodothis.Selectionofoptionscanbeaffectedbytherisk/uncertaintyassessment.Further,wheretheNPVofanoptionissubjecttosignificantuncertainty,itcanbedifficulttodistinguishbetweenalternatives.Alowrisk,lowNPVoptionmaybepreferredtoanalternativewithhigherbutmoreuncertainnetbenefits.Thelevelofuncertaintymaysuggestthatflexibilityneedstobebuiltintotherecommendedapproach,forexampleallowingdecisionstobemadeprogressivelyasmoreinformationbecomesavailable.Inasummarytable,provideanintegratedassessmentoffinancialandnonfinancialimpactstoarriveatarankingofprojectoptions.Whereamulticriteriaanalysisisincludedintheintegratedassessment,outlinetherelativeweightingofthefinancialandnonfinancialcomponents.Seetwoalternativeexamplesofpossiblefinancialandsocioeconomicanalysissummarytablesbelow.Note,choosewhichtableofthesetwooptionsismostappropriatetoyourintegratedanalysis.Donotfilloutboth.]

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Tablexx:Presentingtheresultsoftheoptionsanalysis

Projectoption1:DoNothing

Projectoption2:

Projectoption3:

Projectoption4:

Projectoption5:

AnalysisPeriod(years) CapitalCosts($m) OutputCosts($m) CostBenefitAnalysis(ofmonetarycostsandbenefitsdiscountedattheappropriateDiscountRate)PresentValueofBenefits($m)

PresentValueofCosts($m)

BenefitCostRatio NetPresentValue($m) Otherimportantconsiderations(seetheexamplesprovided)Intangiblecosts/benefits(e.g.small,med.,large)

Distributionalimpacts(e.g.small,med.,large)

Preferredoption

Tablexx:Presentingtheresultsoftheoptionsanalysis,withmulticriteriaanalysis

Projectoption1:DoNothing

Projectoption2:

Projectoption3:

Projectoption4:

Projectoption5:

AnalysisPeriod(years) CapitalCosts($m) OutputCosts($m) CostBenefitAnalysis(ofmonetarycostsandbenefitsdiscountedattheappropriateDiscountRate)PresentValueofBenefits($m)

PresentValueofCosts($m)

BenefitCostRatio NetPresentValue($m) MultiCriteriaAnalysis(rankingofintangiblecostsandbenefits,ifany)Criteria1 Criteria2 Criteria3 Preferredoption

4.9.1 Testingtherobustnessoftheoptionsanalysis[Conductingasensitivityanalysisisaformofquantitativeanalysistoexaminehownetpresentvalues,benefits,costsorotheroutcomesvaryasindividualassumptionsorvariableschange.Thisapproachmaybeusedtotesttherobustnessoftheprojectoptionsanalysis,particularlyforlargerinvestments.Provideahighlevelsummaryofthekeyassumptionsfortheoptionsassessment.Provideadescriptionontherobustnessoftheoptionsanalysisinrelationtokeyassumptionsmade.Thetablebelowisoptional.]Tablexx:SensitivitytestingresultsScenarioOne:.

BusinessCaseTitleSubtitle 13

Projectoption1:DoNothing

Projectoption2:

Projectoption3:

Projectoption4:

Projectoption5:

AnalysisPeriod(years) CapitalCosts($m) OutputCosts($m) CostBenefitAnalysis(ofmonetarycostsandbenefitsdiscountedattheappropriatediscountrate)PresentValueofBenefits($m)

PresentValueofCosts($m)

BenefitCostRatio NetPresentValue($m) OtherimportantconsiderationsorMultiCriteriaAnalysis(rankingofintangiblecostsandbenefits,ifany)Criteria1 Criteria2 Criteria3 Preferredoption

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5. Part5:Deliverabilityofrecommendedsolution

