Project Initiation Process

STRATEGIC ASSET MANAGEMENT

Project InitiationProcess

Government of South AustraliaJanuary 1996

For Capital Works

DOCUMENT UNDER REVISION

Key areas under review include:

reference to the aquittal requirements of Government'sPrudential Management Framework and the Departmentof Premier and Cabinet's Circular No. 15, June 1998 on'Procedures for Submissions Seeking the Review of PublicWorks by the Public Works Committee'.

roles and Responsibilities of the 10 Portfolio Agencies

minor changes to clarify details associated with the textand process

Acknowledgements

The Project Initiation Process developed for South Australia acknowledgesthe work undertaken by other public works authorities and associatedorganisations.

Specific acknowledgement is given to:

• WA Building Management Authority and the Treasury of WesternAustralia.

Acknowledgement is given also to the following organisations:

• Commonwealth Government• Construction Industry Development Authority (CIDA)• National Public Works Council• Department of Public Works and Services, New South Wales• Administrative Services Department, Queensland

ISBN 0 7308 4755 1Published by the Government of South Australia, January 1996Produced by Treasury and Finance/DAIS (Services SA)Project No. 009Layout, graphics and design - GDFXPrint Management - Sprint

© Government of South Australia, 1996

Reproduction of this publication is encouraged, provided that dueacknowledgement is given to the Government of South Australia.

FOREWORD

The Government of South Australia is committed to the efficient and effectivedelivery of essential services to the community.

To achieve this objective Cabinet has endorsed the Strategic Asset Management

Framework and the Project Initiation Process for Capital Works, which will assistgovernment agencies and private sector providers.

The Strategic Asset Management Framework provides information to guidethe direction and management of the State’s investment in assets in wayswhich will maximise benefits to the community and minimise costs togovernment.

The Project Initiation Process for Capital Works is a component of strategicasset management. It highlights the need to carefully consider and justifyproposals for new or replacement services and the most appropriate meansof service delivery. When new or additional assets are under consideration,and before initiating any capital works projects, agencies are expected toconsider all options for service delivery, taking time to examine a range ofalternatives before making a firm commitment.

The Department of Treasury and Finance and DAIS (Services SA) will bothoffer their assistance to people in agencies to apply the process.

Stephen Baker MP Wayne Matthew MPDeputy Premier Minister for State ServicesTreasurer

PROJECT INITIATION PROCESS

CONTENTS

FOREWORD

1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS ........................................... 1

1.1 Government strategies ............................................................................................. 11.2 The importance of the Project Initiation Process ......................................................... 11.3 Benefits .................................................................................................................. 21.4 A consistent process ................................................................................................ 21.5 Agencies required to comply with the process ........................................................... 31.6 Application of the government’s risk management framework .................................... 31.7 Adaptation of the process to meet individual needs ................................................... 31.8 Key features of the Project Initiation Process .............................................................. 4

2. IDEAS TO MEET NEEDS ....................................................................................... 7

2.1 Scope of the Project Initiation Process ....................................................................... 82.2 Application of the Project Initiation Process ............................................................... 82.3 Responsibility, accountability and management ......................................................... 9

3. CORPORATE PLANNING PHASE ....................................................................... 11

Documents and written approvals .......................................................................... 123.1 Review corporate plan for consistency with government priorities .............................. 133.2 Define service delivery needs and broad time frames .............................................. 133.3 Examine demand management and non-asset strategies ......................................... 143.4 Examine existing asset performance ....................................................................... 153.5 Establish project concepts by rigorous testing of assumptions ................................... 153.6 Project concept to be considered for the government's forward program ................... 163.7 Ministerial approval of the agency’s five year strategic asset procurement plan ......... 163.8 Modifications to plan in response to State wide priorities ......................................... 173.9 Authorisation of expenditure for planning and design .............................................. 17

4. CONCEPT DEVELOPMENT PHASE ..................................................................... 19

Documents and written approvals .......................................................................... 204.1 Appoint the project steering committee to develop and manage the concept phase. .. 214.2 Appoint the project team to develop the concept ..................................................... 214.3 Develop project concept to meet service delivery needs ........................................... 224.4 Define the project parameters, quality standards and budget estimate ...................... 254.5 Identify all reasonable service delivery options (including “no build” option) ............. 254.6 Identify procurement options - financing and contract delivery ................................. 26

5. CONCEPT EVALUATION PHASE ........................................................................ 29

Documents and written approvals .......................................................................... 305.1 Agree on the scope of the evaluation brief (preliminary concept plan) ...................... 315.2 Evaluate concept options ....................................................................................... 315.3 Analyse short-listed options .................................................................................... 315.4 Select the preferred project concept option ............................................................. 325.5 Describe the preferred option in an evaluation brief (final concept plan) ................... 325.6 Seek Ministerial endorsement of the concept proposal ............................................. 335.7 Seek Cabinet approval of the concept .................................................................... 345.8 Referral to the Parliamentary Public Works Committee ............................................. 34


6. PROJECT DEFINITION PHASE ........................................................................... 35

Documents and written approvals .......................................................................... 366.1 Appoint project design team utilising the consultants' register ................................... 376.2 Provide the project design team with the detailed definition brief .............................. 376.3 Confirm contract method ....................................................................................... 376.4 Develop a cost plan for the project ......................................................................... 386.5 Develop detailed project timelines .......................................................................... 386.6 Confirm that the proposal satisfies endorsed concept parameters ............................. 386.7 Check to confirm that the project meets the needs of the agency .............................. 406.8 Identify approvals required for the project ............................................................... 406.9 Endorsement to proceed to the delivery phase ........................................................ 40

7. PROJECT DELIVERY PHASE ............................................................................... 41

Documents and written approvals .......................................................................... 427.1 Review definition phase of the design ..................................................................... 437.2 Approval to proceed with contract documents ......................................................... 437.3 Prepare contract documentation ............................................................................. 437.4 Define required quality standards for the contractor ................................................. 437.5 Confirm the agreed and endorsed parameters ........................................................ 447.6 Initiate and facilitate approvals related to the Development Act ................................ 447.7 Obtain pre-tender estimate and associated cash flows ............................................ 457.8 Utilise contractors' register to select tenderers .......................................................... 457.9 Approval to call tenders ......................................................................................... 457.10 Call tenders and obtain tender comparison estimate ............................................... 457.11 Prepare tender appraisal and recommendation....................................................... 467.12 Processing the tender call and final approval for awarding the construction contract . 467.13 Award the construction contract ............................................................................. 477.14 Manage the construction contract .......................................................................... 477.15 Commission and hand over of the completed project .............................................. 48

8. REVIEW PHASE ................................................................................................. 49

Documents and written approvals .......................................................................... 508.1 Post completion review .......................................................................................... 518.2 Update asset information systems ........................................................................... 518.3 Post occupancy evaluation (POE) ........................................................................... 518.4 Management review .............................................................................................. 52

APPENDICES

APPENDIX 1 Non-commercial sector agencies .............................................................. 53APPENDIX 2 Roles and responsibilities of stakeholders ................................................... 55

APPENDIX 3 References for the project initiation process ................................................ 57

GLOSSARY ...................................................................................................... 61

PROJECT INITIATION PROCESS overview .............................. inside back cover


1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS

1.1 GOVERNMENT STRATEGIES

The South Australian Government is committed to the efficient and effectivedelivery of essential services to the community and obtaining best valuefrom new and existing built assets. The Strategic Asset Management

Framework and this Project Initiation Process for Capital Works define thegovernment’s commitment to this process.

The Project Initiation Process is part of the Strategic Asset Management

Framework, endorsed by Government in July 1995. The Strategic Asset

Management Framework describes the context within which decisions aremade. The asset management process (incorporating the project initiationprocess) covers the broad range of activities which follow from the initialidea that an asset may be required, to the provision of a service and to thedisposal of an asset when it is no longer required.

The project initiation process concentrates on the planning of services and,where necessary, the procurement of assets required for the delivery ofthose services. The process should ensure that additional assets are providedonly after service needs have been identified, investigated thoroughly andsubstantiated.

The project initiation process emphasises the need for quality corporateplanning and robust evaluation prior to any firm decision being made toacquire or replace assets. The best solution may not necessarily requirebuilt assets.

As part of this process, Ministerial or Cabinet approval of projects is nowrequired at an early stage, once the concept for service delivery has beendeveloped and evaluated.

1.2 THE IMPORTANCE OF THE PROJECT INITIATION PROCESS

The project initiation process encourages the most detailed planning byagency management, especially in the initial phases. This will help achievea more objective analysis of needs and documented evidence to supportthe case for providing additional services, especially if they involve acquiringor replacing assets.

The process will ensure that agencies are able to justify funding requirementsfor infrastructure or infrastructure alternatives from the capital budget. Theprocess will confirm with confidence that a service is required and that itsprocurement will be cost effective, appropriate and accountable.


PROJECT INITIATION PROCESS2

1.3 BENEFITS

The project initiation process will have the following benefits.

o It aims to achieve the most beneficial outcome for government byrequiring a full needs analysis and the consideration of a wide rangeof options before the project concept is approved.

o Government support for a proposed project can be obtained at anearly stage once the concept development and evaluation phaseshave been completed.

o The process should ensure the clear definition and documentationof the criteria used to test the viability of the project, for the projectjustification, post completion reviews and for future planning.

o It provides a distinct and consistent process to rank priorities on astate wide and agency basis.

o It allows for improved allocation of time and resources for properproject planning and assessment.

o It encourages early planning, including innovative options such as:

• market solutions developed in conjunction with the privatesector;

• using technology to achieve required outcomes;• “no build” strategies to meet service delivery needs; and• “end use” planning so there are alternative uses for the asset.

o It clarifies the process to procure additional assets, or upgrade orreplace existing assets. Agencies with only occasional building needswill benefit from a well documented process which they can adaptto their projects.

o The process encourages regular procedures through which wellplanned projects with documented justification can meet allgovernment requirements.

1.4 A CONSISTENT PROCESS

The project initiation process follows a form similar to that developedby the Construction Industry Development Agency (CIDA), whichrepresents best practice within the building and construction industry.CIDA standards are used by the South Australian Parliamentary PublicWorks Committee as a benchmark when verifying that due process hasbeen followed.

PROJECT INITIATION PROCESS 3

1.5 AGENCIES REQUIRED TO COMPLY WITH THE PROCESS

In July 1995, Cabinet endorsed the project initiation process which isto be implemented by government agencies within the broad frameworkof the Strategic Asset Management Framework. The general principlesof the process apply to all government agencies. Details of the processapply particularly to non-commercial sector agencies in the public sectoras listed in Appendix 1.

While the overall process has been developed for all types of buildingand construction projects, the specific details have been designedprimarily for non-residential building works. It may also be necessaryto modify some aspects to meet the special requirements of agencieswhich carry out engineering construction projects.

The process does not apply to major plant and equipment purchases,although the basic principles remain valid.

1.6 APPLICATION OF THE GOVERNMENT’S RISK MANAGEMENT

FRAMEWORK

The project initiation process encompasses elements of the government’srisk management framework for built assets.

The Department for Building Management was established in 1994 toprovide a central policy and advisory role to government for asset andrisk management of built assets. Services SA, established 30 October1995, assumes this role and incorporates a wider range ofresponsibilities.

For those agencies required to use the risk management services providedby DAIS (Services SA), the activities designated as DAIS (Services SA)responsibilities are identified in the charts and overview which summariseeach phase of the process.

Detailed risk management policy guidelines will be published and furtherdetails of the processes to be followed will be provided as Treasurer’sInstructions.

1.7 ADAPTATION OF THE PROCESS TO MEET INDIVIDUAL NEEDS

The process is adaptable to a tailored project-by-project approach toensure that the individual needs of agencies are met.

The amount of effort and attention required will vary depending on thesize and complexity of the project and agency circumstances. Agenciesneed to consult with the Department of Treasury and Finance and DAIS(Services SA) to determine a minimum standard or approach which bestsuits the agency, the project and general circumstances.


1.8 KEY FEATURES OF THE PROJECT INITIATION PROCESS

Agencies have responsibility for the management of their asset portfoliosand should follow a disciplined approach in the early stages of planningto substantiate needs.

The project is approved by the Minister or Cabinet at the end of theconcept evaluation stage.

Central agencies such as the Department of Treasury and Finance andDAIS (Services SA) provide greater support to agencies by developingand advising them of policies and guidelines for improved assetmanagement.

1.8.1 Delegations for approval of projects

o Cabinet approval is required for any project which has anestimated capital cost of $4 million or more when all stagesof construction are complete.

o Cabinet approval is also required for any project which hasan estimated capital cost of $1 million on completion and isnot included in a budget approved by Cabinet.

o Ministers are authorised to approve projects within limitsprescribed by Cabinet:

• projects with an estimated capital cost of up to $1 millioncan be approved without restriction; and

• projects with an estimated capital cost between$1 - 4 million, and which have been included in abudget approved by Cabinet.

o All submissions seeking Ministerial approval of projects arerequired to include written advice from the Department ofTreasury and Finance, particularly on budgetary provision, andfrom DAIS (Services SA) on building related issues.

o Office accommodation projects with an estimated cost of$1 million or more and Information Technology projectscosting more than $500 000 require Cabinet approval.

o In accordance with Treasurer’s Instruction 302 - Authorities for

Expenditure, Ministers are authorised to delegate approvalfor projects up to $500 000. Ministerial approval is requiredfor amounts above $500 000.


