Governments contract on behalf of citizens to purchase infrastructure assets using taxpayer funds. Thus, the objective for government decision makers is to obtain the optimal value for citizens for the least amount of taxpayer funds. Government's success in solving this dilemma allows it to discharge its responsibility to deliver infrastructure in a manner that protects the public interest.
As the elected representative of citizens and custodian of taxpayer funds, a government makes decisions on the application of public funds or resources.
The prime focus of governments, when making decisions on the allocation of resources, is on supporting the delivery of services to the community. Whilst governments will be very interested in the resources (capital and non capital) that the agency needs to deliver a required community service, their primary focus is not on the desirability or otherwise of capital assets in isolation of the service benefit.
For the purposes of this Study, the steps leading to a government decision on resourcing can be described as follows:
• Agencies come to government with investment proposals that call on public resources to facilitate delivery of priority services to the community.
• Investment proposals are analysed, dimensioned and articulated in business cases.
• Business cases document the merit of the investment proposal based on a thorough and wide ranging analysis of costs, risks and benefits.
• The decision to support or not support an investment proposal is based on a balanced judgement regarding the 'VfM proposition' in the business case, that is, the costs/risks of the proposal balanced against the service benefits to the community.
As such, investment proposals and business cases deal with both the whole-of-life capital and non-capital requirements of delivering community services. That is, the capital project component, the ongoing operations of the infrastructure or facility as well as the recurrent funding of services delivery.
The alliance team is primarily concerned with the delivery of the capital assets, it is not usually required to manage or address the operational phase (other than ensuring fit-for- purpose capital assets and whole-of-life considerations for the capital assets) nor is it responsible for the ongoing service benefits to the community (for example, the alliance does not take the risk of whether the new road does actually lead to travel time savings).
The role of the alliance is to dimension, detail, plan and deliver the capital assets and the VfM proposition impacting on those capital assets within the parameters of the approved business case.
Therefore, the VfM consideration important in the alliance is whether the government's/Owner's capital project implementation objectives and works have been delivered by them at the lowest price and in accordance with the approved business case. This is not to say governments are only interested in cheapest price, rather they are interested in achieving the social, environmental, economic, quality and other objectives that they have agreed to, as well as the direct construction cost, at the lowest price.
Prior to the business case approval, if the Owner believes that a particular social, economic and/or environmental issue is important, and wants it addressed as part of the capital project, then the Owner should analyse its costs, risks and benefits and make it part of the VfM proposition in the business case submitted to government for approval.
After business case approval, if the alliance believes that there is a need to address a further social, economic and/or environmental issue, then the alliance must seek approval from the project Owner (as distinct from the Owner's representative) and potentially the Owner from government.