Project Implementation Process (PIP) Construction ... · Framework in the Strategic Infrastructure...

Construction Procurement PolicyProject Implementation Process

Government of South Australia Copyright.

December 2005

ISBN 0-9775044-0-7

The text in this document may be reproduced free-of-charge

in any format providing that it is reproduced accurately and

not used in any misleading context. The material must be

acknowledged as Government of South Australia copyright

and the title of the document specified.

Construction Procurement PolicyProject Implementation Process

Foreword

South Australia’s Strategic Plan sets the directionsfor the State and its service needs. It outlines thekey priorities and goals to be achieved by theStrategic Infrastructure Plan for South Australia,and forms the basis for planning and deliveringall construction projects.

The Strategic Infrastructure Plan for South Australiaemphasises the need for agencies to undertakedetailed strategic planning and to align proposedprograms of work with South Australia’s StrategicPlan. Agencies are required to take time to preparethe substantiation details of the project before itis formally proposed for inclusion in a governmentapproved program. The need for the project isconfirmed before contracting for concept, designand construction.

The State Procurement Act 2004 governs theprocurement operations of government agenciesand advances government priorities and objectives

including obtaining value for money, providingethical and fair treatment to all participants andensuring probity, accountability and transparencyin procurement operations.

The Regulations under the Act exempt fromState Procurement Board processes ‘prescribedconstruction projects’ over $150,000 in value.Instead these projects are procured within thepolicy framework provided by the 5-stepInfrastructure Planning and Delivery Framework,the Project Implementation Process and Treasurer’sInstructions. These policies provide a robust, well-established and unique policy and managementframework managed by the infrastructure agenciesof government - the Department for Transport,Energy and Infrastructure; the Departmentfor Administrative and Information Services andLand Management Corporation.

This Project Implementation Process is theSouth Australian Government’s policy for theprocurement of construction projects. It guidesconstruction procurement from the timegovernment takes a decision to progress a projectafter Step 4 of the 5-step Infrastructure Planningand Delivery Framework and is applicable to all‘prescribed construction projects’.

The Minister for Infrastructure and the Ministerfor Administrative Services govern the processand the infrastructure agencies administerapplication of the construction procurementpolicy.

The Government of South Australia is committedto the efficient and effective delivery of essentialservices to the community and to obtainingbest value from new and existing built assets by

ensuring its construction projects are designedand constructed to the relevant standards andfunctional requirements. Excellence inconstruction procurement meets the prioritiesof South Australia’s Strategic Plan - growingprosperity, improved wellbeing, attainingsustainability, fostering creativity, buildingcommunities, and expanding opportunities.

Contents

Foreword

Overview

Key features of theProject Implementation Process

Application of theProject Implementation Process

Key roles

Gateway Approvals for Strategic Planningand Project Delivery

Approval Authorities

Integration of the 5-Step Frameworkwith the Project Implementation Process

The 5-Step Infrastructure Planning andDelivery FrameworkStep 1: Strategic Analysis and Identification of

Infrastructure NeedsGateway One Approval

Step 2: Outline of Case for Change andProject Scoping

Gateway Two Approval

Step 3: Project Planning and SubstantiationLeading to a Full Business Case

Gateway Three Approval

Step 4: Project Funding Method andResource Allocation

Gateway Four Approval

Step 5: Delivery of the ProjectProject Implementation ProcessTransition Briefing

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Step 5: Delivery of the ProjectProject Implementation Process

5.1 Concept5.1.1 Appoint the Project Sponsor5.1.2 Establish Project Governance5.1.3 Appoint the Project Design Team5.1.4 Review Full Business Case and

Develop Risk Management Plan5.1.5 Develop Concept Design5.1.6 Conduct Strategic Value Management

Study5.1.7 Select the Preferred Concept Design5.1.8 Secure Stakeholder Sign Off5.1.9 Describe the Preferred Concept in a

Concept ReportGateway Five Approval

Referral to the ParliamentaryPublic Works Committee

Concept: Checklist of Deliverables

5.2 Design5.2.1 Maintain Project Governance5.2.2 Review Concept and Develop Design5.2.3 Test and Confirm a Cost Plan for the Project5.2.4 Test and Confirm a Detailed Project Program5.2.5 Confirm Construction Procurement Method5.2.6 Implement Process for Achieving Approvals

Required for the Project5.2.7 Confirm that the Design Satisfies Endorsed

Concept Parameters5.2.8 Transition Briefing

Design: Checklist of Deliverables

5.3 Documentation5.3.1 Confirm the Project Plan5.3.2 Complete Design Approvals5.3.3 Prepare Construction Contract Documents5.3.4 Prepare Pre-Tender EstimateGateway Six Approval

Documentation: Checklist of Deliverables

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5.4 Tender5.4.1 Determine the Construction Contractor

Tender Field5.4.2 Call Tenders and Obtain Tender

Comparison Estimate5.4.3 Prepare Tender Appraisal and

RecommendationGateway Seven Approval

Tender: Checklist of Deliverables

5.5 Construction5.5.1 Transition Briefing5.5.2 Review Project Governance5.5.3 Manage the Construction Project5.5.4 Manage the Project Budget and Program5.5.5 Commission the Construction Project5.5.6 Handover the Completed Construction

Project5.5.7 Defects Liability

Construction: Checklist of Deliverables

5.6 Review5.6.1 Update Information Systems5.6.2 Post-Construction Review5.6.3 Post-Occupancy Evaluation5.6.4 Management Review5.6.5 Finalise the Project Finance and Contracts5.6.6 Update Construction/Professional Service

Contractor Data5.6.7 Feed Back Information to the Concept

and Design Phases

Review: Checklist of Deliverables

Appendices

1 State Procurement Act 2004 andRegulations Under the Act

2 Approval Authorities for Expenditureand Contracts

3 References for theProject Implementation Process

Glossary

For further information

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The State’s public works authorities have beendesigning, building and maintaining our publicinfrastructure and buildings since the nineteenthcentury. Throughout this history, constructionprocurement has been an independent endeavouroverseen by infrastructure Ministers and theirspecialist departments.

In 1995, construction procurement came under thepolicy umbrella provided by the Cabinet-approved‘Project Initiation Process’, which documented theprocurement process that must apply to all publicsector building construction projects over $150,000including the roles of key stakeholders.

In 2005 Cabinet approved that ‘prescribedconstruction projects’ with a total value exceeding$150,000 would be exempt by regulation fromthe State Procurement Act 2004. This recognisedthat construction has separate well-establishedprocurement processes managed by infrastructureagencies with the level of expertise and establishedprocesses required. Construction procurement ismanaged by the policy framework provided byTreasurer’s Instructions and associated guidelines,the 5-step Infrastructure Planning and DeliveryFramework in the Strategic Infrastructure Plan forSouth Australia, and this Project ImplementationProcess.

The Project Implementation Process is a genericpolicy that can be applied to all types of prescribedconstruction projects under the State ProcurementAct 2004 and Regulations. It has been developedspecifically to guide construction procurement ofinfrastructure - buildings, roads, bridges, landdevelopment and the like - and provides a detailedprocedure through which lead agencies demonstratethat approved prescribed construction projects arewell designed, and tendered and constructedwith documentation to verify that due process hasbeen followed.

It stipulates a role for the infrastructure agencies,Department for Transport Energy and Infrastructure(DTEI), Department for Administrative andInformation Services (DAIS) and Land ManagementCorporation (LMC), in the delivery of prescribedconstruction projects. These agencies havedeveloped specific implementation guidelines forthe application of the Project Implementation Processfor infrastructure, commercial building and landdevelopment projects.

The Department of Treasury and Finance (DTF) willbe involved from the outset in advising on projects,programs and financial matters. All major capitalprojects require a business case that meets therequirements of Treasurer’s Instruction 17 and itsassociated guidelines. The complexity of the businesscase depends on the risk, complexity and profile of theproject. DTF undertakes full evaluation of the businesscase for all proposed construction projects and advisesGovernment on the assumptions underlying theexpected costs and benefits. It ensures that Cabinet isinformed on the accuracy and robustness of theeconomic analysis and that the proposed projectprovides effective value for money to Government.

DTEI will also be involved from the outset in advisingon the requirements of the State Infrastructure Plan,on opportunities for across-agency coordination aswell as monitoring and reporting on infrastructureproject progress.

The Project Implementation Process integrates withthe 5-Step Infrastructure Planning and DeliveryFramework at the completion of Step 4: FundingOptions and provides detailed guidance to Step 5:Delivery. Up to the conclusion of Step 3 the leadagency ascertains the need for an infrastructureproject to support existing or additional services and:

- defines precisely the service required;

- identifies strategies to meet servicedelivery needs;

- decides whether there is a need to upgrade, replace or procure assets;

- sets the quality standards, budget, programand risk management regime required to achieve objectives.

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Overview

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The agency establishes that the proposedconstruction project has a business case withdemonstrable benefit in accordance withthe requirements of Treasurer’s Instruction 17and Guidelines for the Evaluation of Public SectorInitiatives. There is consideration of the range ofappropriate procurement and financing options tobe explored in detail in Step 4, but the business caseis developed independent of a final decision on thepreferred models. The detail in the business case isdependent on the risk, complexity and profile of theproposed project.

In Step 4 there is examination of and a decision onthe preferred funding and procurement model.

At the conclusion of Step 4 the project is included onan approved government program and proceedsto Step 5:Delivery of the Project.

The Project Implementation Process commences atStep 5: Delivery of the Project and breaks this step intosix phases - Concept; Design; Documentation; Tender;Construction and Review. It provides more detail tothe requirements during these complex and high-riskphases of construction procurement.

Step 5: Delivery is the detailed design andprocurement stage for the project and mayinvolve:

- determination of the best forms of contracting;

- implementation of expression of interest and tendering processes;

- negotiation of contracts and development agreements;

- compliance with all government probity andother policy requirements.

(Strategic Infrastructure Plan for South Australia, April 2005)

5-Step Framework and Project Implementation Process

5.1 ConceptThe project team develops the project brief andconcepts to the point where there are sufficientdetails to demonstrate that the concept design isviable and acceptable to the lead agency and endusers, the costs are within the agreed budget andany critical timelines will be met.

At the end of this phase the lead agency’s Ministeror delegate must decide whether the project willproceed to Design and Documentation phasesthrough Gateway 5.

5.2 DesignDesign includes developing the approved conceptoption to a high level of design detail throughschematic design and design development.

The design professionals contribute their expertiseto ensure the design meets the functional andlegislative requirements as well as the agreed leadagency standards.

5.3 DocumentationDocumentation takes the developed design andprepares the detailed drawings and specificationthat will form the basis of the construction contractdocumentation. It includes the preparation of thedrawings, specification and conditions of contractfor the required construction contracts.

At the end of this phase the lead agency’s Ministeror delegate must decide whether the project willproceed to Tender phase through Gateway 6.

5.6

REVIEW

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Project Implementation Process

5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

Key Features of theProject Implementation ProcessThe Project Implementation Process details theprocess for the development and delivery of theprescribed construction project commencing withStep 5: Delivery of the Project. The key features are:

- ensuring that projects meet service delivery needs consistent with the Government’s strategic directions and agency business objectives and the business case agreed under the 5-step process;

- requiring every prescribed construction project to have strong leadership from the lead agency and Minister taking responsibility forits progress from inception to handover to the end users and final completion;

- ensuring every project has construction procurement managed by an infrastructure agency and strategic input from the Departmentof Treasury and Finance and Department ofTransport, Energy and Infrastructure;

- selecting and assigning appropriate professional expertise to develop the approved concept, undertake design, manage risk, calculate cost and time estimates during the procurement process and manage construction;

- establishing good project governance andclear lines of accountability for all phases of the project and for documentation to providean audit trail;

- adhering to the required gateway approvals process and the relevant legislative andpolicy framework;

- providing a holistic approach that rigorously considers ‘whole of life’ costs, ecologically sustainable development initiatives and design options consistent with the triple bottom line ofeconomic, environmental and social outcomes.

5.4 TenderTender includes establishing a tender field, callingtenders, appraising tenders received and makingrecommendations for acceptance of tenders.

Calling and assessing construction tenders is carriedout in accordance with the tendering codes, a finalapproval for expenditure is obtained from the leadMinister and approval of the contract from thecontract Principal before awarding the constructioncontract(s).

At the end of this phase the lead agency’s Ministeror delegate must decide whether the project willproceed to Construction phase through Gateway 7.

5.5 ConstructionConstruction includes the on-site activities byconstruction contractors and subcontractors thatresult in the building asset being constructedor refurbished.

There are specific requirements to be met inthe construction and commissioning of a builtasset project.

Progress of construction and timely response toissues as they arise are important elements ofeffective management during this high risk, highexpenditure phase of construction projects.

5.6 ReviewReview includes feedback about products,processes and asset performance to develop design,construction and market intelligence to benefitfuture building projects.

It includes ensuring all construction work has beencompleted appropriately and there is a smoothhandover of the project to the end users andasset manager.

It also includes monitoring the performance of theasset, generally for twelve months, and makingadjustments as required in response to end userissues.

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Application of the ProjectImplementation ProcessThe Project Implementation Process must be appliedto all projects that are a ‘prescribed constructionproject’ undertaken by government agenciesother than those defined as a ‘prescribed publicauthority’ as defined in the State Procurement Act 1

(Appendix 1). Details of the Government ofSouth Australia departments, agencies, branchesand business units are on the web sitehttp://www.sacentral.com.au/

The policy is applicable regardless of whether thefunding is State capital or recurrent, AustralianGovernment, Local Government, private sector orother funding sources.

It does not apply to minor construction projects,which are those construction projects under$150,000 (exclusive of GST) in value on completion.These projects must be procured under the StateProcurement Act 2004 and Regulations and StateProcurement Board policies. It does not apply to majorplant and equipment purchases or to information andcommunication technology (ICT) projects.