1.8.2 Content of submissions to Cabinet or the agency’s Minister

CABINET SUBMISSIONS

The requirements for the preparation and presentation of Cabinetsubmissions are detailed in the Cabinet handbook.

For major capital projects, the following contents are expected tobe included:

• a statement of the objectives for the proposed project,including details of the underlying assumptions andmeasurable objectives;

• a justification for the proposal, including an economicevaluation in accordance with Treasurer’s Instruction 9105

- Guidelines for the Evaluation of Public Sector Projects;

• estimates of capital and recurrent costs required to operatethe asset over the whole of its life;

• estimated construction commencement and completiondates;

• a report by DAIS (Services SA), where applicable,commenting on the proposal;

• comments by the Parliamentary Public Works Committee,if the project has been referred and reported upon; and

• a statement on the sources of funds including the impacton the Budget.

SUBMISSIONS FOR MINISTERIAL APPROVAL

Submissions seeking Ministerial approval should include detailssimilar to the contents of a Cabinet submission. Where applicable,submissions may also need to include written statements from theDepartment of Treasury and Finance and DAIS (Services SA).

The Department of Treasury and Finance will include commentson:

• the budgetary provision for the project;• the justification of the proposal;• costs to other agencies; and• any other relevant issues.

DAIS (Services SA), where it has a role in the project, will includecomments on:

• risk assessment and management of risk;• specific issues raised through the value management

studies, including compliance with the brief, buildability,statutory requirements and agreed standards for buildingdesign and construction;

• life cycle implications, including ongoing maintenancerequirements; and

• any other relevant issues.


The Department of Treasury and Finance and Services SA are tobe given a minimum of three clear working days to provideagencies with these reports.

1.8.3 Financial threshold for project approval

The financial threshold for submission of projects for approvalwill be based on the capital cost of the project, regardless ofwhether the funds are provided by the public or the private sector.This requirement is for all built assets, including those leasedfrom the private sector.

The estimated cost to be used when seeking approval will bebased on the capital cost on completion (ie it will include anestimate for inflation).

The estimated capital cost also refers to the cost when all stagesof construction are complete. While staging of projects needs tobe considered to ensure the efficient provision of services, agenciesmust not stage projects in a manner which avoids submitting theproposal for approval at a higher delegation.

In addition to the capital cost, the submission will include thecalculation of whole of life costs associated with the project.

1.8.4 Responsibilities for specific components of the project initiation process

Individual agencies have the primary responsibility for all assetsunder their control. This includes responsibility for the planningof specific projects to meet service delivery needs.

The Department of Treasury and Finance has the responsibilityto advise Government on the implications for expenditure on theGovernment’s assets and to ensure that appropriate policies andprocesses are in place to assist agencies in the management oftheir assets.

DAIS (Services SA) provides a central policy and advisory roleto Government for asset and risk management of Government’sbuilt assets. DAIS (Services SA) will undertake risk managementfor specific projects for those non-commercial agencies requiredto use its services. This applies to all projects over $150 000.

More details of the responsibilities and roles of the stakeholdersin the project initiation process are included in Appendix 2.


2. IDEAS TO MEET NEEDS

The project initiation process provides a structured and accountable approachto the planning and delivery of state services. It aims to improve the ability ofall agencies to clearly demonstrate the needs and benefits of a particularproject, and ensure the delivery of essential services in the most appropriateand cost efficient way.

The asset management process

The asset management process includes activities ranging from theidentification of the government’s key directions and strategies for the deliveryof services to the divestment of an asset when it is no longer required. Theproject initiation process is a key element in the overall process which includesthe initial planning of assets, the delivery, and evaluation of their use.

The importance of good planning in the early stages

The greatest potential for identifying and achieving capital and recurrent savingsis in the early planning phases of a project (see the diagram below). Significantsavings can be made by government if the need for built assets is analysedcarefully from the outset, exploring a wide range of options, before anycommitment is made.


2.1 SCOPE OF THE PROJECT INITIATION PROCESS

The process outlines the principles and the processes which follow froma decision that built assets may be required to meet service deliveryneeds.

It describes the strategic planning to be undertaken prior to initiating aproposal for the procurement of built assets.

It requires agencies to develop strategies to meet service delivery needs,to seek government approval of the concept as the preferred option,and to secure formal agreement to proceed to design, documentationand delivery if the concept is endorsed.

The basic principles of the process apply to all aspects of assetmanagement and procurement.

2.2 APPLICATION OF THE PROJECT INITIATION PROCESS

2.2.1 Provision of new services

In the past, planning for built assets has been based on theassumption that this will be the most appropriate way to provideservices to the community. Now agencies are required to undertakea more rigorous process to determine needs, explore optionsand identify the most appropriate action. This process providesthe framework and defines the responsibilities.

All non-commercial sector agencies are expected to follow theproject initiation process when planning and developing assetsrequired to deliver services (refer to Non-commercial sector

agencies, Appendix 1). It will be appropriate, however, for agenciesto tailor the process to fit in with the management and planningprocesses applying within individual agencies.

While commercial sector agencies are not required to follow theprocess, it is considered that the basic principles underlying theprocess can be applied for commercial projects although someaspects of project evaluation and approval are likely to bedifferent.

The process is designed primarily for major projects costing morethan $150 000. Where the total project cost is less than$150 000, agencies should follow the Minor Works Guide, Checklists

and Manual published and distributed by DAIS (Services SA).


2.2.2 Existing assets

An agency’s prime asset management responsibility is to maximisethe service delivery potential of existing assets in the most costeffective ways.

This document describes the process to follow when planning forthe creation of additional service capacity and when consideringthe replacement or upgrading of existing assets.

Asset rationalisation provides opportunities for government torestructure and reallocate resources. Agencies are required toreview asset performance and utilisation and ensure that anyassets retained are essential to the delivery of high priority services.

Agencies are also required to identify and address building relatedhazards in accordance with legislative requirements under theOccupational Health, Safety and Welfare Act.

2.3 RESPONSIBILITY, ACCOUNTABILITY AND MANAGEMENT

The process identifies primary responsibilities and indicates where toseek advice for each phase of the process. It also indicates the keypoints at which approvals to proceed must be sought from the Ministeror Cabinet and when review by the Parliamentary Public WorksCommittee is required.

The process assumes that agencies have well-developed corporateplans. However, agencies are at different stages in the development ofcorporate plans and it is accepted that some agencies may need timeto achieve the level of planning required by this process.

Agencies are expected to work through each phase of this process foreach project and to develop documentation which will provide an audittrail for future reference.

The degree of detail to be documented will vary. Major high costprojects, those with a high degree of risk and projects of criticalimportance to the government will require intensive scrutiny whilerepetitive projects may only require routine checking to ensure thatdue processes are followed.

A project may be progressed through different phases simultaneously.The agency will be responsible for the progress of its project throughthe phases and for seeking necessary endorsements at theappropriate times.



3. CORPORATE PLANNING PHASE

In this phase, an agency systematically analyses the demand for its services,considers methods for delivery of the service and prepares a five year or longerservice delivery strategy or a long term corporate plan.

Agencies should have a range of ideas about the ways they can deliver theservices which the community requires, but no specific options will have beenconfirmed.

Review corporate plan for consistency with Government priorities

Define service delivery needs and broad time frames

Examine demand management and non-asset strategies

Examine existing asset performance

Establish project concepts by rigorous testing of assumptions

Project concept to be considered for the Government's ForwardProgram

Use criteria for ranking of project concepts

Ranking of project concepts

Ministerial approval of the Agency's five year strategic assetprocurement plan

Modifications to plan in response to State wide priorities

Authorisation of expenditure for planning and design

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.6.1

3.6.2

Code:

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Responsibility In Consultation Partnership

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�

�

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Review 8Project

Delivery 7Project

Definition 6Concept

Evaluation 5Concept

Development 43Ideas to

Meet Needs 2Govt Strategies& Key Directions 1 Corporate

Planning

Action can be taken in various phases at the same time CabinetMinister

Process Gov't Treasury& Finance

DAIS(Services SA)

Agency

3. CORPORATE PLANNING PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

AGENCY’S CORPORATE PLANEach agency needs to have a corporate plan which outlines the scope and direction of the core servicesand the assets and resources required to meet service delivery needs.

DAIS (Services SA) can contribute to the development of the plan, especially in the development of assetmanagement plans and the asset performance and rationalisation plan which involve long term strategicplanning as well as the development of ideas and options to meet immediate service delivery needsand the use of BLAMS data.

An agency’s corporate plan will include:

• key assumptions (eg service demand, policies etc);• mission/role/service charter; and• resource implications.

It will include a strategic asset management plan which makes reference to:

• the Metropolitan Development Plan which includes the Urban Development CoordinatingCommittee (UDCC) projections of demography, land releases, urban renewal programs, etc;

• an asset performance and rationalisation plan, land purchase and disposal plan;• the agency’s five year strategic asset management plan;• an ongoing maintenance plan arising from data provided through BLAMS; and• the current financial year capital works program for the agency, including the assets to be

procured.

PROJECT CONCEPT ARISING FROM THE IDENTIFICATION AND QUANTIFICATION OF SERVICE DELIVERY

NEEDSThe project concept arises from the ideas which have been developed to meet the agency’s servicedelivery needs. Design details for the preferred concept option will not have been developed at thisstage and precise costings will not be available.

It details the functions or services to be provided by an agency for the community or a particular sectionof the community. The project concept also describes the extent and nature of the services and thejustification for all aspects of the proposal.

CRITERIA FOR ALLOCATING PRIORITY TO PROJECTS (A WEIGHTED INDEX FOR PROJECTS)Agencies need to use a recognised system which describes the criteria and methods used to allocatepriority to projects. The method used should ensure projects of highest priority are identified and thatan accurate record of the criteria used for allocating priority to projects is available for future reference.The range of criteria is likely to vary from agency to agency and reflect the priorities which are importantto the individual agencies. There is also a need to consider overall government priorities such aseconomic development and broader community benefits (or costs) in developing appropriate criteria.The development of appropriate criteria with relative weightings will enable each agency to rank itsprojects in a consistent and objective manner. This will assist Treasury and Finance when it develops theState-wide program.

PRIORITISED 5 YEAR CAPITAL PROGRAM, INCLUDING CAPITAL WORKS PROCUREMENTThe agency formulates a five year plan, based on the projects which have priority and the order ofpriority. Some projects will not require capital works solutions (“no build”, use of technology etc) whileothers will follow the capital works procurement process outlined in this document.

The program will draw together all of the elements of an agency’s capital works requirements. This isexpected to include committed and uncommitted major works and minor works, plant and equipmentpurchases, land purchases, motor vehicles and information technology acquisition and development.



3. CORPORATE PLANNING PHASE

The Corporate Planning Phase involves the following activities:

3.1 REVIEW CORPORATE PLAN FOR CONSISTENCY WITHGOVERNMENT PRIORITIES

Well executed corporate management processes should result in acorporate or business plan that defines the agency’s service deliveryobjectives and strategies, including:

• government policies and priorities applicable to that agency;• program statements;• the service delivery charter;• long term strategic directions (five to ten years); and• the current business plan.

3.2 DEFINE SERVICE DELIVERY NEEDS AND BROAD TIME FRAMES

Service delivery strategies need to be supported by reliable data onpresent and future demand for services. This will require an agency to:

• provide evidence of demand for services from the community,substantiated by research and analysis;

• describe the nature of the service demands;• detail its statutory service obligations (eg provision of schools,

prisons);• describe community service obligations;• analyse other relevant services within government; and• quantify levels of service that can be achieved.

Specific attention should be given to the agency’s strategic assetmanagement plan. This should take into account asset maintenanceand replacement forecasts and asset upgrading programs. It will alsonominate any additional assets to be provided. The additional capacityprovided, and any new policies being developed which will have animpact on the need for assets and resources, should be detailed as partof the plan.

To help address these issues, agencies will need to consider:

• government policies and stated objectives (eg economicdevelopment for the state);

• the strategies and forecasts included in the government’smetropolitan and regional planning strategy, the MetropolitanDevelopment Program and other relevant local and regionalplanning documents;

• information from key stakeholders (including consultation withthe community as well as agencies);

13


• the key assumptions being made;• emerging issues and trends identified through research,

from reviews, and examples of best practice;• agreed service standards and benchmarks;• market research; and• financial forecasts.

Assumptions and assertions about the demand for services will need tobe tested and supported by empirical evidence.

If the need for additional services has been substantiated, considerationshould be given to alternative delivery options. These include:

• market solutions such as BOO/ BOOT schemes(Build Own Operate/Build Own Operate Transfer);

• leasing; and• greater community involvement and ownership (eg the capital

works assistance scheme which requires financial commitmentfrom the community).

