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How to initiate a project

How to initiate a project

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    Project Initiation Process Project Initiation Process Document Transcript

    • STRATEGIC ASSET MANAGEMENT Project Initiation Process For Capital Works DOCUMENT UNDER REVISION Key areas under review include: reference to the aquittal requirements of Government's Prudential Management Framework and the Department of Premier and Cabinet's Circular No. 15, June 1998 on 'Procedures for Submissions Seeking the Review of Public Works by the Public Works Committee'. roles and Responsibilities of the 10 Portfolio Agencies minor changes to clarify details associated with the text and process Government of South Australia January 1996
    • Acknowledgements The Project Initiation Process developed for South Australia acknowledges the work undertaken by other public works authorities and associated organisations. Specific acknowledgement is given to: • WA Building Management Authority and the Treasury of Western Australia. Acknowledgement is given also to the following organisations: • Commonwealth Government • Construction Industry Development Authority (CIDA) • National Public Works Council • Department of Public Works and Services, New South Wales • Administrative Services Department, Queensland ISBN 0 7308 4755 1 Published by the Government of South Australia, January 1996 Produced by Treasury and Finance/DAIS (Services SA) Project No. 009 Layout, graphics and design - GDFX Print Management - Sprint © Government of South Australia, 1996 Reproduction of this publication is encouraged, provided that due acknowledgement is given to the Government of South Australia.
    • FOREWORD The Government of South Australia is committed to the efficient and effective delivery of essential services to the community. To achieve this objective Cabinet has endorsed the Strategic Asset Management Framework and the Project Initiation Process for Capital Works, which will assist government agencies and private sector providers. The Strategic Asset Management Framework provides information to guide the direction and management of the State’s investment in assets in ways which will maximise benefits to the community and minimise costs to government. The Project Initiation Process for Capital Works is a component of strategic asset management. It highlights the need to carefully consider and justify proposals for new or replacement services and the most appropriate means of service delivery. When new or additional assets are under consideration, and before initiating any capital works projects, agencies are expected to consider all options for service delivery, taking time to examine a range of alternatives before making a firm commitment. The Department of Treasury and Finance and DAIS (Services SA) will both offer their assistance to people in agencies to apply the process. Stephen Baker MP Wayne Matthew MP Deputy Premier Minister for State Services Treasurer PROJECT INITIATION PROCESS
    • CONTENTS FOREWORD 1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS ........................................... 1 1.1 Government strategies ............................................................................................. 1 1.2 The importance of the Project Initiation Process ......................................................... 1 1.3 Benefits .................................................................................................................. 2 1.4 A consistent process ................................................................................................ 2 1.5 Agencies required to comply with the process ........................................................... 3 1.6 Application of the government’s risk management framework .................................... 3 1.7 Adaptation of the process to meet individual needs ................................................... 3 1.8 Key features of the Project Initiation Process .............................................................. 4 2. IDEAS TO MEET NEEDS ....................................................................................... 7 2.1 Scope of the Project Initiation Process ....................................................................... 8 2.2 Application of the Project Initiation Process ............................................................... 8 2.3 Responsibility, accountability and management ......................................................... 9 3. CORPORATE PLANNING PHASE ....................................................................... 11 Documents and written approvals .......................................................................... 12 3.1 Review corporate plan for consistency with government priorities .............................. 13 3.2 Define service delivery needs and broad time frames .............................................. 13 3.3 Examine demand management and non-asset strategies ......................................... 14 3.4 Examine existing asset performance ....................................................................... 15 3.5 Establish project concepts by rigorous testing of assumptions ................................... 15 3.6 Project concept to be considered for the government's forward program ................... 16 3.7 Ministerial approval of the agency’s five year strategic asset procurement plan ......... 16 3.8 Modifications to plan in response to State wide priorities ......................................... 17 3.9 Authorisation of expenditure for planning and design .............................................. 17 4. CONCEPT DEVELOPMENT PHASE ..................................................................... 19 Documents and written approvals .......................................................................... 20 4.1 Appoint the project steering committee to develop and manage the concept phase. .. 21 4.2 Appoint the project team to develop the concept ..................................................... 21 4.3 Develop project concept to meet service delivery needs ........................................... 22 4.4 Define the project parameters, quality standards and budget estimate ...................... 25 4.5 Identify all reasonable service delivery options (including “no build” option) ............. 25 4.6 Identify procurement options - financing and contract delivery ................................. 26 5. CONCEPT EVALUATION PHASE ........................................................................ 29 Documents and written approvals .......................................................................... 30 5.1 Agree on the scope of the evaluation brief (preliminary concept plan) ...................... 31 5.2 Evaluate concept options ....................................................................................... 31 5.3 Analyse short-listed options .................................................................................... 31 5.4 Select the preferred project concept option ............................................................. 32 5.5 Describe the preferred option in an evaluation brief (final concept plan) ................... 32 5.6 Seek Ministerial endorsement of the concept proposal ............................................. 33 5.7 Seek Cabinet approval of the concept .................................................................... 34 5.8 Referral to the Parliamentary Public Works Committee ............................................. 34 PROJECT INITIATION PROCESS
    • 6. PROJECT DEFINITION PHASE ........................................................................... 35 Documents and written approvals .......................................................................... 36 6.1 Appoint project design team utilising the consultants' register ................................... 37 6.2 Provide the project design team with the detailed definition brief .............................. 37 6.3 Confirm contract method ....................................................................................... 37 6.4 Develop a cost plan for the project ......................................................................... 38 6.5 Develop detailed project timelines .......................................................................... 38 6.6 Confirm that the proposal satisfies endorsed concept parameters ............................. 38 6.7 Check to confirm that the project meets the needs of the agency .............................. 40 6.8 Identify approvals required for the project ............................................................... 40 6.9 Endorsement to proceed to the delivery phase ........................................................ 40 7. PROJECT DELIVERY PHASE ............................................................................... 41 Documents and written approvals .......................................................................... 42 7.1 Review definition phase of the design ..................................................................... 43 7.2 Approval to proceed with contract documents ......................................................... 43 7.3 Prepare contract documentation ............................................................................. 43 7.4 Define required quality standards for the contractor ................................................. 43 7.5 Confirm the agreed and endorsed parameters ........................................................ 44 7.6 Initiate and facilitate approvals related to the Development Act ................................ 44 7.7 Obtain pre-tender estimate and associated cash flows ............................................ 45 7.8 Utilise contractors' register to select tenderers .......................................................... 45 7.9 Approval to call tenders ......................................................................................... 45 7.10 Call tenders and obtain tender comparison estimate ............................................... 45 7.11 Prepare tender appraisal and recommendation ....................................................... 46 7.12 Processing the tender call and final approval for awarding the construction contract . 46 7.13 Award the construction contract ............................................................................. 47 7.14 Manage the construction contract .......................................................................... 47 7.15 Commission and hand over of the completed project .............................................. 48 8. REVIEW PHASE ................................................................................................. 49 Documents and written approvals .......................................................................... 50 8.1 Post completion review .......................................................................................... 51 8.2 Update asset information systems ........................................................................... 51 8.3 Post occupancy evaluation (POE) ........................................................................... 51 8.4 Management review .............................................................................................. 52 APPENDICES APPENDIX 1 Non-commercial sector agencies .............................................................. 53 APPENDIX 2 Roles and responsibilities of stakeholders ................................................... 55 APPENDIX 3 References for the project initiation process ................................................ 57 GLOSSARY ...................................................................................................... 61 PROJECT INITIATION PROCESS overview .............................. inside back cover PROJECT INITIATION PROCESS
    • 1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS 1.1 GOVERNMENT STRATEGIES The South Australian Government is committed to the efficient and effective delivery of essential services to the community and obtaining best value from new and existing built assets. The Strategic Asset Management Framework and this Project Initiation Process for Capital Works define the government’s commitment to this process. The Project Initiation Process is part of the Strategic Asset Management Framework, endorsed by Government in July 1995. The Strategic Asset Management Framework describes the context within which decisions are made. The asset management process (incorporating the project initiation process) covers the broad range of activities which follow from the initial idea that an asset may be required, to the provision of a service and to the disposal of an asset when it is no longer required. The project initiation process concentrates on the planning of services and, where necessary, the procurement of assets required for the delivery of those services. The process should ensure that additional assets are provided only after service needs have been identified, investigated thoroughly and substantiated. The project initiation process emphasises the need for quality corporate planning and robust evaluation prior to any firm decision being made to acquire or replace assets. The best solution may not necessarily require built assets. As part of this process, Ministerial or Cabinet approval of projects is now required at an early stage, once the concept for service delivery has been developed and evaluated. 1.2 THE IMPORTANCE OF THE PROJECT INITIATION PROCESS The project initiation process encourages the most detailed planning by agency management, especially in the initial phases. This will help achieve a more objective analysis of needs and documented evidence to support the case for providing additional services, especially if they involve acquiring or replacing assets. The process will ensure that agencies are able to justify funding requirements for infrastructure or infrastructure alternatives from the capital budget. The process will confirm with confidence that a service is required and that its procurement will be cost effective, appropriate and accountable. PROJECT INITIATION PROCESS
    • 1.3 BENEFITS The project initiation process will have the following benefits. o It aims to achieve the most beneficial outcome for government by requiring a full needs analysis and the consideration of a wide range of options before the project concept is approved. o Government support for a proposed project can be obtained at an early stage once the concept development and evaluation phases have been completed. o The process should ensure the clear definition and documentation of the criteria used to test the viability of the project, for the project justification, post completion reviews and for future planning. o It provides a distinct and consistent process to rank priorities on a state wide and agency basis. o It allows for improved allocation of time and resources for proper project planning and assessment. o It encourages early planning, including innovative options such as: • market solutions developed in conjunction with the private sector; • using technology to achieve required outcomes; • “no build” strategies to meet service delivery needs; and • “end use” planning so there are alternative uses for the asset. o It clarifies the process to procure additional assets, or upgrade or replace existing assets. Agencies with only occasional building needs will benefit from a well documented process which they can adapt to their projects. o The process encourages regular procedures through which well planned projects with documented justification can meet all government requirements. 1.4 A CONSISTENT PROCESS The project initiation process follows a form similar to that developed by the Construction Industry Development Agency (CIDA), which represents best practice within the building and construction industry. CIDA standards are used by the South Australian Parliamentary Public Works Committee as a benchmark when verifying that due process has been followed. 2 PROJECT INITIATION PROCESS
    • 1.5 AGENCIES REQUIRED TO COMPLY WITH THE PROCESS In July 1995, Cabinet endorsed the project initiation process which is to be implemented by government agencies within the broad framework of the Strategic Asset Management Framework. The general principles of the process apply to all government agencies. Details of the process apply particularly to non-commercial sector agencies in the public sector as listed in Appendix 1. While the overall process has been developed for all types of building and construction projects, the specific details have been designed primarily for non-residential building works. It may also be necessary to modify some aspects to meet the special requirements of agencies which carry out engineering construction projects. The process does not apply to major plant and equipment purchases, although the basic principles remain valid. 1.6 APPLICATION OF THE GOVERNMENT’S RISK MANAGEMENT FRAMEWORK The project initiation process encompasses elements of the government’s risk management framework for built assets. The Department for Building Management was established in 1994 to provide a central policy and advisory role to government for asset and risk management of built assets. Services SA, established 30 October 1995, assumes this role and incorporates a wider range of responsibilities. For those agencies required to use the risk management services provided by DAIS (Services SA), the activities designated as DAIS (Services SA) responsibilities are identified in the charts and overview which summarise each phase of the process. Detailed risk management policy guidelines will be published and further details of the processes to be followed will be provided as Treasurer’s Instructions. 1.7 ADAPTATION OF THE PROCESS TO MEET INDIVIDUAL NEEDS The process is adaptable to a tailored project-by-project approach to ensure that the individual needs of agencies are met. The amount of effort and attention required will vary depending on the size and complexity of the project and agency circumstances. Agencies need to consult with the Department of Treasury and Finance and DAIS (Services SA) to determine a minimum standard or approach which best suits the agency, the project and general circumstances. PROJECT INITIATION PROCESS 3
