Developing Infrastructure Funding Proposals A Guidance...
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A Joint Iniave by the WA RDA Network Developing Infrastructure Funding Proposals A Guidance Manual for Praconers
Transcript of Developing Infrastructure Funding Proposals A Guidance...
A Joint Initiative by the WA RDA Network
Developing Infrastructure Funding ProposalsA Guidance Manual for Practitioners
RDA WA contacts 1Introduction 2-31.Eligibility 4-11 1.1 Applicant eligibility 4-5 1.2 Project eligibility 6-7 1.3 Other eligibility 8-11 1.4 Solutions options analysis2.Planning 12-29 2.1 Time management 12-14 2.2 Addressing assessment criteria 15 2.2.1 Economic growth 16-17 2.2.2 Addressing disadvantage 18-19 2.2.3 Investment & partnerships 20 2.2.4 Financial Viability 21 - 22 2.3 Sourcing data, estimates, & other evidence 23 - 27 2.4 Gathering support for projects 28 - 293.Analysis 30-43 3.1 Capital & operational costings 30 - 34 3.2 Valuing benefits 35 3.3 Cost benefit analysis 36 3.3.1 Finance costs are not included 37 3.3.2 Calculations 37 3.3.3 Sensitivity analysis 38 3.4 Economic impact assessment 39 - 41 3.5 Business cases 42 - 434.Deliverability 44-49 4.1 Ability to deliver a project 44 - 45 4.2 Risk management & mitigation 46 - 47 4.3 Procurement process 48 4.4 Ongoing asset Management 49AppendixA:Selectinfrastructurefundingprograms 50-59AppendixB:Exampleriskregister 60-64References 66Acknowledgements 67
CONTENTS
CONTENTS
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RDA WA CONTACTS
RDA KimberleyUnit 4, 20 Hamersley StreetPO Box 653Broome WA 6725Phone: 08 9192 2450Email: [email protected]
RDA Midwest Gascoyne209 Foreshore Drive - 2nd floorPO Box 1517Geraldton WA 6530Phone: 08 9964 5757Email: [email protected]
RDA PerthOffice 2 The Rise, 28 Eighth AvenuePO Box 325Maylands WA 6931Phone: 08 9371 5525Email: [email protected]
RDA Goldfields- Esperance171 Piccadilly StreetPO Box 10331Kalgoorlie WA 6433Phone: 08 90916051Email: [email protected]
RDA Peel17/38 Mandurah TerracePO Box 1399Mandurah WA 6210Phone: 08 9586 3400Email: [email protected]
RDA PilbaraSuite 5/7 Morse CourtWelcome Lotteries House PO Box 1404Karratha WA 6714Phone: 08 9144 0651Email: [email protected]
RDA Wheatbelt3 Constable StreetGingin WA 6503Phone: 08 9575 1888Email: [email protected]
RDA South WestPodium Level, Bunbury Tower 61 Victoria StreetPO Box 1827Bunbury WA 6231Phone: 08 9721 1111Email: [email protected]
RDA Great SouthernSuite 6, First Floor, The Coach House, corner York Street and Peels Place, Albany WA 6330PO Box 716Albany WA 6331Phone: 08 9842 5800Email: [email protected]
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All three tiers of Australian government often put in place funding programs to achieve various policy outcomes. Often the funding program aims to address market failure, generally arising from the market’s inability, or unwillingness, to fund, or pay, the true cost of provision. This is particularly the case for public infrastructure that have public good characteristics such as roads.
Generally a funding program contains a number of criteria to be met through application of the funds. The fundamental objective of the criteria is to ensure the policy objective is maximised given one or more constraints. The primary constraint is generally the quantum of funding available.
Applicants apply for funding in a program by submitting their project detailing how it meets the funding program’s criteria. Often the aggregate quantum of funding sought by applicants is much more than that available so program administrators rigorously assess each applicant against the criteria to determine the projects that will best achieve the policy outcomes. Insufficient or weak responses to criteria present an easy means for an administrator to discard an application.
INTRODUCTION
As competition for available funding is always strong, applicants need to ensure that they and their project are eligible, they have undertaken sufficient planning and analysis to meet the criteria and they can demonstrate that they can deliver the projects. Whilst each funding program will have specific criteria the general approach is one of eligibility, planning, analysis and deliverability.
A good funding submission requires the gathering and summation of many different components related to the project, often requiring external studies such as options, design, costing, feasibility, and the applicant must be prepared to make these upfront investments. Therefore, sufficient time needs to be allocated to these processes.
The effort required to prepare a funding submission that has the best chance of success is often under estimated. This manual has therefore been prepared to assist practitioners in understanding and guiding the preparation of a funding submission in particular for infrastructure funding.
Exercises included in this manual are based on guidelines and FAQs from a variety of funding programs, with a focus on the National Stronger Regions Fund Round 2. Guidelines are subject to constant review and updating and those used in this manual should not be relied upon as being current. The most recent versions of guidelines should be referenced before commencing development of any funding application.
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The manual can be used as a reference guide or as a step-by-step tool for preparing a funding submission. Each section provides exercises that will assist you to consider the aspects that you need for a strong funding submission.
The manual is divided into four sections
Eligibility1
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4Analysis
Is the applicant and project eligible and will it deliver the program’s outcomes?
Building the business case using analysis tools.
Planning
Deliverability
Getting organised and gathering all the information required.
Demonstrating that the applicant can deliver the project.
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This may seem like a redundant question but it is often something that gets overlooked in the early stages. You don’t want to get half way through your investigations or be writing your response to the selection criteria and then whilst checking the fine print realise that your organisation or project may not be eligible!
ELIGIBILITY1Key Question: Is your organisation project eligible for the funding program?
You need to confirm that your organisation is eligible for the funding program and that you can demonstrate eligibility with appropriate documentation. As an example the NSRF Round 2 Guidelines state who is eligible and who is ineligible.
1.1 Applicant Eligibility
4.2. Who is eligible to apply for funding?
An eligible Applicant for funding must be:• a legal entity with an Australian Business Number (ABN); and• an organisation that is one of the following: • a Local Government body including the ACT Government, either in its own right or on behalf of a consortium; or • a not-for-profit organisation, either in its own right or on behalf of a consortium, that is not owned by a state or territory government.
Eligible local government bodies are defined in Attachment A.
4.3. Who is ineligible to apply for funding?
The following organisations are not eligible for funding:• NSW, VIC, QLD, WA, SA, TAS and NT governments;• state and territory government-owned entities;• state and territory government-owned not-for-profit organisations;• universities, technical colleges, schools and hospitals;• other organisations which are primarily supported by other
Australian Government programmes or initiatives;• Regional Development Australia committees; and• all for-profit organisations.
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Documentation
A not-for-profit organisation would need to supply evidence of incorporation. However, just providing evidence of incorporation does not always clearly identify that the applicant is a not-for-profit organisation and does not meet the mandatory document requirements. The NSRF Guidelines for Round Two include the following mandatory document “Evidence of Incorporation which must include articles of incorporation or similar document (not-for-profit organisations only).” The document should clearly identify the full requirements of the programme guidelines.All organisations need to supply an ABN. A consortium would need to supply legal documentation such as an executed joint venture agreement outlining roles and responsibilities of each consortium member.
Despite these definitions being seemly clear there could be many interpretations of a consortium. Generally the lead organisation of a consortium is the applicant (and also needs to be an eligible organisation. If you are in any doubt seek clarification as soon as possible.
Exercise: NSRF Round 2 Organisation Eligibility
Type of application organisation:local government, not–for-profit, consortium, other (describe)
Name of applicant organisation:
Available documentation:ABN:
Specific eligibility questions (if any):
Is the applicant organisation eligible?Yes or No
If no why?
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Once you have determine that you are an eligible organisation you need to confirm that your project is eligible for the funding program. For example the NSRF Round 2 Guidelines state what is eligible and what is ineligible.
1.2ProjectEligibility
4.4 What is eligible for funding?
NSRF funding will be provided for capital projects which involve the construction of new infrastructure, or the upgrade or an extension of existing infrastructure. Note the replacement of existing infrastructure will only be eligible where there is a demonstrated significant increase in productivity.
4.5. What is not eligible for funding?
The NSRF will not fund infrastructure projects which:• do not have all partner funding confirmed;• do not deliver sustainable economic benefits, including job creation;• are eligible for funding under the National Disaster Relief and Recovery Arrangements;• shift costs from state, territory or local governments to the Commonwealth; and/or• are integral elements of hospitals, as they are funded by other Government initiatives.
Grant funding from the NSRF cannot be used for the following:
• replacement of existing infrastructure where there is no demonstrated significant increase in productivity;
• expenditure incurred prior to the announcement that the project has been successful in its application for NSRF funding;
• provision of services and support activities;• soft infrastructure, including computer software or hardware that
is not an integral part of the funded capital project;• payment of salaries for new or existing staff or contractors; or• administrative overhead items, including office equipment, vehicles or mobile
capital equipment, for example trucks and earthmoving equipment.
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In the case of infrastructure the NSRF Round 2 FAQ gives the following examples of projects which may be funded:
• Transport networks such as transport hubs, intermodal services, airports, or upgrades to wharves or cargo loading facilities which cannot be funded by the market.
• Enhancing the efficient movement of freight, support an industrial estate or strengthen supply chains.• Increasing access to water and waste services, support improved
water management or enhance irrigation.• Delivery of gas pipelines to new industrial estates, upgrading water pipes to
support irrigation and industrial growth, management of waste water.• Convention centres, community or performance centres.• Construction, expansion or upgrade of multi-purpose or local sporting facilities which are otherwise
available in the state or territory are unlikely to be supported by state and national bodies.
Exercise: NSRF Round 2 Project Eligibility
Description of project:
Problem project attempting to solve:
Confirm that the project does not fit with ineligible examples or use of grant funding:
Is your project eligible?Yes or No
If no why?
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There are often eligibility requirements other than the organisation and the project such as documentation. If certain documentation is not supplied then the application may be deemed ineligible. Again the NSRF Round 2 Guidelines state the following mandatory documentation requirements:
It should be noted that the size and content of documents, and the level of evidence to support responses to the assessment criteria, should be commensurate with the size, scope and nature of the project.
1.3OtherEligibilityRequirements
Exercise: NSRF Round 2 Project Application Eligibility
Do you have for your project:
Written confirmation of all partner funding? Yes or No
Written confirmation of all in-kind contributions? Yes or No
Business Case? Yes or No
Project Management Plan? Yes or No
Risk Management Plan? Yes or No
Procurement Management Plan? Yes or No
Evidence of incorporation Yes or No
Audited financial Statements Yes or No
Evidence of capability to deliver project? Yes or No
Can you demonstrate similar project experience? Yes or No
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4.6 Documents to be provided to support eligibility
Mandatory Documents Grant Requests of < $1 million
✓ ✓
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✓
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✓
✓
✓
✓
✓
✓
✓
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Grant Requests of > $1 million
Evidence of Incorporation which must include articles of incorporation or similar document (not-for-profit organisations only).
Evidence to confirm capacity to deliver the project (not-for-profit organisations only).