3.3 EXAMINE DEMAND MANAGEMENT AND NON-ASSETSTRATEGIES

The project initiation process requires agencies to consider other waysof managing demand or satisfying or redefining service deliveryobjectives to minimise or avoid demand on capital and its associateddebt servicing.

Examination of demand management and non-asset strategies includesoptions such as:

• resource sharing with other agencies or levels of governmentor community groups;

• the use of technology instead of infrastructure;• modifying pricing policy to reduce, redirect, delay or eliminate

demand;• changing service standards;• the redesign of service delivery;• rescheduling of service delivery;• changing policy or legislation;• education programs to reduce demand on service delivery;

and• private sector provision of services essential to the agency.

Agencies should always ensure that the “do nothing” option is fullyinvestigated and that the consequences are outlined, costed anddocumented for future reference.

These strategies will begin to define the real options for service deliveryand to test the need for additional assets.

CORPORATE PLANNING PHASE


Broad estimates of capital and recurrent costs can be assessed in thisphase, based on standards such as the cost per hospital bed, or costper student place in a school.

3.4 EXAMINE EXISTING ASSET PERFORMANCE

To meet service delivery demand, agencies should:

• review existing asset performance in terms of function, qualityand utilisation rate across the agency’s portfolio;

• investigate options to better utilise existing facilities to meetadditional demands; and

• identify and rationalise under-utilised facilities.

Agencies will require an up-to-date asset register and an assetmanagement information system to examine existing asset performanceand rationalise facilities. Most asset management informationrequirements for built assets can be met through the use of the BuildingLand and Asset Management System (BLAMS) which is managed byDAIS (Services SA).

Agencies should note that Cabinet has confirmed (in July 1995) thatprior to any development of an alternative asset information system toBLAMS, the agency will be required to obtain agreement from theDepartment of Treasury and Finance and DAIS (Services SA).

3.5 ESTABLISH PROJECT CONCEPTS BY RIGOROUS TESTING OFASSUMPTIONS

The agency, as a result of the reviews described, will have establishedwhether there is the need to provide additional or replacement services.Further investigations will determine the optimum service delivery solutionand whether the service delivery need is best met by built assets orthrough “no build” solutions.

Rigorous testing of the ideas put forward to meet service delivery needswill be required.

Value management techniques can greatly assist agencies to developand prioritise projects according to need, to identify program and projectrisks and to test assumptions about service delivery requirements. Theprocess can help present a clear set of client/customer objectives for aproject and define the key functional needs early in the planning process.



3.6 PROJECT CONCEPT TO BE CONSIDERED FOR THEGOVERNMENT’S FORWARD PROGRAM

Following this review process in the early phases, the project conceptshould be developed to a stage where the proposal can be included inthe agency’s forward program and consideration can be given to theproposal’s priority at government level.

3.6.1 Use criteria for ranking of project concepts

Agencies, particularly those with large procurement programs,need to rank project concepts from the most important to theleast important. Weighted decision-making criteria based on thekey outcomes relevant to the agency should be developed andused in a consistent and objective manner.

Knowledge of the decision-making criteria and their weighting ismost helpful to Treasury and Finance when they advise on prioritiesacross government and recommend a forward program toCabinet.

3.6.2 Ranking of project concepts

Agencies with several concepts under consideration should rankthem through the use of the weighted decision-making criteria.This process should include a revision of the priority of proposalsalready included in agency procurement plans.

The ranking of individual projects will assist each agency in thedevelopment of a five year strategic asset procurement plan andprovide a clear indication of priorities.

3.7 MINISTERIAL APPROVAL OF THE AGENCY'S FIVE YEARSTRATEGIC ASSET PROCUREMENT PLAN

Each agency’s five year strategic asset procurement plan(capital works forward plan) is to be revised annually as part ofthe normal budget cycle.

The plan will provide the government with a strategic view of futureplans and priorities.

Prior to providing strategic asset procurement plans as part of the budgetprocess, agencies will obtain Ministerial approval, ensuring that anyMinisterial priorities are reflected.



3.8 MODIFICATIONS TO PLAN IN RESPONSE TO STATE WIDEPRIORITIES

After Cabinet has determined the budget allocations and forwardestimates, agencies will need to review their strategic asset procurementplans to ensure that they are in line with the approved estimates andreflect any changes in project priorities determined by Cabinet.

3.9 AUTHORISATION OF EXPENDITURE FOR PLANNING ANDDESIGN

At the completion of this corporate planning phase, the proposal willhave been developed to the stage where work can commence on thedevelopment of the concept.

Before proceeding to the next stage, agencies should formulate a budgetfor the subsequent planning and design phases and seek approval ofproposed expenditure from the Minister or delegate, in accordance withTreasurer’s Instruction 302 - Authorities for Expenditure.




4. CONCEPT DEVELOPMENT PHASE

In this phase an agency moves from its broad, strategic asset developmentplan to individual concepts and projects which may need to be included onthe agency’s strategic asset procurement plan.

Review 8Project

Delivery 7Project

Definition 6Concept

Evaluation 543Ideas to


PlanningConcept

Development

Appoint the project steering committee to develop and manage theconcept phase

Appoint the project team to develop the concept

Develop project concept to meet service delivery needs

Analyse needs and market research in detail

Clarify the functional objectives of the project concept

Identify statutory, planning and environmental issues

Identify cultural and heritage issues

Define project parameters, quality standards and budget estimate

Identify all reasonable service delivery options (including "no-build"option)

Identify procurement options

4.1

4.2

4.3

4.4

4.5

4.6

4.3.1

4.3.2

4.3.3

4.3.4

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Agency

Note that a strategic value management study is to be undertaken during the concept development phase and that a strategic valuemanagement report is required when seeking approval of concept.

*

The feasibility study for the project includes the Concept Development and Concept Evaluation phases.

finance delivery options

contract method options

DAIS(Services SA)

4. CONCEPT DEVELOPMENT PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

PROJECT DEMAND STUDYDemand management aims to reduce asset creation by influencing the community’s demand forservices and by identifying those services which are essential (ie public needs rather than wants).The responsible agency undertakes research to ensure there is a justifiable need for the proposedproject. This research is documented as part of the information to justify the proposal.

COST BENCHMARKSCost benchmarks for services arise from the costing of comparable services or from calculationsof the cost of delivery in new and innovative ways. Cost benchmarks for construction arise fromconstruction standards and from comparisons with the level of service delivery and constructioncosts provided by comparable organisations.

RISK MANAGEMENT PLANRisk management is a structured way of identifying potential risks, analysing their consequences,devising responses and implementing strategies to manage the successful delivery of the project.

DAIS (Services SA) is the government’s risk manager for building assets and is responsible for

developing a risk management plan in conjunction with the service delivery agency.

STRATEGIC VALUE MANAGEMENT STUDY REPORTA strategic value management study is a structured, systematic and analytical process undertakenin the concept development phase to quantify and verify need and assist with the concept evaluation.Value management studies are undertaken by qualified independent experts who work in

conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic

value management study will question underlying assumptions about need and require evidenceto substantiate the need for services. It will provide a documented report which will form part ofthe information required in subsequent stages.

EVALUATION BRIEF (PRELIMINARY CONCEPT PLAN)The evaluation brief (preliminary concept plan) describes the concept and establishes criteria forthe specific project. This is a refinement of the project concept following the development work inthe concept development phase including the strategic value management study.

The evaluation brief sets the parameters for the proposed project, and provides informationwhich is used in subsequent phases. It is prepared by the agency in conjunction with Services SA.The information required includes:

• defined needs, consistent with the corporate business plan;• concept objectives for the project;• concept description for the project (relationship diagrams, plans etc); and• a preliminary estimate of the capital and operating costs for the project concept.

FUNCTIONAL ANALYSIS

A functional analysis is undertaken by DAIS (Services SA) or an appropriate consultant to determine

whether the client’s requirements as described in the client brief have been met.

ACTION PLANThe action plan outlines the key activities which have to be undertaken and sets timelines forthese events. Each project requires cost and timeframe targets for each element. The cost andtime plans are used to control all design and development activities and are measured againstthe standards established early in the life of the project.


4. CONCEPT DEVELOPMENT PHASE

4.1 APPOINT THE PROJECT STEERING COMMITTEE TO DEVELOPAND MANAGE THE CONCEPT PHASE

In the corporate planning phase, the project has generally beensupported by the agency's senior executive or a senior managerresponsible for implementing the agency’s asset program.

At this stage, large and complex projects require the appointment of aproject steering committee while routine projects may only require aproject team. It is also an appropriate time to provide any other liaisonor support arrangements.

The project steering committee provides general direction to a projectteam of professionals who will develop concept options and costings.

The role of the project steering committee and project team is to assignproject responsibilities, seek all relevant approvals and control the projectto its completion.

The project steering committee ensures that the necessary skills are inplace to assist in undertaking the concept development and conceptevaluation phases and subsequent steps in the project initiation process.

o DAIS (Services SA) will be represented on the steering committee asit has responsibility for management of building construction aspects,on behalf of government.

o The Department of Treasury and Finance, the Economic DevelopmentAuthority and the Crown Solicitor, may be represented, particularly ifprivate sector provision or financing is being considered or wherespecific legal issues may arise.

4.2 APPOINT THE PROJECT TEAM TO DEVELOP THE CONCEPT

The project team is responsible for development of the concept and thedaily administration of the project. It allocates project responsibilities,seeks all relevant approvals and generally supervises the project to itscompletion. Where applicable, it reports to the project steeringcommittee.

DAIS (Services SA) is responsible for the management of the government’sbuilding and construction related risk. It also manages the engagementof all private sector consultants (eg consultants for architecture,engineering, cost management etc) including those on the steeringcommittee and the project team.



CONCEPT DEVELOPMENT PHASE

DAIS (Services SA) is developing and will maintain a register of allconsultants who undertake work on behalf of government for urbanplanning, building design and construction. The Consultants’ Register

will enable the selection of professionals with relevant expertise andexperience and is part of an agreed quality assurance process.

Consultants’ registers for other infrastructure services such as roads,water and power are maintained by the respective agencies.

4.3 DEVELOP PROJECT CONCEPT TO MEET SERVICE DELIVERY NEEDS

A perceived need by an agency for an asset is translated into a servicedelivery concept. The development of the concept with reference toagency service delivery requirements is critical to the achievement ofvalue to government over the life of the asset. This assumes that strategicplanning for the business enables a comparison of measurable conceptobjectives with broad program objectives.

The agency should develop the concept detail so that the project canbe compared with its strategic directions, and so that it is able to quantifythe difference that the project is expected to make.

4.3.1 Analyse needs and market research in detail

Systematic and accurate needs analysis is critical to determiningwhat is really required to deliver the essential services.

Most market or service needs analysis has historically relied onbasic information such as:

• historical trends (eg past enrolments or past history ofservice delivery);

• comparable area standards (eg square metres per officeworker, student or prisoner); and

• forecasts including demographic data from the ABScensus (which may not reflect changes which haveoccurred since the last census).

The real purpose of the needs analysis in the project initiationprocess is to ensure that only those projects that meet the criteriafor demonstrated need will be provided. This process involvesasking the following types of questions.



o What are the concept/project objectives, including servicedelivery life?

o What is the state of the market (in terms of price/demand, etc)and in particular what are the expectations and plans of likelyusers and client/customers?

o Which business or service needs are met by the concept/project?

o How will the claimed benefits of the project be measured overtime?

4.3.2 Clarify the functional objectives of the project concept

All parties need to clearly understand the objectives of the project.The strategic value management process can be used as a wayof presenting a clear set of client/customer objectives for a projectand to address the key functional requirements early in the process.For all major projects, in particular those in excess of $4 million,a strategic value management study needs to be carried out toassist agencies to clarify their requirements.

DAIS (Services SA) will assist agencies to carry out strategic valuemanagement studies.

Needs assessment requires a ranked set of functional objectiveswhich describe what the project must do.

Analysis of objectives will result in the following documentation.

o A service delivery needs analysis.

o Detailed function needs and outcomes (what the assetmust do).

o Prioritisation of objectives and functions.

o An explicit evaluation of project objectives against strategicbusiness or service plans.

o An action plan for the following phases, identifying both actionsand gaps; as well as risk assessment and a risk managementplan.


4.3.3 Identify statutory, planning and environmental issues

At this point, agencies should also be aware of other similaractivities being planned and should consult with CommonwealthGovernmnent, Local Government and other State Governmentagencies and relevant organisations about their medium-termstrategies for related service provision. This consultation will enablethe agency to review again any possible sharing arrangements(eg sharing a school site between the government and non-government sectors).

In addition, agencies should consider ways in which a whole ofgovernment approach can be enhanced.

Proper identification of any other constraints at this stage canhelp test alternative concepts and identify the impact ofenvironmental and planning approval procedures on the timelinesfor the program. The questions to be asked include:

o Does the concept completely conform with planning policiesand regulations?

o Does the concept require changes to planning policies andregulations?

o Will the project require utility or infrastructure adjustments?

o Is the project environmentally sensitive and subject to forms ofenvironmental evaluation?