    • 1.8 KEY FEATURES OF THE PROJECT INITIATION PROCESS Agencies have responsibility for the management of their asset portfolios and should follow a disciplined approach in the early stages of planning to substantiate needs. The project is approved by the Minister or Cabinet at the end of the concept evaluation stage. Central agencies such as the Department of Treasury and Finance and DAIS (Services SA) provide greater support to agencies by developing and advising them of policies and guidelines for improved asset management. 1.8.1 Delegations for approval of projects o Cabinet approval is required for any project which has an estimated capital cost of $4 million or more when all stages of construction are complete. o Cabinet approval is also required for any project which has an estimated capital cost of $1 million on completion and is not included in a budget approved by Cabinet. o Ministers are authorised to approve projects within limits prescribed by Cabinet: • projects with an estimated capital cost of up to $1 million can be approved without restriction; and • projects with an estimated capital cost between $1 - 4 million, and which have been included in a budget approved by Cabinet. o All submissions seeking Ministerial approval of projects are required to include written advice from the Department of Treasury and Finance, particularly on budgetary provision, and from DAIS (Services SA) on building related issues. o Office accommodation projects with an estimated cost of $1 million or more and Information Technology projects costing more than $500 000 require Cabinet approval. o In accordance with Treasurer’s Instruction 302 - Authorities for Expenditure, Ministers are authorised to delegate approval for projects up to $500 000. Ministerial approval is required for amounts above $500 000. 4 PROJECT INITIATION PROCESS
    • 1.8.2 Content of submissions to Cabinet or the agency’s Minister CABINET SUBMISSIONS The requirements for the preparation and presentation of Cabinet submissions are detailed in the Cabinet handbook. For major capital projects, the following contents are expected to be included: • a statement of the objectives for the proposed project, including details of the underlying assumptions and measurable objectives; • a justification for the proposal, including an economic evaluation in accordance with Treasurer’s Instruction 9105 - Guidelines for the Evaluation of Public Sector Projects; • estimates of capital and recurrent costs required to operate the asset over the whole of its life; • estimated construction commencement and completion dates; • a report by DAIS (Services SA), where applicable, commenting on the proposal; • comments by the Parliamentary Public Works Committee, if the project has been referred and reported upon; and • a statement on the sources of funds including the impact on the Budget. SUBMISSIONS FOR MINISTERIAL APPROVAL Submissions seeking Ministerial approval should include details similar to the contents of a Cabinet submission. Where applicable, submissions may also need to include written statements from the Department of Treasury and Finance and DAIS (Services SA). The Department of Treasury and Finance will include comments on: • the budgetary provision for the project; • the justification of the proposal; • costs to other agencies; and • any other relevant issues. DAIS (Services SA), where it has a role in the project, will include comments on: • risk assessment and management of risk; • specific issues raised through the value management studies, including compliance with the brief, buildability, statutory requirements and agreed standards for building design and construction; • life cycle implications, including ongoing maintenance requirements; and • any other relevant issues. PROJECT INITIATION PROCESS 5
    • The Department of Treasury and Finance and Services SA are to be given a minimum of three clear working days to provide agencies with these reports. 1.8.3 Financial threshold for project approval The financial threshold for submission of projects for approval will be based on the capital cost of the project, regardless of whether the funds are provided by the public or the private sector. This requirement is for all built assets, including those leased from the private sector. The estimated cost to be used when seeking approval will be based on the capital cost on completion (ie it will include an estimate for inflation). The estimated capital cost also refers to the cost when all stages of construction are complete. While staging of projects needs to be considered to ensure the efficient provision of services, agencies must not stage projects in a manner which avoids submitting the proposal for approval at a higher delegation. In addition to the capital cost, the submission will include the calculation of whole of life costs associated with the project. 1.8.4 Responsibilities for specific components of the project initiation process Individual agencies have the primary responsibility for all assets under their control. This includes responsibility for the planning of specific projects to meet service delivery needs. The Department of Treasury and Finance has the responsibility to advise Government on the implications for expenditure on the Government’s assets and to ensure that appropriate policies and processes are in place to assist agencies in the management of their assets. DAIS (Services SA) provides a central policy and advisory role to Government for asset and risk management of Government’s built assets. DAIS (Services SA) will undertake risk management for specific projects for those non-commercial agencies required to use its services. This applies to all projects over $150 000. More details of the responsibilities and roles of the stakeholders in the project initiation process are included in Appendix 2. 6 PROJECT INITIATION PROCESS
    • 2. IDEAS TO MEET NEEDS The project initiation process provides a structured and accountable approach to the planning and delivery of state services. It aims to improve the ability of all agencies to clearly demonstrate the needs and benefits of a particular project, and ensure the delivery of essential services in the most appropriate and cost efficient way. The asset management process The asset management process includes activities ranging from the identification of the government’s key directions and strategies for the delivery of services to the divestment of an asset when it is no longer required. The project initiation process is a key element in the overall process which includes the initial planning of assets, the delivery, and evaluation of their use. The importance of good planning in the early stages The greatest potential for identifying and achieving capital and recurrent savings is in the early planning phases of a project (see the diagram below). Significant savings can be made by government if the need for built assets is analysed carefully from the outset, exploring a wide range of options, before any commitment is made. PROJECT INITIATION PROCESS 7
    • 2.1 SCOPE OF THE PROJECT INITIATION PROCESS The process outlines the principles and the processes which follow from a decision that built assets may be required to meet service delivery needs. It describes the strategic planning to be undertaken prior to initiating a proposal for the procurement of built assets. It requires agencies to develop strategies to meet service delivery needs, to seek government approval of the concept as the preferred option, and to secure formal agreement to proceed to design, documentation and delivery if the concept is endorsed. The basic principles of the process apply to all aspects of asset management and procurement. 2.2 APPLICATION OF THE PROJECT INITIATION PROCESS 2.2.1 Provision of new services In the past, planning for built assets has been based on the assumption that this will be the most appropriate way to provide services to the community. Now agencies are required to undertake a more rigorous process to determine needs, explore options and identify the most appropriate action. This process provides the framework and defines the responsibilities. All non-commercial sector agencies are expected to follow the project initiation process when planning and developing assets required to deliver services (refer to Non-commercial sector agencies, Appendix 1). It will be appropriate, however, for agencies to tailor the process to fit in with the management and planning processes applying within individual agencies. While commercial sector agencies are not required to follow the process, it is considered that the basic principles underlying the process can be applied for commercial projects although some aspects of project evaluation and approval are likely to be different. The process is designed primarily for major projects costing more than $150 000. Where the total project cost is less than $150 000, agencies should follow the Minor Works Guide, Checklists and Manual published and distributed by DAIS (Services SA). 8 PROJECT INITIATION PROCESS
    • 2.2.2 Existing assets An agency’s prime asset management responsibility is to maximise the service delivery potential of existing assets in the most cost effective ways. This document describes the process to follow when planning for the creation of additional service capacity and when considering the replacement or upgrading of existing assets. Asset rationalisation provides opportunities for government to restructure and reallocate resources. Agencies are required to review asset performance and utilisation and ensure that any assets retained are essential to the delivery of high priority services. Agencies are also required to identify and address building related hazards in accordance with legislative requirements under the Occupational Health, Safety and Welfare Act. 2.3 RESPONSIBILITY, ACCOUNTABILITY AND MANAGEMENT The process identifies primary responsibilities and indicates where to seek advice for each phase of the process. It also indicates the key points at which approvals to proceed must be sought from the Minister or Cabinet and when review by the Parliamentary Public Works Committee is required. The process assumes that agencies have well-developed corporate plans. However, agencies are at different stages in the development of corporate plans and it is accepted that some agencies may need time to achieve the level of planning required by this process. Agencies are expected to work through each phase of this process for each project and to develop documentation which will provide an audit trail for future reference. The degree of detail to be documented will vary. Major high cost projects, those with a high degree of risk and projects of critical importance to the government will require intensive scrutiny while repetitive projects may only require routine checking to ensure that due processes are followed. A project may be progressed through different phases simultaneously. The agency will be responsible for the progress of its project through the phases and for seeking necessary endorsements at the appropriate times. PROJECT INITIATION PROCESS 9
    • 10 PROJECT INITIATION PROCESS
    • 3. CORPORATE PLANNING PHASE In this phase, an agency systematically analyses the demand for its services, considers methods for delivery of the service and prepares a five year or longer service delivery strategy or a long term corporate plan. Agencies should have a range of ideas about the ways they can deliver the services which the community requires, but no specific options will have been confirmed. Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 Process Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister 3.1 Review corporate plan for consistency with Government priorities 3.2 Define service delivery needs and broad time frames 3.3 Examine demand management and non-asset strategies c 3.4 Examine existing asset performance c 3.5 Establish project concepts by rigorous testing of assumptions c 3.6 Project concept to be considered for the Government's Forward Program 3.6.1 Use criteria for ranking of project concepts c 3.6.2 Ranking of project concepts c 3.7 Ministerial approval of the Agency's five year strategic asset procurement plan 3.8 Modifications to plan in response to State wide priorities c 3.9 Authorisation of expenditure for planning and design Code: c Responsibility In Consultation Partnership PROJECT INITIATION PROCESS 11
    • 3. CORPORATE PLANNING PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE AGENCY’S CORPORATE PLAN Each agency needs to have a corporate plan which outlines the scope and direction of the core services and the assets and resources required to meet service delivery needs. DAIS (Services SA) can contribute to the development of the plan, especially in the development of asset management plans and the asset performance and rationalisation plan which involve long term strategic planning as well as the development of ideas and options to meet immediate service delivery needs and the use of BLAMS data. An agency’s corporate plan will include: • key assumptions (eg service demand, policies etc); • mission/role/service charter; and • resource implications. It will include a strategic asset management plan which makes reference to: • the Metropolitan Development Plan which includes the Urban Development Coordinating Committee (UDCC) projections of demography, land releases, urban renewal programs, etc; • an asset performance and rationalisation plan, land purchase and disposal plan; • the agency’s five year strategic asset management plan; • an ongoing maintenance plan arising from data provided through BLAMS; and • the current financial year capital works program for the agency, including the assets to be procured. PROJECT CONCEPT ARISING FROM THE IDENTIFICATION AND QUANTIFICATION OF SERVICE DELIVERY NEEDS The project concept arises from the ideas which have been developed to meet the agency’s service delivery needs. Design details for the preferred concept option will not have been developed at this stage and precise costings will not be available. It details the functions or services to be provided by an agency for the community or a particular section of the community. The project concept also describes the extent and nature of the services and the justification for all aspects of the proposal. CRITERIA FOR ALLOCATING PRIORITY TO PROJECTS (A WEIGHTED INDEX FOR PROJECTS) Agencies need to use a recognised system which describes the criteria and methods used to allocate priority to projects. The method used should ensure projects of highest priority are identified and that an accurate record of the criteria used for allocating priority to projects is available for future reference. The range of criteria is likely to vary from agency to agency and reflect the priorities which are important to the individual agencies. There is also a need to consider overall government priorities such as economic development and broader community benefits (or costs) in developing appropriate criteria. The development of appropriate criteria with relative weightings will enable each agency to rank its projects in a consistent and objective manner. This will assist Treasury and Finance when it develops the State-wide program. PRIORITISED 5 YEAR CAPITAL PROGRAM, INCLUDING CAPITAL WORKS PROCUREMENT The agency formulates a five year plan, based on the projects which have priority and the order of priority. Some projects will not require capital works solutions (“no build”, use of technology etc) while others will follow the capital works procurement process outlined in this document. The program will draw together all of the elements of an agency’s capital works requirements. This is expected to include committed and uncommitted major works and minor works, plant and equipment purchases, land purchases, motor vehicles and information technology acquisition and development. 12 PROJECT INITIATION PROCESS