Project Management Plan
Business Case
Risk Management Plan
Procurement Management Plan
Written confirmation of all partner funding (cash). If partner funding is conditional on the provision of the funding grant, Applicants must provide a letter of intent from a senior member of the organisation providing funding. The certification in the application form is appropriate confirmation, where the Applicant is the only funding partner.
Written confirmation of all in-kind contributions.
Audited Financial Statements for two of the three most recent consecutive years signed by a qualified auditor.
Evidence to demonstrate the Applicant’s experience in delivering projects of similar size and scope or evidence to demonstrate that the applicant will engage the relevant skills and experience.
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It is important to clearly state the problem that your project is attempting to solve and provide evidence that you have considered various solution options, including doing nothing, to determine the optimal acceptable solution that is the basis of your project.
Applications that can demonstrate consideration of a number of possible solutions along with a clear and acceptable method to arrive at the chosen project being applied for are likely to be more successful. Even if the program’s criteria do not ask for it, the approach demonstrates a wider consideration of solutions to a problem.
Investigation of solution options can be extensive and the degree of investigation required depends on the size of the expenditure being considered. Some projects will require extensive engineering investigations and others may have only one solution.
If there is more than one solution then a cost benefit analysis (CBA) will be required to decide between the options. Section 3 provides a number of techniques for this.
1.4 SolutionOptionsAnalysisFor example, consider a road intersection that has been designated a black spot for traffic accidents. The problem is the intersection has a record of 2 or more fatalities over a five year period which is unacceptable. The outcome from upgrading the intersection is to reduce the number of fatalities to as close to zero as possible.The options considered to deliver this outcome may include:
• Upgrading the intersection’s road standard, curbing and channelling.
• Improved approach signage.• Improved intersection lighting.• Roundabout. • Intersection traffic lights.• A combination of the above.
Each of these options will have different costs and traffic disruption impacts during construction but may also have slightly different outcomes.
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Exercise: Project Option Analysis
Problem project attempting to solve:
What is the outcome you are trying to achieve?
What are the solution options to achieve that outcome?
How are these different in terms of cost and outcome variability?
How will you decide between them to demonstration a preferred option?
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PLANNING2Key Question: Have you planned sufficient time and resources to assemble all the material and information required for the funding submission?
Time management is the process of consciously planning actions and milestones to meet a deadline or deliver a project. In regard to funding submissions time management concerns the preparation and submission of an application so that it meets all the requirements as best it can. Time management also relates to the delivery of a project. Some funding programs require the applicant to be able to demonstrate that it can deliver the project within a specified timeframe.
Time management can be considered a sub-set of project management which has become a discipline in itself. Whilst there is insufficient scope within these guidelines to cover the topic in any detail a few simple observations and pointers will suffice.
In its basic form time management is exercising common sense about planning your funding application. The first critical point is that if you are considering an infrastructure project that requires design, costing, business case, project plan, etc., then starting a month before the application is due is not going to allow you to give it your best shot.
2.1TimeManagementSecondly, if you are doing the planning for the funding submission you will need to consult and engage a range of other professionals to assist in preparing technical inputs. Alternatively, it may be, and this is the majority of cases, that your organisation has already progressed the project to a sufficient stage that a funding shortfall is preventing any further progress and a new funding program will help. In this case much of the work may have been done and it just needs to be manipulated into the form required by the funding submission application.
Nevertheless to illustrate the planning of a funding application for a new medium sized infrastructure project consider the following four step process and broad timeframes (obviously really depends on size and complexity of the project):
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SolutionOptions(1-3months)
Identification of problem
Identification of solutions
Engagement of consultants
Policy alignment EIA & CBA consultant
Investigation of solutions
Design & costing Financial feasibility Funding commitment
Choice of solution Solution iteration Funding sources Project plan
Risk assessment
Solution acceptance Procurement Delivery experience
Operations
Project management
Internal approval
Design&Costing(1-3months)
Terms of reference
Business Case (1-2months)
Project description
ApplicationPreparation(1-2months)
Documentation
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As is immediately apparent there are lots of aspects to consider and a logical timeframe for the progression of various elements that need to come together for the funding application. Ideally one person will be responsible for managing the entire process to ensure that inputs are received on time and the elements of the funding application are backed up by appropriate and sufficient evidence.
Exercise: Application Planning
For your particular project and funding program list the elements that need to be undertaken.
Identify who is best placed to undertake each component.
Identify the likely time required for each component.
If external resources are required what is the engagement process and additional procurement time required.
Working back from the funding application submission date when do you need to start?
If you don’t have this much time where can you save time? Is this realistic?
2.1TimeManagement(continued)
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2.2AddressingAssessmentCriteria
It may seem an obvious comment but for any funding application to be successful it must fully meet the assessment criteria. As mentioned in the introduction a funding program is designed to deliver a policy objective and outcome. In the case of the NSRF Round 2 the objectives are:
The objective of the NSRF is to fund investment ready projects which support economic growth and sustainability of regions across Australia, particularly disadvantaged regions, by supporting investment in priority infrastructure.
The desired outcomes of the programme are:
• improved level of economic activity in regions;• increased productivity in the regions;• increased employment and a more skilled workforce in regions;• increased capacity and improved capability of regions to deliver major
projects, and to secure and manage investment funding;• improved partnerships between local, state and territory governments,
the private sector and community groups; and• more stable and viable communities, where people choose to live.
Consequently the NSRF Round 2 assessment criteria are:
Assessment Criterion 1: The extent to which the project contributes to economic growth in the region;
Assessment Criterion 2: The extent to which the project supports or addresses disadvantage in the region;
Assessment Criterion 3: The extent to which the project increases investment and builds partnerships in the region; and
Assessment Criterion 4: The extent to which the project and proponent are viable and sustainable.
Your first steps in addressing the assessment criteria are to:• Read and understand the funding program guidelines.• Read the application form.• Read any other information such as frequently asked questions (FAQ).• Scan any previously funded projects and look for ones similar to your project.
Once you have a good understanding of what is required, make notes and questions then seek answers to your questions from the given program contacts and successful applicants.
These guidelines cover a wide range of areas required for funding submissions but to demonstrate how they all come together the following sections cover in more detail the NSRF Round 2 assessment criteria.
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2.2.1EconomicGrowth
Stimulating economic growth is often a key assessment criteria. Infrastructure projects stimulate economic growth in two ways: firstly through construction activity associated with the project and secondly through annual operation of the infrastructure and the wider economic benefits of the economic activity associated with the infrastructure.Consider NSRF Round 2 Assessment Criteria 1:
NSRF Round 2 Assessment Criterion 1: The extent to which the project contributes to economic growth in the region.
The Applicant must demonstrate how the project contributes to economic growth in the region.Economic benefit relates to those benefits generated by new or improved infrastructure, and can be described in terms of the ability to generate additional income through more efficient use of resources and improved trade opportunities. Economic benefits can include, but are not limited to:
• more efficient use of resources;• increases to productivity or capacity;• the creation of direct and indirect employment, beyond the construction phase of the project;• increases to output, exports and import replacement, or market share;• increases in industry and economic competiveness, including by reducing costs;• more efficient supply chains, including through more efficient transport networks;• diversification of the industrial base and local businesses;• use of local and nationally produced goods and services,
where it is appropriate and cost effective; and• the extent to which the project halts a mooted or foreseen decline in a region, or otherwise
stems a decline in employment, operating businesses, output or population.
Economic growth also delivers social and community benefits. Applicants may describe how their project enhances the public good in the medium term (five to ten years) and long term (ten to twenty years) following completion of the project. These benefits should be quantified and supported by evidence.
A Cost-Benefit Analysis supporting the Applicant’s case will be highly regarded, particularly for projects seeking grant funding of more than $1 million.
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Answering this assessment criteria requires the use of analysis techniques and tools that are probably outside your area of expertise. In this case you will need assistance. That assistance can be more effective and efficient if you consider the information that is required to answer assessment criteria 1, in particular the drivers that will drive outcomes. A number of techniques and tools are contained in Section 3 to give you some knowledge of what is required.
Note: On the electronic application form the response to the above assessment criteria is limited to 5,000 characters (including spaces). The text in the box above below the heading is 1,579 characters, so you have just over three times as much text to answer this assessment criteria. Fortunately in this case you can provide supporting documentation that provides the evidence in support of your claims.
Exercise: Considerations for measuring economic contribution
What economic resources (industry, government, households, products, services, labour, capital) will your project impact on?
How will your project make more efficient use of these resources?
How will your project increase productivity or capacity?
How many additional jobs will the project create?
How the project increase exports?
How will the project diversify the economic base of your region?
What social and/or community benefits will your project deliver?
How will your project enhance the public good in the medium (5-10) and long term (10-20 years)?
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2.2.2AddressingDisadvantage
Some funding programs are aimed at reducing social disadvantage or improving social outcomes and are therefore more likely to be directed to disadvantaged regions. Consider NSRF Round 2 Assessment Criteria 2:
NSRF Round 2 Assessment Criterion 2: The extent to which the project supports or addresses disadvantage in a region
This criterion will be assessed in two equal parts and scored separately. Applicants must address each component in their response to this criterion.
1. Applicants must demonstrate that both their region (or part thereof) is disadvantaged; and2. Projects must address this disadvantage.
There must be a direct relationship between the project seeking funding and the identified region or area of disadvantage. Evidence to demonstrate both the relationship and benefits of the project is encouraged.
To demonstrate that your region (or part thereof) is disadvantaged requires usage of credible statistics comparing them against other similar regions, a state/national average or policy target. Obviously you need to use statistics that are relevant to the objective of the project. The following are suggested:
• Socio-Economic Index for Areas (SEIFA Index) (ABS).• Unemployment data, average income and average weekly earnings, number
of welfare recipients and single income families (ABS, AHIW).• Population change, including significant population increases and decreases (ABS).• Age of the population, percentage of the population from a non-English speaking background,
percentage of the population from Indigenous or Torres Strait Islander backgrounds (ABS Census).• Impact of restructuring or structural change, impact of climate change.• Distance from and ease of access to major service, trade and employment
centres (use google maps to calculate drive times).• House prices and rents, availability of housing (REIA).• Education standards and skill levels of the population (ABS census).
Section 2.3 provides additional data sources that may be of use.
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For example the following is an indication of how such statistics might be reported:
The City of XXX community, and communities in neighbouring local government areas (LGAs) such as AAA, BBB and CCC, are areas of high community dysfunction and disadvantage. These communities report high rates of drug and alcohol abuse, family violence, public violence, general mental health issues (including depression and anxiety), high rates of self-harm/ suicide, and high youth unemployment which contributes to the overall socio-economic malaise in the area. Specifically:
The AAA LGA reported a rate of 60 incidents of alcohol-related hospital admissions per 10,000 residents in 2009-10, and a family incident report rate of 1,364 per 100,000 residents in 2013-14. Both were well above the Victorian rates of 55.3 alcohol-related hospital admissions per 10,000 residents and 1,129 family incident reports per 100,000 residents, respectively.
