2.3.4. Resources.....................................................................................................................14

2.3.5. Outputs........................................................................................................................14

2.4 Post Implementation Review (Measure).............................................................................15

2.4.1. Why..............................................................................................................................15

2.4.2. How..............................................................................................................................15

2.4.3. When...........................................................................................................................15

2.4.4. Resources.....................................................................................................................15

2.4.5. Outputs........................................................................................................................15

Appendix A – Indicative Timelines.......................................................................................................16

The Capital Framework – Framework Overview 2

1. Introduction

1.1 What is The Capital Framework?

The Capital Framework (“TCF”) has been developed to be a fit for purpose delivery model for the successful delivery of infrastructure projects in the ACT; notwithstanding TCF can be used for investments of any type, complexity or cost. TCF provides practical assistance to Directorates proposing investment projects in the ACT. It helps shape proposals, inform investment decisions, monitor project delivery and track the benefits projects achieve. Using TCF will help ensure Government investments provide maximum benefit to the ACT.

TCF materials are found via the ACT Government’s website at:http://www.procurement.act.gov.au/about/capital-framework

The process of planning, proposing and delivering investments is known as the investment lifecycle. TCF aims to provide practical guidance and tools that assist in the process and, in turn, promote the best investment outcomes for the ACT. The results of the TCF will ensure the Government:

Addresses the right problems and pursues the right benefits; Chooses the best value for money investments; Delivers investments as planned; and Realises the benefits it set out to achieve.

To assist the Government in this process, the information that government Directorates provide throughout the investment lifecycle should constantly aspire to objectivity and the highest standards of probity when handling and presenting information and evidence. Equally important is that agencies aim to constantly improve the quality of analysis and information provided to Government. For stakeholders in this process, TCF is designed to help you achieve those ends. This is achieved by providing step by step guidance through the processes from the investment concept through to the beneficial delivery of an investment.

The broader capital lifecycle incorporates 7 key stages, of which four stages are detailed in this guideline. The implementation of TCF affects the following four stages:

Stage 1 (Conceptualise): Investment Logic Workshop (“ILW”); Stage 2 (Present): Early Project Overview (“EPO”); Stage 3 (Prove): Single Assessment Framework (“SAF”); and Stage 6 (Measure): Post Implementation Review (“PIR”).

This guideline does not cover Stage 4 (Procurement) and Stage 5 (Implementation) which are addressed within the current procurement guidelines. Stage 0 relates to prerequisite Government asset and service planning processes that are outside TCF.

TCF replaces the current Capital Initiative Proposals Process and Guidelines for implementation during 2013.

An overview of the TCF is provided in Figure 1:

The Capital Framework – Framework Overview 3

Figure 1: The Capital Framework Process

1.2 Who should use TCF?

TCF targets a wide range of stakeholders and is designed to be useful to Directorates with varying levels of investment/infrastructure knowledge.

1.3 What projects fall under TCF?

TCF scope applies to all projects funded from the capital budget, including:

Building works; Infrastructure works; Roads & civil construction.

ICT projects are not currently included in TCF, however the ILW panel can be accessed for any projects where desired. Any funding under recurrent budget is outside the scope of TCF unless otherwise directed by Treasury.

1.4 What stages apply to what Tiers?

TCF divides projects into three separate Tiers based on their project value and risk. As project complexity increases with project value, not all stages will be applicable to each project. The Tiers are indicative only and flexible based on risk and scope of the particular project. Each Tier and the relevant stages applicable are below:

Tier 1: >$50 million or >$10 million and assessed as high risk - (All stages mandatory);

Tier 2: $10 million - $50 million (Stage 1 strongly recommended, Stages 2 – 6 mandatory);

Tier 3: <$10 million (Stages 3 – 5 mandatory).

1.5 How does this fit in to the budget cycle?

The Capital Works Framework is integral to the Budget process, and the stages used in this framework support the development of budget bids, and their analysis and consideration through the budget process across the many stakeholders (for example Treasury, Procurement, Ministers and Cabinet).

Relevant Ministers should be engaged early in the Budget Development process in relation to projects which agencies are considering. This should be done before starting the processes outline in The Capital Framework.

The Capital Works program, which includes the development of rolling four-year indicative programs of works, is unaffected. This program is to be indicative in nature, and subject to specific Government agreement for each individual project. It will provide a sound planning basis for the consideration and prioritisation of future capital works programs.

Indicative timelines for all three project tiers are outlined in Appendix A.