Long timeframes can sometimes be associated with evaluationof these issues and may limit the development of some optionsand/or identify additional cost elements.

4.3.4 Identify cultural and heritage issues

Any plans for significant work on - or adjacent to - buildings,gardens or public places may involve heritage issues, includingthose relating to Aboriginal people.

In these instances, the agency should contact the appropriategovernment authority.



4.4 DEFINE THE PROJECT PARAMETERS, QUALITY STANDARDS ANDBUDGET ESTIMATE

Benchmark standards can be used to define the parameters of theproposed project from the earliest stages of a project’s development,including:

• the quality standard to be adopted;• project cost; and• project time frame.

Benchmarks developed by DAIS (Services SA) for a range of buildingtypes can be used in this process.

For example, if there is a need for fifty new prison places in a particularlocation, it is possible to quickly define (within a range) building andsite size, total project cost, operating costs and likely project timeframe.

The work undertaken to define the scope of a project becomes part ofthe evaluation brief to be assessed in detail in the evaluation phase foreach project.

4.5 IDENTIFY ALL REASONABLE SERVICE DELIVERY OPTIONS(INCLUDING “NO BUILD” OPTION)

For almost every problem there is more than one solution and in mostcases a range of variations within a solution.

However, the one-off nature of projects often results in the “one rightanswer” being locked in too early in the process.

Sometimes there is a reluctance to spend time and money on thedevelopment of options when the solution seems obvious, but thedevelopment of meaningful options can be used to identify real needsand viable solutions, saving both time and money.

Group processes, expert input and the project management team shoulduse well defined project objectives and functions to help them generatea range of options for analysis and consideration.

Not all options will require detailed examination but consideration ofsome meaningful options may provide a means of assessing the risksassociated with the project and help add flexibility. Different optionscan have significantly different levels of risk, which need to be identified.



Agencies should refer to DAIS (Services SA) for risk management adviceand assistance in the development of a risk management plan forbuilding projects. Where the cost of the project is estimated to be inexcess of $150 000, risk management by DAIS (Services SA) ismandatory for those non-commercial agencies required to use theseservices.

The identification of options is very important and requires input frommembers of the agency and DAIS (Services SA). Community consultationforums may sometimes be appropriate. A brief assessment using strategicvalue management techniques may assist.

4.6 IDENTIFY PROCUREMENT OPTIONS - FINANCE DELIVERY ANDCONTRACT METHOD OPTIONS

Within each option there may be a range of sub-options for financingand delivery. For example, options could include the design and buildingof a new regional office, the purchase of an existing office or a developerlease-back arrangement.

Private sector funding of capital investment in community assets is animportant consideration. A broad range of private sector financingoptions is available. Agencies need to consider the “build, own andoperate” options in various combinations, and whether or not assetswill transfer to the government at some future time.

All costs to government need to be identified and documented todemonstrate the “whole of life” cost of the proposal and enable properanalysis of the value of the project to be undertaken. “Whole of life”costs include construction, maintenance, and refurbishment as well asequipment, operating and disposal costs (including salaries and utilitiescosts).

The documentation of these costs forms part of the probity andaccountability requirements of government.

The project initiation process is applicable to all built asset projects,regardless of whether the funding is provided by the Commonwealth,private sector or funding from internal or recurrent sources.

Commonwealth/State financing arrangements can represent multiplecombinations requiring evaluation. Where there are Commonwealthfunding and approval processes, agencies must ensure that Cabinet isfully informed and able to make its decisions before any commitmentsare entered into with the Commonwealth.



Contract delivery options should be considered at this stage as themethod of delivery can affect other decisions including the appointmentof the project team and the risk management process. Delivery optionsfor built assets include:

• the traditional form of government finance, and a plan, design,and construct process;

• construction management process;• design development/construction and novation packages;• developer lease-back arrangements, which must include

capital and all recurrent cost implications;• developer funded initiatives for the built component only; and• purchase of existing properties or services, including any costs

associated with refurbishment or upgrading.

Options such as BOO/ BOOT (Build Own Operate/ Build Own OperateTransfer) or a leasing option need to be considered and a preferred optionrecommended.

Where private sector provision or financing of infrastructure is beingconsidered, agencies need to be aware of the Economic DevelopmentAuthority (EDA) publication Guidelines for the Private Sector Provision

of Infrastructure. Reference should be made to the Department ofTreasury and Finance publication Contracting Out Financial Guidelines.Early consultation with the EDA, the Department of the Premier andCabinet (Office of Project Coordination) and with the Department ofTreasury and Finance is desirable.

Agencies should note that contracts for the construction or acquisitionof major assets must be certified by the Crown Solicitor or the CrownSolicitor’s delegate as being commercially competent and sound.

DAIS (Services SA) has several approved standard form contracts toassist agencies. The standard contract currently in use is NPWC Edition3. This is under review and it is anticipated that a suite of standard formcontracts based on Australian Standard 2124 -1992 will be introducedin 1996.

Government has adopted the Code of Practice for the South Australian

Building and Construction Industry. This Code and its Implementation

Guidelines applies to all building and construction projects that arefully or partially funded or managed by the Government of SouthAustralia.

Treasury and Finance can advise or assist agencies to undertake thedetailed analysis required in the evaluation phase with reference to theTreasurer’s Instruction 9105 - Guidelines for Evaluation of Public Sector

Projects and Treasury Information Paper No. 90/1 Guidelines for Evaluation

of Public Sector Projects.




5. CONCEPT EVALUATION PHASE

This phase involves quantifying and costing the difference a project will maketo the community by analysing the benefits of the options in terms of programor sub-program objectives and performance indicators, and selecting the mostcost effective option.

Agree on the scope of the evaluation brief (preliminary concept plan)

Evaluate concept options

Analyse short-listed options

Select the preferred project concept option

Describe the preferred option in an evaluation brief (final concept plan)

Seek Ministerial endorsement of the concept proposal>$150,000 to <$4.0m; Minister or delegate to approve

Seek Cabinet approval of the concept,$4.0m and >$4.0m

Referral to the Parliamentary Public Works Committee,if > $4.0m

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

Code:

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Review 8Project

Delivery 7Project

Definition 65Concept

Development 43Ideas to


Planning

* Note that approval at the Concept Evaluation phase is a change in procedure, and that the threshold for approval by Cabinet has beenincreased to $4 million cost on completion, with all stages included.

CabinetMinister

Process: Gov't Treasury& Finance

Agency

ConceptEvaluation

Action can be taken in various phases at the same time

DAIS(Services SA)

5. CONCEPT EVALUATION PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

STRATEGIC VALUE MANAGEMENT REPORTA strategic value management study is a structured, systematic and analytical process undertakenin the concept development phase to quantify and verify need and assist with the concept evaluation.Value management studies are undertaken by qualified independent experts who work in

conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic

value management study will question underlying assumptions about need and require evidenceto substantiate the need for services. It will provide a documented report which will be form partof the information required in subsequent stages.

RISK ASSESSMENT AND A RISK MANAGEMENT STRATEGY, INCLUDING ALLOCATION OF RISK AND

RESPONSIBILITY

Project risk assessment aims to ensure all risk variables are identified and managed. DAIS (Services

SA) is the Government’s risk manager for building assets and operates in conjunction with specific

agencies to identify risks and develop a plan for the management of risks associated withprocurement of assets.

ECONOMIC/FINANCIAL ANALYSIS OF OPTIONS, INCLUDING LIFE CYCLE COSTING OF OPTIONSThis is a systematic way of analysing all the costs and benefits of the various methods by which aproject objective can be met. It takes into account all major costs associated with the project,including capital and recurrent costs.

The economic and financial analysis will identify the option which is most cost effective when allcosts and benefits are taken into account. This analysis is part of the value management process.Reference should be made to Treasurer’s Instruction 9105 Guidelines for the Evaluation of

Public Sector Projects and Treasury Information Paper 90/1 Evaluation of Public Sector

Projects.

PROJECT PLAN (OR FINAL CONCEPT PLAN) FOR THE PREFERRED OPTIONThe project plan provides precise details about the specific project. The following details shouldbe included in submissions for approval of the project (eg submissions to the Minister, Cabinet,

and to the Parliamentary Public Works Committee). The service delivery agency and DAIS (Services

SA) are major contributors to the project plan.

The project plan (or final concept plan) for the preferred option will include:

• the project definition brief (schedule of accommodation, site works etc);• the proposed procurement method (lump sum contract, design/construct, construction

managed);• financing arrangements (agency or alternative funding);• a detailed cost estimate (based on established benchmarks);• a time estimate (based on previous experience and the market); and• a land acquisition/rationalisation plan confirmed by the agency.

MINISTERIAL ENDORSEMENT OF CONCEPTMinisterial endorsement of the project concept is required. Projects which are within the Minister’sdelegations will be approved for ongoing work. Projects requiring higher levels of approvalrequire Ministerial endorsement for referral to Cabinet.

CABINET ENDORSEMENT OF CONCEPTCabinet endorsement of the project concept is required if the estimated cost is $4 million or more.

INQUIRY AND REPORT BY PARLIAMENTARY PUBLIC WORKS COMMITTEE (IF REQUIRED)Projects with an estimated capital cost exceeding $4 million are referred to the Public Works Committee.The report from the Committee forms part of the essential documentation for the project.


5. CONCEPT EVALUATION PHASE

5.1 AGREE ON THE SCOPE OF THE EVALUATION BRIEF(PRELIMINARY CONCEPT PLAN)

From the information and ideas developed in the corporate planningand concept development phases, an agency should develop anevaluation brief, outlining the:

• concept definition;• concept objectives;• impact of the concept on program and service delivery

objectives;• financial/economic evaluation approach to be pursued; and• accommodation needs (where relevant).

To complete the evaluation brief (preliminary concept plan) the agencyshould seek agreement from Treasury and Finance on the scope of theproposed evaluation.

5.2 EVALUATE CONCEPT OPTIONS

An agency first needs to evaluate each option in terms of its total impacton the community and the government system. Economic evaluationaims to take a perspective which goes beyond any one agency andseeks to place values on costs and benefits to the community.

Economic evaluation includes two types of analysis:

• cost benefit analysis which is the preferred technique providedthe major benefits and costs of a project can be valued inmoney terms; and

• cost effectiveness analysis which is the technique to be appliedwhere the major benefits or costs are of an intangible nature.

Selection criteria have to be established to determine the most promisingoptions. Agencies need to reach agreement and document the selectioncriteria after careful debate to avoid problems further into the process.

The options can be ranked by a process of weighting functional objectivesand rating each option’s performance. This is an extension of the valuemanagement techniques used in the concept development phase.

5.3 ANALYSE SHORT-LISTED OPTIONS

Short-listed options need to be subjected to further analysis to determinetheir cost impact.



o Prepare project option cash flows. These cash flows should be basedon a life-cycle basis to reflect both capital and recurrent costsassociated with the project.

o Prepare indicative project management information including projecttime schedules.

o Prepare present value analysis of the project options includingsensitivity analysis.

o Complete risk assessment of project options, and a risk managementplan.

5.4 SELECT THE PREFERRED PROJECT CONCEPT OPTION

Having considered benefits, function, value, cost and delivery options,the best option is selected from the short list, based on the analysis ofthe data.

o Well described, quantified and documented decision-making criteriais required.

o The process and results are to be described in sufficient detail toenable the criteria to be externally verified.

o The balance between quantitative and qualitative factors needs tobe clearly explained to demonstrate the validity of the selection.

All this provides project definition and a check to confirm how well thepreferred project option fits the previously agreed business plan andfunctional objectives.

If the option is other than build (eg lease existing space, make use ofexisting infrastructure or make use of technology) the agency shouldconsult with the relevant government agencies such as the Real EstateManagement unit of DAIS (Services SA), the Department of InformationTechnology and the Department of Treasury and Finance.

5.5 DESCRIBE THE PREFERRED OPTION IN AN EVALUATION BRIEF(FINAL CONCEPT PLAN)

This involves describing the option in the following terms:

• program objectives;• asset function objectives;• scope and quality of proposed works;• capital and recurrent financing requirements;

CONCEPT EVALUATION PHASE


• impact on the State Budget;• economic evaluation of the preferred option including

quantified non-financial costs and benefits;• delivery and procurement method;• cost and time estimates;• land acquisition plan;• statement of risk to government, including risk assessment and

a risk management plan;• rationalisation plan where appropriate (eg plan for disposal

of various schools, following rationalisation and upgradingof the remaining schools);

• statutory planning and environment issues; and• cultural and heritage issues.

5.6 SEEK MINISTERIAL ENDORSEMENT OF THE CONCEPT

PROPOSAL

Agencies need to obtain Ministerial endorsement before a project canproceed. This requirement is subject to the Ministerial delegation, asdetailed in Treasurer’s Instruction 302 - Authorities for Expenditure.

The submission needs to be accompanied by independent reports fromthe Department of Treasury and Finance, and, if it is a building project,from DAIS (Services SA).

The Department of Treasury and Finance will include comments on:

• the budgetary provision for the project;• the justification of the proposal;• costs to other agencies; and• any other relevant issues.