The Project Implementation Process providesguidance on the main phases in the delivery of allprescribed construction projects. Experience hasshown that all of the steps in the ProjectImplementation Process need to be completed toachieve a successful project, but it is not necessary tofollow the steps consecutively or to go into the samelevel of detail for every project.

It is recognised that there is varied risk in projects andthat there should be flexibility to tailor risk and projectmanagement roles and to assign greater levels ofautonomy to agencies that can demonstrate existingcapability. Where the relevant infrastructure agency isof the view that risks can be managed adequately bythe agency or professional contractor or constructionteams, flexible arrangements can be negotiated toexempt projects up to a value of $1 million(excluding GST).

For simplicity the process is presented in the sequenceof phases and gateway approvals applicable totraditional procurement, which will be theprocurement process for many of the ‘prescribedconstruction projects’ to which the policy applies.

The process need not be sequenced in this way andunder a range of procurement methodologies (fast-track, early construction contractor appointment,design-construct or alternative financing optionssuch as PPP or private finance) some phases willrun in parallel and there will be integrated gatewayapprovals.

The infrastructure agencies will advise on the rangeof methodologies available to fast track projectsor respond to alternative procurement modelswhile still achieving key milestones and activitiesin phases and required gateway approvals.

Diagram 1 provides examples of concurrentphases and integrated gateway approvals andan explanation of the differences.

1 Local Government Finance Authority, Local Government Superannuation Board,South Australian Forestry Corporation (Forestry SA), South Australian Housing Trust,South Australian Water Corporation, Superannuation Funds ManagementCorporation of South Australia and TransAdelaide.

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Diagram 1 Phases and Gateways in Various Delivery Models

A Standard reinvestment/new investment construction project

Infrastructure Planning and Delivery Framework Project Implementation Process

The standard reinvestment/new investment construction project generally follows the traditional process andrequires sequential approvals at the four gateways.

B Standard reinvestment/new investment construction project–fast

A fast track approach to standard construction procurement combines tender call and approval to proceed to construction.

C Complex, high value, unusual reinvestment/new investment construction project–fast track

Complex, high value projects of strategic importance may need significant concept work as part of the business case leading to approval of the fundingand procurement model. The project proceeds directly into design before a combined contract and funding approval partway through documentation.

D Complex, high value, unusual reinvestment/new investment construction project–alternative funding/procurement

Complex, high value unusual projects with alternate funding/procurement will need significant concept design work as part of the business caseleading to approval of the funding and procurement model. Development of the brief, the public sector comparator and the contract documentswill follow before a gateway approval of contract arrangements.

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1 2 3 4 5

Strategic analysis& identificationof infrastructureneed

Outline of casefor change andproject scoping

Projectplanning andsubstantiation

Fundingmethod &resourceallocation Concept

5.1 5.2 5.3

DesignDocumen-tation Tender

5.4 5.5 5.6

Construction Review

Gateway 4 Gateway 5 Gateway 6 Gateway 7

1 2 3 4 5

5.1 5.2

5.3

5.5

5.4

5.6

5.1

5.2, 5.3, 5.4, 5.5

financecontract

1 2 3 4 5

5.1 5.2

5.3

5.4

5.5 5.6

Gateway 4 Gateway 5

Gateway 6&7

Gateway 4&5

Gateway 6&7

Gateway 4&5Gateway 6&7

1 2 3 4 5

5.6

Typically, standard reinvestment/new investmentconstruction projects (A) will progress throughthe planning and delivery steps in a traditional,sequential manner.

Standard reinvestment/new investment constructionfast track projects (B) using techniques such asconstruction management or managing contractorprocurement methodologies, will have the Design,Documentation, Tender and Construction phasesoverlapping and a combined gateway approval toproceed to tender and of final estimated expenditure.

Complex, high value, unusual reinvestment/newinvestment construction projects (C) typicallyutilise fast track procurement methodologies andwill have the Design, Documentation, Tender andConstruction phases overlapping and a combinedgateway approval to proceed to tender and finalestimated expenditure. They are likely to requiregreater development of the Concept design beforecompletion of the business case and approval of thefunding and procurement model. Therefore theConcept phase is brought forward and there is acombined gateway approval of the concept designand the project in an approved government program.

Complex, high value, unusual reinvestment/newinvestment construction projects (D) that are to bedelivered utilising alternative funding options suchas PPP or Private Finance, will require developmentof the Concept design prior to completion ofthe business case and approval of the funding andprocurement model. Once the project is approvedto progress there will be development of the brief,the public sector comparator and the contractdocuments in Phase 5.2 before a combined gatewayapproval of final contract and funding arrangementsand transfer of responsibility for achieving allsubsequent delivery phases to the private sectordeveloper.

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Key RolesThe Department of the Premier and Cabinet setsthe strategic directions through South Australia’sStrategic Plan and the requirements for Cabinetsubmissions to ensure that due process hasbeen observed.

The Project Implementation Process describes fourkey roles in the delivery of prescribed constructionprojects – the Department of Transport, Energy andInfrastructure, the Department of Treasury andFinance, the Lead Agency, and the InfrastructureAgency.

Department for Transport, Energy andInfrastructure (DTEI)DTEI plays a strategic lead role in theimplementation of South Australia’s Strategic Planand the Strategic Infrastructure Plan. It coordinatesacross the three tiers of government and alsoprovides an interface with the private sector toensure public and private sector infrastructureplanning is coordinated.

Department of Treasury and Finance (DTF)DTF provides advice on the budgetary andfinancial aspects of proposals, including projectfinancial evaluation and business case preparationas outlined in Treasurer’s Instruction No 17.In accordance with 17:14 any submissions toMinisters need to be accompanied by written advicefrom DTF on budgetary aspects of the initiatives.

DTF is responsible for provision of economic andfinancial advice for the efficient management ofgovernment finances and the efficient use ofresources. This includes the coordination andresolution of asset management policy issues,development of accounting and financial reportingstandards, advice to Cabinet on agency budgetsincluding capital investment proposals andthe review of major capital projects, includingthe assessment of proposals for the private sectorprovision and operation of infrastructure.

Infrastructure AgencyThe Department for Transport Energy andInfrastructure (DTEI), Department for Administrativeand Information Services (DAIS) and LandManagement Corporation (LMC) provide project riskmanagement and management to ensure that theProject Implementation Process and all relevantpolicies and guidelines for construction procurementare followed. These agencies ensure all necessarysteps have been taken, the risks inherent in theplanning, design and procurement of constructionprojects have been identified and treated andthere is proper decision making, monitoringand reporting.

The management role includes:- guiding all stakeholders through the

Project Implementation Process;

- identification of construction procurement risksand management of these risks;

- providing advice and engaging independent orinternal professional expertise to undertake design and manage the project scope, budget, program and quality;

- ensuring that all necessary planning work is completed, and assisting with the achievementof required gateway approvals;

- administering government's endorsed policies and processes such as the prequalification systems to select professional service and construction contractors for the project;

- determining the appropriate construction procurement model and management framework;

- maintaining records, contract drawings and specifications and project financial details;

- ensuring timely and appropriate payments to professional service contractors and construction contractors, in accordance with the contract and government policy;

- accepting formal contract administration roles.

The relevant infrastructure minister or delegate entersinto all professional service and construction contractsto ensure there is a consistent approach to contractingwith the industry supported by robust, risk managedtendering and contract processes and systems.

DTEI has responsibility for management ofconstruction procurement for government road,

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DTF undertakes full evaluation of business casesfor all proposals and advises Government on theassumptions underlying the expected costs andbenefits to ensure Cabinet is fully informed of theaccuracy and robustness of the economic analysisand that the final proposal provides value formoney to the government.

Lead AgencyThe lead agency is responsible for the provisionof government services and consequently definesthe extent, quality and location of services. It isprimarily responsible for the initial planning,budgeting and approval elements of the projectand ultimately accountable for the managementand operation of the asset.

In a prescribed construction project the lead agencyis the project sponsor or ‘owner’ and ensures thereis appropriate project governance and the projectmeets the requirements of State and agencystrategic plans.

Lead agency responsibilities include:

- ensuring the services are consistent with thelead agency’s legislated role;

- determining the services that require new orre-investment in a built asset;

- developing the initial project scope, required standards and preliminary budget and program;

- identification of any project-specific statutoryor legislative requirements;

- developing the positive business case and achieving approval of the project on a government program under the 5-step Infrastructure Planning and Delivery Framework;

- identification and management of key stakeholders and end user inputs;

- project governance;

- gateway approvals under the ProjectImplementation Process.

Agencies may customise their role in the ProjectImplementation Process to their agency businessand structure. Where the Project ImplementationProcess chart indicates lead agency responsibility,the lead agency may develop details to indicateprecisely who in their organisation is responsibleand accountable for this task.


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bridge and other civil engineering assets, as wellas managing the risks related to governmentinfrastructure construction and performing theindustry interface role on behalf of government.

DAIS has responsibility for management ofconstruction procurement for government buildings,as well as managing the risks related to governmentbuilding construction and performing the industryinterface role on behalf of government. DAIS worksin conjunction with other lead agencies, the buildingconstruction industry and the AustralianProcurement and Construction Council (APCC) todevelop procurement practices that reflect bestpractice.

LMC is the State Government corporationresponsible for managing and developing SouthAustralia’s portfolio of land assets. Formed underthe Public Corporations Act, LMC is managed bya Board under the direction of the Minister forInfrastructure. As a public entity with a commercialfocus, LMC manages the development of residentialand industrial land, commercial property and majorurban projects.

Land Management RolesThe Land Management Corporation (LMC) managesthe purchase and/or disposal of real property onbehalf of all government agencies, other thanexempt agencies. In the case of non-metropolitanproperty LMC may enlist the assistance of theDepartment for Environment and Heritage, whereappropriate.

The Department for Environment and Heritage (DEH)manages Crown land in all areas of the State.This includes land held in the conservation reservesystem and as public land. DEH may enlist theassistance of LMC in the transfer of Crown Landon the open market.

Agency RolesThe Department for Environment and Heritage (DEH) is responsible for environment policy,biodiversity conservation, heritage conservationand environmental sustainability The Office ofSustainability within DEH works in conjunction withgovernment agencies and the private sectorincluding the construction industry to drive strategiesfor sustainability. It assists agencies taking social,economic and environmental factors into accountat all levels of decision making, developingsustainability frameworks and tools, modelling andencouraging integrated governance and facilitatingcommunity engagement.

The Department of Trade and EconomicDevelopment is the South Australian Government’skey agency for economic and industry developmentpolicy. Its primary role is to contribute to ongoingeconomic growth and wealth creation inSouth Australia.

The Office of the Crown Solicitor provides advice oncommercial and legal matters generally, and assistscontract negotiation and development. The officeensures certification of the adequacy of proposedcontractual arrangements, as well as probity ofprocedures and the methods proposed for assetacquisition.

Planning SA provides the strategic directions forthe State through the provision of guidelinesfor development planning in metropolitan, outermetropolitan Adelaide and the regional areas.

The Government Office Accommodation Committeehas responsibility for the development andimplementation of policies for the managementof government office accommodation. It isresponsible for maintaining a register of all officeaccommodation owned in the public sector andits current and future availability. It also maintainsa register of all leases of office accommodation fromexternal sources to agencies and instrumentalities.This register includes details of the rent payable,length of tenure and other relevant details.

Gateway Approvals for StrategicPlanning and Project DeliveryThere are seven gateway approvals which must beadhered to in all prescribed construction projects,although depending on the procurement modelsome may be combined approvals.

The first four gateways are part of the 5-stepInfrastructure Planning and Delivery Framework,culminating in Gateway Four, which gives approvalfor the project to move from strategic planning toproject delivery. A further three gateways are partof the Project Implementation Process.

5-Step Infrastructure Planning andDelivery FrameworkHigher value, complex and/or unique re-investmentor new investment projects will be required toachieve four gateway approvals. Achievement ofthese gateways may include presentations to theMajor Projects and Infrastructure Committee ofCabinet (MPICC) and submissions to Cabinet.

Gateway OneStrategic infrastructure priorities approved byGovernment.

Gateway TwoProject defined for investigation and developmentof business case.

Gateway ThreeProject substantiated and the business case completed.

Gateway FourFunding model agreed, project included in anapproved government program and a decision madeto proceed to Step 5: Delivery.

Lower value, routine re-investment or new investmentprojects will be required to achieve one approval,Gateway Four, which will result in the project beingincluded in an ongoing approved agency capitalinvestment program.

Project Implementation ProcessGateway FiveApproval to commit the expenditure requiredto progress the Design, Documentation andTender phases.

Gateway SixApproval to call public tenders and commit to themarket once the lead agency/ project sponsor issatisfied that the project has been sufficientlydeveloped to be reasonably certain that it is withinthe parameters agreed with Government.

Gateway SevenApproval to proceed to construction by committingthe balance of the project expenditure and awardingconstruction contracts.

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In accordance with Treasurer’s Instruction No 17:Guidelines for the Evaluation of Public SectorInitiatives, the following approval authorities applyfor prescribed construction projects that are publicsector initiatives not included in a budget approvedby Cabinet.

Cabinet approves projects where the estimated totalcost of the project when all stages of constructionare complete is:

- equal to or greater than $4.4 million(inclusive of GST).

The lead Minister approves projects where theestimated total cost of the project when all stagesof construction are complete is:

- greater than $1.1 million (inclusive of GST) or1% of the agency’s total annual recurrent andcapital expenditure and less than $4.4 million.

All submissions seeking Ministerial approval ofprojects will include written advice from DTF onbudgetary provision, and from the infrastructureagency on construction issues, including best practiceprocurement and compliance with the ProjectImplementation Process.