Neighbouring LGAs of BBB (66.9 alcohol-related hospital admissions per 10,000 residents and 1,454 family incident reports per 100,000 residents), CCC (104.5 alcohol-related hospital
admissions per 10,000 residents and 1,773 family incident reports per 100,000 residents) and Cardinia (57.4 alcohol-related hospital admissions per 10,000 residents and 1,405 family incident reports per 100,000 residents) reported even higher rates of incidents.
The combined catchment area of AAA, BBB, CCC and DDD LGAs records a high youth unemployment (18.0% of 15 to 19 year olds and 12.7% of 15 to 24 year olds), both above the Victorian averages of 16.4% and 12.1%, respectively.
The project will deliver a dedicated community education and counselling facility in YYY, to address community dysfunction and insufficient areas for values-based education. The facility will provide dedicated areas and spaces facilitating the delivery of the following services…These services will aim to reduce the area of disadvantage listed above by…
Exercise: Considerations for addressing disadvantage
What specific areas of disadvantage is your project aiming to address?
For each of these identify areas what statistics can you access to demonstrated the area is disadvantaged?
What goods and services will your project supply that will improve social outcomes?
How will they address the areas of disadvantage you listed above?
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Infrastructure projects can not only act as a catalyst for further investment but can also act to bring together investment from other sources and allow the formation of mutually beneficial partnerships. These partnerships, if successful, can outlive the project length and deliver more for the region in the longer term.
Consider NSRF Round 2 Assessment Criteria 3:
2.2.3Investment&Partnerships
NSRF Round 2 Assessment Criterion 3: The extent to which the project increases investment and builds partnerships in the region
Partner contributions ensure that the benefits of the Australian Government’s funds are increased. Applicants should seek to attract contributions which are additional to the required 50 per cent matching funding. Both cash and in-kind contributions will be considered against this criterion.
The extent and nature of partnerships, including those of a non-financial nature, formed to develop and deliver the project will
Exercise: Considerations for developing partnerships
What partners are involved in your project?
Are these of a financial or non-financial nature?
Do you have letters of support from these partners for the project which provide confirmation of the partner’s commitment and/or contribution?
What other partners could involve to improve the outcomes of your project?
be considered under this criterion. Sustainable economic growth is underpinned by partnerships with and between governments, industry, representative organisations, the community, the education and training sector, the not-for-profit sector and philanthropic organisations. Partnerships can ensure proper planning, and support increases to the capacity and capability of the region to deliver major projects.
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NSRF Round 2 Assessment Criterion 4: The extent to which the project and Applicant are viable and sustainable
All eligible projects will be appraised for the viability of the Applicant and viability and sustainability of the project. The appraisal will consider all of the following:
• the Applicant’s financial position, which determines whether the Applicant has sufficient funds to meet its obligations, fund any cost overruns and maintain the project in the medium term;
• the quality of supporting documents which gives confidence that the project will be delivered on time, on budget and to the required standard;
• whether all appropriate planning, construction, zoning, environmental and/or native title approvals are in place or will be in place within six months of execution of the funding agreement, to help confirm that the project will commence and be completed on time and according to the agreed scope;
• whether the project is investment ready, that is will be able to commence within 12 months of signing the funding agreement;
• the Applicant’s history in managing grant funding (if any), which provides confidence that the grant will be expended according to the grant agreement; and
• risks associated with project delivery and ongoing management.
A funding body needs to satisfy itself that applicants are financially sustainable before and following the project and have sufficient capability to deliver the project.
Financial viability is the ability to generate sufficient income to cover expenses and liabilities as and when they fall due while maintaining service levels. Current financial viability is demonstrated through several year’s of financial statements.
Planning depth and quality of project documentation is a clear indication of the effort and diligence that has gone into the project and can remove much of the project uncertainty from the assessment process and improve project viability. Applicants should therefore invest prudently in the
2.2.4FinancialViability
preparation of project documentation. More of the project risks that have been identified and mitigated the better. Section 4 provides a number of deliverability aspects that will assist in demonstrating project diligence.
To demonstrate future financial viability requires 5-10 year projections of profit and loss and balance sheets post project completion. New infrastructure will require additional operating costs. These costs can be covered by reducing operating costs, say of replaced infrastructure or additional revenue generated from the infrastructure. If additional revenues are expected and to be relied upon then the risks around these revenue streams will be to be stress tested.
Consider NSRF Round 2 Assessment Criteria 4:
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Exercise: Considerations for demonstrating project viability
Can you demonstrate three years of financial viability?
Have you delivered a similar project before?
What approvals do you require?
Will current project documentation demonstrate you can commence the project within six months?
Will the project be able to commence within 12 months of signing the funding agreement?
Have you projected your P&L and balance sheet post project?
What testing have you undertaken on your financial projections?
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Now that you have closely examined the assessment criteria and what information may be required to answer them how do you go about sourcing data, estimates and the evidence required?
2.3SourcingData,Estimates&OtherEvidence
The creation of primary project specific data will typically involve a number of professional disciplines for example:
Subject Specialists, e.g. Doctors,
Pilots, Public Servants
Consulting Engineer
(infrastructure specific)
Architect
Quantity Surveyor
Town Planner
Economist
Sociologist
Finance Analyst
Researcher
Risk Analyst
Lawyer
Project Manager
Project Design
Infrastructure Design
Building design
Costing
Town Planning
Economic Impact
Social Impact
Financial Feasibility
Market Research
Risk Assessment
Legal Issues
Project Delivery
Project Area Discipline
Obviously you will have to create a certain amount of primary and project specific data but also obtain secondary or published data that will assist in assessing the economic and broader impacts of your project. Other evidence may come in the form of company documents, written commitments or published reports and papers from credible sources.
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Many of these disciplines are found in integrated service companies and therefore depending on the size of the project and organisational capability one or more external companies will need to be commissioned to design your project and to generate project specific data required by the funding application.
2.3SourcingData,Estimates&OtherEvidence(continued)
Secondary data can be obtained from a number of sources. The table below gives an indication of economic and social secondary data sources:
Subject AreaAustralian Bureau of Statistics www.abs.gov.au
2.CensusofPopulation&Housing20. Census statistical products and services21. Historical Censuses (Pre 1996)29. Census reference products and services
3.Demography31. Demography - general32. Population trends and estimates33. Vital statistics34. Migration
4.SocialStatistics41. Social statistics - general42. Education43. Health44. Welfare and social services45. Crime and justice47. Indigenous statistics48. Health49. Social statistics - general
46. Environment 46. Environment
5.NationalAccounts,InternationalTradeandFinance52. National accounts53. Balance of payments and international investment54. International trade55. Public sector accounts56. Finance
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6.LabourStatisticsandPrices 61. Labour statistics - general62. Labour force63. Earnings, hours and employment conditions64. Prices65. Consumer income and expenditure
66. Labour force61. Labour statistics - general62. Labour force63. Earnings, hours and employment conditions64. Prices65. Consumer income and expenditure66. Labour force
7.Agriculture71. Agriculture statistics - general72. Livestock and livestock products73. Crops and pastures74. Agricultural land use75. Agricultural financial statistics and value of products
8.SecondaryIndustryandDistribution 81. Industry wide statistics82. Manufacturing and energy - general83. Manufacturing commodity production85 - 86. Service industries87. Building and construction Information
84.Mining 84. Mining
9.Transport91. General Transport92. Transport services93. Motor vehicle registrations99. Information
SocioEconomicIndexforAreas(SEIFA):Index of Relative Socio-Economic Disadvantage (IRSD) Index of Relative Socio-Economic Advantage and Disadvantage (IRSAD) Index of Education and Occupation (IEO) Index of Economic Resources (IER).
Subject AreaAustralian Bureau of Statistics www.abs.gov.au
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RawlinsonPublishinghttp://www.rawlhouse.com
Cordellhttp://www.cordell.com.au
Assets and Liabilities Payments System Money and Credit Statistics Household and Business Finances Interest Rates Exchange Rates Share Markets Inflation and Inflation Expectations Output and Labour International Trade and External Finance
Aging, disability & carersFamilies & childrenHospitalsHousing & homelessnessIndigeneous AustraliansPopulation groupsRisk factors, diseases and deathServices, workforce and spending
2.3SourcingData,Estimates&OtherEvidence(continued)
Building Costs
Reserve Bank of Australia
Australian Health and Welfare Institute www.aihw.gov.au
PLANNING
27
National Visitor SurveyInternational Visitor Survey
House Prices & Rents
Tourism Research Australia www.tra.gov.au
Real Estate Institute of Australia www.reia.asn.au
Exercise: Gathering information, estimates and other evidence
Considering your project what project specific information do you think you need?
Where will this information come from and how will it be obtained?
What secondary data do you think you will need?
What other evidence is required (funding program specific) and where will it come from?
PLANNING
28
2.4GatheringSupportforProjects
Whilst not always asked for in funding application submissions an indication of documented support from the community and its leaders is often a good mechanism to indicate the level of support a project has. Areas where support can be gained include:
Community surveys undertaken independently and of sufficient sample size and demographic coverage to be representative of the community.
Community surveys need to be carefully worded and do have the ability to reflect polarised opinion particularly if incorrect information is in circulation, or if there is organised opposition to the project. In this case a community education process may be necessary.
Letters of support should give an indication of the benefit that their constituents are likely to experience from the project.
Letters of support from:• Significant employers.• Business groups, i.e. chamber of commerce, tourism networks.• Religious organisations and other prominent not-for-profit organisations.• Universities and major training institutions.• Media organisations.• Special interest groups, e.g. RACQ, AHA.• Local governments (mayor & councillors).• Regional Development Australia Committies.• State and Federal politicians.
PLANNING
29
Exercise: Where will support for your project be found?
Is the project of sufficient prominence that the community is sufficiently aware of it?
Would a representative community generally show high levels of support for the project? Yes or No
If no why?
What could you do about it?
If yes, what questions would you ask them?
Make a list of the business and community organisations in the region impacted by the project.
PLANNING
30
3Key Question: Have you undertaken a sufficient analysis of your project as required by the program criteria?
3.1Capital&OperationalCostings
ANALYSIS
To enable economic and financial analysis to be conducted on a project requires comprehensive and accurate infrastructure capital (building and equipment) and operational cost estimates and activity costs facilitated by the project which are then included in the Business Case.
The estimation of capital costs needs to be undertaken by appropriate independent professionals. As a minimum this will require investing in an engineering or building design and costing by quantity surveyors. It is generally not acceptable to provide a costing based on a square metre rate from a resource such as Rawlinsons. Best practice capital cost estimation guidelines are available such as Evans & Peck (2008).
The first capital cost estimate is produced during project scoping. The cost estimate in the life of a project that should be able to be relied upon for program and funding purposes and will be refined once funding is secured and the project progresses to development. It must be underpinned by a combination of sufficient investigation and definition, preliminary design of key elements to ensure constructability, expert knowledge to advise on the design, definition and construction, comparison with benchmark costs, appropriate risk and contingency allowances and rigorous review.
The structure of a project cost estimate (also known as Outturn Cost) should include the following key components:
• Base Estimate comprising the sum of Construction Costs and Owner’s Costs (staff and land acquisition).