DAIS (Services SA) will comment on:

• risk assessment and management of risk, including theprocurement method, the program of works and the impact ofthe proposed works on the construction industry;

• specific issues raised through the value management studies,including compliance with the brief, buildability, statutoryrequirements and agreed standards for building design andconstruction;

• life cycle implications, including ongoing maintenancerequirements; and

• any other relevant issues.

The Department of Treasury and Finance and DAIS (Services SA) are tobe given a minimum of three clear working days to provide agencieswith their reports.



5.7 SEEK CABINET APPROVAL OF THE CONCEPT

At this stage agencies are required to submit all proposals estimated tocost $4 million or more (cost on completion, with all stages included)to Cabinet for approval to proceed.

Approval at this stage will enable the proposal to proceed to the tenderacceptance stage without further formal approval. However the projectmust remain within the limits of the approval, in particular the costs andthe budget provision.

The following contents are expected to be included in the Cabinetsubmission:

• a statement of the objectives for the proposed project, includingdetails of the underlying assumptions and measurableobjectives;

• description of the proposed project;• a justification for the proposal, including an economic

evaluation in accordance with Treasurer’s Instruction 9105 -

Guidelines for the Evaluation of Public Sector Projects;

• estimates of capital and recurrent costs required to operatethe asset over the whole of its life;

• estimated construction commencement and completion dates;• procurement method and tender process;• a report by DAIS (Services SA), where applicable, commenting

on the proposal; and• a statement on the sources of funds including the impact on

the Budget.

5.8 REFERRAL TO THE PARLIAMENTARY PUBLIC WORKS COMMITTEE

The Parliamentary Committees Act 1991 under which the South AustralianParliamentary Public Works Committee operates, requires that any publicwork with an estimated value in excess of $4 million when all stages ofconstruction are complete must be referred to the Public WorksCommittee by the proposing agency or instrumentality, and that noamount may be applied for construction until the Committee has reportedon the work to the Parliament.

The Parliamentary Public Works Committee can inquire and report onthe project at the concept evaluation phase. In addition it may also wishto review the project at any future stage, including when the final designand costs have been confirmed.



6. PROJECT DEFINITION PHASE

The Project Definition Phase develops and documents the preferred projectconcept option as a design to bring the project plan (including cost plan andtime schedule) to a point where the agency’s Minister or delegate can considerwhether the project should proceed.

The Project Definition Phase requires significant professional involvement whichis coordinated by DAIS (Services SA).

Review 8Project

Delivery 76Concept

Evaluation 543Ideas to


PlanningConcept

Development

6.1

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The sketch phase of the project includes developing and documenting the preferred option

ProjectDefinition

Appoint project design team utilising the consultants' register

Provide the project design team with the detailed definition brief

Confirm contract method

Develop a cost plan for the project

Develop detailed project timelines

Confirm that the proposal satisfies endorsed concept parameters

Project design value management study

Analysis for best value solution

Significant deviation from the original plan

Check to confirm that the project meets the needs of the agency

Identify approvals required for the project

Development approval and certification

Endorsement to proceed to the delivery phase

6.6.1

6.6.2

6.6.3

6.8.1

DAIS(Services SA)

6. PROJECT DEFINITION PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

AGENCY STANDARDS FOR DOCUMENTATIONAgencies are required to develop and maintain details of the standards they require. This

information is made available to DAIS (Services SA) for the briefing of the consultants responsible

for design. This ensures they are aware of specific requirements to meet the agency’s needs.

PROJECT DESIGN VALUE MANAGEMENT REPORT (INDICATING BEST PRACTICE AND VALUE FOR

MONEY)A strategic value management study is undertaken to determine whether the need for the projectcan be substantiated. The project design value management study provides a similar opportunityto analyse the design and to determine whether it meets the needs. The objective analysis aimsto determine whether the design is functional, in accordance with agreed standards and policiesand represents value for money. The agency has responsibility for the project value management

study which will involve DAIS (Services SA) and the design professionals as well as agency

representatives.

ECONOMIC ANALYSIS INCORPORATING LIFE-CYCLE ASSESSMENT

An economic analysis is undertaken by the agency in conjunction with DAIS (Services SA). The

economic analysis should include a “whole of life” cost which takes into account the initialcapital cost, the recurrent cost of operating, staffing costs and any residual value of the asset.

DELIVERY BRIEF (THE PROJECT BRIEF AND PROJECT DEFINITION REPORT)The project delivery brief is a key document confirming that the project can be delivered withinagreed parameters. It includes the following details:

• schematic design (completed sketches);• reliable cost plan and cash flows (based on existing benchmarks); and• reliable time plan (based on previous experience and the market).

The service delivery agency has responsibility for ensuring the accuracy of information provided.

DAIS (Services SA) contributes significantly to the delivery brief through its project management

and risk management role.

PARLIAMENTARY PUBLIC WORKS COMMITTEE REVIEWThe project concept may have been referred to the Public Works Committee in the conceptevaluation phase. If further information is required, it is most likely to be when the design hasbeen developed, the estimated cost is known and a program of works has been developed (iethe project definition brief).

UPDATE THE CONSULTANTS’ REGISTERThe consultants’ register is maintained by Services SA and is updated regularly to reflect thequality of the work undertaken on specific projects.


6. PROJECT DEFINITION PHASE

6.1 APPOINT PROJECT DESIGN TEAM UTILISING THE

CONSULTANTS’ REGISTER

The steering committee or agency reviews the team structure for theconcept phase and determines any new team requirements.

The project team will include representatives from the service deliveryagency and DAIS (Services SA).

Utilise the DAIS (Services SA) Consultants' Register (refer section 4.2).

6.2 PROVIDE THE PROJECT DESIGN TEAM WITH THE DETAILED

DEFINITION BRIEF

The project brief (definition brief) is the basis for the design professionalsto develop detailed schematic designs (sketch plans).

The detailed schematic design process includes:

• drafting a detailed brief, defining all areas, services andfinishes;

• architectural and engineering design to establish form,functional relationships, area definition, site plans, sketch plans,elevations, materials selection etc;

• documentation and drawing of the project to a schematic stage,including all services and civil engineering designs(eg car parks, ovals and retaining walls);

• a specific project timeline;• a limit of cost plan and cash flows;• a quality plan;• confirmation of delivery options; and• project risk analysis.

At the same time a fully developed project plan including an actionplan is prepared for the management of the project delivery phase.

6.3 CONFIRM CONTRACT METHOD

Contract method options have been considered in the conceptdevelopment phase and will need to be discussed further whendetermining project timelines.

The contract method is confirmed by DAIS (Services SA) in consultationwith the agency responsible for the project.



6.4 DEVELOP A COST PLAN FOR THE PROJECT

Professional advice should be sought to develop a cost plan for the project.

The cost plan will include a break down of costs for the project and anestimate within an order of accuracy of ten per-cent (plus or minus) for:

• building works;• site works;• engineering services;• furniture and equipment;• statutory and legal insurance fees;• professional fees;• contingency allowance;• associated works; and• sundries.

The cost plan also indicates the cash flow of funds required on a financialyear basis.

6.5 DEVELOP DETAILED PROJECT TIMELINES

Once the detail of a project has been defined, a program (timelines) canbe established to coordinate all the project variables that are time-dependent. The timelines will be influenced by the method of deliverychosen for the project. The key items include:

• site acquisition and vesting of ownership;• design development/contract documentation process;• tender call and acceptance;• project approval process;• construction;• furniture and equipment purchases;• staffing arrangements;• enabling legislation; and• service delivery deadlines.

6.6 CONFIRM THAT THE PROPOSAL SATISFIES ENDORSED CONCEPT

PARAMETERS

With all aspects of the project defined, the proposed design should becompared with the parameters of the previously endorsed project plan.This is done to ensure that the project has not deviated from the originalintent unless there has been justification and approval for the changes.These changes and associated approvals need to be documented.

6.6.1 Project design value management study

The documentation developed for the project can be used for avalue management study, which confirms the strategic value

PROJECT DEFINITION PHASE


management study undertaken in the concept phase and tacklesthe specifics of value for money in the design and development.

The value management process is used now to ensure delivery ofthe essential functions described earlier, and to eliminate highcost/low function elements of the design.

The developed cost plan and the project design valuemanagement study will result in documented decisions and mayinclude ranked trade-offs in the design process. It should beagreed that any items taken out, will remain out.

Some items may be identified which could be excluded in theevent that cost reductions may be required, but as desirable itemsto be included if further cost savings are not required. Thesechoices should be documented and visible to the chief executiveof the agency, the Minister and Cabinet.

Conducting a value management review confirms that the specificproject represents value for money as well as functional efficiency.It may identify ranked trade-offs which should be documented toindicate which items will be deleted and the anticipated savingand/or effects of the decision.

6.6.2 Analysis for best value solution

It will be necessary to conduct a detailed evaluation of the capitaland recurrent costs of ownership and operation which flow fromthe chosen design.

Methods used to evaluate the best value solution include:

• life cycle costing (capital and recurrent costs for the built asset);• development of a cost of ownership plan which identifies

operating costs (eg staffing, utilities such as electricity, gasand water); and

• benchmark comparisons (standards and examples of bestpractice).

The outcomes of the detailed evaluation include:

• planning approvals identified, so they can be sought atan appropriate time;

• cost of ownership and operation defined and quantified;• time schedules in place; and• financial constraints set.

6.6.3 Significant deviation from the original plan

If the project has deviated significantly from the original plan,effectively it is a new project with likely variations in the estimatedtotal cost and subject to a thorough review using the projectinitiation process.



6.7 CHECK TO CONFIRM THAT THE PROJECT MEETS THE NEEDS OFTHE AGENCY

The analysis developed and refined in the concept evaluation phase isreviewed by the agency and further developed to confirm that the project,which is now defined in some detail, still meets the needs of the agency,will still perform and deliver agreed outcomes and is within the fundsallocated for the project.

6.8 IDENTIFY APPROVALS REQUIRED FOR THE PROJECT

Government projects are required to have a series of approvals whichmust be sought and confirmed before the project can proceed. Inaddition, government projects must conform with legislative requirementsincluding the Development Act and the associated regulations underthe Act.

6.8.1 Development approval and certification

Development approval is required through the DevelopmentAssessment Commission.

Certification for compliance with the regulations under the Act isalso required. Certification covers health and safety matters underthe building rules/code. In addition reference should be made toother relevant legislation including the Occupational Health, Safety

and Welfare Act. DAIS (Services SA) will supervise this process.

Early consultation is recommended with the DevelopmentAssessment Commission and DAIS (Services SA) to identify issueswhich may need to be addressed to ensure compliance.

6.9 ENDORSEMENT TO PROCEED TO THE DELIVERY PHASE

At the end of the project definition phase, the project should be submittedto the appropriate level of delegation (eg director, chief executive orMinister) for endorsement to proceed to contract documentation andtender call.

No further work should be undertaken until this endorsement is given.

While the project usually has a budget allocation, no expenditure canbe incurred until funding has been approved. Agencies need to havedocumented evidence of funds approval by the appropriate delegatebefore proceeding to the project delivery phase.



7. PROJECT DELIVERY PHASE

The Project Delivery Phase requires significant professional involvement which is coordinated by DAIS(Services SA).

Review definition phase of the design

Approval to proceed with contract documents

Prepare contract documentation

Define required quality standards for the contractor

Confirm the agreed and endorsed parameters

Initiate and facilitate approvals related to the Development Act

Obtain pre-tender estimate and associated cash flows

Utilise contractors' register to select tenderers

Approval to call tenders

Call tenders and obtain tender comparison estimate

Prepare tender appraisal and recommendation

Processing the tender call and final approval for awarding theconstruction contract

$4M and > $4.0M Cabinet approval

$0.5M up to $4.0M, Ministerial approval

<$0.5M CEO (subject to Ministerial delegation of authority)

Award the construction contract

Manage the construction contract

Commission and hand over of the completed project

7.1

7.2

7.3

7.4

7.5

7.6

7.7

7.8

7.9

7.10

7.11

7.12

7.13

7.14

7.15

Construction

Code:



Agency

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Design Development and Contract Documentation

Review 8Project

Delivery 7Project

Definition 6Concept

Evaluation 5Concept

Development 4CorporatePlanning 3

Ideas toMeet Needs 2

Govt Strategies& Key Directions 1

Tender Call and Contract Award

DAIS(Services SA)

7. PROJECT DELIVERY PHASE DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

AGENCY REQUIREMENTS CONFIRMED

The agency in conjunction with DAIS (Services SA) reviews the planning undertaken in the project

definition phase and confirms that the requirements have been met.

CLIENT AGREEMENT CONFIRMED (“SIGN OFF”)The agency takes responsibility for ensuring that its requirements have been described in the

required briefs and in the value management reports. DAIS (Services SA) assists and ensures that

there is agreement in writing prior to proceeding with contract documentation.

COMPLETED DESIGN AND CONTRACT DOCUMENTATION

The agency and DAIS (Services SA) ensure the design and documentation has been completedby the consultants prior to tenders being called for construction.

