Capital Development Guidelines

The objective for including a project on the Design List is to bring it to a stage that it is fully planned. Inclusion of a proposal on the Design List does not commit the Victorian government to funding a capital project.

During the Preliminary Business Case Phase, feasibility and initial design work is undertaken to establish the scope and limit of cost of the project.

The main steps in the Preliminary Business Case Phase are:

• Planning Brief - Establishes a framework in which a Master Plan Study can be conducted.  It provides consultants with information about: 
  • Service delivery philosophy of the Agency and a statement of its role within the National, State, regional and local context
  • Broad description of management and operational policies including organisational structure
  • Description of the range, types and level of services to be provided, the requirements of individual departments and the relationships between the various services and departments within the Agency
  • Staffing profile (including number and type of staff and the hours they will work)
  • General planning considerations.
• Master Plan - A thorough investigation of a feasible range of facility planning options which meet the services needs/gaps, resulting in confirmation of the site location and a recommended plan for the future development of the Health Service/Agency, within a prescribed timeframe and estimate (Cost plan A). 
• Functional Brief - A description of the functions to be accommodated and the relationships between functions for a proposed capital project.  It should identify how the project meets the objectives and policies of the organisation. 
• Feasibility Study - Evaluates options against a set of agreed criteria and presents:
  • A detailed analysis of a preferred facility development strategy
  • A realistic estimate of the total project investment (Cost Plan B)
• Final Business Case Phase - A comprehensive analysis of the relative merits (financial and socio-economic) of identified options to determine the preferred option. The Business Case Report forms the basis for government approval of the project and the allocation of capital and recurrent funding to construct and operate the facility.
• Schematic Design - Preparation of design briefs and layout, including key physical elements, areas, locations, and volumes including basic building services systems and Cost Estimate (Cost Plan C1).
• Value Management - Formal review and evaluation of a proposed project to achieve the best value for money.

The Second Gateway Review, Business Case - is then undertaken.  This includes identifying options, determining affordability, achievability and value for money.  For major/complex projects a Preliminary business case is carried out at the Schematic Design stage, while the Final business case follows the Value Management assessment.

Capital Management Branch has produced the following guidelines to assist with processes undertaken during the Preliminary and Final business case phases:

• Master Plan Studies
• Functional Briefs
• Feasibility Studies
• Schematic Design
• Value Management Studies

The Final business case for all projects must be signed off by the Division Director and Capital Management Branch. Proposed projects are again ranked within the overall Department of Human Services asset investment proposal and submitted to the Expenditure Review Committee (ERC).

If ERC approval of the Schematic Design and Cost Plan C (defining the project scope and TEI) is obtained, the project is included on the New Works List and can proceed to documentation and tender. The ERC also independently considers any project over $10 million.

Completion of the Business Case phases may result in approval to either proceed with the project using government funding, terminating the current proposal, or to seek private sector funding. The project funding may involve a number of funding sources that must be identified at this stage. For selected projects to be carried out by Agencies, a Capital Investment Funding Agreement is to be signed. The Agreement defines the scope, cost, timeframe and funding arrangements for the project and commits the responsible Agency to delivering the project within these parameters. The funding agreement is usually signed at the end of schematic design.