• Contingency allowance that is applied to the Base Estimate to cover a specified level of risk in the project implementation.
• Cash Flow applied to the Base Estimate plus Contingency based on a project program.• Escalation that is applied to the Cash Flow and which takes account of increased costs
through the period from the date of the estimate to the completion of construction.
ANALYSIS
31
Drug Aware Margaret River ProAfter infrastructure developemnt (RDA and RFR), Margaret River Mainbreak has now become a stop on the World Surf League. Each year, thousands of spectators flock to Surfers Point in Prevelly to watch the world’s best surfers take on the famous wave.
32
An example of a capital costing presentation for a road project split into these components is given below.
% of Base EstimateItem Base
EstimateContingency
% AmountBase Estimate +
Contingency
Route/Concept/EIS
Project Management
Services
Sponsor
Community Liaison
300,000
2,500,000
1,250,000
125,000
3,750,000
160,000
275,000
180,000
120,000
30,000
500,000
312,500
25,000
1,125,000
48,000
68,750
45,000
24,000
330,000
3,000,000
1,562.500
150,000
4,875,000
208,000
343,750
225,000
144,000
37,500 287,500
24,000 144,000
25,500 110,500
10%
20%
25%
20%
30%
30%
25%
25%
20%
15%
20%
30%
250,000
120,000
85,000
Subtotal Concept Development 755,000 117,000 872,000 1.6%
Investigation and Design
Detailed Design & Documentation
Property Acquisition
Concept Development
Project Management
Services
Sponsor
Community Liaison
8.5%
9.1%
Subtotal Detail Design and
Documentation
Subtotal Property Acquisition
4,325,000 855,500
1,262,750
4,920,500
5,587,750
Acquire Property
Professional Services for
Property
Project Management
Services
Sponsor
Base date of Estimate: June 2008
Phase: Scoping
Total Owners’s Cost 2,265,25 11,380,250 19.2%
ANALYSIS
33
An example of a capital costing presentation for a road project split into these components is given below. % of Base EstimateItem Base
EstimateContingency
% AmountBase Estimate +
Contingency
4,426,552
6,590,400
885,310
1,647,600
5,311,862
8,238,000
1,200,000
300,000
600,000
85,000
90,000
60,000
37,500
4,200,000
1,500,000
3,000,000
510,000
825,000
150,000
750,000
6,325,000
900,000
3,750,000
360,000
162,500
187,500
195,000
1,700,000
1,437,500
845,000
10,200,000
450,000
20%13%
15%
25%24%
40%
25%
25%
20%
25%
20%
30%
15%
20%
25%
15%
30%
20%
3,000,000
1,200,000
2,400,000
425,000
5,500,000
750,000
3,000,000
0
360,000
1,250,000
650,000
8,500,000
0
Utility Adjustments
Noise Barriers
Construction
Bulk Earthworks
Drainage
Retaining Walls
Bridges
Pavements
Road Lighting
Road Furniture and Safety Barriers
Road Markings and Signage
Traffic Signals
Traffic Information Systems
Environmental Works
Landscaping
Other
Preliminaries
Contractors Offsite Overhead and Margin
80.8%
100%
33,640,000Subtotal Contractor’s Direct Costs
8,712,910
10,978,160
27,460,000
38,476,952
47,591,952
47,189,862
58,570,112
6,780,000
Contractor’s Direct Costs
Other Costs
300,000
125,000
Contractor’s Indirect Costs
Total Construction Cost (TCC)
Base Estimate (Owner’s Cost + Construction Cost)
Contingency – Inherrent risk
Contingency – Contingent risk
Base Estimate + Contingency 67,355,629
Escalation (applied to Base Estimate + Contingency)
Cash Flow: Start Construction July 2009, Finish Construction December 2010
17.5% 24.8%11,787,235
Total Outturn Cost 79,142,864 166.3%
8,785,517 141.5%
Note: If the project contains major separable portions which need to be monitored separately, the above information should be repeated f or each portion. Source: Evans & Peck (2008). ANALYSIS
34
Exercise: Identifying Capital Costs
Thinking about your project identify what are the Owner’s Costs likely to be as opposed to the Construction Costs?
Infrastructure operational costs are the ongoing annual capital costs of maintaining and running the infrastructure:
• Capital costs - Yearly depreciation costs concerning investments, renewals and maintenance of infrastructure assets.
• Running costs - Yearly recurring (other) maintenance and operational expenditures.
Estimates of these costs can be supplied through the project scoping phase.
Exercise: Identifying Operational Costs
Thinking about your project identify what are the Operational Costs?
Exercise: Identifying Economic Activity Costs
Thinking about your project identify what are the economic activities that have been enabled to occur with the project in place.
Identify the costs of these economic activities.
In addition to the infrastructure operational costs there may be the costs (and benefits) of the economic activity that the infrastructure allows to occur. For example, the availability of additional potable water will allow an industrial subdivision and attraction of industry to occur. This generally includes: labour, vehicles, materials, or what amounts to an operating budget.
ANALYSIS
35
Exercise: Identifying and valuing benefits
List the stakeholders impacted by your project.
List the benefits that will be delivered from your project to these stakeholders.
For each benefit think about how you might value that benefit.
3.2ValuingBenefits
The benefits of a project are those outcomes that will occur and that are hopefully greater than the costs so that the project has a net benefit. The easiest benefits to measure are those that have a ready market value or can be represented through cost savings or efficiency and productivity gains.
More difficult benefits to measure are those that are unpriced and not the subject of normal market transactions such as social or environmental benefits. Nevertheless, they entail the use of real resources. These attributes are referred to as ‘non-market’ goods or impacts. In each of these cases, quantification of the effects in money terms is an important part of the analysis. Where the impact does not have a readily identifiable dollar value, proxies and other measures should be developed. One commonly used method of approximating values for non-market impacts is ‘benefit transfer’. Benefit transfer means taking already calculated values from previously conducted studies and applying them to different study sites and situations. In light of the significant costs and technical skills needed in using other methodologies to determine values, for many policy makers utilising benefit techniques can provide an adequate solution.
Context is extremely important when deciding which values to transfer and from where. Factors such as population, number of households, and regional characteristics should be considered when undertaking benefit transfer. For example, as population density increases over time, individual households may value nearby open space and parks more highly. Other factors to be considered include: the location of the original study, utilising foreign exchange rates, demographic data, and respective inflation rates.
Benefit transfer should only be regarded as an approximation. Transferring values from similar regions with similar markets is important, and results can be misleading if values are transferred between countries that have starkly different economies (for example a benefit transfer from the Solomon Islands to Sydney would likely have only limited applicability). However, sometimes only an indicative value for environmental assets is all that is required.
In order to value benefits that will be delivered by your project they need to be firstly identified. This is best done by identifying stakeholders that are affected by the project and the impacts (positive and negative) that the project will have on them. The numbers of stakeholders affected and the value of the effect should then be valued.
ANALYSIS
36
3.3CostBenefitAnalysis
Cost benefit analysis (CBA) is a decision making and justification/feasibility technique used to choose between options that solve a problem. Simply put the option that provides benefits that outweigh the costs by the most amount, minimises costs by the most amount, are a candidate for the preferred solution. Funding application assessors often use the outcomes of a CBA as one decision criteria to choose the projects that will fund. The basics of CBA can be found in Commonwealth of Australia (2006).
To enable a robust determination of the net benefits of undertaking a given project, it is necessary to specify base case and alternative
case options or scenarios. The base case scenario represents the ‘without project’ scenario and the alternative or ‘with project’ scenario examines the impact with the project in place.
The base case (without) scenario is represented by line NB1 (bc) over time T1 to T2 in the figure below. The investment in the project at time T1 is likely to generate a benefit, which is represented by line NB2 (bd). Therefore the net benefit flowing from investment in the project is identified by calculating the area (bcd) between NB1 and NB2.
Benefit
ab
T1 T2
d
c
NB2
NB1
TimeSource: AEC
A comprehensive quantitative specification of the benefits and costs included in the evaluation and their various timings is required and must include a clear outline of all major underlying assumptions. These impacts, both positive and negative, should be then tabulated and where possible valued in dollar terms.
Some impacts may not be quantifiable. Where this occurs the impacts and their respective magnitudes should be examined qualitatively for consideration in the overall analysis.
ANALYSIS
37
3.3.1FinanceCostsarenotincluded
3.3.2Calculations
Financing costs are not included in a CBA. As a method of project appraisal, CBA examines a project’s profitability independently of the terms on which debt finance is arranged. This does not mean, however, that the cost of capital is not considered in CBA, as the capital
As costs and benefits are specified over time it is necessary to reduce the stream of benefits and costs to present values. The present value concept is based on the time value of money – the idea that a dollar received today is worth more than a dollar to be received in the future. The present value of a cash flow is the equivalent value of the future cashflow should the entire cashflow be received today. The time value of money is determined by the given discount rate to enable the comparison of options by a common measure.
The selection of appropriate discount rates is of particular importance because they apply to much of the decision criteria and
consequently the interpretation of results. The higher the discount rate, the less weight or importance is placed on future cash flows. The choice of discount rates should reflect the weighted average cost of capital (WACC). A base discount rate of 7% is often used to represent the minimum rate of return, in line with Australian Government guidelines. As all values used in the CBA are in real terms, the discount rate does not incorporate inflation (i.e., it is a real discount rate, as opposed to a nominal discount rate).
To assess the sensitivity of the project to the discount rate used, discount rates either side of the base discount rate (7%) should also be examined (4% and 10%).
The formula for determining the present value is:
, where:PV = FVn
(1+r)n PV = FV
(1+r)
11
+ +FV
(1+r)
22
FV
(1+r )
nn
PV = present value todayFV = future value n periods from nowr = discount rate per periodn = number of periods
Extending this to a series of cash flows the present value is calculated as:
Once the stream of costs and benefits have been reduced to their present values the Net Present Value (NPV) can be calculated as the difference between the present value of benefits and present value of costs. If the present value of benefits is greater than the present value of costs then the option or project would have a net economic benefit.
In addition to the NPV, the internal rate of return (IRR) and benefit-cost ratio (BCR) can
expenses are included in the year in which the transaction occurs, and the discount rate (discussed below) should be selected to provide a good indication of the opportunity cost of funds, as determined by the capital market.
provide useful information regarding the attractiveness of a project. The IRR provides an estimate of the discount rate at which the NPV of the project equals zero, i.e., it represents the maximum WACC at which the project would be deemed desirable. However, in terms of whether a project is considered desirable or not, the IRR and BCR will always return the same result as the NPV decision criterion.
ANALYSIS
38
3.3.3SensitivityAnalysis
Sensitivity analysis allows for the testing of the key assumptions and the identification of the critical variables within the analysis to gain greater insight into the drivers to the case being examined.
