DELIVERABILITY ASSESSMENT

DELIVERABILITY ASSESSMENT

Criteria

Questions, Documentation and Responses

1. Is the risk being managed appropriately?

Key questions on Risk Management:

• Have risks been formally identified, assessed and addressed through a management strategy?

• Can the initiative be staged to reduce risks / improve manageability?Information and documentation to provide includes:

• Risk assessment reports;

• Risk management strategy;

• Peer review of risk assessment and management strategy; and

• Analysis of staging options:

o Factors taken into account - economies of scale (for procurement and usage); and

o Best time to deliver relevant stages - taking into account future demand forecasts, flexibility for other stages of the initiative.

Key questions on Construction Risks:

• Does the initiative pose any significant construction risks due to its location, geology, design, etc?

• Are those risks reflected in the construction cost estimate?

• Is there sufficient capacity (including relevant skills and expertise) to ensure the delivery of the initiative and realisation of benefits?

• Are there any significant consequential risks to the wider network?

• Are those risks reflected in the initiative's cost estimate and cost/benefit analysis?

• Will delivery require associated works to enable initiative to succeed in practical terms?

o What is the scale and cost of likely works?

o Who will fund the works?

o How will they be delivered?

• How will interface risks with the initiative be managed?

• What requirements will need to be satisfied prior to construction of the initiative, including relevant planning and environmental approvals, land acquisition?

Information and documentation to provide includes:

• Detailed engineering report;

• Peer review of engineering report;

• Detailed risk-based construction cost estimate, including probabilistic modelling, that reconciles with the risk assessment; and

• Independent review of construction cost estimate.

Key questions on Environmental Risks:

• What are the significant environmental risks?

• Are they reflected in the initiative's cost estimate?

• What community engagement/consultation have been undertaken?

• What land use/environmental/planning approvals need to be obtained?

• What approvals/licences have already been obtained?

Information and documentation to provide includes:

• Environmental reports (noise, amenity, etc);

• Environmental impact statement; and

• Conditions of approval.

Key questions on Other Risks

• Are there any significant social or political risks?

• Are there any significant risks posed by (or for) other levels of government?

• Are there any other significant risks?

• Are they reflected in the initiative's cost estimate?

Information and documentation to provide includes:

• Political risk analysis;

• Risk-based project estimate (preferably using Monte Carlo simulation); and

• MOUs with other levels of government.

2. Is there a need for government funding?

Key questions:

• Does a market exist or can a market be introduced, ie, where users pay for services?

• If a mix of private and public funding or full public funding is proposed, what are the market failures that require this?

• Can the market failures be remedied through reforms rather than non-market interventions?

• If supplemental public funding is proposed, is it clear that the level of contribution reflects the impact of market failure?

• If supplemental public funding is proposed, what form of contribution is proposed - grant, debt, equity - and why?

• If public financing is proposed, what are the public policy objectives being pursued?

Information and documentation, eg a detailed business case including:

• Analysis of scope for private funding (eg: feasibility of recovery of full or partial costs from users).

3. Is there a need for Commonwealth funding?

Key questions on the case for Commonwealth Funding:

• Why should the Commonwealth rather than State/Territory or Council fund the initiative - what is the national interest?

• Is Commonwealth funding likely to lead to a displacement of State/Territory infrastructure spending?

• What is the proposed State/Territory/Council funding contribution for the initiative?

• What other sources of Commonwealth funding are being provided for the initiative?

• Where a mix of funding sources is envisaged, does the mix reflect the respective interests of the funders and is risk allocated appropriately?

• Outline the proposed timing of cashflows for each contributor and what the each contributor's funds will be used for (include details of the inflator used to derive nominal amounts)?

• Where Commonwealth funding is being sought how is it envisaged that funding would be provided, e.g. grant, equity, loan?

Information and documentation to provide includes:

• Where Commonwealth funding is sought, projected State infrastructure spending with and without Commonwealth funding; and

• Financial model of the initiative's cashflows, including real, nominal and discounted dollars.

4. Does the delivery strategy provide confidence that the initiative benefits will be delivered?

Key questions on Delivery Strategy Issues:

• At what stage is the initiative in its development, eg, one option to address a need, preferred option, concept design, business case, committed funding, inclusion in Strategic Infrastructure Plan or similar, procurement.

• What are the initiative's key milestones?

• What is the proposed delivery strategy, including source of finance, contract type and procurement process?

• Can the private sector add value by financing and delivering the infrastructure and related services?

• If so, is private financing proposed?

• Where private financing is envisaged, is a competitive market for the provision of private capital likely given the location and type of initiative?

• What is the proposed strategy for operations and maintenance of the infrastructure?

• Does the delivery strategy effectively deal with the risks identified?

• Does the delivery strategy introduce new risks, eg, design, construction or operation interfaces?

Information and documentation to provide includes:

• Procurement strategy report, including analysis of options considered; and

• Results of market soundings on:

o Level of interest in the initiative;

o Proposed delivery strategy;

o Proposed financing/ownership model; and

o Timing and staging of the initiative.

5. Does the initiative's governance model provide confidence that claimed benefits will be delivered?

Key questions on the Initiative's Governance include:

• What are the proposed governance arrangements for the project? What has been used until now, and what is proposed between now and commitment to proceed, during procurement and delivery, during operations?

• What role is envisaged (if any) for the Commonwealth if it contributes to the initiative?

• Who are they key stakeholders and what role will they play in the initiative's governance?

• Is the initiative subject to a Gateway or similar review process?

Information and documentation to provide includes:

• Governance plan;

• Independent review of governance plan; and

• Reports from independent reviews of the initiative, e.g. gateway reviews.