[ThefullbusinesscaseisthefirsttimedepartmentsareaskedtoaddresstheinformationrequiredinPart5andspeakstothequestion:Canthesolutionreallybedelivered?,thissectionisakeypartofthefullbusinesscaseandshouldputforwardarigorouscaseclearlyjustifyingwhytherecommendedsolutionisthemosteffectiveandactionablesolution.Thissectionshouldincludeconfirmationoftheaboveanalysisinthelightofdetailedcostingandscopingoftherecommendedsolutionaswellasadditionaldetailedinformationrelatingspecificallytothedeliverabilityoftherecommendedsolution,asspecifiedbelow.Toavoidduplication,refertoearliersectionswhereappropriate.Thissectionshouldalsojustifywhytherecommendedsolutionispreferredinrelationtoeachcomponentoftheanalysis.]

5.1 Detailsofrecommendedsolution[Clearlystatewhichprojectoption(whichmaycompriseoneoranumberofprojects)istheRecommendedSolution,addressingtherationaleforitsselectioninlightoftheintegratedassessment,statingitsdetails(includingobjectivesandaprojectscopestatement).Ifamajorassetisrequired,provideabriefsummaryofthedesignandspecificationstotheextenttheyhavebeendeveloped.Note:detaileddesignsarenotexpectedatthisstage,howeverdepartmentsmustprovideenoughinformationonscopetosupportarigorouscosting.ProvidedetailsonoutputrequirementsassociatedwithchangesproposedtoservicedeliveryincludingVPSandnonVPSstaffingimplications.Whereappropriateincludeasummaryofkeyelementsofthedesignfeasibilitystudywhichdemonstratesthelongtermvisionforthepreferredoptioninthebroaderurban/environmentalcontext.ProvideaDesignIntentStatementtodemonstratetheintendedlevelofdesignqualityandidentifywhatdesignaspectsoftheprojectneedspecialconsideration.Provideinformationonpreferredsequencingorstagingoftheprojectsolutionandjustifywhystaging/sequencingisrequiredordesired.DescribesignificantbroaderimpactsspecifictotheimplementationoftheRecommendedSolution.Indicatelocationaldetailsandserviceareaimpacts.Outlinehowthesolutionisconsistentwith,oraddresses,publicinterestissuessuchasequity,accessetc.]

5.2 Commercialandfinancial5.2.1 Procurement

[Outlinetheprocurementoptionsanalysismethodandprocess,showingrankingofoptionsagainstcriteriausedtoselectedrecommendedprocurementstrategy.Detailtherecommendedprocurementstrategyforthisinvestment,justifyingwhyitisthebestvalueformoneyoption,forexampleduetoitscapacitytoincludeflexibilityorbettermanagerisk.Thisshouldbebalancedwiththerelatedissuesoftime,cost,wholeoflifevalueandquality.Outlinetheorganisationsexperienceandcapabilitytodeliverthepreferredprocurementmethodaswellaskeyrisksandcontractualissues.(Includestrategytoaddressdeficiencieswhereappropriateforexampleintentiontoengageexperthelp.)

BusinessCaseTitleSubtitle 15

Formulateadaptationstothepreferredprocurementmethodtoensurethatqualityandgooddesignareembeddedintheprocess.TheOfficeoftheVictorianGovernmentArchitectcanprovideadviceontheselectionofprocurementmodelsandpotentialadaptationsandthedesign,siteutilisationetc.IfaPPPprocurementapproachisbeingproposedthePartnershipsVictoriaGroupatDTFcanadviseontheadditionaldetailsrequired.Ifprojectalliancingisbeingconsidered,fullbusinesscaserequirementsaredifferent,pleasecontactDTFCommercialDivisionforfurtheradviceorconsulttheNationalguidelines.]