The lead agency Chief Executive or other authorisedofficers approve projects where the estimated totalcost of the project when all stages of constructionare complete is:

- less than $1.1 million (inclusive of GST) orChief Executive delegation or 1% of the agency’s total annual recurrent and capital expenditure,whichever is the lower.

A summary table of Treasurer’s Instruction No 17(as at December 2005) is included in Appendix 2.Details will be verified by checking the governmentweb site for any changes to the delegation amounts.

Approval AuthoritiesThe financial threshold for submission of projects forapproval will be based on the total cost (capital + GST)of the project, regardless of whether the fundsare provided by the public or the private sector.This requirement is for all prescribed constructionprojects including those on assets leased from theprivate sector.

The estimated cost used when seeking approval will bebased on the cost when all stages of construction arecomplete and will include an estimate for priceescalation. While staging of a project needs to beconsidered to ensure the efficient provision of servicesor the effective delivery of the project, agencies mustnot stage projects in a manner that avoids submittingthe proposal for approval at an appropriate delegationbased on the total project cost.

In accordance with Treasurer’s Instruction No 17:Guidelines for the Evaluation of Public SectorInitiatives, the following approval authorities apply forprescribed construction projects that are public sectorinitiatives included in a budget approved by Cabinet.

Cabinet approves projects where the estimated totalcost of the project when all stages of constructionare complete:

- is equal to or greater than $11 million(inclusive of GST);

- exceeds $4.4 million for officeaccommodation projects.

The lead Minister approves projects where theestimated total cost of the project when all stagesof construction are complete:

- is less than $11 million (inclusive of GST);

- less than or equal to $4.4 million (inclusive of GST) for office accommodation projects.

The lead agency Chief Executive or other authorisedofficers approve projects where the estimated totalcost of the project when all stages of constructionare complete is:

- less than $1.1 million (inclusive of GST) orChief Executive delegation whichever is the lower.

Integration of the 5-Step Framework withthe Project Implementation ProcessOnce a prescribed construction project has all requiredapprovals up to the completion of Step 4 of the 5-stepInfrastructure Planning and Delivery Framework it isready to proceed to Step 5: Delivery of the Project.

At this point that the project planning policyintegrates with the project delivery policy, and theProject Implementation Process guides the projectthough six phases and three gateway approvals.

Diagram 2 Integration of the 5-Step Framework

Pro

ject

Imp

lem

enta

tio

nPr

oce

ss

12

5-st

ep In

fras

tru

ctu

rePl

ann

ing

& D

eliv

ery

Fram

ewo

rk

Step1 Strategic analysis and identification of infrastructure needsGateway 1 Strategic infrastructure priorities approved by Government

Step 2 Outline of case for change and project scopingGateway 2 Project defined for investigation and development of business case

Step 3 Project planning and substantiation – leading to a full business caseGateway 3 Project substantiated and the business case completed

Step 4 Project funding method and resource allocationGateway 4 Project included in an approved government program

Step 5 Delivery of the project

5.1 Concept DevelopmentGateway 5 Approval to progress the Design, Documentation and Tender phases

5.2 Design

5.3 DocumentationGateway 6 Approval to call public tenders

5.4 TenderGateway 7 Approval to proceed to construction

5.5 Construction

5.6 Review

Integration

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The 5-Step Infrastructure Planning and Delivery Framework

For a detailed description of the 5-step InfrastructurePlanning and Delivery Framework refer to the policyat www.infrastructure.sa.gov.au/strategic.asp.

To provide context to the Project ImplementationProcess the key features of the five steps aresummarised below. Step 5: Delivery is detailedsubsequently as the Project Implementation Process.

Step1Strategic Analysis and Identificationof Infrastructure Needs

Step 1 is the identification of the State’s infrastructurepriorities in the Strategic Infrastructure Plan.These will be further evaluated and/or refined bythe government through an ongoing strategicinfrastructure planning process focusing on a five andten year timeframe and responding to the objectivesof South Australia’s Strategic Plan.

The guiding principle for agencies is whether theproject is consistent with South Australia’s StrategicPlan, the Strategic Infrastructure Plan and otheragency plans and specific infrastructure prioritiesas determined by Cabinet.


What to doGovernment has provided a broad outline of itsstrategic priorities in South Australia’s Strategic Plan: -growing prosperity; improved wellbeing;attaining sustainability; fostering creativity; buildingcommunities and expanding opportunities. Theinitial planning of proposed construction projectsincludes testing of ideas against these overarchingpriorities for the State.

South Australia’s Strategic Plan is supported bythe Strategic Infrastructure Plan and by strategiesfor service delivery in detailed agency planning.All proposals put forward for consideration andapproval by government must be tested against thestate's plans, the urban and regional planningstrategies, and agency plans for improved servicedelivery.

To inform strategic planning, the agency will apply itsown research and make use of research conducted bythe infrastructure agencies in their role of interfacingwith the construction industry.

Gateway One ApprovalAt the end of Step 1 the strategic infrastructurepriorities will be approved by government.

Government DTF DTEI Lead AgencyStep 1

Government provides a statement ofits key directions and strategies –South Australia’s Strategic Plan

Government provides theStrategic Infrastructure Plan

Review Agency Strategic Plan - lead agencyreviews to see that its corporate planningreflects Government’s key directions andstrategies

Review Strategic Asset Management Plan -lead agency considers information aboutasset life and performance

Undertake strategic project planning -lead agency establishes the basis forproposing a construction project tosupport service delivery

Gateway OneStrategic infrastructure priorities approvedby government

1.1

1.2

1.3

1.4

1.5

InfrastructureAgency

+

+

+

+

+

Strategic Analysis andIdentification of Infrastructure Needs

+ +

+

Lead Joint lead Lead in consultation+

14

What to doLead agencies consider a range of ways in whichservices can be delivered to meet the Government’sstrategic objectives and the agency objectives forservice delivery.

The lead agency undertakes ongoing research anddevelopment to validate the demands for its servicesand reviews its existing asset base using informationfrom its asset management plans and registers.

It tests the performance of its built assets insupporting service delivery and identifies new andinnovative construction or non-constructionsolutions.Testing of the idea will include:

- objectives clarified;

- required services identified;

- strategic asset review and its implications;

- opportunities for asset redevelopment,rationalisation or disposal.

Testing and consideration of the ‘do nothing’ or non-construction options may result in substantiation ofthe requirement for a construction project and willprovide an initial description of project scope alongwith a first broad assessment of affordability andbudget impact. Preliminary costs and timeframes willbe based on an initial NPV whole of life cost analysis,which will be further developed in Step 3 as partof the full business case.

There will be a preliminary risk identification,quantification and treatment exercise, which willcontribute information into the NPV analysis.

By the end of this phase the lead agency will haveestablished a broad prioritised schedule ofservice demands, that require the developmentof built assets through projects.

There may be a requirement to submit the proposedconstruction project for Ministerial, Major Projectsand Infrastructure Committee of Cabinet or Cabinetapproval as advised by DTF and DTEI on a projectby project basis.

Step 2Outline of Case for Change andProject Scoping

Step 2 is the definition by agencies, in associationwith the Department for Transport, Energy andInfrastructure and the Department of Treasury andFinance of the required services and the scope ofprojects to address the State’s strategic infrastructurepriorities. Agencies at this stage will apply a whole-of-government approach to the development ofan outline business case for each project, showing:

- required services to be delivered;

- preliminary costs and timeframes;

- a review of the existing asset base to identify opportunities for redevelopment or disposalof assets;

- a well-argued case for the project, clarifying its objectives, in view of competing priorities;

- initial analysis of affordability, funding method and budget impact;

- the results of initial consultation with key government agencies to ensure alignment of potentially conflicting policy objectives, andthe possible inclusion of additional supporting agencies.


Gateway Two ApprovalThis process leads to a short list of adequately scopedprojects that are then approved by government forfurther detailed analysis.


15


Define required services and scope -lead agency defines required services andscope of projects to address State'sinfrastructure priorities

Establish broad priorities for constructionprojects - lead agency establishes a broadpriorities schedule of service demands thatrequire construction projects

Identification of options - lead agencyconsiders the range of ways including‘do nothing’ option in which services canbe delivered

Test options - lead agency and infrastructureagency undertake research anddevelopment to validate the demand andtest options

Initial description of project scope - an initialdescription of project scope and first broadassessment of affordability and budgetimpact is prepared

Develop outline business case for project -the planning work substantiates, through aprocess of consultation, that the proposedproject satisfies the requirement for it toprovide benefits to government and society.

Gateway TwoProject defined for investigation anddevelopment of business case

2.1

2.2

2.3

2.4

2.5

2.6


+

+ +

Outline of Case for Change andProject Scoping

+

+

+

+

+ +

+


16

What to doIt is critical that any proposed project, even a routineand repetitive project, is investigated thoroughlyin the early stages to establish its viability, developthe project scope and delivery brief and documentits justification through a business case indicatingdemonstrable benefit. The investigation willinclude consideration of the ‘do nothing’ optionand exploration of non-construction alternatives.

Project planning is undertaken to initiate the proposedproject by describing what the project must achieveto support service delivery, which involves analysisof the basis for the project and detailing the scope ofits specific requirements and quality parameters.

Prescribed construction projects range in complexityand risk from multi-million one-off projects ofstrategic importance to the State, and usinginnovative procurement, to projects nearer to$150,000.

Higher value, complex and/or uniquere-investment or new investment projects willrequire development of a full and detailed businesscase with input from DTEI and DTF. Unique projectsare likely to require a full concept design in order toprovide an appropriate basis to the business case.In these instances the concept will be developed by aprofessional planning, design, cost management andbusiness team and generally specific planning study/business case funding will be required. Approval offunds to undertake the necessary investigations willbe secured from the appropriate lead agency delegate.

Lower value, routine re-investment or newinvestment projects will not generally require fullconcept development to formulate the business case.Projects that are included in an ongoing approvedagency capital investment program have met therequirements of the first four steps of the 5-stepInfrastructure Planning and Delivery Framework inthe lead up to being included in the program. Leadagencies, working with infrastructure agency in-houseprofessional expertise, are capable of scoping theprojects and developing the business cases usingrelevant historical asset, design, cost, program andprocurement data.

Step 3Project Planning and Substantiation– Leading to a Full Business Case

Step 3 involves the development of a full business caseor justification for the project, through the followingseries of parallel processes:

- presentation of reasons for the project;

- design development for the project;

- identification of sustainability targets forthe development;

- development of whole-of-life project costs and benefits, including a triple bottom-line assessment;

- consideration of hurdle rate of returnconcepts, where relevant;

- identification of financing options, includingbudget impact, if any;

- discussion of procurement options;

- advice on development consents required;

- the results of more detailed consultation with government agencies;

- discussion of the government’s role;

- recommendations.

Agencies may need to be granted an allocationof funds to support the development of the fullbusiness case.

A structured and well-rounded process will be appliedto all projects to evaluate their economic, social andenvironmental impacts, both positive and negative.Other factors influencing the strategic priority ofprojects will also be considered, to derive their scoreor ranking within infrastructure sectors.


Gateway Three ApprovalAt this stage the projects have been substantiated andbusiness cases approved. The project is ready tobe endorsed by Cabinet as meeting the criteria forproject approval.


17

Lead agencies will make a judgement about the riskand complexity of the project and the associated levelof detail required in the planning and business caseprocess and confirm their judgement with DTEI andDTF. In meeting the requirements of Treasurer’sInstruction 17, the level of business case detail inlower value routine projects or projects that are partof an ongoing approved agency capital investmentprogram is less than that required for higher valuecomplex projects, however agencies must ensure thatan appropriately detailed business case is developed,including a ‘do nothing’ case.

The planning work substantiates, through a process ofbroad consultation including with local governmentwhere applicable, that the proposed project satisfiesthe requirement for it to provide benefits togovernment and society and to be robust in regardto a triple bottom line approach to meet economic,environmental and social objectives. Project planningalso determines that there is a positive business caseor demonstrable benefit to government and paysparticular attention to analysing whole-of-life costs.Research into design, the suitability of new productson the market, alternative forms of contract, andprocesses to increase the efficiency of the construc-tion can provide valuable scoping information toprojects at this stage.

There will be evaluation of all options for relationshipto South Australia’s Strategic Plan, the agency’scorporate or strategic plan, governing legislation andother statutory and policy requirements. Based onthe initial scope definition, an estimated cost oncompletion and an indicative program, each of whichhas a reasonable degree of certainty, a preliminaryproject plan is prepared. There is an analysis ofrisk and an initial assessment of the consents andapprovals required.

DTF will be involved from the outset in advising onfinancial matters. DTF undertakes full evaluation ofthe business case for all proposals and advisesGovernment on the assumptions underlying theexpected costs and benefits. The aim is to ensure thatCabinet is informed of the accuracy and robustnessof the economic analysis and that the proposedconstruction project provides effective value formoney to government.

DTEI will be involved from the outset in advising onthe requirements of the State Infrastructure Planand opportunities for across-agency coordination,including discussions with local councils asappropriate.

Infrastructure agencies will be involved on design,budget, program, risk and procurement matters andwill apply their professional expertise in constructionprocurement and using the risk management processAustralian Standard AS/NZS 4360:1995 to identify,analyse, assess, prioritise and manage risks.

All new project proposals from agencies for theGovernment’s capital works program will beaccompanied by a comment from the infrastructureagency that the total project cost estimates (inclusiveof contingencies) are reasonable and achievablewithin a 10% uncertainty level on current pricesand that the price escalators for future costs arereasonable.

Where the uncertainty level is above 10% theinfrastructure agency will indicate what higher levelof uncertainty is involved, and the extent to whichthat greater uncertainty arises from insufficientplanning and documentation or from factors suchas latent conditions. This advice will allow Cabinetto better understand project cost risks and thereasons for them.

Infrastructure agencies will also assess the overallachievability of a proposed construction projectprogram and, if applicable, the capital investmentprogram of which it is part, so as to optimise theprospects of fully achieving the project and capitalinvestment program cash flow.