    • 3. CORPORATE PLANNING PHASE The Corporate Planning Phase involves the following activities: 3.1 REVIEW CORPORATE PLAN FOR CONSISTENCY WITH GOVERNMENT PRIORITIES Well executed corporate management processes should result in a corporate or business plan that defines the agency’s service delivery objectives and strategies, including: • government policies and priorities applicable to that agency; • program statements; • the service delivery charter; • long term strategic directions (five to ten years); and • the current business plan. 3.2 DEFINE SERVICE DELIVERY NEEDS AND BROAD TIME FRAMES Service delivery strategies need to be supported by reliable data on present and future demand for services. This will require an agency to: • provide evidence of demand for services from the community, substantiated by research and analysis; • describe the nature of the service demands; • detail its statutory service obligations (eg provision of schools, prisons); • describe community service obligations; • analyse other relevant services within government; and • quantify levels of service that can be achieved. Specific attention should be given to the agency’s strategic asset management plan. This should take into account asset maintenance and replacement forecasts and asset upgrading programs. It will also nominate any additional assets to be provided. The additional capacity provided, and any new policies being developed which will have an impact on the need for assets and resources, should be detailed as part of the plan. To help address these issues, agencies will need to consider: • government policies and stated objectives (eg economic development for the state); • the strategies and forecasts included in the government’s metropolitan and regional planning strategy, the Metropolitan Development Program and other relevant local and regional planning documents; • information from key stakeholders (including consultation with the community as well as agencies); PROJECT INITIATION PROCESS 13
    • CORPORATE PLANNING PHASE • the key assumptions being made; • emerging issues and trends identified through research, from reviews, and examples of best practice; • agreed service standards and benchmarks; • market research; and • financial forecasts. Assumptions and assertions about the demand for services will need to be tested and supported by empirical evidence. If the need for additional services has been substantiated, consideration should be given to alternative delivery options. These include: • market solutions such as BOO/ BOOT schemes (Build Own Operate/Build Own Operate Transfer); • leasing; and • greater community involvement and ownership (eg the capital works assistance scheme which requires financial commitment from the community). 3.3 EXAMINE DEMAND MANAGEMENT AND NON-ASSET STRATEGIES The project initiation process requires agencies to consider other ways of managing demand or satisfying or redefining service delivery objectives to minimise or avoid demand on capital and its associated debt servicing. Examination of demand management and non-asset strategies includes options such as: • resource sharing with other agencies or levels of government or community groups; • the use of technology instead of infrastructure; • modifying pricing policy to reduce, redirect, delay or eliminate demand; • changing service standards; • the redesign of service delivery; • rescheduling of service delivery; • changing policy or legislation; • education programs to reduce demand on service delivery; and • private sector provision of services essential to the agency. Agencies should always ensure that the “do nothing” option is fully investigated and that the consequences are outlined, costed and documented for future reference. These strategies will begin to define the real options for service delivery and to test the need for additional assets. 14 PROJECT INITIATION PROCESS
    • CORPORATE PLANNING PHASE Broad estimates of capital and recurrent costs can be assessed in this phase, based on standards such as the cost per hospital bed, or cost per student place in a school. 3.4 EXAMINE EXISTING ASSET PERFORMANCE To meet service delivery demand, agencies should: • review existing asset performance in terms of function, quality and utilisation rate across the agency’s portfolio; • investigate options to better utilise existing facilities to meet additional demands; and • identify and rationalise under-utilised facilities. Agencies will require an up-to-date asset register and an asset management information system to examine existing asset performance and rationalise facilities. Most asset management information requirements for built assets can be met through the use of the Building Land and Asset Management System (BLAMS) which is managed by DAIS (Services SA). Agencies should note that Cabinet has confirmed (in July 1995) that prior to any development of an alternative asset information system to BLAMS, the agency will be required to obtain agreement from the Department of Treasury and Finance and DAIS (Services SA). 3.5 ESTABLISH PROJECT CONCEPTS BY RIGOROUS TESTING OF ASSUMPTIONS The agency, as a result of the reviews described, will have established whether there is the need to provide additional or replacement services. Further investigations will determine the optimum service delivery solution and whether the service delivery need is best met by built assets or through “no build” solutions. Rigorous testing of the ideas put forward to meet service delivery needs will be required. Value management techniques can greatly assist agencies to develop and prioritise projects according to need, to identify program and project risks and to test assumptions about service delivery requirements. The process can help present a clear set of client/customer objectives for a project and define the key functional needs early in the planning process. PROJECT INITIATION PROCESS 15
    • CORPORATE PLANNING PHASE 3.6 PROJECT CONCEPT TO BE CONSIDERED FOR THE GOVERNMENT’S FORWARD PROGRAM Following this review process in the early phases, the project concept should be developed to a stage where the proposal can be included in the agency’s forward program and consideration can be given to the proposal’s priority at government level. 3.6.1 Use criteria for ranking of project concepts Agencies, particularly those with large procurement programs, need to rank project concepts from the most important to the least important. Weighted decision-making criteria based on the key outcomes relevant to the agency should be developed and used in a consistent and objective manner. Knowledge of the decision-making criteria and their weighting is most helpful to Treasury and Finance when they advise on priorities across government and recommend a forward program to Cabinet. 3.6.2 Ranking of project concepts Agencies with several concepts under consideration should rank them through the use of the weighted decision-making criteria. This process should include a revision of the priority of proposals already included in agency procurement plans. The ranking of individual projects will assist each agency in the development of a five year strategic asset procurement plan and provide a clear indication of priorities. 3.7 MINISTERIAL APPROVAL OF THE AGENCY'S FIVE YEAR STRATEGIC ASSET PROCUREMENT PLAN Each agency’s five year strategic asset procurement plan (capital works forward plan) is to be revised annually as part of the normal budget cycle. The plan will provide the government with a strategic view of future plans and priorities. Prior to providing strategic asset procurement plans as part of the budget process, agencies will obtain Ministerial approval, ensuring that any Ministerial priorities are reflected. 16 PROJECT INITIATION PROCESS
    • CORPORATE PLANNING PHASE 3.8 MODIFICATIONS TO PLAN IN RESPONSE TO STATE WIDE PRIORITIES After Cabinet has determined the budget allocations and forward estimates, agencies will need to review their strategic asset procurement plans to ensure that they are in line with the approved estimates and reflect any changes in project priorities determined by Cabinet. 3.9 AUTHORISATION OF EXPENDITURE FOR PLANNING AND DESIGN At the completion of this corporate planning phase, the proposal will have been developed to the stage where work can commence on the development of the concept. Before proceeding to the next stage, agencies should formulate a budget for the subsequent planning and design phases and seek approval of proposed expenditure from the Minister or delegate, in accordance with Treasurer’s Instruction 302 - Authorities for Expenditure. PROJECT INITIATION PROCESS 17
    • 18 PROJECT INITIATION PROCESS
    • 4. CONCEPT DEVELOPMENT PHASE In this phase an agency moves from its broad, strategic asset development plan to individual concepts and projects which may need to be included on the agency’s strategic asset procurement plan. Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 The feasibility study for the project includes the Concept Development and Concept Evaluation phases. Process Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister 4.1 Appoint the project steering committee to develop and manage the concept phase c 4.2 Appoint the project team to develop the concept 4.3 Develop project concept to meet service delivery needs c 4.3.1 Analyse needs and market research in detail c 4.3.2 Clarify the functional objectives of the project concept c 4.3.3 Identify statutory, planning and environmental issues c 4.3.4 Identify cultural and heritage issues c 4.4 Define project parameters, quality standards and budget estimate c 4.5 Identify all reasonable service delivery options (including "no-build" option) c 4.6 Identify procurement options finance delivery options c contract method options c Code: c Responsibility In Consultation Partnership * Note that a strategic value management study is to be undertaken during the concept development phase and that a strategic value management report is required when seeking approval of concept. PROJECT INITIATION PROCESS 19
    • 4. CONCEPT DEVELOPMENT PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE PROJECT DEMAND STUDY Demand management aims to reduce asset creation by influencing the community’s demand for services and by identifying those services which are essential (ie public needs rather than wants). The responsible agency undertakes research to ensure there is a justifiable need for the proposed project. This research is documented as part of the information to justify the proposal. COST BENCHMARKS Cost benchmarks for services arise from the costing of comparable services or from calculations of the cost of delivery in new and innovative ways. Cost benchmarks for construction arise from construction standards and from comparisons with the level of service delivery and construction costs provided by comparable organisations. RISK MANAGEMENT PLAN Risk management is a structured way of identifying potential risks, analysing their consequences, devising responses and implementing strategies to manage the successful delivery of the project. DAIS (Services SA) is the government’s risk manager for building assets and is responsible for developing a risk management plan in conjunction with the service delivery agency. STRATEGIC VALUE MANAGEMENT STUDY REPORT A strategic value management study is a structured, systematic and analytical process undertaken in the concept development phase to quantify and verify need and assist with the concept evaluation. Value management studies are undertaken by qualified independent experts who work in conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic value management study will question underlying assumptions about need and require evidence to substantiate the need for services. It will provide a documented report which will form part of the information required in subsequent stages. EVALUATION BRIEF (PRELIMINARY CONCEPT PLAN) The evaluation brief (preliminary concept plan) describes the concept and establishes criteria for the specific project. This is a refinement of the project concept following the development work in the concept development phase including the strategic value management study. The evaluation brief sets the parameters for the proposed project, and provides information which is used in subsequent phases. It is prepared by the agency in conjunction with Services SA. The information required includes: • defined needs, consistent with the corporate business plan; • concept objectives for the project; • concept description for the project (relationship diagrams, plans etc); and • a preliminary estimate of the capital and operating costs for the project concept. FUNCTIONAL ANALYSIS A functional analysis is undertaken by DAIS (Services SA) or an appropriate consultant to determine whether the client’s requirements as described in the client brief have been met. ACTION PLAN The action plan outlines the key activities which have to be undertaken and sets timelines for these events. Each project requires cost and timeframe targets for each element. The cost and time plans are used to control all design and development activities and are measured against the standards established early in the life of the project. 20 PROJECT INITIATION PROCESS
    • 4. CONCEPT DEVELOPMENT PHASE 4.1 APPOINT THE PROJECT STEERING COMMITTEE TO DEVELOP AND MANAGE THE CONCEPT PHASE In the corporate planning phase, the project has generally been supported by the agency's senior executive or a senior manager responsible for implementing the agency’s asset program. At this stage, large and complex projects require the appointment of a project steering committee while routine projects may only require a project team. It is also an appropriate time to provide any other liaison or support arrangements. The project steering committee provides general direction to a project team of professionals who will develop concept options and costings. The role of the project steering committee and project team is to assign project responsibilities, seek all relevant approvals and control the project to its completion. The project steering committee ensures that the necessary skills are in place to assist in undertaking the concept development and concept evaluation phases and subsequent steps in the project initiation process. o DAIS (Services SA) will be represented on the steering committee as it has responsibility for management of building construction aspects, on behalf of government. o The Department of Treasury and Finance, the Economic Development Authority and the Crown Solicitor, may be represented, particularly if private sector provision or financing is being considered or where specific legal issues may arise. 4.2 APPOINT THE PROJECT TEAM TO DEVELOP THE CONCEPT The project team is responsible for development of the concept and the daily administration of the project. It allocates project responsibilities, seeks all relevant approvals and generally supervises the project to its completion. Where applicable, it reports to the project steering committee. DAIS (Services SA) is responsible for the management of the government’s building and construction related risk. It also manages the engagement of all private sector consultants (eg consultants for architecture, engineering, cost management etc) including those on the steering committee and the project team. PROJECT INITIATION PROCESS 21
    • CONCEPT DEVELOPMENT PHASE DAIS (Services SA) is developing and will maintain a register of all consultants who undertake work on behalf of government for urban planning, building design and construction. The Consultants’ Register will enable the selection of professionals with relevant expertise and experience and is part of an agreed quality assurance process. Consultants’ registers for other infrastructure services such as roads, water and power are maintained by the respective agencies. 4.3 DEVELOP PROJECT CONCEPT TO MEET SERVICE DELIVERY NEEDS A perceived need by an agency for an asset is translated into a service delivery concept. The development of the concept with reference to agency service delivery requirements is critical to the achievement of value to government over the life of the asset. This assumes that strategic planning for the business enables a comparison of measurable concept objectives with broad program objectives. The agency should develop the concept detail so that the project can be compared with its strategic directions, and so that it is able to quantify the difference that the project is expected to make. 4.3.1 Analyse needs and market research in detail Systematic and accurate needs analysis is critical to determining what is really required to deliver the essential services. Most market or service needs analysis has historically relied on basic information such as: • historical trends (eg past enrolments or past history of service delivery); • comparable area standards (eg square metres per office worker, student or prisoner); and • forecasts including demographic data from the ABS census (which may not reflect changes which have occurred since the last census). The real purpose of the needs analysis in the project initiation process is to ensure that only those projects that meet the criteria for demonstrated need will be provided. This process involves asking the following types of questions. 22 PROJECT INITIATION PROCESS