Figure 2 below demonstrates the comparison between the current and new process within the budget cycle.

NEW OLD

Figure 2: The Budget Cycle

The Capital Framework – Framework Overview 6

1.6 What are the objectives of The Capital Framework?

The objectives of TCF are to:

Allocate scarce capital where best justified; Achieve optimal risk allocation and value for money; and Have guidance material, an investment decision and approval process which is fit for

purpose for projects of different sizes and complexity.

These objectives are described in more detail below:

Funding Objective: to provide qualitative and economically measurable information to assess and prioritise capital funding. This will ensure that scarce funds are rationed to projects in order of economic merit. This is primarily defined through a needs analysis and an economic assessment.

Spending Objective: to place a far greater emphasis on up-front analysis where savings per dollar spent are greatest. A formalised and consistent approach will be applied to:

Risk assessment; Risk quantification; Development of commercial principles; and Delivery model selection.

This will ensure that scarce funds are spent in a manner that optimises value for money outcomes by allocating risk to the contractual party than can best manage it.

Process Objective: to be fit-for-purpose to meet the Funding and Spending objectives. The proposed three tiered approach helps ensure that the level of analysis is proportional to the scale of the project.

1.7 What is the purpose of this document?

The purpose of this document is to:

Provide an introduction to, and context for TCF; Describe how TCF process fits with other Government processes; and Provide a summary of each stage of TCF.

It is intended to address the needs of a broad range of stakeholders involved at all stages of the investment lifecycle.

1.8 Inputs to Needs Analysis

The Capital Framework – Framework Overview 7

In undertaking your Needs Analysis from a project perspective, the inputs and outputs from Section 1.9 will need to be considered. The results will be part of your Directorate’s Transformational Service Advice and Strategic Asset Management Plan.

1.9 Needs Analysis: 12 Key Questions

TCF endeavours to address the four main considerations of investment assessment, which are:

Identify the problem; Identify the benefits; Analyse strategic solutions; and Analyse project solutions.

These considerations are expanded into “12 Key Questions” as outlined below in Figure 3. They are designed to help guide and test thinking as Directorates develop their investment proposals.

The Capital Framework – Framework Overview 8

Problem Benefits Strategic Solutions Analysis

Project Solutions Analysis

What is the problem? What are the benefits of addressing the problem?

What different approaches to the problem have been identified?

What different approaches to the solution have been identified?

What is the evidence to confirm there is a problem?

Are the benefits of high value to the ACT Government (how does this project align with your current Transformational Service Advice and Strategic Asset Management Plan?)

What is the evidence to demonstrate that the strategic options are feasible?

Is the recommended project option the best value for money way to address the problem and deliver the results?

Does the problem need to be addressed now?

Are there measurement mechanisms (KPI’s) to provide evidence the benefits have been delivered?

Is the preferred strategic option the most effective way to address the problem & deliver the benefits?

Can the recommended project option be delivered (cost, risk, timeframe etc)?

Eg. Extensive delays at “Canberra Courts” undermine timely access to justice. All court participants face safety risks because of the outdated designs of the court rooms

Eg. Cost savings for courts and public, increased effectiveness of the justices system, safety of all court participants

Eg. Introduce alternative dispute resolution & diversion services, extend existing court, build a new court facility

Eg. New court facility

Figure 3: TCF 12 Key Questions

Directorates should ensure they have considered all the questions above throughout the development of their strategic assessment or EPO, and prior to presentation to Treasury and PCW. Not all questions may be answered in the affirmative however they need to demonstrate that all questions have been considered.

1.10 Why use The Capital Framework?

TCF supports planning, appraisal and evaluation of any investment, whatever its type, complexity or cost may be. The four key stages of TCF and their aims and outcomes are:

Investment Logic Workshop (ILW)

To address the “12 Key Questions”o Identify the problem;o Identify the benefits;o Analyse strategic solutions; ando Analyse project solutions.

To build organisational skills in investment management practices.

The Capital Framework – Framework Overview 9

Early Project Overview (EPO)

To outline the needs analysis for the project; To allow for project programming across WhOG; To provide Treasury/PCW an opportunity to provide early feedback; and Determine whether to proceed to business case (SAF) and help inform the PCB

(Project Concept Brief).

Single Assessment Framework (SAF)

To explore detailed project options; To estimate costs; To propose a delivery model(s); To validate value for money; and To provide adequate information to enable Government to make an informed funding

decision.