A series of Monte Carlo can be used to test the sensitivity of the model outputs to changes in key variables. Monte Carlo simulation is a computerised technique that provides decision-makers with a range of possible outcomes and the probabilities they will occur for any choice
of action. Monte Carlo simulation works by building models of possible results by substituting a range of values – the probability distribution – for any factor that has inherent uncertainty. It then calculates results over and over, each time using a different set of random values from the probability functions. The outputs from Monte Carlo simulation are distributions of possible outcome values. In this way, Monte Carlo simulation provides a comprehensive view of what may happen. It describes what could happen and how likely it is to happen.
Exercise: Simple net benefit calculation
Tablulate the costs and benefits of your project over time (year 0, year 1, year 2,..). Total the benefits and subtract them from the total costs to give net benefit.
Choose a discount rate (e.g. 7%) and discount each net benefit to today’s values. Sum the discounted net benefits and see if it’s a positive or negative number.
ANALYSIS
39
3.4EconomicImpactAssessment
Economic impact modelling is another analysis technique to determine the amount of economic activity supported by a project within a determined geography. It is applied to both the construction phase and the annual operation phase to demonstrate the direct and flow on activity expected to be supported within the regional economy. Whilst there are different economic modelling techniques input-output modelling is generally acceptable for projects of less than $100 million where the sectors impacted are already present in the economy. For those over this figure computable general equilibrium models are generally used.
Input-Output analysis demonstrates inter-industry relationships in an economy, depicting how the output of one industry is purchased by other industries, households, the government and external parties (i.e. exports), as well as expenditure on other factors of production such as labour, capital and imports. Input-Output analysis shows the direct and indirect (flow-on) effects of one sector on other sectors and the general economy. As such, Input-Output modelling can be used to demonstrate the economic contribution of a sector on the overall economy and how much the economy relies on this sector or to examine a change in final demand of any one sector and the resultant change in activity of its supporting sectors.
Theeconomiccontributioncanbetracedthroughtheeconomicsystemvia:
Theseeffectscanbeidentifiedthroughtheexaminationoffourtypesofimpacts:
• Direct impacts, which are the first round of effects from direct operational expenditure on goods and services.
• Flow-on impacts, which comprise the second and subsequent round effects of increased purchases by suppliers in response to increased sales. Flow-on impacts can be disaggregated to:
• Output: Refers to the gross value of goods and services transacted, including the costs of goods and services used in the development and provision of the final product. Output typically overstates the economic impacts as it counts all goods and services used in one stage of production as an input to later stages of production, hence counting their contribution more than once.
• Value Added: Refers to the value of output after deducting the cost of goods and services inputs in the production process. Value added defines the true net contribution and is subsequently the preferred measure for assessing economic impacts.
• Industry Support Effects (Type I), which represent the production induced support activity as a result of additional expenditure by the industry experiencing the stimulus on goods and services in the intermediate usage quadrant, and subsequent round effects of increased purchases by suppliers in response to increased sales.
• Household Consumption Effects (Type II), which represent the consumption induced activity from additional household expenditure on goods and services resulting from additional wages and salaries being paid within the economic system.
ANALYSIS
40
• Income: Measures the level of wages and salaries paid to employees of the industry under consideration and to other industries benefiting from the project.
• Employment: Refers to the part-time and full-time employment positions generated by the economic shock, both directly and indirectly through flow-on activity, and is expressed in terms of full time equivalent (FTE) positions.
Input-Output multipliers can be derived from open (Type I) Input-Output models or closed (Type II) models. Open models show the direct effects of spending in a particular industry as well as the indirect or flow-on (industrial support) effects of additional activities undertaken by industries increasing their activity in response to the direct spending.
Closed models re-circulate the labour income earned as a result of the initial spending through other industry and commodity groups to estimate consumption induced effects (or impacts from increased household consumption). More information on input-output modelling can be found in West (1993).
ConstructionManufacturing
Professional, scientific and technical servicesFinancial and insurance services
Ownership of dwellingsRetail trade
Wholesale TradeHealth care and social assistance
Transport, postal and warehousingEducation and training
Administrative and support servicesRental, hiring and real estate services
Other Services Accommodation and food services
Information media and telecommunicationsElectricity, gas, water and waste services
Agriculture, forestry and fishingPublic administration and safety
Arts and recreation servicesMining
An example of the economic activity generated by the construction of a $1.1 million project is given below along with an indication of the economic activity generated by industry.
$575.0 $185.3 98.6 2
Impact Output($’000)
GrossValueAdded($’000)
Incomes ($’000)
Employment (FTEs)
Direct
Type I Flow-On
Type II Flow-On
Total 4$1,316.3 $551.6 $293.8
$365.5
$375.8
$156.5
$209.8
90.7
$104.4
1
2
It is estimated the $1.1 million capital investment will directly deliver $575,000 in industry output for regionally based businesses in total, with a further $741,300 supported through flow-on activity. A total of $551,600 in gross value added (GVA) activity is estimated to be supported within the regional economy over the construction phase in total. Around four FTE jobs for regional workers are estimated to be supported as a result of
construction over the period, providing $293,800 in wages and salaries. More than $250,000 in GVA activity is estimated to be supported in the area’s construction industry during construction. Over $100,000 in GVA is also estimated to be supported in the manufacturing and professional, scientific and technical services industries.
ANALYSIS
41
ConstructionManufacturing
Professional, scientific and technical servicesFinancial and insurance services
Ownership of dwellingsRetail trade
Wholesale TradeHealth care and social assistance
Transport, postal and warehousingEducation and training
Administrative and support servicesRental, hiring and real estate services
Other Services Accommodation and food services
Information media and telecommunicationsElectricity, gas, water and waste services
Agriculture, forestry and fishingPublic administration and safety
Arts and recreation servicesMining
Direct Type Type II$300$0 $50 $100 $150
Gross Value Added ($’000)
$200 $250
GVA supported by industry during the construction phase
Economic impact assessment is a technical skill but often the focus by decision makers is on the quality of the inputs rather than the end results. Consequently, it is important to focus attention on the accuracy of the costs of project construction, operation and activity facilitated by the project.
Source: AEC
ANALYSIS
42
3.5BusinessCases
The decision to proceed with a project is generally supported by a business case which is a single document that makes the case for the project based on accurate and credible investigations and sources. It contains all the relevant supporting information to facilitate the decision making process.
There is generally no prescribed format for a business case although some funding programs, i.e. WA Royalty for Regions do supply a template. The contents of the business plan will therefore largely be dependent on what the decision making body considers important. As an example elements of a business case could include:
• Executive Summary• Problem to be solved, why it’s a problem, desired outcomes, solution options,
investigations undertaken, option analysis, implementation aspects, recommendation
• Problem to be solved, why it’s a problem• Desired outcomes• Solution approach• Contents of business case
• Description of each option• Investigation of each option • Stakeholder impacts (including costs and benefits)• Quantification of costs and benefits
• Cost benefit analysis• Economic impact assessment (optional)
• Funding and funding avenues• Project management plan and timeframes• Action plan - who• Procurement plan• Risk Assessment – identification, assessment and mitigation• Organisation functional impact – operations, finance, human resources, legal
• Table of Contents• Introduction
• Solution Options
• Options Analysis
• Implementation
ANALYSIS
43
• Levels of Support – community, business, government• Summary and Recommendation• References• Supporting Appendices
• Letters of support• Designs• Relevant technical studies• Costings• CBA detail• Economic modelling detail• Consultation outcomes and letters of support
As you may have already realised the business case pulls together all of the elements required for funding program submissions. All of the elements are also covered in these guidelines.
Exercise: Business Case Development
Using the work completed for your project through these guidelines start to populate the content in dot points for each area of the business case.
ANALYSIS
44
DELIVERABILITY4Key Question: Are you able to demonstrate that you can deliver and support the project if it is funded by the program?
You may have a very attractive project and an excellent business case but if a funding body has no confidence that you have the ability to deliver it then they are unlikely to provide funding.
Delivery not only refers to the capability to deliver but also that it can be delivered in the required timeframe dictated by the funding
4.1AbilitytoDeliveraProjectagreement. For example should there be a significant risk of project commencement delays then the project may not be able to be delivered in the required timeframe.
To demonstrate that the applicant has the ability to deliver the project consideration should be given to the following:
• Significant project planning has already occurred and the project can commence (e.g. on ground works) within say a twelve month period.
• A detailed and realistic project management plan is in place.
• All appropriate planning, construction, zoning, environmental and/or native title approvals are in place or will be in place within say six months of funding being granted.
• The applicant, and its partners, can demonstrate that it has successfully delivered projects of a similar scope and scale.
• All funding sources, including provisions for contingencies, are fully committed to.
• The applicant has the financial resources and experience to maintain and operate the project on completion.
• A full risk assessment has been undertaken and mitigation plans are in place.
A project management plan shows all the steps in implementing the project from commencement to completion. Its complexity is relative to the scope and scale of the project. It defines what, when, duration, resources, costs for each stage of the project. A well-defined project management plan allows analysis and control of the project to occur including such elements as critical path analysis. Principles and generic guidelines on project management are provided in ISO 21500:2012.
DELIVERABILITY
45
Exercise: Demonstrating Ability to Deliver
Has your organisation, or partners, delivered a similar project before?Yes or No
If yes what was it? If no, how might you demonstrate ability to deliver?
Do you have a detailed project management plan? Yes or No
If yes does it contain sufficient detail for the size of the project? If no, how might you develop one?
How can you demonstrate sufficient financial resources for your project?
Karratha Leisureplex supported by RDA
46
High High Extreme Extreme
Extreme
Extreme
Extreme
High
Liklihood/Consequence
Neglibible Marginal Critical Catastrophic
Certain
Likely
Possible
Unlikely
Rare
Moderate
Moderate
Moderate
Moderate
High
LowLow
Low
Low
Low
High
High
Risk management is the identification, assessment and prioritisation of risks so that strategies and resources can be put in place to minimise, monitor and control those risks. Like engineering risk management is a profession and is tightly integrated with project planning since activities to minimise risk need to be considered in planning. Principles and generic guidelines on risk management are provided in ISO 31000:2009.
The first step in risk management is the identification of risk and this is best approached
4.2RiskManagement&Mitigationcommencing with broad areas of concern such as design, funding, construction, operation, etc. Within these areas specific events or uncertainties can be identified and assessed. A simple risk assessment approach is to assess the likelihood of the risk occurring and then determine the consequence of that risk occurring. The combination of likelihood and consequence then gives the risk a level of impact which in turn prioritises the risks that need to be mitigated or managed. An example is:
Mitigation and management techniques for risks fall into one or more categories:• Avoidance (eliminate, withdraw from or not become involved).• Reduction (optimize – mitigate).• Sharing (transfer – outsource or insure).• Retention (accept and budget).
Part of any risk management plan is implementation in terms of staffing arrangements to continuously monitor and manage risks.An output of the risk management is a risk register an example of which is given in Appendix B.
DELIVERABILITY
47
Exercise: Basic Risk Management
Chose an area of risk for your project, e.g. financial
Identify uncertainties or things that could adversely occur.
For each of these assess their likelihood and consequence.
Determine how you might mitigate or manage the risk.
Determine the residual risk post the mitigation strategy.
Identify whom is responsible for the risk.