    • CONCEPT DEVELOPMENT PHASE o What are the concept/project objectives, including service delivery life? o What is the state of the market (in terms of price/demand, etc) and in particular what are the expectations and plans of likely users and client/customers? o Which business or service needs are met by the concept/ project? o How will the claimed benefits of the project be measured over time? 4.3.2 Clarify the functional objectives of the project concept All parties need to clearly understand the objectives of the project. The strategic value management process can be used as a way of presenting a clear set of client/customer objectives for a project and to address the key functional requirements early in the process. For all major projects, in particular those in excess of $4 million, a strategic value management study needs to be carried out to assist agencies to clarify their requirements. DAIS (Services SA) will assist agencies to carry out strategic value management studies. Needs assessment requires a ranked set of functional objectives which describe what the project must do. Analysis of objectives will result in the following documentation. o A service delivery needs analysis. o Detailed function needs and outcomes (what the asset must do). o Prioritisation of objectives and functions. o An explicit evaluation of project objectives against strategic business or service plans. o An action plan for the following phases, identifying both actions and gaps; as well as risk assessment and a risk management plan. PROJECT INITIATION PROCESS 23
    • CONCEPT DEVELOPMENT PHASE 4.3.3 Identify statutory, planning and environmental issues At this point, agencies should also be aware of other similar activities being planned and should consult with Commonwealth Governmnent, Local Government and other State Government agencies and relevant organisations about their medium-term strategies for related service provision. This consultation will enable the agency to review again any possible sharing arrangements (eg sharing a school site between the government and non- government sectors). In addition, agencies should consider ways in which a whole of government approach can be enhanced. Proper identification of any other constraints at this stage can help test alternative concepts and identify the impact of environmental and planning approval procedures on the timelines for the program. The questions to be asked include: o Does the concept completely conform with planning policies and regulations? o Does the concept require changes to planning policies and regulations? o Will the project require utility or infrastructure adjustments? o Is the project environmentally sensitive and subject to forms of environmental evaluation? Long timeframes can sometimes be associated with evaluation of these issues and may limit the development of some options and/or identify additional cost elements. 4.3.4 Identify cultural and heritage issues Any plans for significant work on - or adjacent to - buildings, gardens or public places may involve heritage issues, including those relating to Aboriginal people. In these instances, the agency should contact the appropriate government authority. 24 PROJECT INITIATION PROCESS
    • CONCEPT DEVELOPMENT PHASE 4.4 DEFINE THE PROJECT PARAMETERS, QUALITY STANDARDS AND BUDGET ESTIMATE Benchmark standards can be used to define the parameters of the proposed project from the earliest stages of a project’s development, including: • the quality standard to be adopted; • project cost; and • project time frame. Benchmarks developed by DAIS (Services SA) for a range of building types can be used in this process. For example, if there is a need for fifty new prison places in a particular location, it is possible to quickly define (within a range) building and site size, total project cost, operating costs and likely project timeframe. The work undertaken to define the scope of a project becomes part of the evaluation brief to be assessed in detail in the evaluation phase for each project. 4.5 IDENTIFY ALL REASONABLE SERVICE DELIVERY OPTIONS (INCLUDING “NO BUILD” OPTION) For almost every problem there is more than one solution and in most cases a range of variations within a solution. However, the one-off nature of projects often results in the “one right answer” being locked in too early in the process. Sometimes there is a reluctance to spend time and money on the development of options when the solution seems obvious, but the development of meaningful options can be used to identify real needs and viable solutions, saving both time and money. Group processes, expert input and the project management team should use well defined project objectives and functions to help them generate a range of options for analysis and consideration. Not all options will require detailed examination but consideration of some meaningful options may provide a means of assessing the risks associated with the project and help add flexibility. Different options can have significantly different levels of risk, which need to be identified. PROJECT INITIATION PROCESS 25
    • CONCEPT DEVELOPMENT PHASE Agencies should refer to DAIS (Services SA) for risk management advice and assistance in the development of a risk management plan for building projects. Where the cost of the project is estimated to be in excess of $150 000, risk management by DAIS (Services SA) is mandatory for those non-commercial agencies required to use these services. The identification of options is very important and requires input from members of the agency and DAIS (Services SA). Community consultation forums may sometimes be appropriate. A brief assessment using strategic value management techniques may assist. 4.6 IDENTIFY PROCUREMENT OPTIONS - FINANCE DELIVERY AND CONTRACT METHOD OPTIONS Within each option there may be a range of sub-options for financing and delivery. For example, options could include the design and building of a new regional office, the purchase of an existing office or a developer lease-back arrangement. Private sector funding of capital investment in community assets is an important consideration. A broad range of private sector financing options is available. Agencies need to consider the “build, own and operate” options in various combinations, and whether or not assets will transfer to the government at some future time. All costs to government need to be identified and documented to demonstrate the “whole of life” cost of the proposal and enable proper analysis of the value of the project to be undertaken. “Whole of life” costs include construction, maintenance, and refurbishment as well as equipment, operating and disposal costs (including salaries and utilities costs). The documentation of these costs forms part of the probity and accountability requirements of government. The project initiation process is applicable to all built asset projects, regardless of whether the funding is provided by the Commonwealth, private sector or funding from internal or recurrent sources. Commonwealth/State financing arrangements can represent multiple combinations requiring evaluation. Where there are Commonwealth funding and approval processes, agencies must ensure that Cabinet is fully informed and able to make its decisions before any commitments are entered into with the Commonwealth. 26 PROJECT INITIATION PROCESS
    • CONCEPT DEVELOPMENT PHASE Contract delivery options should be considered at this stage as the method of delivery can affect other decisions including the appointment of the project team and the risk management process. Delivery options for built assets include: • the traditional form of government finance, and a plan, design, and construct process; • construction management process; • design development/construction and novation packages; • developer lease-back arrangements, which must include capital and all recurrent cost implications; • developer funded initiatives for the built component only; and • purchase of existing properties or services, including any costs associated with refurbishment or upgrading. Options such as BOO/ BOOT (Build Own Operate/ Build Own Operate Transfer) or a leasing option need to be considered and a preferred option recommended. Where private sector provision or financing of infrastructure is being considered, agencies need to be aware of the Economic Development Authority (EDA) publication Guidelines for the Private Sector Provision of Infrastructure. Reference should be made to the Department of Treasury and Finance publication Contracting Out Financial Guidelines. Early consultation with the EDA, the Department of the Premier and Cabinet (Office of Project Coordination) and with the Department of Treasury and Finance is desirable. Agencies should note that contracts for the construction or acquisition of major assets must be certified by the Crown Solicitor or the Crown Solicitor’s delegate as being commercially competent and sound. DAIS (Services SA) has several approved standard form contracts to assist agencies. The standard contract currently in use is NPWC Edition 3. This is under review and it is anticipated that a suite of standard form contracts based on Australian Standard 2124 -1992 will be introduced in 1996. Government has adopted the Code of Practice for the South Australian Building and Construction Industry. This Code and its Implementation Guidelines applies to all building and construction projects that are fully or partially funded or managed by the Government of South Australia. Treasury and Finance can advise or assist agencies to undertake the detailed analysis required in the evaluation phase with reference to the Treasurer’s Instruction 9105 - Guidelines for Evaluation of Public Sector Projects and Treasury Information Paper No. 90/1 Guidelines for Evaluation of Public Sector Projects. PROJECT INITIATION PROCESS 27
    • 28 PROJECT INITIATION PROCESS
    • 5. CONCEPT EVALUATION PHASE This phase involves quantifying and costing the difference a project will make to the community by analysing the benefits of the options in terms of program or sub-program objectives and performance indicators, and selecting the most cost effective option. Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 Process: Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister 5.1 Agree on the scope of the evaluation brief (preliminary concept plan) c 5.2 Evaluate concept options 5.3 Analyse short-listed options c 5.4 Select the preferred project concept option c c 5.5 Describe the preferred option in an evaluation brief (final concept plan) 5.6 Seek Ministerial endorsement of the concept proposal >$150,000 to <$4.0m; Minister or delegate to approve c c 5.7 Seek Cabinet approval of the concept, $4.0m and >$4.0m c c 5.8 Referral to the Parliamentary Public Works Committee, if > $4.0m c Code: c Responsibility In Consultation Partnership * Note that approval at the Concept Evaluation phase is a change in procedure, and that the threshold for approval by Cabinet has been increased to $4 million cost on completion, with all stages included. PROJECT INITIATION PROCESS 29
    • 5. CONCEPT EVALUATION PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE STRATEGIC VALUE MANAGEMENT REPORT A strategic value management study is a structured, systematic and analytical process undertaken in the concept development phase to quantify and verify need and assist with the concept evaluation. Value management studies are undertaken by qualified independent experts who work in conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic value management study will question underlying assumptions about need and require evidence to substantiate the need for services. It will provide a documented report which will be form part of the information required in subsequent stages. RISK ASSESSMENT AND A RISK MANAGEMENT STRATEGY, INCLUDING ALLOCATION OF RISK AND RESPONSIBILITY Project risk assessment aims to ensure all risk variables are identified and managed. DAIS (Services SA) is the Government’s risk manager for building assets and operates in conjunction with specific agencies to identify risks and develop a plan for the management of risks associated with procurement of assets. ECONOMIC/FINANCIAL ANALYSIS OF OPTIONS, INCLUDING LIFE CYCLE COSTING OF OPTIONS This is a systematic way of analysing all the costs and benefits of the various methods by which a project objective can be met. It takes into account all major costs associated with the project, including capital and recurrent costs. The economic and financial analysis will identify the option which is most cost effective when all costs and benefits are taken into account. This analysis is part of the value management process. Reference should be made to Treasurer’s Instruction 9105 Guidelines for the Evaluation of Public Sector Projects and Treasury Information Paper 90/1 Evaluation of Public Sector Projects. PROJECT PLAN (OR FINAL CONCEPT PLAN) FOR THE PREFERRED OPTION The project plan provides precise details about the specific project. The following details should be included in submissions for approval of the project (eg submissions to the Minister, Cabinet, and to the Parliamentary Public Works Committee). The service delivery agency and DAIS (Services SA) are major contributors to the project plan. The project plan (or final concept plan) for the preferred option will include: • the project definition brief (schedule of accommodation, site works etc); • the proposed procurement method (lump sum contract, design/construct, construction managed); • financing arrangements (agency or alternative funding); • a detailed cost estimate (based on established benchmarks); • a time estimate (based on previous experience and the market); and • a land acquisition/rationalisation plan confirmed by the agency. MINISTERIAL ENDORSEMENT OF CONCEPT Ministerial endorsement of the project concept is required. Projects which are within the Minister’s delegations will be approved for ongoing work. Projects requiring higher levels of approval require Ministerial endorsement for referral to Cabinet. CABINET ENDORSEMENT OF CONCEPT Cabinet endorsement of the project concept is required if the estimated cost is $4 million or more. INQUIRY AND REPORT BY PARLIAMENTARY PUBLIC WORKS COMMITTEE (IF REQUIRED) Projects with an estimated capital cost exceeding $4 million are referred to the Public Works Committee. The report from the Committee forms part of the essential documentation for the project. 30 PROJECT INITIATION PROCESS
    • 5. CONCEPT EVALUATION PHASE 5.1 AGREE ON THE SCOPE OF THE EVALUATION BRIEF (PRELIMINARY CONCEPT PLAN) From the information and ideas developed in the corporate planning and concept development phases, an agency should develop an evaluation brief, outlining the: • concept definition; • concept objectives; • impact of the concept on program and service delivery objectives; • financial/economic evaluation approach to be pursued; and • accommodation needs (where relevant). To complete the evaluation brief (preliminary concept plan) the agency should seek agreement from Treasury and Finance on the scope of the proposed evaluation. 5.2 EVALUATE CONCEPT OPTIONS An agency first needs to evaluate each option in terms of its total impact on the community and the government system. Economic evaluation aims to take a perspective which goes beyond any one agency and seeks to place values on costs and benefits to the community. Economic evaluation includes two types of analysis: • cost benefit analysis which is the preferred technique provided the major benefits and costs of a project can be valued in money terms; and • cost effectiveness analysis which is the technique to be applied where the major benefits or costs are of an intangible nature. Selection criteria have to be established to determine the most promising options. Agencies need to reach agreement and document the selection criteria after careful debate to avoid problems further into the process. The options can be ranked by a process of weighting functional objectives and rating each option’s performance. This is an extension of the value management techniques used in the concept development phase. 5.3 ANALYSE SHORT-LISTED OPTIONS Short-listed options need to be subjected to further analysis to determine their cost impact. PROJECT INITIATION PROCESS 31
    • CONCEPT EVALUATION PHASE o Prepare project option cash flows. These cash flows should be based on a life-cycle basis to reflect both capital and recurrent costs associated with the project. o Prepare indicative project management information including project time schedules. o Prepare present value analysis of the project options including sensitivity analysis. o Complete risk assessment of project options, and a risk management plan. 5.4 SELECT THE PREFERRED PROJECT CONCEPT OPTION Having considered benefits, function, value, cost and delivery options, the best option is selected from the short list, based on the analysis of the data. o Well described, quantified and documented decision-making criteria is required. o The process and results are to be described in sufficient detail to enable the criteria to be externally verified. o The balance between quantitative and qualitative factors needs to be clearly explained to demonstrate the validity of the selection. All this provides project definition and a check to confirm how well the preferred project option fits the previously agreed business plan and functional objectives. If the option is other than build (eg lease existing space, make use of existing infrastructure or make use of technology) the agency should consult with the relevant government agencies such as the Real Estate Management unit of DAIS (Services SA), the Department of Information Technology and the Department of Treasury and Finance. 5.5 DESCRIBE THE PREFERRED OPTION IN AN EVALUATION BRIEF (FINAL CONCEPT PLAN) This involves describing the option in the following terms: • program objectives; • asset function objectives; • scope and quality of proposed works; • capital and recurrent financing requirements; 32 PROJECT INITIATION PROCESS