TENDER PRICE CONFIRMED

DAIS (Services SA) manages the tender call and tender appraisal process, leading to arecommendation and the awarding of the construction contract. The tender price should bewithin the cost limits previously identified.

CABINET APPROVAL TO LET CONTRACTProjects with a capital cost of $4 million or more (cost on completion and including all stages)require Cabinet approval before awarding the construction contract. The Cabinet submission for

the contract is prepared by DAIS (Services SA) in conjunction with the service delivery agency. The

contract is awarded once the submission has been endorsed by Cabinet.

FUNDS APPROVALPrior to letting any contract, the agency must verify that it has sufficient funds available in itsbudget to cover the cost of the project, allowing for escalation and contingencies. Approvalmust be given by the agency’s appropriate delegate for each project.

CONTRACT AWARDED BY MINISTER FOR STATE SERVICESIn most instances the Minister for State Services acts as the Government’s representative when

entering into construction contracts. DAIS (Services SA) is responsible for accepting the tender,

establishing the contract and executing a formal instrument of agreement. As there are legalissues arising from construction contracts and their administration, it is essential that this is doneby authorised delegates.

CERTIFICATE OF PRACTICAL COMPLETIONPractical completion is when a project has been completed and is fit for its intended purpose,except for minor omissions and defects that do not prevent its use. Any testing required under thecontract will have been carried out.

Practical completion is marked by the issue to the contractor of a certificate of practical completionby the Superintendent responsible for the building construction project.

The owners and the users should be provided with operators’ manuals for plant and equipmentand made familiar with the design features of the building so they are able to use it appropriately.


7. PROJECT DELIVERY PHASE

Prior to commencement of this phase, a review process should ensure thatagreed project parameters are documented and communicated to membersof the project team.

The Government of South Australia is a signatory to an “in principle” agreementto use Australian standards and benchmarks in relation to tendering procedures(as detailed in Appendix 3).

7.1 REVIEW DEFINITION PHASE OF THE DESIGN

The key functions to be reviewed at this stage include cost and cashflow plans, timelines, and quality standards. The roles of the membersof the project team need to be documented and communicated clearlyso there is a common understanding of functions and responsibilities.At this time options should be again reviewed to ensure that the bestoption has been selected for the particular project.

7.2 APPROVAL TO PROCEED WITH CONTRACT DOCUMENTS

Final details and quality standards for all elements of the project mustbe agreed before proceeding with contract documents. As documentsare expensive to produce, the service delivery agency should confirmthat all the features required in the project have been identified andincluded in the project definition phase and in the budget.

The agency is expected to confirm in writing that all essential features havebeen included and that the project can proceed to contract documents.

7.3 PREPARE CONTRACT DOCUMENTATION

The project delivery phase covers design development and thepreparation of contract documentation, proceeding to tender, tenderacceptance and construction, based on the project plan prepared andapproved in the project definition phase.

7.4 DEFINE REQUIRED QUALITY STANDARDS FOR THE CONTRACTOR

Pre-qualification criteria and selection criteria for contractors have beendeveloped. In South Australia, DAIS (Services SA) ensures that contractorshave the specific skills and expertise to undertake the project and ensureits completion to the requirements specified by the sponsoring agency.

The quality standards, with which the contractor is to comply and whichwill be used in the selection process, must be defined in the



documentation to ensure best practice standards are achieved for theproject. These standards have been defined in CIDA guidelines andinclude aspects such as:

• the management and technical capacity of the constructionteam;

• financial capacity and financial control systems;• quality assurance;• time performance;• occupational health and safety;• human resource management (industrial relations); and• skills formation.

In addition, consideration is given to the following factors:

• experience on relevant projects;• track record on contractual disputes; and• management of the program.

7.5 CONFIRM THE AGREED AND ENDORSED PARAMETERS

The analysis developed and refined in the concept evaluation phase,and checked in the project definition phase, is quickly reviewed by theagency to confirm that the project, which is now defined in detail, stillmeets the needs of the agency and will still perform and deliver specifiedoutcomes.

This check is especially necessary for large projects, where a significanttime period may elapse while contract documentation is being prepared.

However all projects require the agency to sign off on a statement ofrequirements, confirming the agreed and endorsed parameters of theproject. Any changes to the requirements after the project has beensigned off are considered additional work.

7.6 INITIATE AND FACILITATE APPROVALS RELATED TO THEDEVELOPMENT ACT

Built asset projects are required to conform with the legislativerequirements of the Development Act.

Development approval, together with certification that the plans complywith the regulations under the Act, must be sought and confirmed beforetender call.

DAIS (Services SA) can facilitate development approval through theDevelopment Assessment Commission and has responsibility for ensuringthat certification is provided.

PROJECT DELIVERY PHASE


7.7 OBTAIN PRE-TENDER ESTIMATE AND ASSOCIATED CASH FLOWS

Agencies now prepare the pre-tender estimate and associated cost plan.DAIS (Services SA) provides assistance to agencies in cost managementfor building projects.

A limit of cost estimate was established in the project definition phaseand the pre-tender estimate should be within this limit. If additionalbudgetary provision is required for a project estimated to cost morethan $1 million, it must be submitted to the Cabinet Budget Committeefor consideration, prior to seeking Cabinet approval.

If the pre-tender estimate exceeds the limit of cost estimate and additionalbudgetary provision is not required, the approval of the Minister (or theMinister’s delegate) needs to be obtained before proceeding to call tenders.

7.8 UTILISE CONTRACTORS' REGISTER TO SELECT TENDERERS

DAIS (Services SA) maintains a Contractors' Register which is to be usedto select tenderers for public sector projects.

7.9 APPROVAL TO CALL TENDERS

Before calling tenders, DAIS (Services SA) will obtain written authorityfrom the agency to proceed. Approval must be sought at the appropriatelevel of delegation.

In seeking the authority, a final check will be carried out to ensure thatthe following requirements are addressed:

• a complete set of documents is available;• the pre-tender estimate has been obtained;• sufficient budgetary provision is available; and• all necessary approvals have been secured (including

approvals under the Development Act) and a report from theParliamentary Public Works Committee where necesssary.

7.10 CALL TENDERS AND OBTAIN TENDER COMPARISON ESTIMATE

Once documentation for tender call has been finalised and the cost isconfirmed as within the budget parameters, tenders may be called. All tendercalls for projects over $150 000 must be conducted by DAIS (Services SA).



7.11 PREPARE TENDER APPRAISAL AND RECOMMENDATION

The tender appraisal is undertaken in accordance with the principlesoutlined in the Code of Tendering (Australian Standard AS 4120 - 1994).

The Code is a statement of ethics and procedures which underpin bestpractice tendering. It details the obligations of the Principal in the contractand the tenderers in the tendering process, and provides a consistentbasis for the calling of tenders among contractors and subcontractors.

Information is prepared in accordance with the principles detailed inthe Code and the agency is presented with a recommendation which isconsistent with the construction industry’s standard.

For public sector projects the Principal in the contract is usually theMinister for State Government Services. The Minister has been giventhis authority for the majority of contracts for public works.

7.12 PROCESSING THE TENDER CALL AND FINAL APPROVAL FORAWARDING THE CONSTRUCTION CONTRACT

It is essential to obtain final approval of funds and acceptance of thetender before awarding the construction contract.

The final approval for awarding the construction contract is sought fromthe appropriate level of delegation, which is Cabinet for projects with acapital cost of $4 million or more (cost on completion and including allstages), and the agency’s Minister or authorised delegate for projectsless than $4 million.

However if additional budgetary provision is required, projects of$1 million or more need approval from Cabinet before the contract is let.



7.13 AWARD THE CONSTRUCTION CONTRACT

DAIS (Services SA) is responsible for accepting the tender and establishingthe contract by the issuing of a “letter of acceptance”.

DAIS (Services SA) is responsible for preparing and executing a formalinstrument of agreement. Currently this is done in accordance withNPWC Edition 3 Conditions of Contract. This contract is well known tothe construction industry in South Australia and is used for major worksprojects.

This contract is under review and it is expected that a suite of standardform contracts based on AS 2124-1992 will be introduced in 1996.

7.14 MANAGE THE CONSTRUCTION CONTRACT

During the construction phase, DAIS's (Services SA) Superintendentadministers the contract on behalf of the Minister for State GovernmentServices who is the Principal in the contract.

The Superintendent, in turn, delegates the day to day authority underthe contract to the Superintendent’s Representative (usually the projectmanager) who is responsible for ensuring that the project proceedswithin the parameters approved by the service delivery agency and itsMinister, and in some instances Cabinet.

The project manager is also responsible for working with the agency toprovide all information necessary to allow the agency to retainresponsibility for the project during the construction phase.

Any increase in the estimated cost limits or any significant design scopevariations arising during the construction period should immediatelybe referred to the delegate who approved the project, together with anexplanation.

If any increase in cost is expected to exceed the approved expenditure,approval of additional funds must be sought from the person withdelegated authority to incur expenditure for the total amount (ie theinitial approval plus the proposed additional amount).



7.15 COMMISSION AND HAND OVER OF THE COMPLETED PROJECT

7.15.1 Commissioning

Commissioning of the works is usually undertaken before handover to ensure everything is ready for occupation and use. Anyworks outstanding under the contract should be identified anddocumented so there is a clear understanding of the work still tobe completed as part of the project.

7.15.2 Hand over

Once the construction works have reached practical completion,hand over from the contractor to the service delivery agency andits users can occur. From this time on the agency/user takesresponsibility for the asset.

Hand over includes the provision of operating instructions andmaintenance plans for the built asset and for any specific itemsof equipment which require instructions.

7.15.3 Defects liability period of the contract

During the defects liability period of the contract, the contractoris responsible for completing minor omissions and defectsoutstanding at practical completion and for rectifying constructiondefects identified during this period, which is usually twelvemonths.

Service delivery agencies are responsible for ensuring that theirusers understand the legal importance associated with obligationsduring the defects liability period, and for ensuring that no workis carried out by anyone except the authorised contractor.



8. REVIEW PHASE

The Review Phase provides opportunities to refine details and to feed backinto the system information about products, processes and performance. Thisinformation provides market intelligence which is used to benefit other projects.



Agency

Post completion review

Update asset information systems

8.1

8.2

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Management review8.4 �

Post occupancy evaluation (POE)8.3 �


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On Completion Of Project

Review 8Project

Delivery 7Project

Definition 6Concept

Evaluation 5Concept

Development 4CorporatePlanning 3

Ideas toMeet Needs 2

Govt Strategies& Key Directions 1

Post Occupancy - > 12 Months

At Any Phase Of the Project, Or After Completion

DAIS(Services SA)

8. REVIEW PHASE

DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

POST COMPLETION REVIEW

A post completion review is carried out by DAIS (Services SA) in conjunction with the agency anda representative of the group which will be using the asset. Any significant issues identifiedthrough this process have to be documented and a clear delineation made between rectifyingmatters under the contract as distinct from additional work which will require additional funds tobe approved and allocated by the agency.

POST OCCUPANCY EVALUATION REPORTPost occupancy evaluation (POE) is undertaken to determine whether the objectives of the projectwere achieved and whether the briefed standards were appropriate. It is a careful and systematicevaluation of the performance of an occupied facility, measured in terms of user satisfaction,fitness for purpose (based on the requirements stated in the evaluation brief), technical performanceand value for money.

Information from the post occupancy evaluation is used to upgrade briefing information, toreview standards and benchmarks and to ensure that appropriate processes are in place.

The process may be used to identify design issues which need to be amended or to bring toattention variations between the anticipated needs and the actual needs once the facility is inoperation. It does not imply any commitment to make changes or to allocate additional funds.

When undertaking the post occupancy evaluation, reference will be made to documentedstandards, project briefs and the plans developed and authorised during the project initiationprocess.

BLAMS INFORMATION TO UPDATE THE STATE ASSET REGISTERThe physical and financial details of the project (as built), with relevant information about thenature and location of the asset needs to be incorporated in an agency asset managementinformation system (usually BLAMS), the agency asset register and the State Asset Register.

CONTRACTOR/CONSULTANT DATA

DAIS (Services SA) maintains a register which provides information about the capabilities andperformance of people engaged on Government projects. This information is used in selectingconsultants and contractors for specific types of work. It is based on financial, technical andmanagerial capabilities, especially as demonstrated on past work undertaken on behalf ofGovernment.

FEEDBACK INFORMATION TO THE PLANNING PHASE.Information from a post completion review, post occupancy review or management review is fedback into the planning phase to improve the planning process and provide for continuousimprovement.

MANAGEMENT REVIEW REPORTA management review report is expected to identify whether due process has been followed andwhether issues of probity and accountability have been addressed. The report is provided toagency management for action including adjustment or improvement of the processes to befollowed in future projects.


8. REVIEW PHASE

8.1 POST COMPLETION REVIEW

A post completion review should be undertaken as soon as constructionof the project is completed. The purpose of this review is to identifyquickly any features which need to be rectified immediately, anyomissions from the contract and any unauthorised variations. It alsoprovides an ideal opportunity to identify any details in planning whichneed to be amended or updated to improve the process for projectscurrently in the design phase, and to amend documented standards, ifnecessary.

