While a detailed procurement plan is developed after resource allocation has been approved, agencies must document the proposed procurement strategy to identify the most effective way of achieving the objectives of the project or program.
Finalising the procurement strategy is important task as procurement costs can contribute up to 30 per cent of the estimated total cost of the proposal. Agencies need to demonstrate at an early stage how the procurement strategy will contribute to value for money and how this will be managed as part of the governance arrangements (5.2 above).
Agencies must ensure that a procurement strategy takes into account the risks and constraints, use of the market's capabilities and the procuring agencies' requirements. A procurement strategy aims to achieve the optimum balance of risk, innovation, control and funding for a particular project.
Procurement options will depend on the scale, risk and complexity of the project or program, affordability of the options and also the capacity of the delivery agency. These factors may lead to different procurement models such as direct purchase, service level agreements, construct and design; design, construct and manage, alliancing, or privately financed projects.
The decision for delivering a project through private financing or similar procurement methods can only occur after the Government has made a resource allocation decision, that is, it has been proven that a proposal has merit, is a priority and it is value for money.