Where there are legal issues, the Crown Solicitor willprovide advice. Projects with high-risk or exceptionalcircumstances may be referred to the PrudentialManagement Group for comment before beingrecommended to Cabinet.

Specific advice will be provided by the DAIS HeritageUnit and the Department for Environment andHeritage for heritage assets, and the Office ofSustainability on environmental sustainability. TheDepartment of Trade and Economic Developmentwill advise on small business matters and its Office forRegional Affairs on regional matters; the Departmentfor Families and Communities for family impact issues;

18

and the Department for the Premier and Cabinet,Department for Aboriginal Affairs and Reconciliationon issues relating to Aboriginal people.

The lead agency establishes that the proposedconstruction project has a business case withdemonstrable benefit in accordance with therequirements of Treasurer’s Instruction 17 andGuidelines for the Evaluation of Public SectorInitiatives.

There is consideration of the range of appropriateprocurement and financing options to be exploredin detail in Step 4, but the business case is developedindependent of a final decision on the preferredmodels. The detail in the business case is dependenton the risk, complexity and profile of the proposedproject.

Procurement OptionsDuring Step 3 there will be preliminary analysis ofthe likely construction procurement options as

the method of delivery can affect other decisionsincluding the appointment of the project teamand the risk management process.

The infrastructure agencies have a range ofapproved standard form contracts and the capabilityto develop contracts and construction procurementplans to meet unique project requirements.

Procurement options are considered to determinethe best forms of contracting, taking into accounta full range of public and private sector delivery andfunding options.

Possibilities include recognised governmentcontracting methods including traditional lumpsum contracting, construction manager, design andconstruct, managing construction contractor,early construction contractor involvement andalliance contracting as well as public/privateinterface methods such as Build Own Operate,development agreements and operating leases andprivate delivery of public infrastructure throughoutsourcing and privatisation.


Develop full business case

- For high value, complex and/or unique projects full concept design may be

required - seek approval of funds for business case development fromthe appropriate agency delegateand appoint professional service contractor team

- For lower value, standard projectsutilise infrastructure agency in-house expertise and design research

Develop a preliminary project plan - leadagency develops a preliminary project planbased on estimated cost on completion,indicative program, assessed risk profile andinitial assessment of consents and approvalsrequired

Seek relevant specialist advice –many projects benefit from specialistprofessional advice which may be legal,environmental, heritage, regional,Aboriginal sites etc

Gateway ThreeProject substantiated andbusiness case completed

3.1

3.2

3.3


+

Project Planning and Substantiation –Leading to a full Business Case

++

+

+ +

+

+ +

+

+



19

Step 4Project Funding Method andResource Allocation

Step 4 involves determining the funding method,which may include an allocation of state capital fundsthat may need to be drawn down for the project.A state capital allocation may be submitted as abudget bid, or Cabinet could be asked to approve adraw down of funds as the need is established froman earlier budget allocation.

Consideration is also given to opportunities for privateprovision and/or funding of the project, as well aslocal or Australian Government participation.

Opportunities for private sector participation inthe project will be reviewed, according to keycriteria established in the Partnerships SA document,‘Private Sector Participation in the Provision ofPublic Services – Guidelines for the Public Sector’.(Strategic Infrastructure Plan for South Australia, April 2005)

Gateway Four ApprovalAt this point, Cabinet is able to approve the fundingmethod for the project and any appropriations thatare required. This includes approval for the project tobe included in an approved government program andto proceed to Step 5: Delivery of the Project.

What to doIn Step 4 there is examination of and a decision onthe preferred funding and procurement model.

At the conclusion of Step 4 the project is included onan approved government program and proceeds tothe delivery step.

When the prescribed construction project issubstantiated through the development ofan appropriate business case, the lead agency inconsultation with DTF and DTEI will consider thepotential funding source.

DTEI and DTF will assist agencies in identifying thefunding options and the preferred funding modelwhere alternative funding options are available.

The Government’s Capital Investment Programtraditionally provides funding for a project to supportgovernment service delivery. Funding for agencyprograms or routine projects is generally through thebudget bi-lateral process in which agencies putforward their prioritised projects for consideration.

Some projects will be appropriately funded from othersources including Public Private Partnerships/ PrivateFinance Initiatives (PPP/PFI), Build Own Operate (BOO)or Build Own Operate Transfer (BOOT) agreements.

PPP/PFI options will depend primarily upon twopre-conditions:

- the extent to which outputs may be clearlyspecified in a service contract and whether thereis sufficient operational content in the projectto support ongoing provision of services by theprivate sector;

- the extent to which project risks can beeffectively transferred to the private sector,is a key element of the options appraisal.

If Cabinet approves project delivery by the privatesector, the Partnerships SA procurement processmust be invoked immediately.

Some projects will attract Australian Governmentor Local Government funding, or donated funds.Where there are funding arrangements involving theAustralian Government, Local Government andprivate sector, agencies must ensure that Cabinetis fully informed to make its decisions before anycommitments are entered into.

When the first four steps of the Government’s 5-stepInfrastructure Planning and Delivery Frameworkare successfully completed the project is included inan approved government program and there is adecision to proceed.

20

Step 5Delivery of the ProjectThe Project Implementation Process is used to design,document, tender and construct the project.

Transition BriefingThere is a formal transition briefing from thoseinvolved in the planning work in Steps 1- 4 tothose responsible for Step 5 Delivery to ensure thatassumptions, key decisions and identified risksare understood and the project is implementedaccordingly.


Consider funding options - considerationis given to a state capital allocation oropportunities for private provision and/or funding of the project, as well as AustralianGovernment or Local Government participation.

Consider procurement options

Gateway FourFunding model agreed, project includedin an approved government program anda decision made to proceed to Step 5:Delivery (PIP 5.1- 5.6)

4.1

4.2


+

Project Planning Methodand Resource Allocation

++

+ ++

+ +


22

5.1 Concept

5.2 Design

5.3 Documentation

5.4 Tender

5.5 Construction

5.6 Review



5.6

REVIEW

23

The Concept phase includes the developmentof options for a project approved in the CapitalInvestment Program or other governmentprogram and tests assumptions about cost, time,risk and procurement plans. At the end of thisphase the lead agency’s Minister or delegate mustdecide whether the project will proceed to Designand Documentation phases through Gateway Five.

The prescribed construction project is nowprogressed through the appointment of theprofessional design and cost management teamthat will deliver the completed project. Teamcommunications and governance structuresare established.

The team develops the project brief and conceptson which project approval is based to test the

5.1 Concept

5.5

CONSTRUCTION

initially briefed scope, budget and timelines andto develop the concept design. Risks are reviewedand a risk management plan developed.

The project proceeds through the Concept phaseto the point where there are sufficient detailsto demonstrate that the concept design is viableand acceptable to the lead agency and the endusers, the costs are within the agreed budget andany critical timelines will be met.

There is a gateway at the end of this phase wherethe preferred concept design and associatedproject plan for the management of cost, time,quality and risk must be submitted for approvalby a party with the appropriate financialdelegation before the project is progressed intoDesign, Documentation and Tender with itsassociated commitment of further project funds.

Government DTF DTEI Lead Agency5.1

Appoint project sponsor

Establish project governance

Appoint the project design team

Review full business case and developrisk management plan

Develop concept design

Conduct strategic value management study

Select the preferred concept design

Secure stakeholder sign off

Describe the preferred concept designin a concept report

Gateway FiveApproval to commit the expenditure requiredto progress the Design, Documentation andTender phases

Referral to the Parliamentary Public WorksCommittee [if required]

5.1.1

5.1.2

5.1.3

5.1.4

5.1.5

5.1.6

5.1.7

5.1.8

5.1.9


Concept

+

++

+

+

+

+

+

+

+

+


5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

5.1.1 Appoint the Project SponsorEach project is required to have a lead Minister and asenior officer at an executive level appointed as itsproject sponsor. The lead Minister has responsibilityfor the project while the project sponsor providesleadership and direction to the project, ensures projectcontrols are in place and takes responsibility fortimely and informed decisions to ensure the projectis delivered on time, within budget and to the qualityrequired.

A lead agency representative carries out the day-to-day work of the project sponsor but accountability forthe project and its outcomes cannot be delegatedfrom the executive project sponsor.

5.1.2 Establish Project GovernanceTo manage the project, various governancecommittees must be established.

The lead agency will be represented through theproject sponsor, lead agency representative andnominees including end users and other keystakeholders. The infrastructure agency will besimilarly represented.

Large and complex projects may require theappointment of a steering committee and projectcontrol group while routine projects may beappropriately governed with a project control grouponly. The role of the steering committee is to guidethe project and ensure the objectives are understoodand being achieved. It is responsible for achieving allproject approvals and for liaising with the lead Minister.It also provides the project sponsor with anindependent body to comment on the proposal andcontribute to solutions to any issues arising.Notwithstanding the governance arrangements,the project sponsor is responsible for ensuring thattimely and appropriate decisions are made.

The role of the project control group is to undertakeday-to-day management of all project issues,escalating those issues outside its authority to thesteering committee. It is responsible for implement-ing management techniques that will achieve therequired project parameters in scope, time, cost andquality. It allocates project responsibilities, seeksall relevant approvals and generally supervises theproject to its completion. It reports to the steeringcommittee where such a committee exists, and to

the project sponsor. In lower value, less risky projectsthe two committee roles are integrated and under-taken by the project control group.

5.1.3 Appoint the Project Design TeamThe project design team consists of carefully selectedprofessionals (engineers of various disciplines,planners, architect, quantity surveyor etc) who thendevelop the concepts that form the basis for thebusiness case. This ensures more-precise designdetails and accurate measurements on which tocalculate the likely cost and time needed to designand construct the project.

For building construction projects, most members ofthe project design team are selected from the privatesector, using the government’s approved processfor prequalification and competitive tendering forselection of professional service contractors. Privatesector providers must be registered with InSkill SA.

5.1.4 Review Full Business Case andDevelop Risk Management Plan

In the Concept phase the full business casedeveloped for the proposed project during the 5-stepInfrastructure Planning and Delivery Frameworkprocess is reviewed to ensure it can be procured asanticipated and to develop the proposal in more detail.

The process should have resulted in a project thatmeets the lead agency’s service delivery objectives andstrategies, including:

- alignment with South Australia’s Strategic Planand the Strategic Infrastructure Plan;

- consideration of government policies andpriorities applicable to the lead agency;

- mission or program statements by the lead agency;

- the lead agency’s service delivery charter andits long term strategic directions (five to ten years).

The business case will include identification of keyrisks to the project and these risks will form the basisof a detailed risk identification and treatment planto be developed by the project team in accordancewith Australian Standard AS/NZS 4360:1995. Therewill be ongoing review and updating of the riskmanagement plan throughout all delivery phases ofthe prescribed construction project.

24

25

5.1 Concept

5.1.5 Develop Concept DesignThe project design team will complete a detaileddesign brief and develop a range of conceptdesign options that define all elements, servicesand materials in the design of the built asset.

The team will indicate the design process and ananalysis of the advantages and disadvantages of eachalternative with a view to determining the optimumconcept design to meet service delivery needsbased on both capital and operational costs forthe built asset.

Early identification of statutory, planning andenvironmental constraints at this stage can helptest alternative concepts and identify the impact ofenvironmental and planning approval procedureson the cost and program for the project. Long time-frames can be associated with resolution of theseissues and may limit the development of somealternative options and/or identify additional costelements.

The construction project may involve heritage orcultural issues including those relating to Aboriginalsites and people, and will require contact withthe appropriate government authority. Refer tothe government web site for details.

There must be confirmation of the ways in whichecologically sustainable development initiatives canbe incorporated in the construction project includingundertaking life cycle costing to calculate the costsassociated with any initiative and applicationof the government’s Energy Efficiency Action Planrequirements.

5.1.6 Conduct Strategic ValueManagement Study

It is important to ensure that the lead agency’s projectbrief, the nominated budget and preferred conceptare aligned. The project cannot progress to theDesign phase if there is a mismatch, so time must bespent resolving any outstanding issues, includingstakeholder aspirations and expectations as well asalignment with government requirements.

For all prescribed construction projects, in particularthose equal to or greater than $11 million (inclusiveof GST), a strategic value management study willbe carried out to assist agencies to determine thepreferred concept design.

Strategic value management is a structured,systematic and analytical process undertaken toquantify and verify the key functional requirements.

5.1.7 Select the Preferred Concept DesignHaving considered benefits, functions, value, costsand delivery options, the preferred concept design isselected and documented in sufficient detail toenable the selection criteria to be externally verified.

5.1.8 Secure Stakeholder Sign OffTo ensure the project proceeds without delay, andavoid additional costs incurred through delays andlate changes, the lead agency must secure agree-ment to the preferred concept by key stakeholders.These include the end user, any relevant communitybodies and government agencies that have a role inconsidering the impact of the project on the budget,the environment, business or the community.

5.1.9 Describe the Preferred Concept ina Concept Report

A detailed concept report provides the basis for theproject to progress to the later stages of theProject Implementation Process. The report includes:

- project objectives and how the projectlinks to South Australia’s Strategic Plan andthe Strategic Infrastructure Plan;

- asset function objectives;

- scope and quality of proposed construction project;

- a written description of all viable conceptdesigns considered;

- preferred concept design drawings;

- preferred concept design described in a report including design philosophy, design solution, statutory planning and environment issues, and an assessment of cultural and heritage issues;

- capital and recurrent funding requirements, impact on the State Budget and cash flow;

- economic evaluation of the preferred option including quantified non-financial costs and benefits or appropriate financial evaluation;

- ‘whole of life’ costs, including those for ecologically sustainable development initiatives;

- construction procurement method;

26

- cost estimate;

- indicative program;

- land acquisition plan;

- statement of risk to government, includingrisk assessment and a risk management plan;

- asset rationalisation plans, where required.