Karratha Leisureplex supported by RDA
DELIVERABILITY
48
Procurement is the acquisition of goods or services from another party. The aim of a procurement process is to acquire the goods or services that represent the best value for money. Procurement objectives and policies will vary depending on the procuring organisation. Public sector organisations generally include objectives that represent value for money, encourage competition, and efficient, effective, economical and ethical and are accountable and transparent.
4.3ProcurementProcessIn some cases standing offers from pre-approved providers have been developed at a commonwealth, state or local level which are intended to reduce or remove some steps in the procurement process and lock in prices and other conditions.
Some funding programs require a procurement management plan that outlines how the applicant will procure goods and services for their project. Typical information in the procurement management plan may be:
• Procurement method to be used (e.g. open tender, pre-qualified tender, limited tender, standing offer).• Specification of the goods or services required.• Evaluation process and timeframes.• Selection criteria used to evaluate submissions.• Contracts to be used.• Probity arrangements.
The funding program may determine the procurement policy to be used, however, it is likely that your organisation already has a procurement policy.
Exercise: Developing a procurement plan
Does your organisation have a procurement policy? Yes or No
What procurement method will you use?
What documents will you need for the procurement?
How long is procurement likely to take? Is it in the project management plan?
DELIVERABILITY
49
In addition to ensuring the applicant can deliver the infrastructure project, funding bodies also like to ensure that the applicant will appropriately maintain the infrastructure and have the necessary funds or revenues, so that it continues to deliver its designed services levels for its expected life.
4.4 OngoingAssetManagementInfrastructure asset management is a combination of financial, operational, engineering, management and any other necessary disciplines applied to the infrastructure to maintain the design service levels in the most cost effective manner. A typical asset management plan may include:
• Asset description and ownership.• Standard of service definition including capacity.• Measuring asset performance.• Cost associated with operating and maintaining the asset to its expected life.• Revenues that may be generated from use of the asset.• Other benefits that may flow from the use of the asset.• How shortfalls in revenues, if any, will be funded.• Potential improvements or extensions.
Exercise: Developing an asset management plan
Does your organisation use asset management plans? Yes or no
If no what steps will you take to prepare an asset management plan?
What % of the revenues associated with the assets be used to cover the costs of maintaining the asset?
DELIVERABILITY
50
CommonwealthPrograms
SelectInfrastructureFundingPrograms
National Stronger Regions Fund
The National Stronger Regions Fund (NSRF) promotes economic development in Australia’s regions. The Government is providing $1 billion over five years, commencing in 2015-16, to fund priority infrastructure in local communities. The desired outcomes of the
A APPENDIX A:
programme are: improved level of economic activity; increased productivity; increased employment; increased capacity and improved capability of regions to deliver major projects; improved partnerships between local, state and territory governments, the private sector and community groups amongst others.
This appendix showcases a selection of commonwealth and state infrastructure funding programs, their key features, requirements, selection criteria as well as funding available.
An eligible Applicant for funding must be:• a legal entity with an Australian Business Number (ABN); and• an organisation that is one of the following:• a Local Government body including the ACT Government,
either in its own right or on behalf of a consortium; or• a not-for-profit organisation, either in its own right or on behalf of a
consortium, that is not owned by a state or territory government.
• Applicable funding:
• Payments will be made on achievement of agreed milestones• Compliance with the Building Code 2013 and Australian Government
Building and Construction OHS Accreditation Scheme • Funding proponents will be required to declare as part of
their proposal, existing conflicts of interest or that to the best of their knowledge there is no conflict of interest
• Exclusions:
Criteria NationalStrongerRegionsFund
Eligible Organisation/Group
Eligibility Criteria/Requirement • Capital projects which involve the construction of new infrastructure,
or the upgrade or an extension of existing infrastructure. • Replacement of existing infrastructure is eligible where there
is a demonstrated significant increase in productivity.
• replacement of existing infrastructure where there is no demonstrated significant increase in productivity;
• expenditure incurred prior to the announcement that the project has been successful in its application for NSRF funding;
• provision of services and support activities;• soft infrastructure, including computer software or hardware
that is not an integral part of the funded capital project;• payment of salaries for new or existing staff or contractors; or• administrative overhead items
APPENDIX A
51
• The extent to which the project contributes to economic growth in the region (three scores):
• The extent to which the project supports or addresses disadvantage in the region (two scores):
• The extent to which the project increases investment and builds partnerships in the region (one score):
• The extent to which the project and proponent are viable and sustainable (one score):
• Value for money
• If applicant seeks a grant $1,000,000+:
Criteria NationalStrongerRegionsFund
Evaluation Criteria
Eligibility Criteria/Requirement
Submission
Funding Available
• more efficient use of resources;• increases to productivity or capacity;• the creation of direct and indirect employment; • increases to output, exports and import replacement, or market share;• increases in industry and economic competiveness, reducing costs;• more efficient supply chains, including through
more efficient transport networks;• diversification of the industrial base and local businesses;• use of local and nationally produced goods and services; • social and community benefits
• Evidence of Incorporation which must include articles of incorporation or similar document
• Evidence to confirm capacity to deliver the project• Project Management Plan• Business Case• Risk Management Plan• Procurement Management Plan• Written confirmation of all partner funding• Written confirmation of all in-kind contributions• Audited Financial Statements for two of the three most
recent consecutive years signed by a qualified auditor• Evidence to demonstrate the Applicant’s experience in delivering
projects of similar size and scope or evidence to demonstrate that the applicant will engage the relevant skills and experience
• Applicants must demonstrate that both their region (or part thereof) is disadvantaged; and
• Projects must address this disadvantage.
• Partner contributions ensure that the benefits of the Australian Government’s funds are increased.
• The extent and nature of partnerships
• the Applicant’s financial position;• the quality of supporting documents;• whether planning, construction, zoning, environmental and/
or native title approvals are in place or will be in place within six months of the funding agreement;
• whether the project is investment ready, that is will be able to commence within 12 months of signing the funding agreement;
• the Applicant’s history in managing grant funding (if any); and• risks associated with project delivery and ongoing management.
• Between $20,000 and $10,000,000
APPENDIX A
52
• Following an appraisal of the eligible applications, the Department provides advice to the Ministerial Panel on the individual and relative merits of each application.
• The Ministerial Panel will consider the advice of the Department and supporting information, and make decisions on projects to be funded in consultation with the National Infrastructure Committee of Cabinet.
• In addition to the application, supporting material and outcomes of the Department’s appraisal, the Ministerial Panel and the National Infrastructure Committee may take other factors into account.
• The Department may request advice on applications from state and territory governments, other Australian Government agencies, independent experts and other external parties.
• Applicants that have been selected to receive grant funding will be required to enter into a grant agreement with the Commonwealth of Australia, represented by the Department. The grant agreement states the obligations of the Grant Recipient and of the Department.
Criteria NationalStrongerRegionsFund
Process
CommunityDevelopmentGrantsProgramme
The Australian Government supports funding for identified projects that construct and upgrade local community and sports infrastructure across Australia. The Community Development Grants Programme was identified as the mechanism to provide this assistance. Specifically, the
Community Development Grants Programme supports infrastructure that promotes stable, secure and viable local and regional economies. A total of $342 million is available under the Community Development Grants Programme for single year or multiple year projects.
• Only projects identified by the Australian Government will be considered for funding under the Community Development Grants Programme. These projects include the 2013 election commitments and a number of uncontracted projects of the previous Government.
• As above• Funding proponents will be required to declare as part of
their proposal, existing conflicts of interest or that to the best of their knowledge there is no conflict of interest.
• Compliance with the Building Code 2013 and Australian Government Building and Construction OHS Accreditation Scheme.
• Payments will be made on achievement of agreed milestones.
Criteria NationalStrongerRegionsFund
Eligible Organisation/Group
Eligibility Criteria/Requirement
• Before any payment can be made, funding proponents will be required to provide:
• a tax invoice for the amount of the payment • evidence of meeting the requirements for payment,
as stipulated in the Funding or Project Agreement • a satisfactory progress report and supporting documentation
APPENDIX A
53
• Outcome:
• Project viability and sustainability:
• Funding proponent viability.
• Project proposal form• Audited financial statements for the last 2 years• Cash flow forecasts for the next 5 years (if applicable)• Business Plan and/or Feasibility Study (if applicable)• Project Management Plan (if applicable)• Risk Management Plan (if applicable)• Asset Operations Management Plan (if applicable)• Copies of Insurance documents (certificates of currency)• Evidence of bank borrowings (if applicable)• Market research/community consultation (if applicable)• Statutory Approvals (if applicable)• Confirmation of partnership funding (if applicable)• Evidence of third party leasing arrangements (if applicable)• Designs, tender documents, cost estimates (if available)
• A total of $342 million is available for single year or multiple years projects. Projects range in value from $9,000 to $13 million.
• The Department will undertake a value with public money assessment of proposals against the appraisal criteria.
• An Independent Viability Assessment may be undertaken.• Following an appraisal of the funding proposal, a recommendation
on funding will be provided to the Approver. • Successful funding proponents will be required to enter into a
formal agreement with the Commonwealth of Australia.• Funding provided by the Australian Government to a State or Territory
government will be managed under a Project Agreement.• Funding provided by the Australian Government to all other
organisations will be managed under a Funding Agreement.• Successful funding proponents will be required to
actively manage the delivery of the project. • The Department will monitor progress against the Funding
Agreement and Project Agreement through progress reports submitted by the funding proponent and site visits conducted by the Department or representatives of the Department.
Criteria NationalStrongerRegionsFund
Evaluation Criteria
Submission
Funding Available
Process
• Alignment with the Outcome of the Community Development Grants Programme
• Project contribution to the Community Development Grants Programme Outcome.
• project scoping and costing;• securing partnership funding (both in-kind and
cash) for the project, where required;• assessment of delivery risks and treatments for these risks
• funding proponent’s level of liquidity and solvency• funding proponent’s financial governance (policies and procedures
to ensure that financial information is complete and accurate and this information is being used for decision-making)
• funding proponent’s ability to secure partner funding to meet the cost of the project, where required
APPENDIX A
54
WAPrograms
Regional Airports Development Scheme
The Regional Airports Development Scheme (RADS) is the means by which the WA Department of Transport (DoT) seeks to improve regional air services and air safety for
the benefit of regional communities. RADS is a State Government grant program which aims to specifically improve airport related infrastructure in regional Western Australia.
• Applicant must be aerodrome owner or lease holder (or duly authorised delegate).
• The airport must be accessible to the public.• The airport must be located in Western Australia.• The airport must be maintained on an ongoing basis.
