Stage

Description

Components Required

Rationale

1.  Goal Definition

Definition of the fundamental economic, environmental and social goals that Australia seeks to achieve. For example:

•  sustained economic growth and increased productivity;

•  lower carbon emissions and pollution; and

•  greater social amenity and improved quality of life.

•  Formalised, comprehensive, and agreed goals, objectives, targets and indicators.

•  Specific and quantified goals, objectives and targets.

•  Outline how the initiative fits within existing infrastructure plans.

•  Outline of how the goals and objectives align with those of other parties (e.g.: National - including Infrastructure Australia's Strategic Priorities, State/Territory, Regional, and Local level) and across sectors.

Goals are needed against which problems and solutions can be assessed.

2.  Problem Idenitification

Objective, specific, evidence-based, and data rich identification of problems of infrastructure systems and networks that may hinder the achievement of those economic, environmental and social goals.

•  Situation Assessment - a review and analysis of the current status.

•  Scenario Assessment - a review and analysis of the future status that identifies:

o  Driver and trends of the current and future situation o o  Base-case using the current trends (certainties) 

o  Alternative futures using future trends (uncertainties)

•  A list of Problem Statements that can be accurately defined and quantified.

Specificity regarding inadequacies is essential in order to take targeted and therefore more effective action.

3. Problem Assessment 

Objective and quantified appraisal of the economic, environmental and social costs of those deficiencies, so that the most damaging deficiencies can be identified and prioritised.

•  Accurate and objective assessment of the economic /environmental/social impacts of those problems.

•  Priorities identified which reflect the scale of impacts.

Understanding the costs/impact of deficiencies allows the worst problems to be identified and prioritised.

4.  Problem Analysis

Objective policy and economic analysis of why these deficiencies exist - i.e. what is the underlying cause (depending on the sector, reasons could include market failure, government failure, capital restrictions, etc). This should include an assessment of non-infrastructure reasons for the problem - e.g. land use patterns, peak demand; or education/business hours.

•  For each deficiency, analysis of why those problems have developed.

•  Covers both immediate and underlying causes (e.g. not just 'lack of investment', but causes of underinvestment, e.g. regulatory environment).

Understanding the causes allows effective and targeted solutions to be created.Infrastructure is often not the only cause of problems.

5.  Option Generation

Development of a full range of interventions that address the issue in the domains of:

•  reform (regulation, legislation, governance); and

•  investment.

Identify the full range of Options for each problem from the domains of:

•  reform - e.g. independent pricing, regulation, approvals, coordination; and

•  investment - e.g. better use through demand management, capacity increases.

Identification of a broad range of options - across reform and investment areas - rather than relying on early judgements or pre-conceived ideas - is more likely to identify the best Solution or package of Solutions.

6.  Option Assessment

Strategic analysis and cost-benefit analysis to assess those options. The appraisal should incorporate the full range of economic, environmental and social impacts (including agglomeration and trade impacts, carbon impacts, noise, and social amenity) so that the impact on all goals is measured and understood.

Qualitative and quantitative analysis including:

•  Strategic analysis - using high-level profiling assessment - to assist in the analysis of a large number of Options; and

•  Rapid analysis - using a high-level Appraisal assessment -such as a Rapid Cost-Benefit Analysis (CBA) - to assist in the analysis of a smaller of Options.

An understanding of the strategic and economic value along with the risks and uncertainties in delivery - is essential to understand how the Options or package of Options will achieve the fundamental goals outlined in Stage 1.

7.  Solution Prioritisation

Identification of policy and investment priorities from the list of solutions, on an objective basis that gives primacy to the Benefit-Cost Ratio (BCR) of initiatives, but is balanced by considerations such as strategic fit and deliverability (including risk, affordability).

•  A structured and objective evaluation framework - that reflects the primacy of Cost Benefit Analysis along side of the strategic value and deliverability risk - is used to make decisions on the long term infrastructure pipeline.

•  A review of the Solution is made against he fundamental goals/problem identification.

BCRs provide the best available objective evidence as to how well solutions will impact on the goals outlined in Stage 1 - but is not the whole story.