All of this information forms the basis of subsequentsubmissions to the Minister, Cabinet and Public WorksCommittee.

Design work will go ahead pending approvals fromthe respective bodies, but no money can be spent onconstruction until the appropriate approval is secured.

For projects of $4 million or more the Public WorksCommittee report must be tabled in the Parliamentbefore construction commences.

Gateway Five ApprovalApproval to commit the expenditure requiredto progress the Design, Documentation andTender phases.

When the preferred concept option has been selectedand the concept report prepared, the lead agencymust obtain approval to proceed to the Designand Documentation Phases in which furthercosts will be incurred. The recommendations maybe accompanied by independent reports fromthe relevant infrastructure agency and/or DTF.It is the responsibility of the project sponsor toensure all requirements are met.

Referral to the Parliamentary Public WorksCommitteeCabinet must approve a project requiring review bythe Public Works Committee before it is referred tothe Committee for inquiry and report.

The Parliamentary Committees Act 1991, underwhich the Public Works Committee operates, requiresthat any public work with an estimated value inexcess of $4 million (exclusive of GST) when all stagesof construction are complete be referred to thePublic Works Committee by the lead agency orinstrumentality, and that no amount may be appliedfor construction until the Committee has reportedon the work to the Parliament.

Furthermore, the Public Works Committee can reviewany project with a value less than $4 million if it sodesires. In such situations construction can proceedwithout waiting for finalisation of the report by theCommittee.

The Public Works Committee will inquire into andreport on the project following resolution of theconcept phase when the business case has beenverified, concept designs and plans developed, andcost estimates and program timelines developedwith a reasonable degree of certainty.

In addition, it can choose to review the project at anyfuture stage or request further information.

Concept Checklist of deliverables- Project sponsor appointed.

- Project team structure and organisationimplemented.

- Professional service contractors appointedto design team.

- Strategic value management study completed.

- Preferred concept design developed andsigned off by stakeholders.

- Gateway Five approval achieved.

Also, if applicable- Submission to Cabinet and referral to

Public Works Committee completed.


27

The Design phase includes developing theendorsed project concept in detail to confirmform and structure, materials and aesthetics,services and site works and detailed workon the cost plan and estimate, procurementprogram and risk management plan.

Design includes the development of theapproved concept option to a high level ofdesign detail through schematic design anddesign development. The design professionalscontribute their expertise to ensure thedesign meets the functional and legislativerequirements as well as the agreed leadagency standards.

A key activity includes checking that thedeveloped design is within the approvedparameters and still meets the objectivesoutlined in the Concept phase and is consistentwith the scope and quality requirements andthe project plan.

There is also a need to check that the projectdesign delivers value for money and addressesthe requirements for asset life cycle performanceand ecologically sustainable development.

5.2 Design

Maintain project governance

Review concept and develop design

Test and confirm a cost plan for the project

Test and confirm a detailed project program

Confirm construction procurement method

Implement process for achieving approvalsrequired for the project

Confirm that the design satisfies endorsedconcept parameters

Transition briefing


5.2.1

5.2.2

5.2.3

5.2.4

5.2.5

5.2.6

5.2.7

5.2.8


Design

+

+

+

+

+

+


5.6

REVIEW5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

5.2.1 Maintain Project GovernanceTo manage the project during design, the governancestructures are reviewed to ensure they are meetingthe requirements for proper management ofconstruction procurement during the more detaileddesign phase. The professional service contractors willplay a pivotal role in coordinating the design processand ensuring that all have the necessary input toproduce an integrated design.

5.2.2 Review Concept and Develop DesignThe detailed concept report is used by the projectdesign team to develop the design. The processincludes:

- incorporating lead agency design standards;

- architectural or engineering design to establishform, appearance and layout, functionalrelationships, area definition, location andsite plans, plans, elevations, sections, materialsselection etc;

- documentation and drawing of the project todesign development stage.

5.2.3 Test and Confirm a Cost Plan for the ProjectBased on the estimates prepared in the Conceptphase, a cost plan is prepared.

The cost plan will include a break down of costsfor the project and an estimate within an order ofaccuracy of 10% (plus or minus) and will indicatethe cash flow required on a financial year basis.

For building construction projects the professionalservice contractor is responsible for managing thebudget and costs.

5.2.4 Test and Confirm a DetailedProject Program

Following development of the project design,program timelines are established to coordinate allthe project variables that are time-dependent.The timelines will be influenced by the methodof delivery chosen for the project.

28

The key timelines include:

- project approval processes including development,planning, Cabinet and Public Works Committee;

- enabling legislation;

- site acquisition and vesting of ownership;

- schematic design, design development, contractdocumentation process;

- tender call and acceptance;

- construction;

- commissioning;

- post handover period.

5.2.5 Confirm Construction Procurement MethodConstruction procurement options considered in theconcept phase will be discussed further and agreedas they influence the approach to and sequencein which contract documentation is prepared. Theprocurement method also affects the project program.

5.2.6 Implement Process for Achieving Approvals Required for the Project

Government construction projects require specificapprovals before the project can proceed. In additionto Cabinet, Ministerial, Chief Executive andParliamentary Committee approvals, public sectorprojects must conform to legislative requirementsincluding the Development Act and the associatedRegulations under the Act. The approvals requiredand the timelines to secure these approvals identifiedin the Concept phase must now be secured.

Development approval is required through theDevelopment Assessment Commission.

The infrastructure agency is responsible for earlyconsultation with the Development AssessmentCommission and for timely identification of issuesthat may need to be addressed to meet planningrequirements.

For building construction projects, certification forcompliance with the Regulations under the Act isalso required.

Certification covers planning approval and buildingrules compliance on matters including structuralintegrity, appropriate provision of amenities, lighting,ventilation and fire safety, and disability access.

29

5.2 Design

Reference will be made to other relevant legislationincluding the Occupational Health, Safety andWelfare Act. There are specific approvals that mustbe secured before the project design is finalised.These include:

- verifying land and property ownership;

- resolving any land use agreements;

- checking for any easements or encumbranceson the property;

- addressing legislation regarding any significanttrees on site;

- addressing heritage requirements if it is aheritage listed property;

- identifying and addressing issues relating to Aboriginal sites and people;

- checking for site contamination and meetingthe requirements of the EnvironmentProtection Authority.

5.2.7 Confirm that the Design Satisfies Endorsed Concept Parameters

With all aspects of the project defined, the proposeddesign will be compared with the approved businesscase and the progressively refined project brief. This isdone to ensure that the project has not deviated fromthe original intent unless there has been justificationand approval for the changes. These changes andassociated approvals need to be documented.

Some time may have passed since the developmentof the concept so it is necessary to confirm thatthe project still meets the needs of the lead agency.

If the project has deviated significantly from theoriginal endorsed concept, effectively it is a newproject with likely variations in the estimatedtotal cost and subject to a thorough review usingthe Project Implementation Process. In thesecircumstances the project must be referred backto the authorised delegate within the lead agencywith full details of the proposed changes and theassociated costs.

The documentation developed for the project can beused for a value management study, which confirmsthe strategic value management study undertaken inthe Concept phase. The value management process isused now to ensure delivery of the essential functionsdescribed earlier, and to eliminate high cost/lowfunction elements of the design.

The lead agency and key stakeholders must signoff on the design details before proceeding to theDocumentation phase. Documentation takesconsiderable time and expertise and significant costsare incurred. These costs, any additional expensesincurred in making late changes to design andescalation costs due to extension of time, put pressureon the project budget. The sign off process is toensure that all parties agree on the design beforedetailed documentation work is done.

5.2.8 Transition BriefingThere is a formal briefing from those people involvedin the concept and design phases to those responsiblefor documentation to ensure that assumptions,key decisions and identified risks are understood andthe project is implemented accordingly.

Design Checklist of Deliverables- Design professionals have completed schematic

design and design development.

- Project cost plan developed.

- Detailed project program prepared and agreed.

- Construction procurement model selected.

- All necessary approvals secured – planning approval and project specific approvals.

- Sign off by lead agency and key stakeholders toconfirm the design meets requirements.

- Design team briefed on key project requirements.

Also, if applicable- Report from Public Works Committee

tabled in Parliament.


30

5.3 Documentation

The Documentation phase includes thepreparation of the drawings, specification andconditions of contract for the requiredconstruction contracts. At the end of this phasethe lead agency’s Minister or delegate mustdecide whether the project will proceed toTender phase through Gateway Six.

Documentation takes the developed design andusing it as a basis, prepares the detailed drawingsand specification that will form the basis of theconstruction contract documentation. Reviewis undertaken to ensure that the documents are

coordinated and complete, the market is provi-ded with a robust basis for tendering andthe lead agency is confident that costs duringconstruction will be contained within approved budgets.

There is a gateway at the end of this phase wherethe lead agency gives approval to call publictenders and commit to the market once thelead agency/ project sponsor is satisfied thatthe project has been sufficiently developedto be reasonably certain that it is within theparameters agreed with Government.

Confirm the project plan

Complete design approvals

Prepare construction contract documents

Obtain pre-tender estimate

Gateway SixApproval to call public tenders andcommit to the market


5.3.1

5.3.2

5.3.3

5.3.4


Documentation

+

+

+

+

+


5.6

REVIEW5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

31

5.3 Documentation

5.3.1 Confirm the Project PlanIt is essential at this stage to review the project plan inregard to management of cost, time, communications,risk and procurement.

The elemental cost plan will be reviewed to ensurethat there is agreement on the provisions for thekey activities of construction, fees, contingency,escalation, equipment and sundry works or contracts.If the cost plan indicates that the project budgetwill be exceeded, steps will be taken using valuemanagement or other techniques to identify scopethat will be omitted to return the project to budget.Where this is not possible the lead agency will takeaction to gain approval from the appropriate delegatefor additional funds and an adjustment to the budget.

The anticipated cash flow will be updated.

The detailed program will be updated to ensurethere is adequate time provided for the thoroughpreparation of drawings and specification. Insufficienttime will result in incomplete or incorrect documentswhich will present a significant risk of claims forvariations from the construction contractor duringthe construction phase.

Roles of the members of the project team duringdocumentation need to be confirmed andcommunicated clearly so there is a commonunderstanding of functions and responsibilities.

The preferred construction procurement model will beconfirmed after discussion between the lead agencyand project team on which parties will manage therange of construction risks including design, weather,latent conditions, time and cost.

Decisions will be made on which parties haveauthority to approve the documents, proceeding totender call, total expenditure and tender acceptance.

5.3.2 Complete Design ApprovalsProjects are required to conform to legislativerequirements including the Development Act,the Occupational Health, Safety & Welfare Act,the Environment Protection Act, the Public andEnvironmental Health Act, the DisabilityDiscrimination Act and the Heritage Act.

Development approval, together with certificationthat the plans comply with the Regulations under theDevelopment Act, must be sought and confirmedbefore tender call.

5.3.3 Prepare Construction Contract DocumentsThe Government of South Australia is a signatoryto an ‘in principle' agreement to use AustralianStandards and benchmarks in relation to tenderingprocedures, as outlined in Appendix 3.

The professional service contractors in the projectteam will prepare contract drawings andspecifications that describe the constructionrequirements in sufficient detail to allow aconstruction contractor to provide a reliable tenderfor the work and to construct the project with theminimum of errors and omissions and to the requiredstandard. The quality standards with which theconstruction contractor is to comply will be definedin the documentation to ensure best practicestandards are achieved for the project.

5.3.4 Obtain Pre-Tender EstimateThe professional service contractor responsible formanaging the cost plan will progressively review itto ensure that the scope of work and the designdetailed in the documentation can be met from theallocated budget.

If the progressive review of cost or the pre-tenderestimate exceeds the approved budget there must beagreement on the appropriate arrangements forbudget management prior to proceeding to tender.

Generally, if the pre-tender estimate is less than 5%above the construction budget steps will be takento identify items in the contract documentation thatcan be separately priced by the tenderers and, ifnecessary, deleted after tender close to return theproject to budget.

If the pre-tender estimate is 5% or more over theconstruction budget, steps will be taken either todelete scope from the contract documentationsufficient to return to budget or for there to beapproval of additional funding by the relevantdelegate (which may be Cabinet or the lead Minister)prior to tenders being called.

32

Gateway Six ApprovalApproval to call public tenders and commit tothe market once the lead agency/ project sponsoris satisfied that the project has been sufficientlydeveloped to be reasonably certain that it is withinthe parameters agreed with Government.

When the design and documentation progresses toa stage when the selected procurement model canprogress within reasonable risk parameters, the leadagency must obtain approval at the appropriate levelof delegation to proceed to the Tender Phase in whichcosts will be incurred by the construction market.A final check will be carried out to ensure that thefollowing requirements are addressed:

- a complete and coordinated set of contractdocuments is available;

- the pre-tender estimate has been obtained andis within 5% of the approved construction budget;

- all necessary approvals have been secured,including approvals under the Development Actand, where necessary, a report from theParliamentary Public Works Committee.

Documentation Checklist of deliverables- Project plan confirmed.

- Design approvals completed.

- Pre-tender estimate prepared with estimatedcost confirmed within 5% of budget.

- Contract documents (conditions, drawings and specifications) finalised.

- Gateway Six approval to proceed to tender.


33

The Tender phase includes establishing a tenderfield, calling tenders, appraising tenders receivedand making recommendations for acceptance oftenders. At the end of this phase the lead agency’sMinister or delegate must decide whetherthe project will proceed to Construction phasethrough Gateway 7.

Calling and assessing construction tenders iscarried out in accordance with the tenderingcodes. A final approval for expenditure isobtained from the lead Minister and approval of

the contract from the contract Principal beforeawarding the construction contract(s). There isa gateway at the end of this phase where finalexpenditure approval is given by the lead agencyand contract approval is given by the Principal inconstruction industry contracts prior to contractsbeing let and construction commencing.

