3. Preliminary business case phase overview
The objective for including a project on the design list is to bring it to a stage that it is fully planned. Inclusion of a proposal on the design list does not commit the Victorian government to funding a capital project.
During the preliminary business case phase, feasibility and initial design work is undertaken to establish the scope and limit of cost of the project.
The main steps in the preliminary business case phase are:
- Planning brief - Establishes a framework in which a master plan study can be conducted. It provides consultants with information about
- Service delivery philosophy of the Agency and a statement of its role within the National, State, regional and local context
- Broad description of management and operational policies including organisational structure
- Description of the range, types and level of services to be provided, the requirements of individual departments and the relationships between the various services and departments within the agency
- Staffing profile (including number and type of staff and the hours they will work)
- General planning considerations.
- Master plan - A thorough investigation of a feasible range of facility planning options which meet the services needs/gaps, resulting in confirmation of the site location and a recommended plan for the future development of the Health Service/Agency, within a prescribed timeframe and estimate (cost plan A).
- Functional brief - A description of the functions to be accommodated and the relationships between functions for a proposed capital project. It should identify how the project meets the objectives and policies of the organisation.
- Feasibility study - Evaluates options against a set of agreed criteria and presents:
- A detailed analysis of a preferred facility development strategy
- A realistic estimate of the total project investment (cost plan B)
- Final business case phase - A comprehensive analysis of the relative merits (financial and socio-economic) of identified options to determine the preferred option. The business case report forms the basis for government approval of the project and the allocation of capital and recurrent funding to construct and operate the facility.
- Schematic design - Preparation of design briefs and layout, including key physical elements, areas, locations, and volumes including basic building services systems and cost estimate (cost plan C1).
- Value management - Formal review and evaluation of a proposed project to achieve the best value for money.
The second gateway review, business case - is then undertaken. This includes identifying options, determining affordability, achievability and value for money. For major / complex projects a preliminary business case is carried out at the schematic design stage, while the final business case follows the value management assessment.
Infrastructure Planning and Delivery (IPD) branch has produced the following guidelines to assist with processes undertaken during the preliminary and final business case phases:
- master plan studies
- functional briefs
- feasibility studies
- schematic design
- value management studies.
The Final business case for all projects must be signed off by the division director and IPD branch. Proposed projects are again ranked within the overall Department of Health and Human Services asset investment proposal and submitted to the Budget and Expenditure Review Committee (BERC).
If BERC approval of the schematic design and cost plan C (defining the project scope and TEI) is obtained, the project is included on the New Works List and can proceed to documentation and tender. The BERC also independently considers any project over $10 million.
Completion of the business case phases may result in approval to either proceed with the project using government funding, terminating the current proposal, or to seek private sector funding. The project funding may involve a number of funding sources that must be identified at this stage. For selected projects to be carried out by Agencies, a capital investment funding agreement is to be signed. The agreement defines the scope, cost, timeframe and funding arrangements for the project and commits the responsible agency to delivering the project within these parameters. The funding agreement is usually signed at the end of schematic design.
Cost Plan A - Master Plan Study
The Master Plan Study based on an approved service plan identifies broad scope of works entailing new, alteration, external and any major service or site-specific issues including property acquisition. (Refer to the Master Plan Studies Guideline).
Due to the very nature of information available, Cost Plan A is developed in conjunction with floor area schedules and should be based on data gathered from other similar projects, surveys of existing conditions and major project specific issues such as the suitability, age and condition of existing facilities, including upgrade of site services, asbestos removal, topography, heritage issues and so on.
Cost Plan B - Feasibility Study
The Feasibility Study provides more detailed information on the preferred development option and therefore the Cost Plan reflects a more project specific influence on cost estimates. Cost Plan B is, however, still fundamentally based on floor area schedules.
As part of the preliminary cost data a brief specification shall be prepared covering the following topics upon which estimates have been based:
- Type of Foundation
- Structural Frame System
- External Enclosure
- Roof System
- Type of Internal Subdivision
- General Quality of Finishes
- Extent of Built-in Fittings
- Electrical and Mechanical Services and general servicing principles, that is, central or localised plant, distribution by vertical duct, horizontal duct, ceiling plenum or other
- Special Site Conditions eg level of redundancy for critical infrastructure
- Specific Exclusions.