    • CONCEPT EVALUATION PHASE • impact on the State Budget; • economic evaluation of the preferred option including quantified non-financial costs and benefits; • delivery and procurement method; • cost and time estimates; • land acquisition plan; • statement of risk to government, including risk assessment and a risk management plan; • rationalisation plan where appropriate (eg plan for disposal of various schools, following rationalisation and upgrading of the remaining schools); • statutory planning and environment issues; and • cultural and heritage issues. 5.6 SEEK MINISTERIAL ENDORSEMENT OF THE CONCEPT PROPOSAL Agencies need to obtain Ministerial endorsement before a project can proceed. This requirement is subject to the Ministerial delegation, as detailed in Treasurer’s Instruction 302 - Authorities for Expenditure. The submission needs to be accompanied by independent reports from the Department of Treasury and Finance, and, if it is a building project, from DAIS (Services SA). The Department of Treasury and Finance will include comments on: • the budgetary provision for the project; • the justification of the proposal; • costs to other agencies; and • any other relevant issues. DAIS (Services SA) will comment on: • risk assessment and management of risk, including the procurement method, the program of works and the impact of the proposed works on the construction industry; • specific issues raised through the value management studies, including compliance with the brief, buildability, statutory requirements and agreed standards for building design and construction; • life cycle implications, including ongoing maintenance requirements; and • any other relevant issues. The Department of Treasury and Finance and DAIS (Services SA) are to be given a minimum of three clear working days to provide agencies with their reports. PROJECT INITIATION PROCESS 33
    • CONCEPT EVALUATION PHASE 5.7 SEEK CABINET APPROVAL OF THE CONCEPT At this stage agencies are required to submit all proposals estimated to cost $4 million or more (cost on completion, with all stages included) to Cabinet for approval to proceed. Approval at this stage will enable the proposal to proceed to the tender acceptance stage without further formal approval. However the project must remain within the limits of the approval, in particular the costs and the budget provision. The following contents are expected to be included in the Cabinet submission: • a statement of the objectives for the proposed project, including details of the underlying assumptions and measurable objectives; • description of the proposed project; • a justification for the proposal, including an economic evaluation in accordance with Treasurer’s Instruction 9105 - Guidelines for the Evaluation of Public Sector Projects; • estimates of capital and recurrent costs required to operate the asset over the whole of its life; • estimated construction commencement and completion dates; • procurement method and tender process; • a report by DAIS (Services SA), where applicable, commenting on the proposal; and • a statement on the sources of funds including the impact on the Budget. 5.8 REFERRAL TO THE PARLIAMENTARY PUBLIC WORKS COMMITTEE The Parliamentary Committees Act 1991 under which the South Australian Parliamentary Public Works Committee operates, requires that any public work with an estimated value in excess of $4 million when all stages of construction are complete must be referred to the Public Works Committee by the proposing agency or instrumentality, and that no amount may be applied for construction until the Committee has reported on the work to the Parliament. The Parliamentary Public Works Committee can inquire and report on the project at the concept evaluation phase. In addition it may also wish to review the project at any future stage, including when the final design and costs have been confirmed. 34 PROJECT INITIATION PROCESS
    • 6. PROJECT DEFINITION PHASE The Project Definition Phase develops and documents the preferred project concept option as a design to bring the project plan (including cost plan and time schedule) to a point where the agency’s Minister or delegate can consider whether the project should proceed. The Project Definition Phase requires significant professional involvement which is coordinated by DAIS (Services SA). Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 The sketch phase of the project includes developing and documenting the preferred option Process Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister 6.1 Appoint project design team utilising the consultants' register c 6.2 Provide the project design team with the detailed definition brief c 6.3 Confirm contract method c 6.4 Develop a cost plan for the project c 6.5 Develop detailed project timelines c 6.6 Confirm that the proposal satisfies endorsed concept parameters c 6.6.1 Project design value management study 6.6.2 Analysis for best value solution 6.6.3 Significant deviation from the original plan c 6.7 Check to confirm that the project meets the needs of the agency c c 6.8 Identify approvals required for the project 6.8.1 Development approval and certification 6.9 Endorsement to proceed to the delivery phase c c Code: c Responsibility In Consultation Partnership PROJECT INITIATION PROCESS 35
    • 6. PROJECT DEFINITION PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE AGENCY STANDARDS FOR DOCUMENTATION Agencies are required to develop and maintain details of the standards they require. This information is made available to DAIS (Services SA) for the briefing of the consultants responsible for design. This ensures they are aware of specific requirements to meet the agency’s needs. PROJECT DESIGN VALUE MANAGEMENT REPORT (INDICATING BEST PRACTICE AND VALUE FOR MONEY) A strategic value management study is undertaken to determine whether the need for the project can be substantiated. The project design value management study provides a similar opportunity to analyse the design and to determine whether it meets the needs. The objective analysis aims to determine whether the design is functional, in accordance with agreed standards and policies and represents value for money. The agency has responsibility for the project value management study which will involve DAIS (Services SA) and the design professionals as well as agency representatives. ECONOMIC ANALYSIS INCORPORATING LIFE-CYCLE ASSESSMENT An economic analysis is undertaken by the agency in conjunction with DAIS (Services SA). The economic analysis should include a “whole of life” cost which takes into account the initial capital cost, the recurrent cost of operating, staffing costs and any residual value of the asset. DELIVERY BRIEF (THE PROJECT BRIEF AND PROJECT DEFINITION REPORT) The project delivery brief is a key document confirming that the project can be delivered within agreed parameters. It includes the following details: • schematic design (completed sketches); • reliable cost plan and cash flows (based on existing benchmarks); and • reliable time plan (based on previous experience and the market). The service delivery agency has responsibility for ensuring the accuracy of information provided. DAIS (Services SA) contributes significantly to the delivery brief through its project management and risk management role. PARLIAMENTARY PUBLIC WORKS COMMITTEE REVIEW The project concept may have been referred to the Public Works Committee in the concept evaluation phase. If further information is required, it is most likely to be when the design has been developed, the estimated cost is known and a program of works has been developed (ie the project definition brief). UPDATE THE CONSULTANTS’ REGISTER The consultants’ register is maintained by Services SA and is updated regularly to reflect the quality of the work undertaken on specific projects. 36 PROJECT INITIATION PROCESS
    • 6. PROJECT DEFINITION PHASE 6.1 APPOINT PROJECT DESIGN TEAM UTILISING THE CONSULTANTS’ REGISTER The steering committee or agency reviews the team structure for the concept phase and determines any new team requirements. The project team will include representatives from the service delivery agency and DAIS (Services SA). Utilise the DAIS (Services SA) Consultants' Register (refer section 4.2). 6.2 PROVIDE THE PROJECT DESIGN TEAM WITH THE DETAILED DEFINITION BRIEF The project brief (definition brief) is the basis for the design professionals to develop detailed schematic designs (sketch plans). The detailed schematic design process includes: • drafting a detailed brief, defining all areas, services and finishes; • architectural and engineering design to establish form, functional relationships, area definition, site plans, sketch plans, elevations, materials selection etc; • documentation and drawing of the project to a schematic stage, including all services and civil engineering designs (eg car parks, ovals and retaining walls); • a specific project timeline; • a limit of cost plan and cash flows; • a quality plan; • confirmation of delivery options; and • project risk analysis. At the same time a fully developed project plan including an action plan is prepared for the management of the project delivery phase. 6.3 CONFIRM CONTRACT METHOD Contract method options have been considered in the concept development phase and will need to be discussed further when determining project timelines. The contract method is confirmed by DAIS (Services SA) in consultation with the agency responsible for the project. PROJECT INITIATION PROCESS 37
    • PROJECT DEFINITION PHASE 6.4 DEVELOP A COST PLAN FOR THE PROJECT Professional advice should be sought to develop a cost plan for the project. The cost plan will include a break down of costs for the project and an estimate within an order of accuracy of ten per-cent (plus or minus) for: • building works; • site works; • engineering services; • furniture and equipment; • statutory and legal insurance fees; • professional fees; • contingency allowance; • associated works; and • sundries. The cost plan also indicates the cash flow of funds required on a financial year basis. 6.5 DEVELOP DETAILED PROJECT TIMELINES Once the detail of a project has been defined, a program (timelines) can be established to coordinate all the project variables that are time- dependent. The timelines will be influenced by the method of delivery chosen for the project. The key items include: • site acquisition and vesting of ownership; • design development/contract documentation process; • tender call and acceptance; • project approval process; • construction; • furniture and equipment purchases; • staffing arrangements; • enabling legislation; and • service delivery deadlines. 6.6 CONFIRM THAT THE PROPOSAL SATISFIES ENDORSED CONCEPT PARAMETERS With all aspects of the project defined, the proposed design should be compared with the parameters of the previously endorsed project plan. This is done to ensure that the project has not deviated from the original intent unless there has been justification and approval for the changes. These changes and associated approvals need to be documented. 6.6.1 Project design value management study The documentation developed for the project can be used for a value management study, which confirms the strategic value 38 PROJECT INITIATION PROCESS
    • PROJECT DEFINITION PHASE management study undertaken in the concept phase and tackles the specifics of value for money in the design and development. The value management process is used now to ensure delivery of the essential functions described earlier, and to eliminate high cost/low function elements of the design. The developed cost plan and the project design value management study will result in documented decisions and may include ranked trade-offs in the design process. It should be agreed that any items taken out, will remain out. Some items may be identified which could be excluded in the event that cost reductions may be required, but as desirable items to be included if further cost savings are not required. These choices should be documented and visible to the chief executive of the agency, the Minister and Cabinet. Conducting a value management review confirms that the specific project represents value for money as well as functional efficiency. It may identify ranked trade-offs which should be documented to indicate which items will be deleted and the anticipated saving and/or effects of the decision. 6.6.2 Analysis for best value solution It will be necessary to conduct a detailed evaluation of the capital and recurrent costs of ownership and operation which flow from the chosen design. Methods used to evaluate the best value solution include: • life cycle costing (capital and recurrent costs for the built asset); • development of a cost of ownership plan which identifies operating costs (eg staffing, utilities such as electricity, gas and water); and • benchmark comparisons (standards and examples of best practice). The outcomes of the detailed evaluation include: • planning approvals identified, so they can be sought at an appropriate time; • cost of ownership and operation defined and quantified; • time schedules in place; and • financial constraints set. 6.6.3 Significant deviation from the original plan If the project has deviated significantly from the original plan, effectively it is a new project with likely variations in the estimated total cost and subject to a thorough review using the project initiation process. PROJECT INITIATION PROCESS 39
    • PROJECT DEFINITION PHASE 6.7 CHECK TO CONFIRM THAT THE PROJECT MEETS THE NEEDS OF THE AGENCY The analysis developed and refined in the concept evaluation phase is reviewed by the agency and further developed to confirm that the project, which is now defined in some detail, still meets the needs of the agency, will still perform and deliver agreed outcomes and is within the funds allocated for the project. 6.8 IDENTIFY APPROVALS REQUIRED FOR THE PROJECT Government projects are required to have a series of approvals which must be sought and confirmed before the project can proceed. In addition, government projects must conform with legislative requirements including the Development Act and the associated regulations under the Act. 6.8.1 Development approval and certification Development approval is required through the Development Assessment Commission. Certification for compliance with the regulations under the Act is also required. Certification covers health and safety matters under the building rules/code. In addition reference should be made to other relevant legislation including the Occupational Health, Safety and Welfare Act. DAIS (Services SA) will supervise this process. Early consultation is recommended with the Development Assessment Commission and DAIS (Services SA) to identify issues which may need to be addressed to ensure compliance. 6.9 ENDORSEMENT TO PROCEED TO THE DELIVERY PHASE At the end of the project definition phase, the project should be submitted to the appropriate level of delegation (eg director, chief executive or Minister) for endorsement to proceed to contract documentation and tender call. No further work should be undertaken until this endorsement is given. While the project usually has a budget allocation, no expenditure can be incurred until funding has been approved. Agencies need to have documented evidence of funds approval by the appropriate delegate before proceeding to the project delivery phase. 40 PROJECT INITIATION PROCESS
    • 7. PROJECT DELIVERY PHASE The Project Delivery Phase requires significant professional involvement which is coordinated by DAIS (Services SA). Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 Process Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister Design Development and Contract Documentation 7.1 Review definition phase of the design c 7.2 Approval to proceed with contract documents c 7.3 Prepare contract documentation c 7.4 Define required quality standards for the contractor c 7.5 Confirm the agreed and endorsed parameters c 7.6 Initiate and facilitate approvals related to the Development Act c 7.7 Obtain pre-tender estimate and associated cash flows 7.8 Utilise contractors' register to select tenderers c 7.9 Approval to call tenders c Tender Call and Contract Award 7.10 Call tenders and obtain tender comparison estimate 7.11 Prepare tender appraisal and recommendation c 7.12 Processing the tender call and final approval for awarding the construction contract c $4M and > $4.0M Cabinet approval c c $0.5M up to $4.0M, Ministerial approval c c <$0.5M CEO (subject to Ministerial delegation of authority) Construction 7.13 Award the construction contract c 7.14 Manage the construction contract c 7.15 Commission and hand over of the completed project Code: c Responsibility In Consultation Partnership PROJECT INITIATION PROCESS 41