Gateway Seven at the end of 5.4 ensures thatthere is a lead agency formal sign-off andappropriate contract approvals in place beforethe most significant expenditure component ofprescribed construction projects is committed.

5.4 Tender

Determine the construction contractortender field

Call tenders and obtain tendercomparison estimate

Prepare tender evaluation report andrecommendation

Gateway SevenApproval to proceed to construction bycommitting the balance of projectexpenditure and awarding constructioncontracts


5.4.1

5.4.2

5.4.3


Tender

+

+

+

+ +


5.6

REVIEW5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

5.4.1 Determine the Construction ContractorTender Field

The government’s prequalification schemes ensurethat construction contractors have the specificskills and expertise to undertake the contract tothe specified requirements. Required skills andexperience include:

- the management and technical capacity ofthe construction team, including experience,expertise and performance on previous projects;

- financial capacity and financial control systems;

- registration as required by InSkill SA;

- a demonstrated commitment to training andskills development;

- conformance with Occupational Health, Safetyand Welfare Regulations and other criteria.

The rules established under prequalificationschemes will be utilised to select the tender field.

5.4.2 Call Tenders and Obtain TenderComparison Estimate

The relevant infrastructure agency will conduct alltender calls, including design and construction,observing the requirements for probity and adheringto all relevant Treasurer’s Instructions. During thecourse of the tender call the agency will arrange fortender enquiries to be responded to promptly andconsistently for all tenderers. Prior to the close ofthe tender call a tender comparison estimate willbe prepared to provide a price benchmark againstwhich to compare tenders.

5.4.3 Prepare Tender Evaluation Report and Recommendation

The tender evaluation is undertaken in accordancewith the principles outlined in the Code of Tendering(Australian Standard AS 4120 - 1994). The Code is astatement of ethics and procedures that underpin bestpractice tendering. It details the obligations of thetenderers in the tendering process and the Principalin the construction contract and provides a consistentbasis for the calling of tenders among constructioncontractors and subcontractors.

34

The Government of South Australia has published‘Guidelines for Public Sector Building andConstruction Tendering Practices for Contractors’(September 1997) to assist agencies withimplementation of the Code of Tendering.

Tender appraisal information is prepared inaccordance with the principles detailed in the Codeand the lead agency participates in the preparation,consistent with the construction industry’s standard,of a tender recommendation.

The recommended tender price should be withinthe cost limits previously identified.

Gateway Seven ApprovalApproval to proceed to construction by committingthe balance of the project expenditure andawarding construction contracts.

It is essential for the lead agency to obtain approvalof total capital and GST expenditure sufficient to allowacceptance of the recommended tender beforeawarding the construction contract and extending theprofessional service contractor contracts into theConstruction phase.

The expenditure approvals are sought from the partywith the appropriate level of authority (Appendix 2).

The relevant infrastructure agency will accept thetender, establish the contract and execute a formalinstrument of agreement in accordance with the Codeof Tendering (Australian Standard AS 4120 - 1994)and the Government of South Australia guidelines forimplementation introduced in September 1997.

The Code and guidelines have been endorsed by theconstruction industry in South Australia. As there arelegal issues arising from construction contracts andtheir administration, it is essential that the authorisedpersons appointed under the contract manage andresolve these issues.

The contract award approvals are sought fromthe party with the appropriate level of authority(Appendix 2).

35

5.4 Tender

Tender Checklist of deliverables- Construction contractors selected to tender.

- Tender call process completed using infrastructure agency systems with required standards of probity and in accordance with conditions of tendering.

- Tender evaluation report and recommendation.

- Tender and expenditure approvalrecommendation documented.

- Agency approval of sufficient expenditure tocomplete the project.

- Tender acceptance by infrastructure agencydelegate and all necessary contracts extendedand awarded.

and management representatives of the constructioncontractor to participate. This ensures that thereis direct input from the party with the most directinfluence on the success of the project duringconstruction.

5.5.3 Manage the Construction ContractConstruction contracts are administered byinfrastructure agencies on behalf of the Principal in theContract. Generally the construction contracts arearranged so that the Minister appoints a Superintendentto independently and objectively administer thecontract. The Superintendent is an executive in the

5.5.1 Transition BriefingThere is a formal briefing from those peopleinvolved in the design and documentation phasesto those responsible for construction to ensure thatassumptions, key decisions and identified risksare understood and the project is implementedaccordingly.

5.5.2 Review Project GovernanceThe various governance committees required tomanage the project during construction are reviewedand re-established. The Steering Committee andProject Control Group will generally invite executive


5.6

REVIEW

36

The Construction phase includes the on-siteactivities by construction contractors andsubcontractors that result in the buildingasset being constructed or refurbished.

There are specific requirements to be met in theconstruction and commissioning of a built assetproject. In particular, progress of constructionand timely response to issues as they arise areimportant elements of effective management

5.5 Construction

during this high risk, high expenditure phaseof construction projects.

There will be regular reviews with the designand construction team to monitor progress andto agree on the appropriate response to issues.The response may require formal approval ofadjustments to the scope, design, budget orprogram of the prescribed construction project.

5.5

CONSTRUCTION


Transition briefing

Review project governance

Manage the construction contract

Manage the project budget and program

Commission the construction project

Handover the completedconstruction project

Defects liability

5.5.1

5.5.2

5.5.3

5.5.4

5.5.5

5.5.6

5.5.7


Construction

+

+

+

+

+

+


5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

Handover includes the provision of operatinginstructions and maintenance plans for the built assetand for any specific items of equipment thatrequire instructions.

At handover the lead agency will be provided with‘as built’ plans and financial information.

Practical completion or equivalent is when aconstruction contract has been completed and is fit forits intended purpose, except for minor omissions anddefects that do not prevent its use or expose the endusers to risk. Any testing required under the contractwill have been carried out. Practical completion ismarked by the issue to the construction contractor ofa certificate of practical completion or equivalent.

5.5.7 Defects LiabilityMost construction contracts have a defects liabilityperiod, usually twelve months, during which theconstruction contractor is responsible for completingminor omissions and defects outstanding at the timethe building was handed over to the lead agency orfor rectifying construction defects identified duringthis period.

Lead agencies and end users are advised by theinfrastructure agency on the contractualresponsibilities that the construction contractorretains after handover and will ensure that nowork is carried out by anyone except the authorisedconstruction contractor or its nominee.

Construction Checklist of Deliverables

- Construction team briefed on key projectrequirements.

- Project team structures and organisation in place.

- Construction contract administered in accordance with conditions of contract.

- Project within approved budget and program.

- Construction completed.

- Commissioning arrangements in place including training and manuals.

- Certification of occupancy to confirm statutory requirements have been met before handover fromthe construction contractor to the lead agency.

- Handover of construction from the construction contractor to the lead agency and end users.

- Defects documented and action agreed.

infrastructure agency with responsibility for ensuringthat the construction procurement processes andpolicies are applied to the contract administrationactivities undertaken by all parties.

5.5.4 Manage the Project Budget and ProgramThe infrastructure agency is responsible for workingwith the lead agency to provide all informationnecessary to allow the lead agency to retainresponsibility for the project during the constructionphase.

Any changes to milestones and program, increase inthe estimated cost on completion, or significantchanges to design or variations arising during theconstruction period, will be referred immediately tothe lead agency with an explanation of the changesand the proposed action to be taken. In most instancessuch issues will be discussed at the regular (usuallymonthly) Project Control Group and SteeringCommittee meetings.

If any increase in cost is expected to exceed theapproved expenditure, approval of additional fundsmust be sought by the lead agency from the party withdelegated authority to incur expenditure for the totalamount (ie the initial approval plus the proposedadditional amount).

If any extended time is required and milestones arelikely to be missed the infrastructure agency willprovide early warning wherever possible to allow thelead agency to advise the end users and to makealternative arrangements, if required.

5.5.5 Commission the Construction ProjectCommissioning of the prescribed construction projectis usually undertaken before handover to ensureeverything is ready for occupation and use. Any workoutstanding under the contract will be identified anddocumented so there is a clear understanding ofthe work still to be completed as part of the project.

5.5.6 Handover the CompletedConstruction Project

Once the construction work has reached practicalcompletion or equivalent, handover from theconstruction contractor to the lead agency and endusers can occur. From this time on the lead agencytakes responsibility for the asset and its use.

37

5.5 Construction

5 Step Framework and Project Implementation Process

38

5.6 Review

The Review Phase includes feedback about products,processes and asset performance to develop design,construction and market intelligence to benefit futurebuilding projects.

Review includes ensuring all construction work hasbeen completed appropriately and there is a smoothhandover of the project to the end users and assetmanager. It includes monitoring the performanceof the asset, generally for twelve months, and makingadjustments as required in response to end user issues.

Various reviews are conducted to identify the designand construction achievements, to compare theexpected service delivery outcomes with the actualperformance of services and to report on areas whereimprovements can be made in subsequent projects.

Review includes finalising all design and constructioncontracts and updating of information systemsincluding data systems, asset registers and assetmanagement plans so that information will be fedback into the planning process to provide reliableinformation to facilitate ongoing improvements tothe planning and delivery of future projects.

Update information systems

Post - construction review

Post - occupancy evaluation

Management review

Finalise the project finance and contracts

Update construction / professional servicecontractor data

Feed back information to the concept anddesign phases


5.6.1

5.6.2

5.6.3

5.6.4

5.6.5

5.6.6

5.6.7


Review

+

+

+

+

++

+

+


5.6

REVIEW5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

39

5.6 Review

5.6.1 Update Information SystemsThe physical details of the project as built, withrelevant information about the nature and location ofthe asset will be incorporated in an asset managementinformation system.

At the completion of construction, the followinginformation should be recorded in asset managementsystems so that accurate records are established:

- ‘as built’ plans and drawings;

- operating and maintenance information;

- copy of certified documents.

The financial details of the project need to beincorporated in the lead agency’s financialmanagement information system.

5.6.2 Post-Construction ReviewA post-construction review is undertaken inconjunction with the lead agency and representativesof the end user group that will be using the asset.Any significant issues arising from the design,documentation and construction phases from whichlessons can be learnt for future projects, will beidentified through this process and documented.

A clear delineation must be made between rectifyingmatters under the contract as distinct from additionalwork that will require additional funds to be approvedand allocated by the lead agency.

The post-construction review provides anopportunity to identify any steps that need tobe clarified to improve project approval andimplementation processes and amend documentedstandards, if necessary.

There will be ongoing review undertaken to identifyany items that need to be rectified by the constructioncontractor during the defects liability period.

5.6.3 Post-Occupancy EvaluationPost-occupancy evaluation is undertaken todetermine whether the objectives of the project wereachieved and whether the briefing standards wereprescribed appropriately. It is a careful and systematicevaluation of the performance of an occupied facility,measured in terms of user satisfaction, fitnessfor purpose (based on the requirements stated inthe evaluation brief), technical performance andvalue for money.

Information from the post-occupancy evaluationis used to update briefing information, to reviewstandards and benchmarks and to ensure thatappropriate processes are in place.

5.6.4 Management ReviewIn some instances a management review may berequired to address specific issues relating tomatters of probity and accountability such as:

- accountability for decisions and outcomes consistent with the project brief anddocumented plans;

- confirmation that due process has been observed and endorsed procedures have been followed;

- evidence that appropriate records have been maintained, and that an effective audit trail exists;

- documentation that confirms that all costs have been identified and substantiated, and payments made accordingly;

- evidence that all necessary approvals were sought and confirmed at the appropriate time and at the approved level of delegation.

A management review is most likely if the integrity ofthe process or project management is questioned, butit may be used to audit whether endorsed processesare being followed and to assure the Government ofSouth Australia that all aspects of procurement riskare being managed appropriately.

A management review report is expected to identifywhether due process has been followed. The reportwill provide the lead agency’s senior managementwith the necessary information for action includingadjustment or improvement of the processes to beapplied in future projects.

5.6.5 Finalise the Project Finance and ContractsAll contracts and project finance need to be finalisedat the conclusion of the construction phase.

The expenditure and contract award approvals aresought from the party with the appropriate level ofauthority (Appendix 2).

Check that project finance has been finalised inaccordance with the authorised approvals andcontract conditions.

40

5.6.6 Update Construction/Professional Service Contractor Data

Performance reports on construction contractorsand professional service contractors will becompleted to update the prequalification registersthat are maintained by the infrastructure agencies

5.6.7 Feed Back Information to the Conceptand Design Phases

Information from a post-construction review, post-occupancy review or management review is fed backinto the planning phase to improve the planningprocess and provide for continuous improvement toall facets of the Project Implementation Process.

Review Checklist of deliverables- Management, post-construction/ post-occupancy

reviews completed.

- Information systems updated and records management requirements addressed.

- Contracts and project finance finalised.

- Prequalification performance reportinformation completed.

- Feedback into the planning phase to ensure continuous improvement.

State Procurement Act 2004 andRegulations under the ActThe State Procurement Act was proclaimed in 2004.

The Minister for Administrative Services hasresponsibility for administration of the Act andDAIS provides administrative support. The StateProcurement Act regulates the procurement ofgoods, services and construction by public authoritiesand advances government priorities and objectivesincluding:

- value for money in the expenditure ofpublic monies;

- providing for ethical and fair treatmentof participants; and

- ensuring probity, accountability andtransparency in procurement operations.

Regulations under the State Procurement Act 2004,exclude a ‘prescribed public authority’. Theseinclude the Local Government Finance Authority,Local Government Superannuation Board, SouthAustralian Forestry Corporation (Forestry SA), SouthAustralian Housing Trust, South Australian WaterCorporation, Superannuation Funds ManagementCorporation of South Australia and TransAdelaide.These agencies possess the level of expertise andthe robust procurement process controls requiredto independently procure goods, services andconstruction.