Post Implementation Review (PIR)

To monitor and evaluate investments, projects or programs; To measure the success of an investment; To assess outcomes against expectations; and To identify lessons learned to inform future project delivery.

The entire framework is directed around the outcomes of business case submissions by Directorates and the current budgeting cycle. Indicative timelines for all three project tiers individually are outlined in Appendix A.

Figure 4 below outlines the indicative timelines and demonstrates what stages apply to each tier of the project.

The Capital Framework – Framework Overview 10

Figure 4 TCF Indicative Timelines

2. The Capital Framework Process

2.1 Stage 1: Investment Logic Workshop (Conceptualise)

2.1.1. WhyThe purpose of this stage is to identify a clear need that by addressing, offers the ACT Government significant benefit.

Undertaking the ILM process will enable Directorates to identify and prioritise investments that they believe are the most deserving of attention from Government. Directorates are to undertake this process with accredited provider via the panel administered by Procurement and Capital Works (PCW). It is recommended that Treasury and PCW are involved in the process as either observers or participants.

ILW accredited Facilitators can be engaged under a pre-established panel at: Panel for Investment Logic Map Workshop Facilitators . This panel should be reviewed and performance assessed in line with standard ACT Government practice on panel arrangements including agency representatives.

ILW is required for Tier 1 projects. Although not mandatory, it is recommended that Tier 2 projects participate in an ILW. An ILW is not required for Tier 3 projects.

2.1.2. HowThe ILW is a highly focused 2 hour facilitated workshop led by an accredited facilitator. Depending on the complexity of the project, more than 1 workshop may be required.

To ensure successful outcomes, key decision makers are required to attend. These include but are not limited to:

Project Sponsor (for Tier 1 projects typically the Director General from the Requesting Directorate)

Project Director (from the Requesting Directorate) Key stakeholder representatives

It is recommended that a representative of Treasury also attends as an observer or participant where appropriate.

The “12 Key Questions” of the TCF are the focus of this workshop, aiming to:

Identify the problem; Identify the benefits; Analyse project solutions; and Analyse strategic solutions.

Please see section 2.1.4 for links to the relevant guidance notes.

2.1.3. WhenIt is recommended that the ILW is undertaken prior to the EPO. This will normally be in July. It is generally accepted that an ILW, if done for feasibility, does not need to be done again once a project moves to the full funding phase of the SAF. The exception will be, however, when the scope of the project has changed significantly as a result of the feasibility study that it is worthwhile re-testing the investment proposition.

2.1.4. Resources Investment Logic Workshop – Guidance Notes. Investment Logic Map – Template Panel for Investment Logic Map Workshop Facilitators

The above resources can be to be found at the following websitehttp://www.procurement.act.gov.au/about/capital-framework/investment-logic

2.1.5. Outputs The following outputs will be produced by the ILW:

Investment Logic Map

2.2 Stage 2: Early Project Overview and Project Concept Briefs

2.2.1. WhyThe key purpose of this stage is to present to Treasury the investment proposal. The presentation is to concentrate on the Problem and Benefits and provide some detail on the Strategic Solutions Analysis. The EPO will only briefly touch on the Project Solutions Analysis.

EPO’s are mandatory for all Tier 1 project and strongly recommended for Tier 2 projects. An EPO is not required for Tier 3 projects.

The EPO will be a useful conversation to facilitate feedback from Treasury and PCW which can be incorporated into the PCB.

2.2.2. HowDirectorates are asked to present their investment proposals based on the EPO PowerPoint template. If an ILW process has been undertaken, the presentation will include all outcomes of the workshop. If an ILW process has not been undertaken, the presentation will cover the “12 Key Questions” as outlined in section 1.9.

Please see section 2.2.4 for links to the relevant template.

2.2.3. WhenThis process will be undertaken in August - September of each year, ensuring Directorates have allowed sufficient time to move forward to the next stage and develop a robust business case under the SAF.

The Capital Framework – Framework Overview 13

2.2.4. Resources Early Project Overview Template Early Project Overview Protocol Document

The above resources can be to be found at the following websitehttp://www.procurement.act.gov.au/about/capital-framework/early-project-overview

2.2.5. Outputs Based on this examination and assessment, Directorates are then required to develop the following outputs for submission to Treasury/PCW:

Early Project Overview PowerPoint Presentation

2.3 Stage 3: Single Assessment Framework (Prove)

2.3.1. WhyThe purpose of this stage is to conduct a thorough pre-funding assessment of capital works proposals. The SAF aims to provide an upfront business case driven rigor to capital project evaluation. It also enables Treasury to make an informed recommendation to Cabinet on investment proposals. A comprehensive business case provides evidence of rigor and appropriate due diligence.