8.2 UPDATE ASSET INFORMATION SYSTEMS

The agency’s asset register needs to be updated and the informationincorporated in the State Asset Register at Treasury and Finance, asnecessary.

The information also needs to be included in the agency’s assetmanagement information system which is generally expected to be theBuilding and Land Asset Management System (BLAMS) operated by DAIS(Services SA).

In addition, performance reports on contractors and consultants shouldbe completed to update the contractors’ and consultants’ registers whichare maintained by DAIS (Services SA) and used as a guide for theallocation of work.

8.3 POST OCCUPANCY EVALUATION (POE)

Complete a formal post occupancy evaluation on all projects, particularlythose costing more than $4 million, after the asset has been used fortwelve months (when providers and users have had an opportunity toassess performance through a complete cycle of operation).

Include the following information.

o Determine the extent to which the project is achieving programobjectives and functions as described in the brief and through thevalue management process undertaken.

o Identify the key factors which helped achieve the outcomes as wellas the main causes of variances and advise stakeholders.

o Compare the planned versus actual operational costs and report tostakeholders.

o Identify opportunities for improvement (design, maintenance,operation) and document substantiated information to the stakeholders.



A post occupancy evaluation can result in an increase in the expectationsof users and in the briefing requirements for future projects. Stakeholdersneed to consider this both as an opportunity to improve service deliveryin response to identified shortcomings, and as a potential problem ifunrealistic or inappropriate standards are being sought. The standardsmay be too high (with initial cost implications); too low (with maintenancecost or safety implications); or unnecessary for the purpose of the project.

The review process includes the opportunity to review best practicestandards and recommend appropriate changes to incorporate thenew requirements as authorised improvements.

Smaller repetitive projects should also be considered for occasionalpost occupancy review, especially early in the cycle so that modificationsand improvements can be made to subsequent projects.

DAIS (Services SA) has guidelines for post completion reviews and postoccupancy evaluation to assist agencies.

Agencies are expected to allow for the cost of post completion and postoccupancy reviews as part of the project budget.

8.4 MANAGEMENT REVIEW

In some instances a management review may be required whichaddresses specific issues relating to matters of probity and accountabilitysuch as:

• accountability for decisions and outcomes consistent with thedocumented plans;

• confirmation that due process has been observed anddocumented procedures have been followed;

• evidence that appropriate records have been maintained, andthat an effective audit trail exists;

• documentation which confirms that all costs have beenidentified and substantiated, and payments made accordingly;and

• evidence that all necessary approvals were sought andconfirmed at the appropriate time and at the approved levelof delegation.

A management review is most likely if serious problems are evidentconcerning the integrity of the process or project management. Howeverit may be used as an audit check to ensure that appropriate processesare being followed and to assure the Government that all aspects ofprocurement risk are being managed appropriately.

REVIEW PHASE


NON-COMMERCIAL SECTOR AGENCIES

Non-commercial sector agencies are required to use the Project Initiation Process endorsed

by Cabinet in July 1995. These agencies include:

Adelaide Convention CentreAdelaide Festival Centre TrustArt Gallery Board of South AustraliaArts and Cultural Development, Department for theAttorney-General’s DepartmentAuditor-General’s DepartmentAustralian Formula One Grand Prix BoardBoard of the Botanic GardensCoast Protection BoardCommissioner for Public Employment, Office for theCorrectional Services, Department forCountry Fire ServiceCourts Administration AuthorityEconomic Development AuthorityEducation and Children’s Services, Department forElectoral Office, StateEmployment, Training and Further Education, Department forEnfield General Cemetery TrustEntertainment CentreEnvironment and Natural Resources, Department ofFamily and Community Services, Department forFoundation SAHistory Trust of South AustraliaHousing and Urban Development, Department ofIndustrial Affairs, Department forInformation Technology, Department ofInstitute of Medical and Veterinary ScienceJoint Parliamentary ServicesLegal Services CommissionLibraries Board of South AustraliaLotteries Commission of South AustraliaMetropolitan Fire ServiceMFP AustraliaMines and Energy, Department ofMulticultural and Ethnic Affairs, Office ofOutback Areas Community Development TrustParks Community CentrePassenger Transport BoardPolice DepartmentPremier and Cabinet, Department of thePrimary Industries, Department ofRecreation, Sport and Racing, Office ofServices SASenior Secondary Assessment Board of South AustraliaSouth Australian Government Employee and Residential PropertiesSouth Australian Health CommissionSouth Australian Housing TrustSouth Australian Meat Corporation

APPENDIX 1


South Australian Museum BoardSouth Australian Research and Development InstituteSouth Australian Totalizator Agency BoardSouth Australian Urban Projects AuthoritySouth East Water Conservation and Drainage BoardState Aboriginal Affairs, Department ofState Governor’s EstablishmentState Theatre CompanyTourism South AustraliaTransAdelaideTransport, Department ofTreasury and Finance, Department ofWest Beach Trust

(APPENDIX 1 Cont.)


ROLES AND RESPONSIBILITIES OF STAKEHOLDERS

The following summary outlines the roles and/or responsibilities of stakeholders involved in theProject Initiation Process:

o Agency/Service Provider - Responsible for the provision of government services and consequentlydefines the extent, quality and location of services. The service delivery agency is primarilyresponsible for the initial planning, budgeting and approval elements of the project. Ultimatelythe responsibility for the management and operation of the asset rests with the agency.

o Department of the Premier and Cabinet - Provision of “whole of Government” strategic planningto assist in determining the priorities for agency service delivery and resource allocations. It setsthe requirements for Cabinet submissions and ensures that due process has been observed.

o The Department of Treasury and Finance - Provision of economic and financial advice towardsthe efficient management of the Government’s finances and the efficient use of its resources.This includes the coordination and resolution of asset management policy issues, developmentof accounting and financial reporting standards, advice to Cabinet on agency budgets includingcapital works proposals and the review of major capital projects, including the assessment ofproposals for the private sector provision and operation of infrastructure.

o DAIS (Services SA) - Operates in conjunction with government agencies to provide professionalassistance for the planning, delivery, maintenance and disposal of built assets. Has responsibilityfor property management services and management of the procurement process for theGovernment’s built assets, as well as managing the risks related to Government’s building andconstruction and performing the industry interface role on behalf of Government. Also maintainsBLAMS, a computer based asset information system with details of public sector built assetswhich is used to update the Government property register.

It operates in cooperation with other agencies, through the Infrastructure Agencies Forum, todevelop standardised government contracts, documentation and procurement practices whichreflect best practice through the use of recognised National standards including AustralianStandards (AS) and National Public Works Council (NPWC) policies and procedures.

o Government Office Accommodation Committee (GOAC) - Has responsibility for thedevelopment and implementation of policies for the management of Government officeaccommodation.

It is responsible for maintaining a register of all office accommodation owned in the publicsector and its current and future availability. It also maintains a register of all leases of officeaccommodation from external sources to agencies and instrumentalities. This register includesdetails of the rent payable, length of tenure and other relevant details.

o Department of Environment and Natural Resources (DENR) - Has a responsibility for propertyvaluations and to undertake the acquisition and the disposal of land and property for thoseagencies with a governing statute which excludes the power to acquire and deal in land.

o Department for Housing and Urban Development (DHUD) - Guides and manages land useplanning, and urban, rural and regional development, for the benefit of present and futureSouth Australians. Responsible for the administration and ongoing review of planning legislationtowards achieving these objectives.

DHUD administers the Development Act on behalf of Government. However for Governmentprojects, certification of individual project compliance with the building rules is vested withDAIS (Services SA).

APPENDIX 2


o Economic Development Authority (EDA): Provision of advice and assistance on infrastructureissues which have an impact on the economic welfare of the State, including the private sectorinvolvement in infrastructure provision, in support of the economic priorities of the State.

o Crown Solicitor: The office of the Crown Solicitor provides advice on commercial and legalmatters generally, and assists contract negotiation and development. The office ensures certificationof the adequacy of proposed contractual arrangements, as well as probity of procedures andthe methods proposed for asset acquisition.

(APPENDIX 2 Cont.)


APPENDIX 3

REFERENCES FOR THE PROJECT INITIATION PROCESS

The Project Initiation Process for Capital Works, January 1996 has been developed in response toGovernment’s requirement for a clear process which will provide consistency in the planning anddelivery of Government’s built assets.

It follows the endorsement of a submission to Cabinet in July 1995. It details the steps to be takenand allocates the responsibilities of agencies and government in the process.

It accompanies the Strategic Asset Management Framework, January 1996 which addresses theGovernment’s policy for asset management of public infrastructure.

It will be complemented by a further publication, Building Asset Management Framework andaccompanying building asset management guidelines.

In addition there will be a publication which describes risk management and risk managementresponsibilities.

o Strategic Asset Management Framework, Department of Treasury and Finance/DAIS (Services

SA, January 1996

o Project Initiation Process for Capital Works, Department of Treasury and Finance/ DAIS (Services SA), January 1996 The Project Initiation Process replaces DPC 112 Capital Works Efficiency Measures.

o Treasury Information Paper • Paper 90/1 Guidelines for the Evaluation of Public Sector Projects, October 1990

o Annual Budget papers• Financial Papers

- Budget Speech- Financial Statement- Estimates of Receipts and Payments

• Financial Information Papers- Program Estimates and Information- Capital Works Program

o Treasurer’s Instructions, issued in accordance with Public Finance and AuditAct, 1987

• Treasurer’s Instructions (TI) re Expenditure for Goods, Services and Works

TI 302 Authorities for ExpenditureTI 304 Service Contracts, Supply Contracts and General ProvisionsTI 306 Approval to Incur Liability for Expenditure Under Contracts other than

Contracts under the State Supply ActTI 308 Calling Tenders for Service ContractsTI 322 Receipt of Goods, Services or WorksTI 324 Sales Tax Certificate of ExemptionTI 326 Approval for Payment of Recurrent ServicesTI 328 Register of ContractsTI 330 Preparation and Certification of AccountsTI 332 Payment of Accounts


• Treasurer’s Instructions re Financial Reporting

TI 1001 Asset Registers

• Treasurer’s Instructions - Miscellaneous

TI 9104 Purchase and Disposal of Government AssetsTI 9105 Guidelines for the Evaluation of Public Sector ProjectsTI 9106 Accounting for the Sale of Assets

o Further publications developed by DAIS (Services SA) in conjunction with others

• Code of Practice for the South Australian Building and Construction Industrypublished by the Construction Industry Advisory Council and the Department for Building

Managementon behalf of the Government of South Australia , July 1995

• Code of Practice for the South Australian Building and Construction IndustryImplementation Guidelines Part 1. Implementation Procedures

• Code of Practice for the South Australian Building and Construction IndustryImplementation Guidelines Part 2. Schedules of Best Practice

• Building and Construction Industry Prequalification and Registration of Contractorsand Consultants

Discussion Paper, Services SA, November 1995

• Building and Construction Minor Works Guide, Manual and ChecklistServices SA, November 1995

• South Australian Whole of Government Built Asset Management Quality AssurancePolicy (draft)

Infrastructure Agencies Forum, November 1995

o Other Relevant Publications

• Charting the Way Forward: Report of the South Australian Commission of Audit:Improving public sector performance, Vol 1, April 1994

• Guidelines for Private Sector Provision of Infrastructure, Economic DevelopmentAuthority, October 1994

• Guidelines for the Private Sector on Contracting Out and Competitive Tendering,Economic Development Authority, June 1995

• All About Contracting Out, Office of Public Sector Management,Department of the Premier and Cabinet, June 1995

• Contracting Out Financial Guidelines, Department of Treasury and Finance,November 1995

• Risk Management Strategy Plan, SA Insurance Corporation (SAICORP), March 1995

(APPENDIX 3 Cont.)


o National Standards and Benchmarks for the Building Construction Industry

o Australian Standards

The South Australian Government is a signatory to an “in principle agreement” which is part of theNational Construction Industry Reform Strategy. The agreement includes an undertaking to developand implement National standards and codes of practice which will ensure consistency, equity andprofessional conduct in the delivery and maintenance of infrastructure.

The “in principle” agreement by Government supports the implementation of international bestpractice and the ongoing monitoring of industry benchmarks to ensure there are acknowledgedexamples of best practice.

Australian Standards are used in this process. The relevant National standards include:

• Code of Tendering: Australian Standard AS 4120 - 1994This is a statement of ethics and procedures which underpin best practice tendering techniques.

The Code details the obligations of principals and tenderers in the tendering process andintroduces a consistent basis for the calling of tenders among contractors and subcontractors.

• Selection of Consultants: Australian Standard AS 4121- 1994This Standard has been specifically designed for the selection of consultant architects,engineers, quantity surveyors and other consultants. It sets out the ethics and the obligationsof both the client and the consultants. It also outlines appropriate procedures for the callingfor proposals, evaluation of proposals and the obligations of consultants and principals inthat process.

