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4. Gate 1: strategic business case

Preliminary business case (PBC)

Key principles

The preliminary business case should include options. The options analysis builds on the strategic assessment and is not intended to form a final view on a preferred option. Its purpose is to shortlist options for further detailed assessment in the final business case. However, for some larger, more complex proposals, the options analysis may evaluate short-listed options in more detail, with the final business case focusing on the preferred option.

The options should include the identification of all potential methods to meet the demands for service delivery, including non-asset solutions, using or adapting existing resources, demand management strategies and, where relevant, the public private partnerships (PPP) framework.

All options analysis are to be based on informed decision-making to: 

  • achieve value for money and project objectives
  • evaluate all feasible alternatives
  • consider lifecycle costs and benefits, including related operating costs / benefits
  • manage or transfer risks associated with each stage of the lifecycle
  • test the validity/sensitivity to changes in key assumptions.


Options analysis supports efficient planning and decision-making. The purpose of the options analysis is to evaluate all feasible solutions (both asset and non-asset) and shortlist options for further evaluation. Shortlisting options for further evaluation allows for early decisions on public policy issues and channelling resources to proposals that are likely to be successful. This will allow:

  • a clear rationale for a preferred option or shortlist of options for further evaluation
  • the identification of project and third party risks and risk management and / or mitigation strategies
  • the initial feasibility of a proposal to be determined at minimal cost
  • information / knowledge gaps to be determined and addressed before the development of a business case
  • a decision on whether it is appropriate that a proposal be progressed to the final business case stage.


An options analysis ensures that high-level analysis is undertaken on the widest range of service delivery options before a department invests in a detailed and more costly business case development. Benefits include the following: 

  • allocation of resources to proposals that are the most likely to be successful 
  • an opportunity early in the project lifecycle to identify and quantify critical asset investment issues 
  • a sound basis for key strategic decisions to meet service delivery objectives cost effectively
  • identification of the appropriate depth of business case analysis needed and the level of supporting studies required
  • consistent ranking of proposals using similar criteria
  • an identified process to manage risks.


  • Master plan / cost - refer to master plan studies guideline.
  • Feasibility study - refer to feasibility studies guideline.
  • Project cost - refer to cost plan studies guideline.
  • Recurrent modelling - refer to cost plan studies guideline.
  • PPP options appraisal - refer to the public private partnerships manual on the Department of Treasury and Finance website.
  • Risk management plan - refer to the risk management essential engineering services guideline.
  • Outline of proposed next steps.

Key actions

  • IPD engages capital consultants.
  • IPD manages design processes / consultants.
  • Service division develops functional brief and operating model.
  • Division assesses recurrent cost and revenue implications. 
  • Division engages other consultants as required, e.g. financial / commercial.

Key sign offs

  • Service division approves master plan, feasibility study, and capital cost as part of PBC.
  • Service division / F&CS sign off PBC at executive director (ED) level.
  • CPSP / service division negotiates timeframes and costs of next stage of work and review proposed year of funding.