5.2.2 Riskassessmentandmanagement[Provideadetailedriskassessmentoftherecommendedsolution,outliningkeyrisksandmanagementstrategies.]Risk Managementstrategy[Describerisk] [Outlinestrategyformanagement] TableX:Keyriskstothesuccessofthisinvestment[Therisksmayhighlighttheneedforaflexibleapproachtotheinvestment.Forexamplewheretheuncertaintiesmayberesolvedatapointintime(e.g.successorfailureofapilotstudy)andflexibilitycanbebuiltintoallowaninformeddecisionatthistime(whethertoproceedwiththefullinvestment).Thissectionshoulddescribedesiredflexibilityandcircumstanceswhichmakeflexibilitydesirable.Provideanoverviewofproposedarrangementsforongoingriskmonitoringandmanagement.Includeappendixwithriskmanagementstrategyandriskregister.]

5.2.3 Detailedcostingandeconomicevaluation[ProvideadetailedoverviewofthecostingfortheRecommendedSolution,includingcapitalTEIandoutputcosts.Includebudgetcashflowoverarelevantperiodforbothcapitalandoutputamounts.Theprojectbudgetestimateincluding:basecostestimate,baseriskallocationandcontingencyshouldbebasedonaprojectscopestatementatthepreliminarydesignestimatelevel.Identifytheimpactonoutputfundingandthebreakdownofoperatingcoststokeycomponentssuchasstaffing,maintenance,depreciation,CACetc.Thisdetailshouldextendoverareasonableperiodofyearstoallowawholeoflifecostingperspective.Attachappropriatetablesintheappendices,referAppendixBforexampletables.DepartmentsshouldconsultwithDTFtoagreecostingsbeforesubmittingthebusinesscaseforBudgetfundingconsideration.ForAssetprojects:RefertotheInvestmentLifecyclesProjectBudgetGuidelinewhichprovidesspecificguidanceondevelopmentoftheprojectbudget.Thetablesbelowarebasedonthatguidanceandmaybemodifiedtoincorporateappropriatedetails.]Element Estimate TablereferenceBasecostestimate $XXXm (Table2)Baseriskallocation $XXm (Table3)Projectcostestimate $XXXm Contingency $XXm (Table3)Projectbudget $XXXm Table1:Headlineprojectcostelementsummary

16 DepartmentTitle

BASECOSTESTIMATEEffectivedateofBCE:dd/mm/yyEstimateddateofcommencementofconstruction:dd/mm/yy1 DirectCosts 1.1 Materials 1.2 Labour 1.3 PlantHire Subtotal $2 IndirectCosts 2.1 Recurrentoverheads 2.1.1 Sitefacilities 2.1.2 Plant&Equipmentsitemaintenance 2.1.3 Projectmanagementcosts 2.1.4 Commercial 2.1.5 QAandSafety 2.2 Nonrecurrentoverheads 2.2.1 Establishmentandmobilisation 2.2.2 Disestablishmentanddemobilisation 2.2.3 Projectinsurances 2.2.4 Professionalfeesdesign,legal,financial,etc Subtotal $3 OwnersCost 3.1 Contractedprofessionalstaff 3.2 Investigations 3.3 Landcosts&resumptions 3.4 Authorityfees 3.5 Ownersuppliedplantandequipment Subtotal $4 ContractorsFee 4.1 Profitmargin 4.2 CorporateOverheads Subtotal 5 ProvisionalSums 5.1 Subtotal $TOTALOFBASECOSTESTIMATE $Table2:BasecostestimateBASERISKALLOCATIONANDCONTINGENCY6 BaseRiskAllocation 6.1 Escalation (periodbetweenBCEandconstruction) 6.2 ProjectRiskA 6.3 ProjectRiskBetc Subtotal $ 7 Contingency 7.1 Subtotal $TOTALOFPROJECTRISKS $Table3:Projectrisks[TheNetPresentValueestimateshouldberecalculatedbasedontherefinedcostsandamoredevelopedassessmentofthebenefitsfortherecommendedsolution.Fortherecommendedsolutionagenciesmayneedtoinvestinvaluationtechniquessuchasmarketbasedvaluation,revealedpreferences,statedpreferenceorbenefittransfermethodtobetterassessthemonetaryvalueofbenefits.Note:thisshouldonlybeundertakeniftheadditionaleffortandexpenseincurredinassigningmonetaryvaluesreflectsthelikelysizeofthoseimpacts.