Regulations also exclude a ‘prescribed constructionproject’ of a cost exceeding $150,000. These projectsare managed by infrastructure agencies under thepolicy umbrella provided by the 5-step Infrastructureand Planning Framework, the Project ImplementationProcess and Treasurer’s Instructions.

The definition in the Regulations is:

A prescribed construction project:

(a) is a project that primarily involves the procurementof construction work: and encompasses

(i) the acquisition and installation of fixtures,plant, equipment, appliances and fittingsin conjunction with construction work; and

(ii) the acquisition of survey, planning,design and other services in conjunction withconstruction work; and

41

Appendix 1

(b) does not encompass the acquisition of goodsand services for the ongoing maintenance of abuilding or structure.

In the regulation-

building work has the same meaning as in theBuilding Work Contractors Act 1995 and is;

(a) the whole or part of the work of constructing,erecting, underpinning, altering, repairing,improving, adding to or demolishing a building or

(b) the whole or part of the work of excavatingor filling a site for work referred to in (a)

(c) work of a class prescribed by regulation;or the whole or part of the work of excavating orfilling of land not constituting building work.

construction work means

(a) building work; or

(b) the whole or part of the work of excavatingor filling land not constituting building work.

Approval Authorities for Expenditureand ContractsTreasurer’s Instruction 17: Guidelines for the Evaluationof Public Sector Initiatives and its associated guidelinesprovide details on approvals to proceed with publicsector initiatives.

Department for the Premier and Cabinet Circular 18:Government Office Accomodation Framework setsout the process for planning and procuring officeaccommodation.

Diagram 3 Approval Authorities

42

Appendix 2

Lead AgencyChief Executive

Lead Minister CabinetConstruction type

Agency/Minister’sdelegation

As above

As above

Buildings,Infrastructure, LandDevelopment

OfficeAccomodation

BuildingInfrastructure, LandDevelopment

Public WorksCommittee

Lead AgencyProject Sponsor

Less than $1.1m orChief Executivedelegation whicheveris the lower

As above

Less than $1.1m orChief Executivedelegation or 1% ofagency’s total annualrecurrent andcapital expenditurewhichever is the lower

Less than $11m

Less than or equalto $4.4m

Greater than $1.1mor 1% of agency’stotal annualrecurrent and capitalexpenditure and lessthan $4.4m

Equal to or greaterthan $11m

Exceeds $4.4m

Equal to or greaterthan $4.4m

$4m or more(excl. GST)

As above

As above

Details- Treasurer’s Instruction 17. DAIS must be involved in projects of $150,000 or more

Details- Department of Premier & Cabinet Circular 18. Government Office Accommodation Committee (GOAC) must be involved.

Approval authorities for projects not included in an approved budget ($ including GST)

Approval authorities for projects included in an approved budget ($ including GST)

Lead Agency delegation–refer to internal delegations as these differ according to the agency

References for the ProjectImplementation ProcessSouth Australia’s Strategic Plan, March 2004

South Australia’s Strategic Plan was released inMarch 2004. It sets the directions for the State andits service needs, outlines the key priorities and goalsto be achieved and forms the basis for all servicesand infrastructure. It is supported by the StrategicInfrastructure Plan which was released in April 2005.

Strategic Infrastructure Plan forSouth Australia, April 2005The Strategic Infrastructure Plan is a dynamicdocument that outlines priority infrastructure projects.It is subject to ongoing review to meet service needs.

Treasurer’s InstructionsKey Treasurer’s Instructions, issued in accordancewith Public Finance and Audit Act, 1987.- Treasurer’s Instruction No 8 Expenditure for

Goods, Services and Works.

- Treasurer’s Instruction No 17 Guidelines forthe Evaluation of Public Sector Initiatives.

Guidelines for Public Sector Initiatives- Guidelines for the Evaluation of Public Sector

Initiatives, Department of Treasury and Finance,June 2005.

- Partnerships SA - Private Sector Participation inthe Provision of Public Services; Guidelines forthe Public Sector, Department of Treasury and Finance, September 2002.

Planning Strategy for Metropolitan AdelaidePlanning SA, 2005.

Planning SA provides the government’s planningstrategy for metropolitan and outer metropolitanAdelaide and the regional planning strategy to guideland use and development.

Strategic Asset Management FrameworkDepartment of Treasury and Finance/Services SA,January 1996.

Outlines government policy for asset managementof public infrastructure and provides a frameworkfor assessing asset needs to support service delivery,consistent with South Australia’s Strategic Plan andthe Strategic Infrastructure Plan.

Appendix 3

43

Project Initiation Process for Capital WorksJanuary 1996 and revised in March 2002. Reviewedand revised as the Project Implementation Processin 2005.

The Project Initiation Process for Capital Workswas developed by DTF in conjunction with DAIS inresponse to government’s requirement for aclear process which will provide consistency in theplanning and delivery of government’s buildingassets. It followed the endorsement of a submissionto Cabinet in July 1995 and replaced DPC 112 CapitalWorks Efficiency Measures. It detailed the steps to betaken and allocates the responsibilities of agenciesand government in the process.

Construction Procurement Policy;Project Implementation ProcessThe Project Initiation Process for Capital Works wasrevised as the Project Implementation Process andendorsed by Cabinet on 12 December 2005.Department of the Premier and Cabinet CircularPC028 describes this policy.

The Project Implementation Process is a genericpolicy that can be applied to all types of ‘prescribedconstruction projects’ as defined by the StateProcurement Act 2004. It complements the 5-stepInfrastructure Planning and Delivery Framework andguides construction procurement of infrastructureincluding roads, buildings and land development.It also provides a detailed procedure to guidegovernment agencies and private sector providersthrough the government process for project planningand delivery.

The Project Implementation Process 2005 iscomplemented by the Strategic Asset ManagementFramework and building asset managementguidelines. In addition DAIS provides guidelines whichdescribes risk management and risk managementresponsibilities.

Australian Procurement and Construction Council(APCC) publications that provide further guidance onissues in the Project Implementation Process include:

- Improving Project Documentation – A Guideto Improve Current Practice, 2003.

- Client Skills; Skills required by Government asthe Construction Industry Client, 2002.

- Key Issues in Procurement through PublicPrivate Partnerships - Discussion Paper, 2002.

Annual Budget papersAs developed and published by the Department ofTreasury and Finance.

Department of the Premier and Cabinet Circulars- PC015 Procedures for Submissions

seeking the review of Public Works bythe Public Works Committee.

- PC018 Government Office Accommodation Framework (March 2004 Revision).

- PCO20 Upgrading of Safety and Access inCrown Buildings, December 2002.

- PC024 Integration of South Australia's Strategic Plan into Government Agency Planning Processes (amended March 2005).

- PCC114 Purchase and Disposal of Government Real Property (including Crown Lands), September 1999. Note that this Circular isbeing revised and will be updated in 2006.

- PC028 Construction Procurement Policy:Project Implementation Process, December 2005.

Government and the Building andConstruction Industry Policy Guidelines- Code of Practice for the South Australian

Building and Construction Industry publishedby the Construction Industry Advisory Counciland DAIS on behalf of the Government ofSouth Australia, March 2003.

- Code of Practice for the South Australian Building and Construction Industry Implementation Guidelines Part 1. Implementation Procedures, March 2003.

- Code of Practice for the South AustralianBuilding and Construction Industry Implementation Guidelines Part 2.Schedules of Best Practice, March 2003.

- Building and Construction Industry Prequalification and Registration ofContractors and Consultants 2002.

- Building and Construction Minor Works Guide, Manual and Checklist, DAIS, November 1995.

- InSkill SA Industry Skilling South Australiansfor Employment Registration Information,December 2002.

Appendix 3

44

- Energy Efficiency Action Plan, Energy SA(now Department for Transport, Energy and Infrastructure, Energy Division), May 2002.

Other Relevant Publications- Guidelines for the Private Sector on Contracting

Out and Competitive Tendering,Economic Development Authority, June 1995.

- All About Contracting Out, Office of Public SectorManagement, Department of the Premier and Cabinet, June 1995.

- Contracting Out Financial Guidelines,Department of Treasury and Finance, June 1998.

- Risk Management Strategy Plan, SA Insurance Corporation (SAICORP), March 1995.

National Standards and Benchmarks for theBuilding Construction IndustryThe South Australian Government is a signatory toan ‘in principle agreement’ which is part of theNational Construction Industry Reform Strategy.The agreement includes an undertaking to developand implement National standards and codes ofpractice which will ensure consistency, equity andprofessional conduct in the delivery and mainten-ance of infrastructure. The ‘in principle’ agreementby Government supports the implementationof international best practice and the ongoingmonitoring of industry benchmarks to ensurethere are acknowledged examples of best practice.Australian Standards are used in this process.The relevant National standards include:

- Risk Management: Australian StandardAS/NZS 4360:1995.This standard provides a systematic processused to identify, analyse, assess and prioritiserisks and document a risk management planfor the project.

- Code of tendering: Australian StandardAS 4120:1994.This is a statement of ethics and procedures thatunderpin best practice tendering techniques.It sets out the ethics and obligations of thePrincipal and tenderers in the tendering processin the construction industry. It applies to theselection of construction contractors andsubcontractors and introduces a consistentbasis for the calling of tenders.

Appendix 3

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USA companies must be able to tender forprojects of this value or more (estimated coston completion, GST included) without discrimination. Standard procurement processes already address this matter by placing tenders on a public web site, providing advanced notice of projects and allowing sufficient time for tenders to be submitted. To date most USA companies tendering for government construction projects have had an Australian presence and therefore have been aware of the tendering processesof government.

The New Zealand Free Trade Agreement (ANZ-FTA)makes similar provisions for access to tender markets but there is no threshold amount for construction procurement projects.

International Standards Organisation (ISO)9000 Series and associated guidelinesThe International Standards are used also,especially for quality assurance.

ISO 9001:1994 Quality Systems - Model for qualityassurance in design, development, production,installation and servicing:

ISO 9002:1994 Quality Systems - Model for qualityassurance in production, installation and servicing;and ISO 9001:1994 Quality Systems - Model forquality assurance in final inspection and test .

Australian Procurement andConstruction CouncilThe Australian Procurement and Construction Council(APCC) is the peak council for the Commonwealth,State and Territory departments responsible forprocurement and construction policy for thegovernments of Australia. APCC provides guidanceto establish and improve government procurement,ensure the application of consistent processes acrossgovernment, and provide reliable information to thebuilding and construction industry. APCC guidelinesare available on the web site http://www.apcc.gov.au/

- Code of ethics and procedures for the selection of consultants: Australian Standard AS 4121:1994. This Australian Standard has been specifically designed for the selection of consultantarchitects, engineers, quantity surveyors and other professional service contractors. It sets out the ethics and the obligations of both the client and the professional service contractors. It also outlines appropriate procedures for the callingfor proposals, evaluation of proposals and the obligations of professional service contractors and principals in that process.

- General conditions of contract for engagement of consultants: Australian StandardAS 4122:2000.This document provides a general set ofconditions to be used when engaging profes-sional service contractors. It consists of efficientand fair contractual arrangements for theemployment of professional service contractors.This standard has not been finalised, so DAISis using a standard developed in conjunctionwith the Crown Solicitor's Office.

- General conditions of contract: Australian Standard AS 2124:1992 together with General conditions of tendering and form of tender Australian Standard AS 2125:1992 and Formof formal instrument of agreement Australian Standard AS 2127:1992.

In South Australia, a suite of standard form contracts based on AS 2124:1992 is used for most government building projects. There are further Australian Standards and guidelinesthat may be used. These are available through Standards Australia. The relevant web site is http://online.standards.com.au/online/

- United States Free Trade Agreement (AUS-FTA)On 18 May 2004 the Australian Government entered into a Free Trade Agreement with the United States of America. The FTA thresholdfor procurement of construction services isAUD$9.933M (as at December 2005).

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Glossary

CertificationA means of documenting compliance with perfor-mance or prescriptive building code requirements byan independent accredited agency or individual notpart of the statutory approval authority.

Code of practiceA statement of the minimal acceptable levels ofaspects of behaviour and best practice requiredto bring about improved performance throughindustry reform.

ConceptThe idea developed to meet a specific servicedelivery need.

Concept designDevelopment of the concept idea to a design thatmeets a specific service delivery need. Includesinformation gathered in a site assessment and thedevelopment of suitable plan options based onthe project brief.

Concept reportThe report containing analysis of the conceptdesigns considered, summary of the evaluation andidentification of the preferred option.

Construction (as defined in the Regulationsunder the State Procurement Act 2004)

Construction is building work – defined as

(d) the whole or part of the work of constructing,erecting, underpinning, altering, repairing,improving, adding to or demolishing a building or

(e) the whole or part of the work of excavating orfilling a site for work referred to in (a)

(f) work of a class prescribed by regulation; or the whole or part of the work of excavating or

filling of land not constituting building work.

Construction Contractor(see also Professional Service Contractor)The party that contracts to manage the process ofconstruction of a building or structure.

ContractAn agreement entered into between two or moreparties that involves an exchange of specified goodsand/or services for specified financial reimbursementor other considerations. The terms of agreement areusually set out in writing and the signing of a contractcreates specific legal obligations.

Glossary of terms relevant toProject Implementation ProcessAsset managementThe process of managing demand and guidingacquisition, use and disposal of assets to makethe most of their service delivery potential, andmanage risks and costs over their entire life.

(Strategic Asset Management Framework, firstpublished January 1996).

A systematic approach to the procurement,maintenance, operation, rehabilitation and disposalof one or more assets which integrates the utilisationof assets and their performance with the businessrequirements of asset owners or users.

Asset management information systemA system for collecting and analysing data on theperformance of existing assets and their operationalcosts. (An example is the Strategic Asset ManagementInformation System - SAMIS).