2.3.2. HowDirectorates are to submit a business case to Treasury for funding consideration. Please see section 2.3.4 for links to the relevant guidance notes and templates.

The level of detail and analysis required varies depending on the size and complexity of the project. Section 2.3.4 provides the different templates for each of the three tiers.

For Tiers 1 and 2, business case preparation will typically be carried out internally by the Directorate. For Tier 1 projects, it is strongly recommended that the Directorates engage external advisors to prepare the business case.

2.3.3. WhenThis process will coincide with the current budget cycle process. Business case submissions are due to PCW in December each year to allow review prior to consideration by Treasury. Complete business cases are due to Treasury mid February. The precise timetable will be issued by Treasury each year. Larger projects may pass through multiple budget cycles and SAF submissions.

Funding may be sought through the SAF for:

Feasibility Concept Design Detailed Design (note only where D+C has been justified) Full Business Case Delivery/Construction

The Capital Framework – Framework Overview 14

2.3.4. Resources Single Assessment Framework – Business Case Template (Tier 1 > $50 M) Single Assessment Framework – Business Case Template (Tier 2 $10 - $50 M) Single Assessment Framework – Business Case Template (Tier 3 < $10 M) Single Assessment Framework – Guidance Notes (all bands) Panel for Commercial Advisors

The above resources can be to be found at the following websitehttp://www.procurement.act.gov.au/about/capital-framework/single-assessment

2.3.5. Outputs Based on this examination and assessment, Directorates are required to develop the following outputs for submission to Government:

Business Case (SAF)

2.3.6. Reviews requiredThe following reviews are required subject to the tier of SAF prior to submission to Budget Committee (not sequential):

Review 1 (PCW) – Status of Functional Brief/Output SpecificationReview to ensure that the functional brief/output specifications are sufficiently progressed in order to go to market under the delivery model selected and within the procurement timeline outlined in the business case. If not it is then returned to the Directorate.

Review 2 (Treasury) – Needs AnalysisReview to ensure that sufficient needs analysis has been undertaken. If not it is then returned to the Directorate.

Review 3 (PCW) – Delivery Model SelectionReview to ensure that the delivery model selected is suited to the project requirements and level of risk. If not it is then returned to the Directorate.

Review 4 (Treasury) – FinancialReview to ensure that the financial analysis is adequately robust. If not it is then returned to the Directorate.

2.4 Post Implementation Review (Measure)

2.4.1. WhyThe purpose of this stage is to evaluate project outcomes against the expectations set out in the business case. The PIR aims to measure the success of a project using a consistent measurement framework. The PIR should be identified at any point prior to sign off of the Procurement Plan Minute (“PPM”). It is important to note that the PIR is not a remedial exercise and it is not a toll to manage projects that are perceived to have difficulties in delivery.

The Capital Framework – Framework Overview 15

2.4.2. HowAny of the sponsor directorate, PCW, Treasury, or the Government Procurement Board (“GPB”) can identify projects that meet the criteria for a PIR. PCW will engage the services of a panel member to undertake the PIR prior to the close out of the project funds. Once completed, a copy of the report will be provided to the sponsor, GPB, and Treasury for consideration prior to forwarding to Budget Committee of Cabinet.

The PIR Report will be Budget-in-Confidence.

Relevant criteria for selecting which projects go through PIR may include the following: o All Tier 1 projectso Where a new delivery model has been utilisedo Where a new financing strategy has been utilisedo All Alliance, Managing Contractor or PPP projectso High risk profile projects

Outcomes of the PIR should be fed into Strategic Service Planning to ensure lessons learnt assist future planning.

2.4.3. WhenIt is recommended that this process will be undertaken 6 – 12 months post project completion/commissioning. There is nothing preventing a Directorate from selecting a time period that is better suited to a particular project.

2.4.4. Resources Post Implementation Review – Report Template Panel for Commercial Advisors for Post Implementation Review

The above resources can be to be found at the following websitehttp://www.procurement.act.gov.au/about/capital - framework/post - implementation

2.4.5. Outputs The output for this stage is:

Post Implementation Review Report

The Capital Framework – Framework Overview 16

Appendix A – Indicative Timelines

The Capital Framework – Framework Overview 18

The Capital Framework – Framework Overview 19