    • 7. PROJECT DELIVERY PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE AGENCY REQUIREMENTS CONFIRMED The agency in conjunction with DAIS (Services SA) reviews the planning undertaken in the project definition phase and confirms that the requirements have been met. CLIENT AGREEMENT CONFIRMED (“SIGN OFF”) The agency takes responsibility for ensuring that its requirements have been described in the required briefs and in the value management reports. DAIS (Services SA) assists and ensures that there is agreement in writing prior to proceeding with contract documentation. COMPLETED DESIGN AND CONTRACT DOCUMENTATION The agency and DAIS (Services SA) ensure the design and documentation has been completed by the consultants prior to tenders being called for construction. TENDER PRICE CONFIRMED DAIS (Services SA) manages the tender call and tender appraisal process, leading to a recommendation and the awarding of the construction contract. The tender price should be within the cost limits previously identified. CABINET APPROVAL TO LET CONTRACT Projects with a capital cost of $4 million or more (cost on completion and including all stages) require Cabinet approval before awarding the construction contract. The Cabinet submission for the contract is prepared by DAIS (Services SA) in conjunction with the service delivery agency. The contract is awarded once the submission has been endorsed by Cabinet. FUNDS APPROVAL Prior to letting any contract, the agency must verify that it has sufficient funds available in its budget to cover the cost of the project, allowing for escalation and contingencies. Approval must be given by the agency’s appropriate delegate for each project. CONTRACT AWARDED BY MINISTER FOR STATE SERVICES In most instances the Minister for State Services acts as the Government’s representative when entering into construction contracts. DAIS (Services SA) is responsible for accepting the tender, establishing the contract and executing a formal instrument of agreement. As there are legal issues arising from construction contracts and their administration, it is essential that this is done by authorised delegates. CERTIFICATE OF PRACTICAL COMPLETION Practical completion is when a project has been completed and is fit for its intended purpose, except for minor omissions and defects that do not prevent its use. Any testing required under the contract will have been carried out. Practical completion is marked by the issue to the contractor of a certificate of practical completion by the Superintendent responsible for the building construction project. The owners and the users should be provided with operators’ manuals for plant and equipment and made familiar with the design features of the building so they are able to use it appropriately. 42 PROJECT INITIATION PROCESS
    • 7. PROJECT DELIVERY PHASE Prior to commencement of this phase, a review process should ensure that agreed project parameters are documented and communicated to members of the project team. The Government of South Australia is a signatory to an “in principle” agreement to use Australian standards and benchmarks in relation to tendering procedures (as detailed in Appendix 3). 7.1 REVIEW DEFINITION PHASE OF THE DESIGN The key functions to be reviewed at this stage include cost and cash flow plans, timelines, and quality standards. The roles of the members of the project team need to be documented and communicated clearly so there is a common understanding of functions and responsibilities. At this time options should be again reviewed to ensure that the best option has been selected for the particular project. 7.2 APPROVAL TO PROCEED WITH CONTRACT DOCUMENTS Final details and quality standards for all elements of the project must be agreed before proceeding with contract documents. As documents are expensive to produce, the service delivery agency should confirm that all the features required in the project have been identified and included in the project definition phase and in the budget. The agency is expected to confirm in writing that all essential features have been included and that the project can proceed to contract documents. 7.3 PREPARE CONTRACT DOCUMENTATION The project delivery phase covers design development and the preparation of contract documentation, proceeding to tender, tender acceptance and construction, based on the project plan prepared and approved in the project definition phase. 7.4 DEFINE REQUIRED QUALITY STANDARDS FOR THE CONTRACTOR Pre-qualification criteria and selection criteria for contractors have been developed. In South Australia, DAIS (Services SA) ensures that contractors have the specific skills and expertise to undertake the project and ensure its completion to the requirements specified by the sponsoring agency. The quality standards, with which the contractor is to comply and which will be used in the selection process, must be defined in the PROJECT INITIATION PROCESS 43
    • PROJECT DELIVERY PHASE documentation to ensure best practice standards are achieved for the project. These standards have been defined in CIDA guidelines and include aspects such as: • the management and technical capacity of the construction team; • financial capacity and financial control systems; • quality assurance; • time performance; • occupational health and safety; • human resource management (industrial relations); and • skills formation. In addition, consideration is given to the following factors: • experience on relevant projects; • track record on contractual disputes; and • management of the program. 7.5 CONFIRM THE AGREED AND ENDORSED PARAMETERS The analysis developed and refined in the concept evaluation phase, and checked in the project definition phase, is quickly reviewed by the agency to confirm that the project, which is now defined in detail, still meets the needs of the agency and will still perform and deliver specified outcomes. This check is especially necessary for large projects, where a significant time period may elapse while contract documentation is being prepared. However all projects require the agency to sign off on a statement of requirements, confirming the agreed and endorsed parameters of the project. Any changes to the requirements after the project has been signed off are considered additional work. 7.6 INITIATE AND FACILITATE APPROVALS RELATED TO THE DEVELOPMENT ACT Built asset projects are required to conform with the legislative requirements of the Development Act. Development approval, together with certification that the plans comply with the regulations under the Act, must be sought and confirmed before tender call. DAIS (Services SA) can facilitate development approval through the Development Assessment Commission and has responsibility for ensuring that certification is provided. 44 PROJECT INITIATION PROCESS
    • PROJECT DELIVERY PHASE 7.7 OBTAIN PRE-TENDER ESTIMATE AND ASSOCIATED CASH FLOWS Agencies now prepare the pre-tender estimate and associated cost plan. DAIS (Services SA) provides assistance to agencies in cost management for building projects. A limit of cost estimate was established in the project definition phase and the pre-tender estimate should be within this limit. If additional budgetary provision is required for a project estimated to cost more than $1 million, it must be submitted to the Cabinet Budget Committee for consideration, prior to seeking Cabinet approval. If the pre-tender estimate exceeds the limit of cost estimate and additional budgetary provision is not required, the approval of the Minister (or the Minister’s delegate) needs to be obtained before proceeding to call tenders. 7.8 UTILISE CONTRACTORS' REGISTER TO SELECT TENDERERS DAIS (Services SA) maintains a Contractors' Register which is to be used to select tenderers for public sector projects. 7.9 APPROVAL TO CALL TENDERS Before calling tenders, DAIS (Services SA) will obtain written authority from the agency to proceed. Approval must be sought at the appropriate level of delegation. In seeking the authority, a final check will be carried out to ensure that the following requirements are addressed: • a complete set of documents is available; • the pre-tender estimate has been obtained; • sufficient budgetary provision is available; and • all necessary approvals have been secured (including approvals under the Development Act) and a report from the Parliamentary Public Works Committee where necesssary. 7.10 CALL TENDERS AND OBTAIN TENDER COMPARISON ESTIMATE Once documentation for tender call has been finalised and the cost is confirmed as within the budget parameters, tenders may be called. All tender calls for projects over $150 000 must be conducted by DAIS (Services SA). PROJECT INITIATION PROCESS 45
    • PROJECT DELIVERY PHASE 7.11 PREPARE TENDER APPRAISAL AND RECOMMENDATION The tender appraisal is undertaken in accordance with the principles outlined in the Code of Tendering (Australian Standard AS 4120 - 1994). The Code is a statement of ethics and procedures which underpin best practice tendering. It details the obligations of the Principal in the contract and the tenderers in the tendering process, and provides a consistent basis for the calling of tenders among contractors and subcontractors. Information is prepared in accordance with the principles detailed in the Code and the agency is presented with a recommendation which is consistent with the construction industry’s standard. For public sector projects the Principal in the contract is usually the Minister for State Government Services. The Minister has been given this authority for the majority of contracts for public works. 7.12 PROCESSING THE TENDER CALL AND FINAL APPROVAL FOR AWARDING THE CONSTRUCTION CONTRACT It is essential to obtain final approval of funds and acceptance of the tender before awarding the construction contract. The final approval for awarding the construction contract is sought from the appropriate level of delegation, which is Cabinet for projects with a capital cost of $4 million or more (cost on completion and including all stages), and the agency’s Minister or authorised delegate for projects less than $4 million. However if additional budgetary provision is required, projects of $1 million or more need approval from Cabinet before the contract is let. 46 PROJECT INITIATION PROCESS
    • PROJECT DELIVERY PHASE 7.13 AWARD THE CONSTRUCTION CONTRACT DAIS (Services SA) is responsible for accepting the tender and establishing the contract by the issuing of a “letter of acceptance”. DAIS (Services SA) is responsible for preparing and executing a formal instrument of agreement. Currently this is done in accordance with NPWC Edition 3 Conditions of Contract. This contract is well known to the construction industry in South Australia and is used for major works projects. This contract is under review and it is expected that a suite of standard form contracts based on AS 2124-1992 will be introduced in 1996. 7.14 MANAGE THE CONSTRUCTION CONTRACT During the construction phase, DAIS's (Services SA) Superintendent administers the contract on behalf of the Minister for State Government Services who is the Principal in the contract. The Superintendent, in turn, delegates the day to day authority under the contract to the Superintendent’s Representative (usually the project manager) who is responsible for ensuring that the project proceeds within the parameters approved by the service delivery agency and its Minister, and in some instances Cabinet. The project manager is also responsible for working with the agency to provide all information necessary to allow the agency to retain responsibility for the project during the construction phase. Any increase in the estimated cost limits or any significant design scope variations arising during the construction period should immediately be referred to the delegate who approved the project, together with an explanation. If any increase in cost is expected to exceed the approved expenditure, approval of additional funds must be sought from the person with delegated authority to incur expenditure for the total amount (ie the initial approval plus the proposed additional amount). PROJECT INITIATION PROCESS 47
    • PROJECT DELIVERY PHASE 7.15 COMMISSION AND HAND OVER OF THE COMPLETED PROJECT 7.15.1 Commissioning Commissioning of the works is usually undertaken before hand over to ensure everything is ready for occupation and use. Any works outstanding under the contract should be identified and documented so there is a clear understanding of the work still to be completed as part of the project. 7.15.2 Hand over Once the construction works have reached practical completion, hand over from the contractor to the service delivery agency and its users can occur. From this time on the agency/user takes responsibility for the asset. Hand over includes the provision of operating instructions and maintenance plans for the built asset and for any specific items of equipment which require instructions. 7.15.3 Defects liability period of the contract During the defects liability period of the contract, the contractor is responsible for completing minor omissions and defects outstanding at practical completion and for rectifying construction defects identified during this period, which is usually twelve months. Service delivery agencies are responsible for ensuring that their users understand the legal importance associated with obligations during the defects liability period, and for ensuring that no work is carried out by anyone except the authorised contractor. 48 PROJECT INITIATION PROCESS
    • 8. REVIEW PHASE The Review Phase provides opportunities to refine details and to feed back into the system information about products, processes and performance. This information provides market intelligence which is used to benefit other projects. Govt Strategies Ideas to Corporate Concept Concept Project Project & Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8 Process Gov't Treasury Agency DAIS Action can be taken in various phases at the same time Cabinet & Finance (Services SA) Minister On Completion Of Project 8.1 Post completion review c 8.2 Update asset information systems Post Occupancy - > 12 Months 8.3 Post occupancy evaluation (POE) c At Any Phase Of the Project, Or After Completion 8.4 Management review c Code: c Responsibility In Consultation Partnership PROJECT INITIATION PROCESS 49
    • 8. REVIEW PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE POST COMPLETION REVIEW A post completion review is carried out by DAIS (Services SA) in conjunction with the agency and a representative of the group which will be using the asset. Any significant issues identified through this process have to be documented and a clear delineation made between rectifying matters under the contract as distinct from additional work which will require additional funds to be approved and allocated by the agency. POST OCCUPANCY EVALUATION REPORT Post occupancy evaluation (POE) is undertaken to determine whether the objectives of the project were achieved and whether the briefed standards were appropriate. It is a careful and systematic evaluation of the performance of an occupied facility, measured in terms of user satisfaction, fitness for purpose (based on the requirements stated in the evaluation brief), technical performance and value for money. Information from the post occupancy evaluation is used to upgrade briefing information, to review standards and benchmarks and to ensure that appropriate processes are in place. The process may be used to identify design issues which need to be amended or to bring to attention variations between the anticipated needs and the actual needs once the facility is in operation. It does not imply any commitment to make changes or to allocate additional funds. When undertaking the post occupancy evaluation, reference will be made to documented standards, project briefs and the plans developed and authorised during the project initiation process. BLAMS INFORMATION TO UPDATE THE STATE ASSET REGISTER The physical and financial details of the project (as built), with relevant information about the nature and location of the asset needs to be incorporated in an agency asset management information system (usually BLAMS), the agency asset register and the State Asset Register. CONTRACTOR/CONSULTANT DATA DAIS (Services SA) maintains a register which provides information about the capabilities and performance of people engaged on Government projects. This information is used in selecting consultants and contractors for specific types of work. It is based on financial, technical and managerial capabilities, especially as demonstrated on past work undertaken on behalf of Government. FEEDBACK INFORMATION TO THE PLANNING PHASE. Information from a post completion review, post occupancy review or management review is fed back into the planning phase to improve the planning process and provide for continuous improvement. MANAGEMENT REVIEW REPORT A management review report is expected to identify whether due process has been followed and whether issues of probity and accountability have been addressed. The report is provided to agency management for action including adjustment or improvement of the processes to be followed in future projects. 50 PROJECT INITIATION PROCESS