Asset management planIdentifies the short and long term requirements ofan agency and provides a framework for managingits asset portfolio. These needs are driven by goalsdefined in the agency’s corporate plan and servicedelivery strategies.

Asset registerA record of items considered worthy of identificationas discrete assets. A physical asset register includesinformation about each asset, such as type ofconstruction and technical details. (Details includelocation, value and construction type).

BudgetThe total allotment of funds for a construction project.

Construction industryThe industry that provides the design andconstruction services associated with the constructionof buildings and structures.

Business caseThe description and substantiation of the quantifiablebenefits of the proposed project.

Capital investmentA term which relates to the procurement ofconstruction projects through the expenditure ofcapital funds.

Glossary

47

Corporate planA written record describing the reason for an organi-sation’s existence, programs, program objectives,statutory requirements, issues and how it intendsto achieve and measure progress to address theseissues and objectives.

Cost benefit analysisA technique for the evaluation of projects, whereall costs and benefits (direct and indirect) areconsidered. Costs and benefits will be quantified,but where this is not possible they will be listed.

Cost planCost targets for each element of a project, used forcontrolling the design and construction activitiesagainst these targets.

DesignThe development of a project brief into design detailsprior to documentation. Includes concept design,sketch design and design development.

Development planA plan showing, in outline, the overall developmentintentions for an area, including land use, majortransport links, utility networks, drainage, openspace and built form.

Energy Efficiency Action PlanA comprehensive energy management program forState government operations including measures forgreening of buildings, vehicles fleet and equipmentpurchasing.

Estimated capital costPrediction of all costs of a capital nature requiredto bring a project to completion. Costs may includeprofessional service contractor fees and disburse-ments, construction contract prices includingescalation and country loadings, lead agency costs,equipment and sundry costs such as insurance,land purchase etc.

Estimated total costIncludes ‘whole of life’ costs - operating costs,staffing costs and the cost of maintenance andrefurbishment. Agencies are required to quote theestimated total cost of a project at the time ofseeking approval at the completion of Step Fourof the 5-step Infrastructure Planning andDelivery Framework.

Gateway approvalAn approval at the completion of critical activities ina phase or phases, which must be in place before theprescribed construction project can progress.

InfrastructureThe state’s roads, railways, airports and ports,buildings, parks, water and waste management,power, communications and ICT systemsconstructed to provide a framework for the socialand economic development of the State.

Infrastructure agencyAn agency in the South Australian Government,responsible and accountable for implementingpolicies, guidelines and processes for constructionprocurement. (As at December 2005 theseagencies are the Department for Transport, Energyand Infrastructure (DTEI), the Department forAdministrative and Information Services (DAIS) andLand Management Corporation (LMC).

InSkill SAA requirement for businesses to commit to trainingas a precondition to tendering for governmentworks and services contracts and associatedsubcontracts valued at $250,000 or more(GST inclusive).

Lead agencyThe agency in the South Australian Governmentresponsible and accountable for the constructionproject as its sponsor and funder other than thoseagencies which are a ‘prescribed public authority’under the State Procurement Act 2004 andRegulations.

Lead Minister (of the Crown)A person appointed by (or under the authority of)the sovereign or executive head of a government toa high office of state who is the Minister of the leadagency funding the project.

Life cycleThe complete life of a built asset from acquisitionthrough to controlling, operating, maintaining anddisposing of the asset.

Life cycle costingThe evaluations of a project, taking into account allsignificant costs of total ownership over the life ofthe asset. Costs considered include capital costs ofconstruction, maintenance and upgrading as well asrecurrent costs of operation, maintenance, cleaning,utilities (gas, electricity, water) and staffing.

Glossary

48

Project briefWritten goals, methods and desired results providedby the lead agency, as a result of rigorous evaluationof service delivery needs and options, to theprofessional service contractors for interpretationinto a design and development of details for aconstruction project.

Project conceptAn idea or strategy responding to an identifieddemand for service delivery.

Project control groupThe team with responsibility for managing theproject and ensuring all necessary action is taken atthe appropriate time including the professionalservices contractors, lead agency and infrastructureagency representatives and the constructioncontractors.

Project design teamThe design professionals selected to developthe project design.

Project risk managementThe identification and management of design,construction, procurement, political, scope, time,quality, communications, budget, relationships,approvals and construction risks during aconstruction project.

Project sponsorAn executive/senior manager who is accountablefor achieving project objectives.

Project steering committeeA group, usually chaired by the project sponsor,comprising executive representatives of the majorstakeholders, which guides the prescribedconstruction project and ensures the objectives areunderstood and achieved. It provides the projectsponsor with an independent body to contributesolutions to any issues arising.

Project teamAll parties who contribute to the prescribedconstruction project.

Risk managementA structured way of identifying potential risks,analysing their consequences, and devising andimplementing responses to ensure that the project isachieved. It includes the systematic application ofmanagement policies, procedures and practices tothe tasks of identifying, analysing, assessing,treating and monitoring risk.

Post construction reviewA careful and systematic evaluation of theconstruction of a facility measured in terms of teamrelationships, technical performance, timelinessand completion of the construction project.

Post occupancy evaluation(Post completion review)A careful and systematic evaluation of theperformance of an occupied asset measured in termsof user satisfaction, fitness for purpose (based onclient requirements) and value for money.

Practical completionThe stage reached when construction has beenessentially completed and is fit for its intendedpurpose, except for minor omissions and defectsthat do not prevent its use.

Prequalification registerA register of construction contractors andprofessional service contractors drawn up for thepurpose of cataloguing the financial, technical,managerial capabilities and capacity of the respectiveconstruction contractors and professional servicecontractor in order to allocate them into specificcategories to be used in selecting contractors to beengaged on projects.

PrincipalThe party to whom the contractor is legally bound toconstruct the construction project. (The term ‘Client’is commonly used in professional service contractorcontracts where the Client is the party to whomthe professional service contractor is legally boundto design or manage the construction project.)

Professional Service Contractor(see also Construction Contractor)The professional party that contracts to designor manage aspects of a construction project.(eg architects, engineers, cost managers, projectmanagers).

ProjectA building or engineering undertaking from inceptionto completion involving a number of interrelatedactivities including the weighing up of costs andbenefits in order to meet a desired objective; and/orA series of activities carried out according to a planto achieve a definite objective within certain time,cost and quality parameters.

Glossary

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Schematic design (sketch design)A preliminary design showing in outline form thegeneral intentions of the designer developed to apoint where a limit of cost estimate can be estab-lished and a descriptive and illustrative definitionof a preferred option, including a program, riskmanagement plan and procurement plan.

StakeholderThose individuals, groups or organisations with adirect interest, concern or involvement in the projectand its outcomes.

Strategic asset managementThe comprehensive management of asset demand,procurement, use, maintenance, operation, rehabili-tation, disposal and replacement to maximise returnon investment at the required standard of service.

Strategic asset management frameworkA management model for the identification, analysisand planning of assets to meet service needs.

Strategic value managementA structured, systematic and analytical processundertaken at the concept evaluation phase of theProject Implementation Process to quantify andverify needs.

SuperintendentA party appointed in writing by the Principal as thePrincipal’s agent and notified to the constructioncontractor as such. The Superintendent is respon-sible to the Principal for all aspects of theadministration of the contract for a project. Someof the functions may be delegated to a nominatedSuperintendent’s Representative.

Transition BriefingA briefing that occurs at the conclusion of theplanning, design and tender phases to ensure keydecisions and risks are understood and addressed inongoing management of the project.

Value managementA structured, systematic and analytical process,which seeks to achieve value for money by providingall the necessary functions at the lowest total cost,consistent with required levels of quality andperformance.

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For further information

For information about the ConstructionProcurement Policy Project ImplementationProcess, and building projects:

Department for Administrative andInformation Services (DAIS)Building ManagementLevel 9 Wakefield House30 Wakefield Street,Adelaide South Australia 5000Telephone [08] 8226 5340Facsimile [08] 8226 5588

For capital investment program and budgetinformation and for economic analysis:

Department of Treasury and Finance (DTF)Project and/or Finance BranchState Administration CentreVictoria SquareAdelaide South Australia 5000Telephone [08] 8226 9500Facsimile [08] 8226 3819

For further information about the StrategicInfrastructure Plan for South Australia:

Department for Transport, Energy andInfrastructure (DTEI)Infrastructure DivisionLevel 12 Terrace Towers178 North TerraceAdelaide South Australia 5000Telephone [08] 8124 4000Facsimile [08] 8124 4010

For further information aboutInfrastructure projects:

Department for Transport, Energy andInfrastructure (DTEI)Contracting and Procurement DivisionPO Box 1 Walkerville SA 5081Telephone [08] 8343 2809Facsimile [08] 8343 2747

For further information aboutland development projects:

Land Management Corporation (LMC)GPO Box 698, Adelaide SA 5001Telephone [08] 8207 0801Facsimile [08] 8207 0830

Enquiries

Copies of the Construction ProcurementPolicy Project Implementation Process areavailable from:

Building ManagementDepartment for Administrative andInformation Services (DAIS)Telephone [08] 8226 5209 or atwww.buildingmanagement.sa.gov.au

Printed by Finsbury Green Printing usingrecycled paper.

Project Implementation Process Overview

5.6

REVIEW5.5

CONSTRUCTION5.4

TENDER5.3

DOCUMENTATION5.2

DESIGN

1STRATEGICANALYSIS

2CASE FORCHANGE

3PROJECTPLANNING

4PROJECTFUNDING

5PROJECTDELIVERY

5.1

CONCEPT

Gateway 5

Gateway 6

Gateway 7

Gateway 4

5-Step Infrastructure Planning and Delivery Framework


Government provides a statement of its key directions andstrategies – South Australia’s Strategic Plan

Government provides the Strategic Infrastructure Plan

Review Agency Strategic Plan - lead agency reviews tosee that its corporate planning reflects Government’skey directions and strategies

Review Strategic Asset Management Plan - lead agencyconsiders information about asset life and performance

Undertake strategic project planning - lead agency establishesthe basis for proposing a construction project to supportservice delivery

Gateway OneStrategic infrastructure priorities approved by Government

Define required services and scope - lead agency definesrequired services and scope of projects to address State'sinfrastructure priorities

Establish broad priorities for construction projects - lead agencyestablishes a broad priorities schedule of service demands whichrequire construction projects

Identification of options - lead agency considers the range of waysincluding ‘do nothing’ option in which services can be delivered

Test options - lead agency and infrastructure agency undertakeresearch and development to validate the demand and test options

Initial description of project scope - an initial description ofproject scope and first broad assessment of affordability andbudget impact is prepared

Develop outline business case for project - the planning worksubstantiates, through a process of consultation, that theproposed project satisfies the requirement for it to providebenefits to government and society.

Gateway TwoProject defined for investigation and developmentof business case

Develop full business case

For high value, complex and/or unique projects full conceptdesign may be required - seek approval of funds for businesscase development from the appropriate agency delegate andappoint professional service contractor team

For lower value, standard projects utilise infrastructure agencyin-house expertise and design research

Develop a preliminary project plan based on estimated coston completion, indicative program assessed risk profile and initialassessment of consents and approvals required.

Seek relevant specialist advice – eg legal, environmental, heritage,regional, social, Aboriginal sites etc

Gateway ThreeProjects substantiated and the business case completed

Consider funding options

Consider procurement options

Gateway FourFunding model agreed, project included in an approvedgovernment program and a decision made to proceed toStep 5: Delivery of the Project

1.1

1.2

1.3

1.4

1.5

2.1

2.2

2.3

2.4

2.5

2.6

3.1

3.2

3.3

4.1

4.2


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Strategic Analysis and Identification of Infrastructure Needs

Step 2 Outline of Case for change and Project Scoping

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Step 3 Project Planning and Substantiation

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Step 4 Project Funding Method and Resource Allocation

Delivery of the ProjectStep 5



5.1

5.1.1

5.1.2

5.1.3

5.1.4

5.1.5

5.1.6

5.1.7

5.1.8

5.1.9

5.2

5.2.1

5.2.2

5.2.3

5.2.4

5.2.5

5.2.6

5.2.7

5.2.8

5.3

5.3.1

5.3.2

5.3.3

5.3.4

5.4

5.4.1

5.4.2

5.4.3

5.5

5.5.1

5.5.2

5.5.3

5.5.4

5.5.5

5.5.6

5.5.7

5.6

5.6.1

5.6.2

5.6.3

5.6.4

5.6.5

5.6.6

5.6.7

Government DTF DTEI Lead Agency

Concept

Appoint the project sponsor

Establish project governance

Appoint the project design team

Review full business case and develop risk management plan

Develop concept design

Conduct strategic value management study

Select the preferred concept design

Secure stakeholder sign off

Describe the preferred concept in a concept report

Gateway FiveApproval to commit the expenditure required to progressthe Design, Documentation and Tender phases

Referral to the Parliamentary Public Works Committe (if required)

Design

Maintain project governance

Review concept and develop design

Test and confirm a cost plan for the project

Test and confirm a detailed project program

Confirm construction procurement method

Implement process for achieving approvalsrequired for the project

Confirm that the design satisfies endorsed concept parameters

Transition briefing

Documentation

Confirm the project plan

Complete design approvals

Prepare construction contract documents

Obtain pre-tender estimate

Gateway SixApproval to call public tenders and commit to the market

Tender

Determine the construction contractor tender field

Call tenders and obtain tender comparison estimate

Prepare tender evaluation report and recommendation

Gateway SevenApproval to proceed to construction by committing the balanceof project expenditure and awarding construction contracts.

Construction

Transition Briefing

Review project governance

Manage the construction contract

Manage the project budget and program

Commission the construction project

Handover of the completed construction project

Defects liability

Review

Update information systems

Post - construction review

Post - occupancy evaluation

Management review

Finalise the project finance and contracts

Update construction / professional service contractor data

Feed back information to the concept and design phases


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Delivery of the Project

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Step 5

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