BusinessCaseTitleSubtitle 17

Basedonthedetailedcostingofcapital,outputsandbenefitsfortherecommendedsolutionformalisetheeconomicanalysis(e.g.NPVandBCR)todemonstratetheeconomicimpactoftheinvestment.]

5.2.4 Fundingsources[Discussproposedfundingsourcesincludingpotentialcontributionsfromotherlevelsofgovernment,privatesector,saleofassetsetc.Thissectionshouldpresentasummaryofthesourcesoffundingrequirementforcapitalandoutputcostswhichwillberequiredforbudgetdeliberations.Thisshouldincludeoffsetsortheconsequencesofadoptingamarketbasedsolution.TypicallythispresentsbudgetandforwardestimateswithabalanceofTEIandongoingoutputfunding.ReferAppendixBforexamplesofhowthisinformationmightbepresented.]

5.3 Management5.3.1 Governance

[Fortherecommendedsolution,detailtheproposedprojectgovernancestructuredemonstratingitsappropriateness.Note:ForHVHRprojects,DTFmustbeincludedintheprojectgovernancestructure.ASeniorResponsibleOwnerneedstobeidentified(orproposedforallinvestments.]

5.3.2 Stakeholderengagementandcommunicationsplan[Providedetailedinformationaboutkeystakeholdersinrelationtotherecommendedsolution.Provideanoutlineofkeyelementsofstakeholderandcommunicationsanalysisdescribingstakeholders,theirlikelypositionontheprojectandplanstomanagethat.Ifavailableattachasanappendixaproposedhighlevelstakeholderengagementandcommunicationsstrategycoveringtheapproachtodealingwithstakeholdersbothuponprojectannouncementandongoingduringproject.]

5.3.3 Projectmanagementstrategy[Outlinetheproposedprojectmanagementstrategydemonstratingitssuitabilityandrobustness,appendinganydetailedplansasanappendixifnecessary.Describetheorganisationalcapabilityandgenericsystems,standardsandmethodologywhichwouldallowtheprojecttobedeliveredsuccessfully.Demonstrateinthissectionthattheimplementingorganisationhasthecapacityandcapabilitytomobiliseanddeliverthisinvestment.]

5.4 Delivery5.4.1 Changemanagement

[Outlinethescopeoforganisational/processchangemanagementrequiredtoeffectivelydeliverthebenefits.Thismayinvolveprocessreengineering,staffretrainingetc.requiredtotransitionfromexistingarrangementstosupporttheoperationofthenewinvestment.Ifchangemanagementrequirementsaresignificantconsiderappendinganoutlineofthechangemanagementstrategy.Notethisdoesnotincludemanagementofproposedscopechangesduringimplementation.]

5.4.2 Timelinesandmilestones[Listthemajormilestonesanddeliverablesandtheirdeliverytimelinesandcontingencies.Outlinethehighlevelprojectschedule,includingprocurementstepsandstatutoryapprovalsandkeydecisionpointsforprojectprogression,terminationorotherwise.Provideinformationonpotentialcompetingpriorities,dependencyanalysis,skills,capabilities,availabilityofagencystaffetc.Provideadviceonpubliccommunicationofprojecttimelines(tobeconsistentwithcommunicationsstrategy).]