• The project will benefit the community.• The project is unlikely to be undertaken without RADS assistance.• All Regular Public Transport airports must submit the airport’s most current
Income and Expenditure Statement and Airport Asset Management Plan.• Project must be for:
• RADS grants are usually limited to 50 per cent of the estimated total cost. • Exclusions for funding:
Criteria NationalStrongerRegionsFund
Eligible Organisation/Group
Eligibility Criteria/Requirement
Eligibility Criteria/Requirement
• Airport asset management planning• Other aviation infrastructure projects• Runway development• Airside development• Grounds development• Terminal development• Airport master planning
• ‘landside’ infrastructure such as car parks, access roads, landscaping or power/water connection, dams and commercial developments
• the purchase of motor vehicles, heavy plant and equipment• ongoing aerodrome operating or running costs• depreciation costs• administration costs• audit costs• contingency costs• overheads• price mark-ups• replacement of capital spending plans for
developments that would occur in any event• retrospective costs
Evaluation Criteria • safety benefits• benefit to community and region• population benefiting from the improvements• demonstration that the applicant cannot source funding to
undertake the project without assistance from RADS• integration with the aerodrome’s master plan and/or wider community
plan, airport asset management plan and/or wider community plans• project deliverability• the existence of an ongoing management and
maintenance plan, and associated funding
APPENDIX A
55
The application form requests:• aerodrome details• project description• project costs• needs analysis• integration with community plans• project timelineSubmission of Airport’s Income and Expenditure Statement
Not available
• RADS Consultative Committee evaluates applications and makes recommendations for approval to the Minister for Transport.
• Acceptance of grant offer• Signing of Funding Agreement• Monitoring of Work• Grant Payment following project closure• Project acquittal following provision of financial statement
showing income and expenditure of the project
Criteria NationalStrongerRegionsFund
Submission
Funding Available
Process
APPENDIX A
56
WAPrograms
Regional Boating Facilities Scheme
The Recreational Boating Facilities Scheme (RBFS) grants are awarded to state, local and other government authorities for development of public recreational boating facilities in Western Australia, including: planning new
public recreational boating facilities; building new public recreational boating facilities; upgrading existing public recreational boating facilities; maintenance dredging of public recreational navigation channels and boating facilities in regional Western Australia.
• Grants are available to Local Governments, State Government departments, Statutory Authorities where they are directly responsible for the delivery and operation of recreational boating facilities.
• Grants available for the planning or construction of new public recreational boating facilities, for the upgrade of existing public recreational boating facilities, or for maintenance dredging works directly associated with such facilities located in areas to which the Royalties for Regions program applies.
• Eligible projects include:
• Funding for approved projects is available at 75% of the estimated total cost of the project, up to the maximum specified.
• Grants are typically paid in arrears.• Proposed new facilities or improvements to existing facilities shall comply
with the appropriate Australian Standards, including maritime structures (AS 4997), marinas (AS 3962) and universal access design (AS 1428)
• Funding is not available for the following:
• Applications are evaluated according to the benefits they provide to the recreational boating public.
• When funding is constrained, the priority order for grant funding from highest to lowest is: maritime facilities, essential land-based facilities, desirable land-based facilities.
• Projects are prioritised where available RBFS funding is limited or the funding round is over-subscribed. The amount of funding requested in relation to the total amount of RBFS funds available may be an important consideration in the assessment, with applicants encouraged staging large projects in component.
Criteria NationalStrongerRegionsFund
Eligible Organisation/Group
Eligibility Criteria/Requirement
Evaluation Criteria
• Maritime facilities such as boat launching ramps, boat holding jetties, moorings, maritime lighting;
• Land-based facilities located at a boating facility, such as trailer parking, lighting, toilets, waste facilities, fish cleaning tables;
• Maintenance dredging of regional public recreational boating navigation channels and facilities; and
• Other worthwhile projects that meet the RBFS guidelines.• Land-based facilities if the associated maritime infrastructure
is maintained at an appropriate standard.
• Private facilities or facilities associated with private clubs;• Facilities which are not used primarily by recreational boat users;• Maritime facilities which are substantially
commercial rather than recreational;• Demolition of existing facilities may be funded if in association
with provision of new or upgraded facilities.
APPENDIX A
57
• Department of Transport, Coastal Infrastructure Business Unit;• Department of Regional Development;• Department of Fire and Emergency Services;• Swan River Trust; and• Western Australian Local Government Association
• Applications for infrastructure projects are submitted as Works applications. • Applications for projects with a set of engineering drawings,
community consultation, a pre-tender brief, detailed cost estimates, environmental impact assessment, demand report or environmental approvals are submitted as Planning grant applications.
• Applications supported by detailed concepts, plans and/or reports are highly regarded.
• The applicant must provide a financial statement upon completion of the project, which includes the actual cost of each component, as set out in their application.
• Up to $1,500,000 depending on type of project and location of it.
• Regional applications are reviewed by the local Regional Assessment Panel. Regional Services Manager in each region convenes the Regional Assessment Panel, selecting members according to their expertise and local knowledge.
• Applications are ranked in priority order for the region.• The RBFS Assessment Panel reviews all applications, with advice
from the Regional Assessment Panels. The RBFS Panel should be independent and include representation from at least:
Criteria NationalStrongerRegionsFund
Submission
Funding Available
Process
APPENDIX A
58
WAPrograms
Regional Grants Scheme
The Regional Grants Scheme is a Royalties for Regions (RfR) initiative, administered by each of the nine Regional Development Commissions, that seeks to improve economic and community infrastructure and services in regional Western Australia.
It is aimed at bigger projects that will help attract investment, increase job opportunities and assist in improving the quality of life in the regions. The Regional Grants Scheme is a contestable funding round that will make available grants ranging from $20, 001 to $300, 000 for regional communities to improve and develop infrastructure and community services.
• Regionally based local governments, voluntary organisations, educational institutions, philanthropic foundations and community organisations.
• All voluntary and community groups applying for funding must be incorporated or have equivalent status.
• The Regional Grants Scheme provides grants for infrastructure projects, project development activities, non-capital projects such as community development activities, establishment of new services and increasing access to information.
• Grant funding is also available to assist with costs associated with headworks undertaken by essential service providers to connect businesses to water, electricity, gas, telecommunications, drainage and sewerage.
• Preference will be given to projects that can demonstrate that a grant from this Regional Grants Scheme will leverage funds from other sources.
• The project must demonstrate how it addresses a recognised need within the community and/or region.
• The project must demonstrate that it will contribute to achieving at least one of the Royalties for Regions Regional Grant Scheme objectives.
• The project should demonstrate alignment with existing regional development strategic planning.
• Applicants should demonstrate a high level of financial commitment to the project, either through sourcing other project funding and/or a direct financial contribution.
• The project should have the support of local government/s and/or other key regional stakeholders.
• The project should promote partnerships (i.e. between the community/business sector and government; or across various levels of government).
• The project should reflect a commitment to local decision-making and planning.• The project should demonstrate its capacity for meeting
ongoing operating and maintenance costs.• The proponent should demonstrate that detailed project planning has
been completed (including all approvals being in place or achievable in a short timeframe), the project is ready to proceed and that it can be completed in a timely manner. (Note: This criteria will not preclude applications for feasibility studies and business planning)
Criteria NationalStrongerRegionsFund
Eligible Organisation/Group
Eligibility Criteria/Requirement
Evaluation Criteria
APPENDIX A
59
• All applications will be assessed by the Peel Development Commission Board which will make recommendations to the Minister for Regional Development.
• The Minister for Regional Development will review and finalise the recommendations.
• Final recommendations will be considered by Cabinet for approval.
Completion of an application form which requires:• General project information• Organisation details• Project description• Statement of need• Funding category, sector and strategic objectives• Partnerships and local decision making• Project and management• Project budget and leveraged fundsRequests for funding of $150,00 or more require:• Objectives and benefits• Risk management plan• Up to $1,500,000 depending on type of project and location of it.
• Each application will be assessed against the Regional Grants Scheme’s criteria by an assessment team which will make recommendations to the Board of the Peel Development Commission.
Criteria NationalStrongerRegionsFund
Submission
Funding Available
Process
$20,001 to $300,000
• It is anticipated that this approval process make up to six months to be completed. Please allow for this time frame as part of your project planning.
APPENDIX A
60
Example Risk RegisterB APPENDIX B:
RDA Kimberley launched a new $15m Kimberley Land Council Sebastian Watson Building and Nulungu Research Institute Cultural Natural Resource Management Feasibility Study Report in July and August 2015.
APPENDIX B
61
Ensu
re a
ppro
pria
te c
ontr
act i
s in
pla
ce w
ith
tend
erer
to a
ccou
nt fo
r var
iatio
ns.
Seek
add
ition
al fu
nd ra
ising
acti
vitie
s.
Seek
alte
rnati
ve s
oluti
ons
that
ach
ieve
a
simila
r out
com
e w
ithou
t fina
ncia
l im
plic
ation
s or
whi
ch o
ffset
fina
ncia
l im
pact
s.
Ensu
re fi
nanc
ial c
ontin
genc
y w
ithin
es
timat
ed b
udge
ts to
cov
er v
aria
tions
.
Exte
rnal
fund
ing
dela
ysH
igh
Very
low
CEO
CEO
Item
Risk
/sLi
kelih
ood
of
Occ
urre
nce
Resi
dual
Ris
kM
itiga
tion
Stra
tegi
esRe
spon
sibl
e O
ffice
r
Fund
ing
Tend
ers
high
er
than
esti
mat
ed
cons
truc
tion
cost
Low
Low
Low
Fina
ncia
l
Proj
ect c
omm
ence
men
t onc
e su
ffici
ent
fund
ing
beco
mes
ava
ilabl
e.
Whe
re te
nder
ed c
ost i
s <2
0% e
stim
ated
cos
t: Se
ek
addi
tiona
l fun
d ra
ising
acti
vitie
s, an
d do
natio
ns
thro
ugh
chur
ches
and
col
lege
s with
in th
e D
ioce
se
of M
elbo
urne
and
the
paris
h of
St M
ina
and
St
Mar
ina
Hal
lam
to e
nsur
e de
sired
faci
lity
is bu
ilt.
Whe
re te
nder
ed c
ost i
s >2
0% e
stim
ated
cos
t: Re
cons
ider
pr
ojec
t and
/or s
eek
addi
tiona
l fun
d ra
ising
acti
vitie
s, an
d do
natio
ns th
roug
h ch
urch
es a
nd c
olle
ges w
ithin
the
Dio
cese
of M
elbo
urne
and
the
paris
h of
St M
ina
and
St M
arin
a H
alla
m to
ens
ure
desir
ed fa
cilit
y is
built
.
Varia
tions
dur
ing
cons
truc
tion
Lack
of fi
nanc
ial
repo
rting
/ m
onito
ring
Very
Low
Med
ium
Very
low
Very
low
Low
CEO
CEO
Proj
ect
Man
ager
Cost
s
Mon
itorin
g
Prep
are
mon
thly
fina
nce
repo
rts
to p
roje
ct
grou
p to
ens
ure
prog
ress
is m
onito
red
of
finan
cial
s ag
ains
t con
stru
ction
pro
gres
s an
d ag
ains
t for
ecas
t pro
ject
exp
endi
ture
.
APPENDIX B
62
Ensu
re th
at in
form
ation
is p
rovi
ded
timel
y to
the
cons
ulta
nt
with
app
ropr
iate
tim
ing
conti
ngen
cies
in p
lace
.
Ensu
re th
at th
e te
nder
alig
ns w
ith th
e pr
ojec
t brie
f.