    • 8. REVIEW PHASE 8.1 POST COMPLETION REVIEW A post completion review should be undertaken as soon as construction of the project is completed. The purpose of this review is to identify quickly any features which need to be rectified immediately, any omissions from the contract and any unauthorised variations. It also provides an ideal opportunity to identify any details in planning which need to be amended or updated to improve the process for projects currently in the design phase, and to amend documented standards, if necessary. 8.2 UPDATE ASSET INFORMATION SYSTEMS The agency’s asset register needs to be updated and the information incorporated in the State Asset Register at Treasury and Finance, as necessary. The information also needs to be included in the agency’s asset management information system which is generally expected to be the Building and Land Asset Management System (BLAMS) operated by DAIS (Services SA). In addition, performance reports on contractors and consultants should be completed to update the contractors’ and consultants’ registers which are maintained by DAIS (Services SA) and used as a guide for the allocation of work. 8.3 POST OCCUPANCY EVALUATION (POE) Complete a formal post occupancy evaluation on all projects, particularly those costing more than $4 million, after the asset has been used for twelve months (when providers and users have had an opportunity to assess performance through a complete cycle of operation). Include the following information. o Determine the extent to which the project is achieving program objectives and functions as described in the brief and through the value management process undertaken. o Identify the key factors which helped achieve the outcomes as well as the main causes of variances and advise stakeholders. o Compare the planned versus actual operational costs and report to stakeholders. o Identify opportunities for improvement (design, maintenance, operation) and document substantiated information to the stakeholders. PROJECT INITIATION PROCESS 51
    • REVIEW PHASE A post occupancy evaluation can result in an increase in the expectations of users and in the briefing requirements for future projects. Stakeholders need to consider this both as an opportunity to improve service delivery in response to identified shortcomings, and as a potential problem if unrealistic or inappropriate standards are being sought. The standards may be too high (with initial cost implications); too low (with maintenance cost or safety implications); or unnecessary for the purpose of the project. The review process includes the opportunity to review best practice standards and recommend appropriate changes to incorporate the new requirements as authorised improvements. Smaller repetitive projects should also be considered for occasional post occupancy review, especially early in the cycle so that modifications and improvements can be made to subsequent projects. DAIS (Services SA) has guidelines for post completion reviews and post occupancy evaluation to assist agencies. Agencies are expected to allow for the cost of post completion and post occupancy reviews as part of the project budget. 8.4 MANAGEMENT REVIEW In some instances a management review may be required which addresses specific issues relating to matters of probity and accountability such as: • accountability for decisions and outcomes consistent with the documented plans; • confirmation that due process has been observed and documented procedures have been followed; • evidence that appropriate records have been maintained, and that an effective audit trail exists; • documentation which confirms that all costs have been identified and substantiated, and payments made accordingly; and • 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 serious problems are evident concerning the integrity of the process or project management. However it may be used as an audit check to ensure that appropriate processes are being followed and to assure the Government that all aspects of procurement risk are being managed appropriately. 52 PROJECT INITIATION PROCESS
    • APPENDIX 1 NON-COMMERCIAL SECTOR AGENCIES Non-commercial sector agencies are required to use the Project Initiation Process endorsed by Cabinet in July 1995. These agencies include: Adelaide Convention Centre Adelaide Festival Centre Trust Art Gallery Board of South Australia Arts and Cultural Development, Department for the Attorney-General’s Department Auditor-General’s Department Australian Formula One Grand Prix Board Board of the Botanic Gardens Coast Protection Board Commissioner for Public Employment, Office for the Correctional Services, Department for Country Fire Service Courts Administration Authority Economic Development Authority Education and Children’s Services, Department for Electoral Office, State Employment, Training and Further Education, Department for Enfield General Cemetery Trust Entertainment Centre Environment and Natural Resources, Department of Family and Community Services, Department for Foundation SA History Trust of South Australia Housing and Urban Development, Department of Industrial Affairs, Department for Information Technology, Department of Institute of Medical and Veterinary Science Joint Parliamentary Services Legal Services Commission Libraries Board of South Australia Lotteries Commission of South Australia Metropolitan Fire Service MFP Australia Mines and Energy, Department of Multicultural and Ethnic Affairs, Office of Outback Areas Community Development Trust Parks Community Centre Passenger Transport Board Police Department Premier and Cabinet, Department of the Primary Industries, Department of Recreation, Sport and Racing, Office of Services SA Senior Secondary Assessment Board of South Australia South Australian Government Employee and Residential Properties South Australian Health Commission South Australian Housing Trust South Australian Meat Corporation PROJECT INITIATION PROCESS 53
    • (APPENDIX 1 Cont.) South Australian Museum Board South Australian Research and Development Institute South Australian Totalizator Agency Board South Australian Urban Projects Authority South East Water Conservation and Drainage Board State Aboriginal Affairs, Department of State Governor’s Establishment State Theatre Company Tourism South Australia TransAdelaide Transport, Department of Treasury and Finance, Department of West Beach Trust 54 PROJECT INITIATION PROCESS
    • APPENDIX 2 ROLES AND RESPONSIBILITIES OF STAKEHOLDERS The following summary outlines the roles and/or responsibilities of stakeholders involved in the Project Initiation Process: o Agency/Service Provider - Responsible for the provision of government services and consequently defines the extent, quality and location of services. The service delivery agency is primarily responsible for the initial planning, budgeting and approval elements of the project. Ultimately the responsibility for the management and operation of the asset rests with the agency. o Department of the Premier and Cabinet - Provision of “whole of Government” strategic planning to assist in determining the priorities for agency service delivery and resource allocations. It sets the requirements for Cabinet submissions and ensures that due process has been observed. o The Department of Treasury and Finance - Provision of economic and financial advice towards the efficient management of the Government’s finances and the efficient use of its resources. This includes the coordination and resolution of asset management policy issues, development of accounting and financial reporting standards, advice to Cabinet on agency budgets including capital works proposals and the review of major capital projects, including the assessment of proposals for the private sector provision and operation of infrastructure. o DAIS (Services SA) - Operates in conjunction with government agencies to provide professional assistance for the planning, delivery, maintenance and disposal of built assets. Has responsibility for property management services and management of the procurement process for the Government’s built assets, as well as managing the risks related to Government’s building and construction and performing the industry interface role on behalf of Government. Also maintains BLAMS, a computer based asset information system with details of public sector built assets which is used to update the Government property register. It operates in cooperation with other agencies, through the Infrastructure Agencies Forum, to develop standardised government contracts, documentation and procurement practices which reflect best practice through the use of recognised National standards including Australian Standards (AS) and National Public Works Council (NPWC) policies and procedures. o Government Office Accommodation Committee (GOAC) - Has responsibility for the development and implementation of policies for the management of Government office accommodation. It is responsible for maintaining a register of all office accommodation owned in the public sector and its current and future availability. It also maintains a register of all leases of office accommodation from external sources to agencies and instrumentalities. This register includes details of the rent payable, length of tenure and other relevant details. o Department of Environment and Natural Resources (DENR) - Has a responsibility for property valuations and to undertake the acquisition and the disposal of land and property for those agencies with a governing statute which excludes the power to acquire and deal in land. o Department for Housing and Urban Development (DHUD) - Guides and manages land use planning, and urban, rural and regional development, for the benefit of present and future South Australians. Responsible for the administration and ongoing review of planning legislation towards achieving these objectives. DHUD administers the Development Act on behalf of Government. However for Government projects, certification of individual project compliance with the building rules is vested with DAIS (Services SA). PROJECT INITIATION PROCESS 55
    • (APPENDIX 2 Cont.) o Economic Development Authority (EDA): Provision of advice and assistance on infrastructure issues which have an impact on the economic welfare of the State, including the private sector involvement in infrastructure provision, in support of the economic priorities of the State. o Crown Solicitor: The office of the Crown Solicitor provides advice on commercial and legal matters generally, and assists contract negotiation and development. The office ensures certification of the adequacy of proposed contractual arrangements, as well as probity of procedures and the methods proposed for asset acquisition. 56 PROJECT INITIATION PROCESS
    • APPENDIX 3 REFERENCES FOR THE PROJECT INITIATION PROCESS The Project Initiation Process for Capital Works, January 1996 has been developed in response to Government’s requirement for a clear process which will provide consistency in the planning and delivery of Government’s built assets. It follows the endorsement of a submission to Cabinet in July 1995. It details the steps to be taken and allocates the responsibilities of agencies and government in the process. It accompanies the Strategic Asset Management Framework, January 1996 which addresses the Government’s policy for asset management of public infrastructure. It will be complemented by a further publication, Building Asset Management Framework and accompanying building asset management guidelines. In addition there will be a publication which describes risk management and risk management responsibilities. o Strategic Asset Management Framework, Department of Treasury and Finance/DAIS (Services SA, January 1996 o Project Initiation Process for Capital Works, Department of Treasury and Finance/ DAIS (Services SA), January 1996 The Project Initiation Process replaces DPC 112 Capital Works Efficiency Measures. o Treasury Information Paper • Paper 90/1 Guidelines for the Evaluation of Public Sector Projects, October 1990 o Annual Budget papers • Financial Papers - Budget Speech - Financial Statement - Estimates of Receipts and Payments • Financial Information Papers - Program Estimates and Information - Capital Works Program o Treasurer’s Instructions, issued in accordance with Public Finance and Audit Act, 1987 • Treasurer’s Instructions (TI) re Expenditure for Goods, Services and Works TI 302 Authorities for Expenditure TI 304 Service Contracts, Supply Contracts and General Provisions TI 306 Approval to Incur Liability for Expenditure Under Contracts other than Contracts under the State Supply Act TI 308 Calling Tenders for Service Contracts TI 322 Receipt of Goods, Services or Works TI 324 Sales Tax Certificate of Exemption TI 326 Approval for Payment of Recurrent Services TI 328 Register of Contracts TI 330 Preparation and Certification of Accounts TI 332 Payment of Accounts PROJECT INITIATION PROCESS 57
    • (APPENDIX 3 Cont.) • Treasurer’s Instructions re Financial Reporting TI 1001 Asset Registers • Treasurer’s Instructions - Miscellaneous TI 9104 Purchase and Disposal of Government Assets TI 9105 Guidelines for the Evaluation of Public Sector Projects TI 9106 Accounting for the Sale of Assets o Further publications developed by DAIS (Services SA) in conjunction with others • Code of Practice for the South Australian Building and Construction Industry published by the Construction Industry Advisory Council and the Department for Building Managementon behalf of the Government of South Australia , July 1995 • Code of Practice for the South Australian Building and Construction Industry Implementation Guidelines Part 1. Implementation Procedures • Code of Practice for the South Australian Building and Construction Industry Implementation Guidelines Part 2. Schedules of Best Practice • Building and Construction Industry Prequalification and Registration of Contractors and Consultants Discussion Paper, Services SA, November 1995 • Building and Construction Minor Works Guide, Manual and Checklist Services SA, November 1995 • South Australian Whole of Government Built Asset Management Quality Assurance Policy (draft) Infrastructure Agencies Forum, November 1995 o Other Relevant Publications • Charting the Way Forward: Report of the South Australian Commission of Audit: Improving public sector performance, Vol 1, April 1994 • Guidelines for Private Sector Provision of Infrastructure, Economic Development Authority, October 1994 • Guidelines for the Private Sector on Contracting Out and Competitive Tendering, Economic Development Authority, June 1995 • All About Contracting Out, Office of Public Sector Management, Department of the Premier and Cabinet, June 1995 • Contracting Out Financial Guidelines, Department of Treasury and Finance, November 1995 • Risk Management Strategy Plan, SA Insurance Corporation (SAICORP), March 1995 58 PROJECT INITIATION PROCESS
    • (APPENDIX 3 Cont.) o National Standards and Benchmarks for the Building Construction Industry o Australian Standards The South Australian Government is a signatory to an “in principle agreement” which is part of the National Construction Industry Reform Strategy. The agreement includes an undertaking to develop and implement National standards and codes of practice which will ensure consistency, equity and professional conduct in the delivery and maintenance of infrastructure. The “in principle” agreement by Government supports the implementation of international best practice and the ongoing monitoring of industry benchmarks to ensure there are acknowledged examples of best practice. Australian Standards are used in this process. The relevant National standards include: • Code of Tendering: Australian Standard AS 4120 - 1994 This is a statement of ethics and procedures which underpin best practice tendering techniques. The Code details the obligations of principals and tenderers in the tendering process and introduces a consistent basis for the calling of tenders among contractors and subcontractors. • Selection of Consultants: Australian Standard AS 4121- 1994 This Standard has been specifically designed for the selection of consultant architects, engineers, quantity surveyors and other consultants. It sets out the ethics and the obligations of both the client and the consultants. It also outlines appropriate procedures for the calling for proposals, evaluation of proposals and the obligations of consultants and principals in that process. • Engagement of Consultants: Interim Australian Standard AS 4122 (Int) - 1993 This document provides a general set of conditions to be used when engaging consultants. It consists of efficient and fair contractual arrangements for the employment of consultants. This standard has not been finalised, so DAIS (Services SA) is using a standard developed in conjunction with the Crown Solicitor's Office. o Construction Industry (CIDA) Guidelines • Project Management Guide The Construction Industry Development Agency (CIDA) has published a project management guide which identifies the principles and practical rules which help to achieve successful building construction projects. The guide has been structured for use by owners and principals in contracts, but is of use to consultants and contractors also. • Partnering: A Strategy for Excellence The Commonwealth Government, through the Construction Industry Development Agency (CIDA) identified the formation of new relationships between stakeholders in the industry as a vital step in the reform of the construction industry. CIDA has developed a guide for the development of cooperative relationships between clients/users, consultants, contractors and subcontractors, suppliers and unions. The guide provides practical case studies to illustrate the partnering process and the benefits to all participants. PROJECT INITIATION PROCESS 59
