Governments rely upon a comprehensive and robust Business Case from the agency, with clear and transparent assessments of the proposed investment and the procurement options analysis, so it can decide whether to support any one investment proposal against competing priorities for public resources. Such business cases should be prepared by agencies in accordance with their relevant jurisdiction's policies and guidelines.10
A Business Case that recommends alliancing as the preferred procurement option should be supported by an options analysis that shows the potential for superior value for money outcomes compared to other procurement alternatives.
Although a Business Case may demonstrate otherwise, alliancing is unlikely to provide optimal outcomes for projects with a capital value of less than $50 million, primarily due to the resources which are required (from both the agency and industry) to set up and maintain an effective project or program alliance. Alliancing should only be considered for small projects if the agency's Business Case has expressly addressed the relevant resource impacts and costs. It is important for any recommendation by an agency to use an alliance contract (where there is an anticipated capital value of less than $50 million) to be accompanied by supporting information and a full procurement strategy analysis.
Where an agency intends to establish a program alliance,11 this policy still requires the agency to show the superior case for using alliance contracting to deliver the project(s), and for selecting the program alliance approach, in the Business Case.
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10 Each jurisdiction will have its own approval processes, polices and guidelines for approving and developing business cases for investment proposals. For example, see the Victorian Lifecycle Guidance material; and National Public Private Partnerships Guidelines.
11 A program alliance for projects is effectively a pre-qualified panel of potential alliancing par ties that an agency establishes so it can expeditiously and conveniently select from the panel to form an alliance for a specific project or for a package of related works.