Del
ay in
app
rova
l fr
om C
ounc
ilM
ediu
m
Med
ium
Med
ium
Low
CEO
Proj
ect M
anag
er
Item
Risk
/sLi
kelih
ood
of
Occ
urre
nce
Resi
dual
Ris
kM
itiga
tion
Stra
tegi
esRe
spon
sibl
e O
ffice
r
Plan
ning
/DA
A
ppro
val
App
rova
l doc
umen
tatio
n no
t app
ropr
iate
ly
com
plet
ed
Acqu
ittal
doc
umen
tatio
n no
t app
ropr
iate
ly
reco
rded
Very
Low
Regu
lato
ry
Exte
rnal
con
sulta
nt e
ngag
ed to
ens
ure
appr
opria
te
docu
men
tatio
n pr
ovid
ed to
redu
ced
unne
cess
ary
dela
ys.
Ensu
re a
ll do
cum
ents
are
com
plet
ed a
nd c
heck
ed p
rior
to b
eing
retu
rned
to re
spon
sible
per
son/
s pr
ompt
ly.
Ensu
re a
ppro
pria
te fi
nanc
ial r
ecor
ds a
re
kept
thro
ugho
ut th
e co
nstr
uctio
n.
Ensu
re th
e ex
pend
iture
is a
ppro
pria
te to
be
clai
med
with
in th
e Fu
ndin
g G
uide
lines
.
Very
low
Very
low
Low
Very
Low
CEO
CEO
CEO
CEO
Gra
nt F
undi
ng
Gra
nt F
undi
ng
Proc
urem
ent
Det
aile
d D
esig
n/Te
nder
D
ocum
enta
tion
Del
ay in
rece
ivin
g de
taile
d de
sign
by
exte
rnal
pro
vide
r
Del
ay in
com
pilin
g te
nder
doc
umen
tatio
n
Med
ium
Med
ium
Enga
ge s
uita
bly
qual
ified
con
sulta
nt e
ngag
ed
to u
nder
take
des
ign
wor
ks w
ith a
ppro
pria
te
timin
g co
nting
enci
es in
pla
ce.
Ensu
re th
at in
form
ation
requ
ired
to u
nder
take
the
wor
k is
prov
ided
tim
ely
to th
e co
nsul
tant
.
Enga
ge s
uita
bly
qual
ified
con
sulta
nt e
ngag
ed
to u
nder
take
tend
er s
peci
ficati
ons.
Proj
ect M
anag
er
APPENDIX B
63
Ensu
re te
nder
er m
inim
ises
impa
ct to
nei
ghbo
urin
g pr
oper
ties v
ia te
nder
er p
ropo
sal a
nd w
ork
com
plie
s with
Cou
ncil
requ
irem
ents
.
Del
ay in
resp
onse
s fr
om te
nder
ers
and/
or e
ngag
emen
t of
succ
essf
ul te
nder
er
Med
ium
Med
ium
Low
CEO
CEO
Proj
ect M
anag
er
Proj
ect M
anag
er
Item
Risk
/sLi
kelih
ood
of
Occ
urre
nce
Resi
dual
Ris
kM
itiga
tion
Stra
tegi
esRe
spon
sibl
e O
ffice
r
Succ
essf
ulTe
nder
er
Inad
equa
te o
r in
appr
opria
te
resp
onse
s to
tend
er
Proc
urem
ent (
conti
nued
)
Site
/Con
stru
ction
Enga
ge s
uita
bly
qual
ified
con
sulta
nt to
pre
pare
co
ntra
ct s
peci
ficati
ons
docu
men
tatio
n an
d en
sure
an
y qu
erie
s ar
e att
ende
d to
in a
tim
ely
man
ner.
Ensu
re th
at th
e su
cces
sful
tend
erer
has
the
appr
opria
te
appr
oval
s to
und
erta
ke c
onst
ructi
on a
ctivi
ties.
Ensu
re th
at in
form
ation
is p
rovi
ded
in a
tim
ely
man
ner
to th
e co
nsul
tant
to d
evel
op c
ontr
act d
ocum
enta
tion.
Revi
ew te
nder
and
targ
et s
peci
fic
cons
truc
tion
firm
s fo
r fee
dbac
k.
Rew
rite
tend
er a
nd re
-adv
ertis
e.
Low
Low
Low
Proj
ect M
anag
er
Poor
or N
o Re
spon
se to
Te
nder
Site
Saf
ety
Surr
ound
ing
Com
mun
ityIm
pact
s
WH
&S
inci
dent
s im
pacti
ng th
e w
orks
ite
(tend
erer
, sub
-co
ntra
ctor
s, pu
blic
)
Noi
se, d
ust a
nd
cons
truc
tion
activ
ity fo
r ne
ighb
ourin
g re
siden
ts
Med
ium
Med
ium
Ensu
re te
nder
er h
as o
wn
risk
man
agem
ent
cont
rols
for s
afet
y of
oth
er p
erso
n/s
and
that
sub
-co
ntra
ctor
s ar
e th
e te
nder
er’s
resp
onsib
ility
.
Ensu
re te
nder
er h
as c
urre
nt a
nd a
ppro
pria
te
liabi
lity
cove
rage
to c
over
any
and
all
even
ts.
Proj
ect M
anag
er
APPENDIX B
64
Requ
est a
nd a
tten
d re
gula
r ons
ite m
eetin
gs w
ith th
e re
spon
sible
per
sons
to e
nsur
e th
at is
sues
that
may
de
lay
cons
truc
tion
are
iden
tified
as
early
as
poss
ible
.
Sele
ction
of a
sui
tabl
e te
nder
er.
Ensu
re te
nder
er is
cap
able
of d
eliv
ery
cons
truc
tion
and
has
reso
urce
s av
aila
ble.
Requ
est a
nd a
tten
d re
gula
r ons
ite m
eetin
gs
to e
nsur
e th
at a
ny d
iffer
ence
s in
con
stru
ction
m
ater
ials
used
are
kno
wn
as e
arly
as
poss
ible
, w
ith re
ason
s an
d im
plic
ation
s cl
early
not
ed.
Ensu
re th
e Pr
ojec
t Man
ager
and
oth
er k
ey p
erso
n/s
atten
d re
gula
r mee
tings
to e
nsur
e un
ders
tand
ing
of p
roje
ct s
tatu
s an
d co
ntinu
ity o
f pro
ject
.
Del
ay in
con
stru
ction
Com
petin
g pr
ioriti
es
Med
ium
Med
ium
Med
ium
Low
Proj
ect M
anag
er
Proj
ect M
anag
er
Item
Risk
/sLi
kelih
ood
of
Occ
urre
nce
Resi
dual
Ris
kM
itiga
tion
Stra
tegi
esRe
spon
sibl
e O
ffice
r
Tim
efra
me
Site
cha
ract
eristi
cs
requ
iring
an
amen
dmen
t to
orig
inal
des
ign
Site
/Con
stru
ction
(con
tinue
d)
Requ
est a
nd a
tten
d re
gula
r ons
ite m
eetin
gs w
ith th
e re
spon
sible
per
sons
to e
nsur
e th
at d
iffer
ence
s to
des
ign
and
cons
truc
tion
are
know
n as
ear
ly a
s po
ssib
le.
Sign
off
from
orig
inal
arc
hite
ct/e
ngin
eer
of a
ny p
ropo
sed
chan
ges.
Low
Low
Low
Very
Low
Proj
ect M
anag
er
Des
ign
Chan
ges
Cons
truc
tion
Mat
eria
ls
Key
Staff
A
bsen
ces
Inad
equa
te d
esig
n m
ater
ials
Cove
rage
of p
ropo
nent
’s ke
y st
aff (s
ick
or h
olid
ays)
Med
ium
Med
ium
Low
Ensu
re th
at a
ny c
hang
es to
the
orig
inal
des
ign
do n
ot
incu
r add
ition
al c
osts
and
will
stil
l be
func
tiona
l to
mee
t the
orig
inal
inte
nded
pur
pose
of t
he fa
cilit
y.
Sign
off
from
orig
inal
arc
hite
ct/e
ngin
eer
of a
ny p
ropo
sed
chan
ges.
Proj
ect M
anag
er
Proj
ect M
anag
er
Chan
ges
to d
esig
n by
the
prop
onen
t pos
t-st
art
APPENDIX B
65
Major RDAF and Federal projects: Esperance Waterfront and Port Access Corridor construction.
66
REFERENCES
Commonwealth of Australia (Department of Finance and Administration) (2006), Handbook of Cost- Benefit Analysis. Department of Finance and Administration.
Department of Infrastructure and Regional Development (2015a). Community Development Grants Programme. Available from: http://investment.infrastructure.gov.au/funding/ communitydevelopment/index.aspx. Accessed 28 May 2015.
Department of Infrastructure and Regional Development (2015b). National Stronger Regions Fund. Available from: http://investment.infrastructure.gov.au/funding/communitydevelopment/index. aspx. Accessed 28 May 2015.
Department of Infrastructure and Regional Development (2015c). Tourism Industry Regional Development Fund. Available from: http://www.regional.gov.au/department/ statements/2013-14/ministerial-statement-2013-14/resources-energy-tourism.aspx. Accessed 28 May 2015.
Department of Transport WA (2015a). Regional Boating Facilities Scheme. http://www.transport. wa.gov.au/imarine/recreational-boating-facilities-scheme-rbfs-grants.asp. Accessed 6 June 2015.
Department of Transport WA (2015b). Regional Airports Development Scheme. http://www.transport. wa.gov.au/aviation/rads-overview.asp Accessed 4 June 2015. Accessed 6 June 2015.
Evans & Peck (2008). Best Practice Cost Estimation for Publicly Funded Road and Rail Construction. Report prepared for Department of Infrastructure, Transport, Regional Development and Local Government, June 2008. http://investment.infrastructure.gov.au/publications/administration/ pdf/best_practice_cost_estimation.pdf. Accessed 22 July.
ISO 31000 (2009). Risk management — Principles and guidelines on implementation. International Organization for Standardization.
ISO 21500 (2012), Guidance on Project Management. International Organization for Standardization
Peel Development Commission (2015). Royalties for Regions Peel Regional Grants Scheme, 2014-15 Guidelines. http://www.peel.wa.gov.au/wp-content/uploads/2014/10/RGS-Guidelines.pdf. Accessed 10 August 2015.
West, G. R. (1993). User’s Guide, Input-Output Analysis for Practitioners An Interactive Input-Output Software Package Version 7.1. Department of Economics. University of Queensland, 1993.
REFERENCES
67
ACKNOWLEDGEMENTS
The Western Australian Network of Regional Development Australia Committees acknowledges the contribution of the following entities in development of this resource:
AEC Group Pty Ltd – Mr Ashley Page and staff at AEC Group Pty Ltd who were engaged by the WA RDA Network to develop this manual’
Department of Infrastructure and Regional Development – Mr Gordon McCormick and staff who provided invaluable feedback on the content of this manual.
ACKNOWLEDGEMENTS
Karratha Leisureplex supported by RDA