    • (APPENDIX 3 Cont.) • Construction Industry Project Initiation Guide for Project Sponsors, Clients and Owners; CIDA, Second Edition, Commonwealth of Australia, November 1994 to be read in conjunction with - Australian Standards 4120 Code of Tendering - Australian Standards 4121 Code of Ethics and Procedures for the Selection of Consultants In addition there are further Australian Standards and guidelines which may be used. o International Standards Organisation (ISO) 9000 Series and associated guidelines The International Standards are used also, especially for quality assurance. • ISO 9001: 1994 Quality Systems - Model for quality assurance in design, development, production, installation and servicing • ISO 9002: 1994 Quality Systems - Model for quality assurance in production, installation and servicing • ISO 9001: 1994 Quality Systems - Model for quality assurance in final inspection and test 60 PROJECT INITIATION PROCESS
    • GLOSSARY TERMS RELEVANT TO THE PROJECT INITIATION PROCESS Accountability Responsibility for services or functions that have been delegated and/or accepted. Accrual Accounting Recognition and recording of revenue, expenses, assets and liabilities at the time they arise or are incurred. Asset management • The process of managing demand and guiding acquisition, use and disposal of assets to make the most of their service delivery potential, and manage risks and costs over their entire life (Strategic Asset Management Framework, January 1996). • A systematic approach to the procurement, maintenance, operation, rehabilitation and disposal of one or more assets which integrates the utilisation of assets and their performance with the business requirements of asset owners or users. Asset management information system A system for collecting and analysing data on the performance of existing assets, including their operational costs. (An example in the South Australian context is the Building and Land Asset Management System - BLAMS). Asset management plan Identifies the short and long term requirements of an agency and provides a framework for managing its asset portfolio. These needs are driven by goals defined in the agency’s corporate plan and service delivery strategies. Asset performance A quantified measure of the contribution an asset makes towards stated objectives or agreed standards. Asset register A record of items considered worthy of identification as discrete assets. A physical asset register includes information about each asset, such as type of construction and technical details. (Details include location, value and construction type). Benchmarking Identifies a starting point for measuring products, costs, services and practices against those recognised as industry leaders, in order to improve agency performance. Brief Written goals, methods and desired results prepared by project participants at the end of key phases of the project initiation process, providing sufficient substantiation to approve advancement of the project to the next phase. Client brief The functional and operational requirements for the proposed project, stating the end user’s requirements and setting out objectives in terms of time, cost, quality, function and scope. Delivery brief A report which contains the schematic design, limit of cost estimate, and cash flow plan. A key document in confirming that the project can be delivered within agreed parameters. Used in the project delivery phase. PROJECT INITIATION PROCESS 61
    • (GLOSSARY Cont.) Evaluation brief A written description of the concept, outlining accommodation needs, impact on the program, service delivery objectives and the financial/economic approach to be pursued. Used in the evaluation phase of the project initiation process and also in the value management process. Functional brief • that part of a the client’s brief that sets out the detailed functional requirements of a project; • a precise definition of the end user’s requirements, including but not limited to, anticipated workload, staffing, key relationships, accommodation requirements and major physical requirements. Project brief The brief developed by the client as a result of rigorous evaluation of service delivery needs and options, and forwarded to the design professionals for interpretation into a design for a built asset. Building and construction industry The industry that provides the services associated with the activities of the building and construction sectors covering buildings and associated engineering services and civil engineering (sometimes also referred to as construction). Capital works A term which relates to the procurement of physical assets through the expenditure of capital funds. Certification A means of documenting compliance with performance or prescriptive building code requirements by an independent accredited agency or individual not part of the statutory approval authority. Client The person or organisation requiring and paying for a building or engineering work or a specific professional service. Client brief (see brief) Code of practice A statement of the minimal acceptable levels of aspects of behaviour and best practice that are deemed to be required so as to bring about improved performance through industry reform. Concept The idea developed to meet a specific service delivery need. Consultant A specialist paid for a service. Often used to refer to ‘the professionals’ such as: architects, engineers, quantity surveyors. Consultant register A register of consultants drawn up using the financial, technical and managerial capabilities and capacity of the consultant to allocate them into specific categories. Used in selecting consultants to be engaged on projects. Contract An agreement entered into between two or more parties which involves an exchange of specified goods and/or services for specified financial reimbursement or other considerations. The terms of agreement are usually set out in writing and specific legal obligations are created by the signing of a contract. 62 PROJECT INITIATION PROCESS
    • (GLOSSARY Cont.) Corporate, strategic or business plan A written record describing the reason for an organisation’s existence, programs, program objectives, issues and how it intends to achieve and measure progress to address these issues and objectives. Cost benefit analysis A technique for the evaluation of projects, where all costs and benefits (direct and indirect) are considered. Costs and benefits should be quantified, but where this is not possible they should be listed. Cost plan/time plan Cost and time targets for each element of a project, used for controlling all design and development activities against these targets. Design The development of a client brief into design details prior to documentation (see brief). Includes conceptual design, sketch design and design development. Design concept plan The combination of information gathered in a site assessment and the development of suitable plan options based on the client brief. Development plan A plan showing, in outline, the overall development intentions for an area, including land use, major transport links, utility networks, drainage, open space and built form. Estimated total cost (of the project) All costs of a capital nature which are required to bring a project to completion. Costs include planning, construction, land and equipment. As distinct from whole of life costs which will include operating costs, staffing costs and the cost of maintenance and refurbishment. Agencies are required to quote the estimated total cost of a project at the time of seeking approval. The cost is to include the anticipated cost on completion, including escalation. Financial analysis A project evaluation technique which is undertaken from the perspective of the individual or agency, rather than having an economy or system-wide perspective, as used in cost benefit analysis. Functional analysis Information generated from a value management study of a concept or project, which details at different levels the functions required of a facility or its component parts. Functional brief (see brief) Indicative cost A first indication of cost, used as a guide to feasibility and based on an outline statement of needs. It is intended as a guide for feasibility and planning purposes and should not be treated as a firm cost estimate or estimated total cost calculation. Infrastructure Major capital works constructed to provide a framework for the social and economic development of the State. Land acquisition plan A plan outlining an agency’s known additional land requirements. Where capital funding is required for the purchase of land, the proposals form part of the agency’s strategic asset management plan. PROJECT INITIATION PROCESS 63
    • (GLOSSARY Cont.) Life-cycle The cycle of activities that an item (or aggregation of items) goes through while it retains its own physical identity, comprising planning, design, acquisition and support, including rehabilitation. Life-cycle cost The cost of an item throughout its life including the costs of planning, design, acquisition, operations, maintenance, and disposal, less any residual value. Life-cycle costing The evaluation of a project, considering all significant costs of total ownership over the life of the asset. Costs considered include capital costs of construction, maintenance and upgrading as well as recurrent costs of operation, maintenance, cleaning, utilities (gas, electricity, water) and staffing. Non asset strategies Methods of addressing demand other than by adding asset capacity (ie "no build" solutions, pricing mechanisms, selective targeting of services). Performance indicators Measures of the effectiveness and efficiency of a program, strategy or issue being managed. Post occupancy evaluation A careful and systematic evaluation of the performance of an occupied facility measured in terms of user satisfaction, fitness for purpose (based on client requirements), technical performance and value for money. Practical completion The stage reached when a project has been essentially completed and is fit for its intended purpose, except for minor omissions and defects that do not prevent its use, and with tests required under the contract having been carried out. Practical completion is marked by the issue to the contractor of a Certificate of Practical Completion by the Superintendent. Principal The party (owner, client or developer) to whom the contractor is legally bound to construct the works. The term “Principal” is used in most Australian contracts in lieu of “client” or “proprietor”. The Principal operates in conjunction with the superintendent and superintendent’s representative. Procurement strategy Method of satisfying a service delivery strategy. Project Any proposal that requires the weighing up of costs and benefits in order to meet a desired objective. Project brief (see brief) Project concept Asset strategy responding to a service delivery strategy developed to address identified demand. Project evaluation A review process during the life of a project to assess the functional efficiency of the design and documentation process. It may include a performance review of the various parties involved in the design and construction of a project. 64 PROJECT INITIATION PROCESS
    • (GLOSSARY Cont.) Project initiation process The early phases of a project from the initial idea to the approval to procure, and in these guidelines including delivery and review. The project initiation process involves strategic planning, project concept development, option identification, evaluation and definition of the preferred procurement strategy as well as delivery, performance review and feedback of information into the early planning phases. Project option evaluation Testing the different service delivery or procurement strategies by quantitative methods (ie financial and economic analysis) and qualitative methods (ie level of consumer satisfaction). Project risk management A formal process of checking projects at initiation, engagement of consultants, tender call, awarding the contract and contract administration to ensure that project and probity risks are identified and managed by the project manager. Project steering committee A group, usually chaired by an accountable officer or senior delegate and comprising major stakeholders. Established to control a project from inception to completion. Project team A group which takes responsibility for ensuring the required work is undertaken in accordance with the requirements of the steering committee and the project brief. Risk The possibility that an outcome is not achieved or is replaced by another outcome or an unforeseen event occurs. This includes both uncertainty due to future events and the consequences of limited knowledge, information or experience. The significance of risks is the impact that they may have on the achievement of proposal objectives, delivery goals or management effectiveness. Risk analysis The process of identifying risks, estimating their likelihood and evaluating potential consequences. A systematic use of available information to determine how often specified events may occur and their likely consequences. The purpose of risk analysis is to identify the causes, effects and magnitudes of risk and to provide a basis for risk assessment and treatment. Risk management • A structured way of identifying potential risks, analysing their consequences, and devising and implementing responses so as to ensure that the proposal or project objectives are achieved. This includes management of on-going risks associated with the ownership of assets. • The systematic application of management policies, procedures and practices to the tasks of identifying, analysing, assessing, treating and monitoring risk. There is a specific role within the construction process whereby the risks within a construction project are identified and managed. The term risk management is also used to refer to project risk management and the activities of the project manager in managing the identified risks. Schematic design or drawing A preliminary design drawing, sketch or diagram showing in outline form the general intentions of the designer. A descriptive and illustrative definition of a preferred option, including a time schedule, cost plan and schematic drawings, developed to a point where a limit of cost estimate can be established. PROJECT INITIATION PROCESS 65
    • (GLOSSARY Cont.) Strategic asset management The comprehensive management of asset demand, procurement, use, maintenance, operation, rehabilitation, disposal and replacement to maximise return on investment at the required standard of service. Superintendent The project manager or other person appointed in writing by the Principal as the Principal’s agent and notified to the contractor as such. The Superintendent is responsible to the Principal for all aspects of the administration of the contract for a project. Some of the functions may be delegated to a nominated Superintendent’s representative. Value analysis A systematic analysis to identify the essential functions of systems, equipment, facilities and procedures that are consistent with purpose, performance, reliability and manageability. This analysis will facilitate the achievement of those functions in a way that represents the optimum value. Value management A structured, systematic and analytical process, which seeks to achieve value for money by providing all the necessary functions at the lowest total cost, consistent with required levels of quality and performance. Strategic Value Management - A structured, systematic and analytical process undertaken at the concept evaluation phase of the project initiation process to quantify and verify needs. Project Design Value Management - A structured, systematic and analytical process undertaken to ensure the project design achieves value for money while meeting functional objectives. 66 PROJECT INITIATION PROCESS
    • For further information If you require further copies of the Project Initiation Process for Capital Works or any information about this publication, please contact: Department of Treasury and Finance Debt and Asset Management Branch Level 6 State Administration Centre Victoria Square Adelaide South Australia 5000 Telephone: (08 ) 8226 9618 Facsimile: (08) 8226 9844 Department for Administrative and Information Services (Services SA) Level 5 Wakefield House 30 Wakefield Street, Adelaide South Australia 5000 Telephone: (08 ) 8226 5124 Facsimile: (08) 8226 5077 PROJECT INITIATION PROCESS 67
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