18 DepartmentTitle

5.4.3 Performancemeasures[Provideastatementofinvestmentbenefits.Analysehowwelltherecommendedsolutionaddressestheproblemandkeybenefits.Thissectionaddressestheeffectivenessandefficacyoftheproposal.Providereferencestotheevidenceofbenefitdeliveryidentifiedinsection4andprovidefurtherspecificinformationonperformancemeasurementfortheproposedproject,thisshouldbeadetaileddescriptionof: howwelltherecommendedsolutiondeliversidentifiedbenefits;and thespecificKPIsthatrelatetotherecommendedsolution.Refertotheappendedupdatedbenefitmanagementplantoinformthissection.Mostinvestmentswillaffectoutputperformancemeasures.Theimpactonexistingoutputsandperformancemeasuresshouldbespecifiedindicatingboththechangestooutputmetricsrelativetocurrentlevelsandthetimingofthatimpact.]Outputname:PerformanceMeasures

Unitofmeasure

Changeintargetifproposalisendorsed201213201314201415201516201617

Quantity Quality Timeliness

5.4.4 Readinessandnextsteps[Explainplanstotransitiontheinvestmenttothenextstage(Stage3:Procure)Explainthemainareasofuncertaintytoberesolvedinthenextstage,forexample,informationregardingstaffing,approvals,andlandacquisitionetc.]

5.4.5 Signoff[Signoffsarerequiredby: Primaryauthor Theseniorresponsibleowner(ordepartmentalChiefFinancialOfficer)onGatewaysProject

ProfileModel(PPM)includedtoupdateproposalrisks. Theseniorresponsibleowner(orChiefFinancialOfficer)andthedepartmentsSecretarythese

arerequiredforfullbusinesscasestobeconsideredbytheGovernment.InestablishingtheprojectbudgetestimatetheSROshouldsignoffon: Thestatementsoftheservicebenefitsandprojectscope. Theadequacyoftheprojectbudgetincludingthebasecostestimate,riskassessment,baserisk

allocationandcontingency. Thisshouldbesupportedbyadditionalsignoffsfrom:

Thebasecostestimator;and Theagencyanditsadvisersonbaseriskallocationandcontingency.

Providedetailsofanyreviewprocess(e.g.forHVHRGatewayreviewsaremandatory).Sothatdecisionmakersknowthatthebusinesscaseisthoroughandcomplete,pleaseprovideaqualityassurancechecklistsuchassetoutinAppendixC,withbusinesscasesubmissionsseekingendorsementfromdepartmentalSecretaries.SeetheStage2:Proveguidelineformoredetails.]

5.4.6 Exitstrategy[Detailtheexitstrategyandthefactorsthatwouldleadtowantingtoexiteitherearlyoratterm.Investmentsmaybetimelimitedormayinvolvepilotstudies.Thissectionallowsforconsiderationofwhatterminationrightsaredesirableatkeyreviewordecisionpointsforexamplelapsingprograms.]

BusinessCaseTitleSubtitle 19

AppendixA:BenefitManagementPlan

[PasteSpecialasanEnhancedMetafileforoptimumpicturequality.]IncludeabenefitmanagementorevaluationplanifavailableorcompletethefollowingtableforeachKPI.]KPI Baseline Source Interimtarget Reportingforum Startdate Frequency Enddate Responsibility

20 DepartmentTitle

AppendixB:Financialdatapresentation

Thefollowingtablesareintendedasaguidetodatainclusionandshouldbeusedorsupplementedasappropriate.Operatingcostsshouldbeaddressedoverareasonableperiodtoallowawholeoflifeperspectiveinanappropriatetable.Modifytablesasrequired,forexamplebyadjustingperiodtocaptureoutputcostsfromcommencementoftheoperationofnewfacility.B.1FundinghistoryInthetablebelowprovidedetailsofthefundinghistoryforthisorsimilar/relatedinitiatives.Thistableshouldincludefundingforanearlierstageinamultistageproject,fundingforbusinesscasedevelopmentorscopingstudy,fundingforalapsingprogram,orfundingforarelatedprogramthathasbroadlythesamepolicyobjectiveasthisinitiative.Descriptionoffundingprovided 200809

$m200910$m

201011$m

201112$m

201213$m

B.2ExistingfundingbaseInthetablebelowprovidedetailsoftheexistingfundingbasethathasbeenprovidedforthisorsimilar/relatedprograms.Thisshouldincludefundingthatisinthedepartmentsbaseaswellasfundingforanyrelatedlapsingprograms.Descriptionoffundingprovided 201213