• Engagement of Consultants: Interim Australian Standard AS 4122 (Int) - 1993This document provides a general set of conditions to be used when engaging consultants.It consists of efficient and fair contractual arrangements for the employment of consultants.This standard has not been finalised, so DAIS (Services SA) is using a standard developedin conjunction with the Crown Solicitor's Office.

o Construction Industry (CIDA) Guidelines

• Project Management GuideThe Construction Industry Development Agency (CIDA) has published a project managementguide which identifies the principles and practical rules which help to achieve successfulbuilding construction projects.

The guide has been structured for use by owners and principals in contracts, but is of use toconsultants and contractors also.

• Partnering: A Strategy for ExcellenceThe Commonwealth Government, through the Construction Industry Development Agency(CIDA) identified the formation of new relationships between stakeholders in the industry asa vital step in the reform of the construction industry.

CIDA has developed a guide for the development of cooperative relationships betweenclients/users, consultants, contractors and subcontractors, suppliers and unions. The guideprovides practical case studies to illustrate the partnering process and the benefits to allparticipants.

(APPENDIX 3 Cont.)


• Construction Industry Project Initiation Guide for Project Sponsors, Clientsand Owners; CIDA, Second Edition, Commonwealth of Australia, November 1994to be read in conjunction with- Australian Standards 4120 Code of Tendering- Australian Standards 4121 Code of Ethics and Procedures for the Selection of Consultants

In addition there are further Australian Standards and guidelines which may be used.

o International Standards Organisation (ISO) 9000 Series and associated guidelines

The International Standards are used also, especially for quality assurance.

• ISO 9001: 1994 Quality Systems - Model for quality assurance in design, development,production, installation and servicing

• ISO 9002: 1994 Quality Systems - Model for quality assurance in production, installationand servicing

• ISO 9001: 1994 Quality Systems - Model for quality assurance in final inspection and test

(APPENDIX 3 Cont.)


GLOSSARY

TERMS RELEVANT TO THE PROJECT INITIATION PROCESS

AccountabilityResponsibility for services or functions that have been delegated and/or accepted.

Accrual AccountingRecognition and recording of revenue, expenses, assets and liabilities at the time they arise or areincurred.

Asset management• The process of managing demand and guiding acquisition, use and disposal of assets to

make the most of their service delivery potential, and manage risks and costs over their entirelife(Strategic Asset Management Framework, January 1996).

• A systematic approach to the procurement, maintenance, operation, rehabilitation and disposalof one or more assets which integrates the utilisation of assets and their performance with thebusiness requirements of asset owners or users.

Asset management information systemA system for collecting and analysing data on the performance of existing assets, including theiroperational costs. (An example in the South Australian context is the Building and Land AssetManagement System - BLAMS).

Asset management planIdentifies the short and long term requirements of an agency and provides a framework for managingits asset portfolio. These needs are driven by goals defined in the agency’s corporate plan andservice delivery strategies.

Asset performanceA quantified measure of the contribution an asset makes towards stated objectives or agreedstandards.

Asset registerA record of items considered worthy of identification as discrete assets. A physical asset registerincludes information about each asset, such as type of construction and technical details. (Detailsinclude location, value and construction type).

BenchmarkingIdentifies a starting point for measuring products, costs, services and practices against thoserecognised as industry leaders, in order to improve agency performance.

BriefWritten goals, methods and desired results prepared by project participants at the end of keyphases of the project initiation process, providing sufficient substantiation to approve advancementof the project to the next phase.

Client briefThe functional and operational requirements for the proposed project, stating the end user’srequirements and setting out objectives in terms of time, cost, quality, function and scope.

Delivery briefA report which contains the schematic design, limit of cost estimate, and cash flow plan. Akey document in confirming that the project can be delivered within agreed parameters.Used in the project delivery phase.


Evaluation briefA written description of the concept, outlining accommodation needs, impact on the program,service delivery objectives and the financial/economic approach to be pursued. Used in theevaluation phase of the project initiation process and also in the value management process.

Functional brief• that part of a the client’s brief that sets out the detailed functional requirements of a project;• a precise definition of the end user’s requirements, including but not limited to,

anticipated workload, staffing, key relationships, accommodation requirements andmajor physical requirements.

Project briefThe brief developed by the client as a result of rigorous evaluation of service delivery needsand options, and forwarded to the design professionals for interpretation into a design for abuilt asset.

Building and construction industryThe industry that provides the services associated with the activities of the building and constructionsectors covering buildings and associated engineering services and civil engineering (sometimesalso referred to as construction).

Capital worksA term which relates to the procurement of physical assets through the expenditure of capital funds.

CertificationA means of documenting compliance with performance or prescriptive building code requirementsby an independent accredited agency or individual not part of the statutory approval authority.

ClientThe person or organisation requiring and paying for a building or engineering work or a specificprofessional service.

Client brief (see brief)

Code of practiceA statement of the minimal acceptable levels of aspects of behaviour and best practice that aredeemed to be required so as to bring about improved performance through industry reform.

ConceptThe idea developed to meet a specific service delivery need.

ConsultantA specialist paid for a service. Often used to refer to ‘the professionals’ such as: architects, engineers,quantity surveyors.

Consultant registerA register of consultants drawn up using the financial, technical and managerial capabilities andcapacity of the consultant to allocate them into specific categories. Used in selecting consultants tobe engaged on projects.

ContractAn agreement entered into between two or more parties which involves an exchange of specifiedgoods and/or services for specified financial reimbursement or other considerations. The terms ofagreement are usually set out in writing and specific legal obligations are created by the signing ofa contract.

(GLOSSARY Cont.)


Corporate, strategic or business planA written record describing the reason for an organisation’s existence, programs, program objectives,issues and how it intends to achieve and measure progress to address these issues and objectives.

Cost benefit analysisA technique for the evaluation of projects, where all costs and benefits (direct and indirect) areconsidered. Costs and benefits should be quantified, but where this is not possible they should belisted.

Cost plan/time planCost and time targets for each element of a project, used for controlling all design and developmentactivities against these targets.

DesignThe development of a client brief into design details prior to documentation (see brief). Includesconceptual design, sketch design and design development.

Design concept planThe combination of information gathered in a site assessment and the development of suitable planoptions based on the client brief.

Development planA plan showing, in outline, the overall development intentions for an area, including land use,major transport links, utility networks, drainage, open space and built form.

Estimated total cost (of the project)All costs of a capital nature which are required to bring a project to completion. Costs includeplanning, construction, land and equipment.As distinct from whole of life costs which will include operating costs, staffing costs and the cost ofmaintenance and refurbishment.Agencies are required to quote the estimated total cost of a project at the time of seeking approval.The cost is to include the anticipated cost on completion, including escalation.

Financial analysisA project evaluation technique which is undertaken from the perspective of the individual or agency,rather than having an economy or system-wide perspective, as used in cost benefit analysis.

Functional analysisInformation generated from a value management study of a concept or project, which details atdifferent levels the functions required of a facility or its component parts.

Functional brief (see brief)

Indicative costA first indication of cost, used as a guide to feasibility and based on an outline statement of needs.It is intended as a guide for feasibility and planning purposes and should not be treated as a firmcost estimate or estimated total cost calculation.

InfrastructureMajor capital works constructed to provide a framework for the social and economic developmentof the State.

Land acquisition planA plan outlining an agency’s known additional land requirements. Where capital funding is requiredfor the purchase of land, the proposals form part of the agency’s strategic asset management plan.

(GLOSSARY Cont.)


Life-cycleThe cycle of activities that an item (or aggregation of items) goes through while it retains its ownphysical identity, comprising planning, design, acquisition and support, including rehabilitation.

Life-cycle costThe cost of an item throughout its life including the costs of planning, design, acquisition, operations,maintenance, and disposal, less any residual value.

Life-cycle costingThe evaluation of a project, considering all significant costs of total ownership over the life of theasset. Costs considered include capital costs of construction, maintenance and upgrading as wellas recurrent costs of operation, maintenance, cleaning, utilities (gas, electricity, water) and staffing.

Non asset strategiesMethods of addressing demand other than by adding asset capacity (ie "no build" solutions, pricingmechanisms, selective targeting of services).

Performance indicatorsMeasures of the effectiveness and efficiency of a program, strategy or issue being managed.

Post occupancy evaluationA careful and systematic evaluation of the performance of an occupied facility measured in terms ofuser satisfaction, fitness for purpose (based on client requirements), technical performance andvalue for money.

Practical completionThe stage reached when a project has been essentially completed and is fit for its intended purpose,except for minor omissions and defects that do not prevent its use, and with tests required under thecontract having been carried out. Practical completion is marked by the issue to the contractor ofa Certificate of Practical Completion by the Superintendent.

PrincipalThe party (owner, client or developer) to whom the contractor is legally bound to construct theworks. The term “Principal” is used in most Australian contracts in lieu of “client” or “proprietor”.The Principal operates in conjunction with the superintendent and superintendent’s representative.

Procurement strategyMethod of satisfying a service delivery strategy.

ProjectAny proposal that requires the weighing up of costs and benefits in order to meet a desired objective.

Project brief (see brief)

Project conceptAsset strategy responding to a service delivery strategy developed to address identified demand.

Project evaluationA review process during the life of a project to assess the functional efficiency of the design anddocumentation process. It may include a performance review of the various parties involved in thedesign and construction of a project.

(GLOSSARY Cont.)


Project initiation processThe early phases of a project from the initial idea to the approval to procure, and in these guidelinesincluding delivery and review. The project initiation process involves strategic planning, projectconcept development, option identification, evaluation and definition of the preferred procurementstrategy as well as delivery, performance review and feedback of information into the early planningphases.

Project option evaluationTesting the different service delivery or procurement strategies by quantitative methods (ie financialand economic analysis) and qualitative methods (ie level of consumer satisfaction).

Project risk managementA formal process of checking projects at initiation, engagement of consultants, tender call, awardingthe contract and contract administration to ensure that project and probity risks are identified andmanaged by the project manager.

Project steering committeeA group, usually chaired by an accountable officer or senior delegate and comprising majorstakeholders. Established to control a project from inception to completion.

Project teamA group which takes responsibility for ensuring the required work is undertaken in accordance withthe requirements of the steering committee and the project brief.

RiskThe possibility that an outcome is not achieved or is replaced by another outcome or an unforeseenevent occurs. This includes both uncertainty due to future events and the consequences of limitedknowledge, information or experience. The significance of risks is the impact that they may have onthe achievement of proposal objectives, delivery goals or management effectiveness.

Risk analysisThe process of identifying risks, estimating their likelihood and evaluating potential consequences.

A systematic use of available information to determine how often specified events may occur andtheir likely consequences. The purpose of risk analysis is to identify the causes, effects and magnitudesof risk and to provide a basis for risk assessment and treatment.

Risk management• A structured way of identifying potential risks, analysing their consequences, and devising

and implementing responses so as to ensure that the proposal or project objectives areachieved. This includes management of on-going risks associated with the ownership ofassets.

• The systematic application of management policies, procedures and practices to thetasks of identifying, analysing, assessing, treating and monitoring risk.

There is a specific role within the construction process whereby the risks within a constructionproject are identified and managed. The term risk management is also used to refer to project riskmanagement and the activities of the project manager in managing the identified risks.

Schematic design or drawingA preliminary design drawing, sketch or diagram showing in outline form the general intentions ofthe designer. A descriptive and illustrative definition of a preferred option, including a time schedule,cost plan and schematic drawings, developed to a point where a limit of cost estimate can beestablished.

(GLOSSARY Cont.)


Strategic asset managementThe comprehensive management of asset demand, procurement, use, maintenance, operation,rehabilitation, disposal and replacement to maximise return on investment at the required standardof service.

SuperintendentThe project manager or other person appointed in writing by the Principal as the Principal’s agentand notified to the contractor as such. The Superintendent is responsible to the Principal for allaspects of the administration of the contract for a project. Some of the functions may be delegatedto a nominated Superintendent’s representative.

Value analysisA systematic analysis to identify the essential functions of systems, equipment, facilities and proceduresthat are consistent with purpose, performance, reliability and manageability. This analysis will facilitatethe achievement of those functions in a way that represents the optimum value.

Value managementA structured, systematic and analytical process, which seeks to achieve value for money by providingall the necessary functions at the lowest total cost, consistent with required levels of quality andperformance.

Strategic Value Management - A structured, systematic and analytical process undertaken at theconcept evaluation phase of the project initiation process to quantify and verify needs.

Project Design Value Management - A structured, systematic and analytical process undertakento ensure the project design achieves value for money while meeting functional objectives.

(GLOSSARY Cont.)


For further information

If you require further copies of the ProjectInitiation Process for Capital Works or anyinformation about this publication, pleasecontact:

Department of Treasury and FinanceDebt and Asset Management BranchLevel 6 State Administration CentreVictoria SquareAdelaide South Australia 5000

Telephone: (08 ) 8226 9618Facsimile: (08) 8226 9844

Department for Administrative andInformation Services (Services SA)Level 5 Wakefield House30 Wakefield Street,Adelaide South Australia 5000

Telephone: (08 ) 8226 5124Facsimile: (08) 8226 5077

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