$m201314$m

201415$m

201516$m

201617$m

B.3Budgetimpact 201213

$m201314$m

201415$m

201516$m

201617$m

TEI$m

capitalfundingEstimatedassetinvestmentcashflow

(Componenta) 0.000 0.000 0.000 0.000 0.000 0.000(Componentb) 0.000 0.000 0.000 0.000 0.000 0.000(Componentc) 0.000 0.000 0.000 0.000 0.000 0.000Subtotal(grossassetpriceincrease) 0.000 0.000 0.000 0.000 0.000 0.000Fundsfromothersources(e.g.assetsaleproceeds,Commonwealthfunding,trustaccounts)pleasespecify

(0.000) (0.000) (0.000) (0.000) (0.000) (0.000)

NetImpactoncapitalappropriation 0.000 0.000 0.000 0.000 0.000 0.000outputfundingPricechangerequestedforprovisionofoutput

(Componentx)grossoutputprice 0.000 0.000 0.000 0.000 0.000 0.000

BusinessCaseTitleSubtitle 21

201213$m

201314$m

201415$m

201516$m

201617$m

TEI$m

(Componenty)grossoutputprice 0.000 0.000 0.000 0.000 0.000 0.000Capitalassetcharge 0.000 0.000 0.000 0.000 0.000 0.000Depreciationexpense 0.000 0.000 0.000 0.000 0.000 0.000Offsetfrominternalreprioritisation (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)Subtotal(netoutputpriceincrease) 0.000 0.000 0.000 0.000 0.000 0.000Offsetfromrevenue (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)Offsetfromanotherfundingsource(eg.Commonwealthfunding,CSF,trustaccount)pleasespecify

(0.000) (0.000) (0.000) (0.000) (0.000) (0.000)

NetImpactonoutputappropriation 0.000 0.000 0.000 0.000 0.000 0.000B.4RevenueRevenueincrease/decrease 201213

$m201314$m

201415$m

201516$m

201617$m

Ongoing$m

Revenueinitiative1 0.000 0.000 0.000 0.000 0.000 0.000Revenueinitiative2 0.000 0.000 0.000 0.000 0.000 0.000Lessrevenuealreadyinbudget/forwardestimates

(0.000) (0.000) (0.000) (0.000) (0.000) (0.000)Netrevenueimpact 0.000 0.000 0.000 0.000 0.000 0.000

22 DepartmentTitle

AppendixC:Signoffchecklist

Investmenttitle:Agency:

Y/N

Istheneedclearlyestablished(e.g.investmentconceptbrief)? Arethelinkstogovernmentpolicy(ies)andcontributionsexplicit? Isthereaclearstatementoftheservicebenefitsandprojectscopeandarefuture

implicationsnoted?

Arecostestimatesprovidedforcapitalandoperationalphases? Havecostandriskestimatorssignedoffontheadequacyoftheirwork? Istheprojectbudgetincludingthebasecostestimate,riskassessment,baserisk

allocationandcontingencyadequate?

Docostandbenefitestimatesandanalysesshowvalueformoney? Aretheprojectdeliverablesclearlystated? Isabenefitmanagementorevaluationplanincluded? Areriskmanagementprocessesinplaceandassumptionsstated? Doestheproposalassesstheprojectscheduleandreadiness(includingmarketappetite)? Aregovernancestructuresidentified? Arestakeholderinterfacesdetailed? Areregulatoryrequirementsidentified? IstheprojectHighValue/HighRisk? HaveGatewayreviewsbeenundertaken?Gate1 Gate2 Thismodelchecklistisdesignedfortheprojectproponentsendorsement.Preparedby:.. Date:Approvedby:.. Date:... .(nameofapprovingofficerordelegate) (title)Secretary:.. Date: