Project Initiation Process

STRATEGIC ASSET MANAGEMENT

Project Initiation
Process
For Capital Works

DOCUMENT UNDER REVISION

Key areas under review include:
reference to the aquittal requirements of Government's
Prudential Management Framework and the Department
of Premier and Cabinet's Circular No. 15, June 1998 on
'Procedures for Submissions Seeking the Review of Public
Works by the Public Works Committee'.
roles and Responsibilities of the 10 Portfolio Agencies
minor changes to clarify details associated with the text
and process

Government of South Australia
January 1996

Acknowledgements

The Project Initiation Process developed for South Australia acknowledges
the work undertaken by other public works authorities and associated
organisations.

Specific acknowledgement is given to:

• WA Building Management Authority and the Treasury of Western
Australia.

Acknowledgement is given also to the following organisations:

• Commonwealth Government
• Construction Industry Development Authority (CIDA)
• National Public Works Council
• Department of Public Works and Services, New South Wales
• Administrative Services Department, Queensland

ISBN 0 7308 4755 1
Published by the Government of South Australia, January 1996
Produced by Treasury and Finance/DAIS (Services SA)
Project No. 009
Layout, graphics and design - GDFX
Print Management - Sprint

© Government of South Australia, 1996

Reproduction of this publication is encouraged, provided that due
acknowledgement is given to the Government of South Australia.

FOREWORD

The Government of South Australia is committed to the efficient and effective
delivery of essential services to the community.

To achieve this objective Cabinet has endorsed the Strategic Asset Management
Framework and the Project Initiation Process for Capital Works, which will assist
government agencies and private sector providers.

The Strategic Asset Management Framework provides information to guide
the direction and management of the State’s investment in assets in ways
which will maximise benefits to the community and minimise costs to
government.

The Project Initiation Process for Capital Works is a component of strategic
asset management. It highlights the need to carefully consider and justify
proposals for new or replacement services and the most appropriate means
of service delivery. When new or additional assets are under consideration,
and before initiating any capital works projects, agencies are expected to
consider all options for service delivery, taking time to examine a range of
alternatives before making a firm commitment.

The Department of Treasury and Finance and DAIS (Services SA) will both
offer their assistance to people in agencies to apply the process.

Stephen Baker MP Wayne Matthew MP
Deputy Premier Minister for State Services
Treasurer

PROJECT INITIATION PROCESS

CONTENTS
FOREWORD

1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS ........................................... 1
1.1 Government strategies ............................................................................................. 1
1.2 The importance of the Project Initiation Process ......................................................... 1
1.3 Benefits .................................................................................................................. 2
1.4 A consistent process ................................................................................................ 2
1.5 Agencies required to comply with the process ........................................................... 3
1.6 Application of the government’s risk management framework .................................... 3
1.7 Adaptation of the process to meet individual needs ................................................... 3
1.8 Key features of the Project Initiation Process .............................................................. 4

2. IDEAS TO MEET NEEDS ....................................................................................... 7
2.1 Scope of the Project Initiation Process ....................................................................... 8
2.2 Application of the Project Initiation Process ............................................................... 8
2.3 Responsibility, accountability and management ......................................................... 9

3. CORPORATE PLANNING PHASE ....................................................................... 11
Documents and written approvals .......................................................................... 12
3.1 Review corporate plan for consistency with government priorities .............................. 13
3.2 Define service delivery needs and broad time frames .............................................. 13
3.3 Examine demand management and non-asset strategies ......................................... 14
3.4 Examine existing asset performance ....................................................................... 15
3.5 Establish project concepts by rigorous testing of assumptions ................................... 15
3.6 Project concept to be considered for the government's forward program ................... 16
3.7 Ministerial approval of the agency’s five year strategic asset procurement plan ......... 16
3.8 Modifications to plan in response to State wide priorities ......................................... 17
3.9 Authorisation of expenditure for planning and design .............................................. 17

4. CONCEPT DEVELOPMENT PHASE ..................................................................... 19
4.1 Appoint the project steering committee to develop and manage the concept phase. .. 21
4.2 Appoint the project team to develop the concept ..................................................... 21
4.3 Develop project concept to meet service delivery needs ........................................... 22
4.4 Define the project parameters, quality standards and budget estimate ...................... 25
4.5 Identify all reasonable service delivery options (including “no build” option) ............. 25
4.6 Identify procurement options - financing and contract delivery ................................. 26

5. CONCEPT EVALUATION PHASE ........................................................................ 29
5.1 Agree on the scope of the evaluation brief (preliminary concept plan) ...................... 31
5.2 Evaluate concept options ....................................................................................... 31
5.3 Analyse short-listed options .................................................................................... 31
5.4 Select the preferred project concept option ............................................................. 32
5.5 Describe the preferred option in an evaluation brief (final concept plan) ................... 32
5.6 Seek Ministerial endorsement of the concept proposal ............................................. 33
5.7 Seek Cabinet approval of the concept .................................................................... 34
5.8 Referral to the Parliamentary Public Works Committee ............................................. 34


6. PROJECT DEFINITION PHASE ........................................................................... 35
6.1 Appoint project design team utilising the consultants' register ................................... 37
6.2 Provide the project design team with the detailed definition brief .............................. 37
6.3 Confirm contract method ....................................................................................... 37
6.4 Develop a cost plan for the project ......................................................................... 38
6.5 Develop detailed project timelines .......................................................................... 38
6.6 Confirm that the proposal satisfies endorsed concept parameters ............................. 38
6.7 Check to confirm that the project meets the needs of the agency .............................. 40
6.8 Identify approvals required for the project ............................................................... 40
6.9 Endorsement to proceed to the delivery phase ........................................................ 40

7. PROJECT DELIVERY PHASE ............................................................................... 41
7.1 Review definition phase of the design ..................................................................... 43
7.2 Approval to proceed with contract documents ......................................................... 43
7.3 Prepare contract documentation ............................................................................. 43
7.4 Define required quality standards for the contractor ................................................. 43
7.5 Confirm the agreed and endorsed parameters ........................................................ 44
7.6 Initiate and facilitate approvals related to the Development Act ................................ 44
7.7 Obtain pre-tender estimate and associated cash flows ............................................ 45
7.8 Utilise contractors' register to select tenderers .......................................................... 45
7.9 Approval to call tenders ......................................................................................... 45
7.10 Call tenders and obtain tender comparison estimate ............................................... 45
7.11 Prepare tender appraisal and recommendation ....................................................... 46
7.12 Processing the tender call and final approval for awarding the construction contract . 46
7.13 Award the construction contract ............................................................................. 47
7.14 Manage the construction contract .......................................................................... 47
7.15 Commission and hand over of the completed project .............................................. 48

8. REVIEW PHASE ................................................................................................. 49
8.1 Post completion review .......................................................................................... 51
8.2 Update asset information systems ........................................................................... 51
8.3 Post occupancy evaluation (POE) ........................................................................... 51
8.4 Management review .............................................................................................. 52

APPENDICES
APPENDIX 1 Non-commercial sector agencies .............................................................. 53
APPENDIX 2 Roles and responsibilities of stakeholders ................................................... 55
APPENDIX 3 References for the project initiation process ................................................ 57

GLOSSARY ...................................................................................................... 61

PROJECT INITIATION PROCESS overview .............................. inside back cover


1. GOVERNMENT STRATEGIES AND KEY DIRECTIONS
1.1 GOVERNMENT STRATEGIES

The South Australian Government is committed to the efficient and effective
delivery of essential services to the community and obtaining best value
from new and existing built assets. The Strategic Asset Management
Framework and this Project Initiation Process for Capital Works define the
government’s commitment to this process.

The Project Initiation Process is part of the Strategic Asset Management
Framework, endorsed by Government in July 1995. The Strategic Asset
Management Framework describes the context within which decisions are
made. The asset management process (incorporating the project initiation
process) covers the broad range of activities which follow from the initial
idea that an asset may be required, to the provision of a service and to the
disposal of an asset when it is no longer required.

The project initiation process concentrates on the planning of services and,
where necessary, the procurement of assets required for the delivery of
those services. The process should ensure that additional assets are provided
only after service needs have been identified, investigated thoroughly and
substantiated.

The project initiation process emphasises the need for quality corporate
planning and robust evaluation prior to any firm decision being made to
acquire or replace assets. The best solution may not necessarily require
built assets.

As part of this process, Ministerial or Cabinet approval of projects is now
required at an early stage, once the concept for service delivery has been
developed and evaluated.

1.2 THE IMPORTANCE OF THE PROJECT INITIATION PROCESS

The project initiation process encourages the most detailed planning by
agency management, especially in the initial phases. This will help achieve
a more objective analysis of needs and documented evidence to support
the case for providing additional services, especially if they involve acquiring
or replacing assets.

The process will ensure that agencies are able to justify funding requirements
for infrastructure or infrastructure alternatives from the capital budget. The
process will confirm with confidence that a service is required and that its
procurement will be cost effective, appropriate and accountable.


1.3 BENEFITS

The project initiation process will have the following benefits.

o It aims to achieve the most beneficial outcome for government by
requiring a full needs analysis and the consideration of a wide range
of options before the project concept is approved.

o Government support for a proposed project can be obtained at an
early stage once the concept development and evaluation phases
have been completed.

o The process should ensure the clear definition and documentation
of the criteria used to test the viability of the project, for the project
justification, post completion reviews and for future planning.

o It provides a distinct and consistent process to rank priorities on a
state wide and agency basis.

o It allows for improved allocation of time and resources for proper
project planning and assessment.

o It encourages early planning, including innovative options such as:

• market solutions developed in conjunction with the private
sector;
• using technology to achieve required outcomes;
• “no build” strategies to meet service delivery needs; and
• “end use” planning so there are alternative uses for the asset.

o It clarifies the process to procure additional assets, or upgrade or
replace existing assets. Agencies with only occasional building needs
will benefit from a well documented process which they can adapt
to their projects.

o The process encourages regular procedures through which well
planned projects with documented justification can meet all
government requirements.

1.4 A CONSISTENT PROCESS

The project initiation process follows a form similar to that developed
by the Construction Industry Development Agency (CIDA), which
represents best practice within the building and construction industry.
CIDA standards are used by the South Australian Parliamentary Public
Works Committee as a benchmark when verifying that due process has
been followed.

2 PROJECT INITIATION PROCESS

1.5 AGENCIES REQUIRED TO COMPLY WITH THE PROCESS

In July 1995, Cabinet endorsed the project initiation process which is
to be implemented by government agencies within the broad framework
of the Strategic Asset Management Framework. The general principles
of the process apply to all government agencies. Details of the process
apply particularly to non-commercial sector agencies in the public sector
as listed in Appendix 1.

While the overall process has been developed for all types of building
and construction projects, the specific details have been designed
primarily for non-residential building works. It may also be necessary
to modify some aspects to meet the special requirements of agencies
which carry out engineering construction projects.

The process does not apply to major plant and equipment purchases,
although the basic principles remain valid.

1.6 APPLICATION OF THE GOVERNMENT’S RISK MANAGEMENT
FRAMEWORK

The project initiation process encompasses elements of the government’s
risk management framework for built assets.

The Department for Building Management was established in 1994 to
provide a central policy and advisory role to government for asset and
risk management of built assets. Services SA, established 30 October
1995, assumes this role and incorporates a wider range of
responsibilities.

For those agencies required to use the risk management services provided
by DAIS (Services SA), the activities designated as DAIS (Services SA)
responsibilities are identified in the charts and overview which summarise
each phase of the process.

Detailed risk management policy guidelines will be published and further
details of the processes to be followed will be provided as Treasurer’s
Instructions.

1.7 ADAPTATION OF THE PROCESS TO MEET INDIVIDUAL NEEDS

The process is adaptable to a tailored project-by-project approach to
ensure that the individual needs of agencies are met.

The amount of effort and attention required will vary depending on the
size and complexity of the project and agency circumstances. Agencies
need to consult with the Department of Treasury and Finance and DAIS
(Services SA) to determine a minimum standard or approach which best
suits the agency, the project and general circumstances.

PROJECT INITIATION PROCESS 3

1.8 KEY FEATURES OF THE PROJECT INITIATION PROCESS

Agencies have responsibility for the management of their asset portfolios
and should follow a disciplined approach in the early stages of planning
to substantiate needs.

The project is approved by the Minister or Cabinet at the end of the
concept evaluation stage.

Central agencies such as the Department of Treasury and Finance and
DAIS (Services SA) provide greater support to agencies by developing
and advising them of policies and guidelines for improved asset
management.

1.8.1 Delegations for approval of projects

o Cabinet approval is required for any project which has an
estimated capital cost of $4 million or more when all stages
of construction are complete.

o Cabinet approval is also required for any project which has
an estimated capital cost of $1 million on completion and is
not included in a budget approved by Cabinet.

o Ministers are authorised to approve projects within limits
prescribed by Cabinet:

• projects with an estimated capital cost of up to $1 million
can be approved without restriction; and
• projects with an estimated capital cost between
$1 - 4 million, and which have been included in a
budget approved by Cabinet.

o All submissions seeking Ministerial approval of projects are
required to include written advice from the Department of
Treasury and Finance, particularly on budgetary provision, and
from DAIS (Services SA) on building related issues.

o Office accommodation projects with an estimated cost of
$1 million or more and Information Technology projects
costing more than $500 000 require Cabinet approval.

o In accordance with Treasurer’s Instruction 302 - Authorities for
Expenditure, Ministers are authorised to delegate approval
for projects up to $500 000. Ministerial approval is required
for amounts above $500 000.


1.8.2 Content of submissions to Cabinet or the agency’s Minister

CABINET SUBMISSIONS

The requirements for the preparation and presentation of Cabinet
submissions are detailed in the Cabinet handbook.

For major capital projects, the following contents are expected to
be included:

• a statement of the objectives for the proposed project,
including details of the underlying assumptions and
measurable objectives;
• a justification for the proposal, including an economic
evaluation in accordance with Treasurer’s Instruction 9105
- Guidelines for the Evaluation of Public Sector Projects;
• estimates of capital and recurrent costs required to operate
the asset over the whole of its life;
• estimated construction commencement and completion
dates;
• a report by DAIS (Services SA), where applicable,
commenting on the proposal;
• comments by the Parliamentary Public Works Committee,
if the project has been referred and reported upon; and
• a statement on the sources of funds including the impact
on the Budget.

SUBMISSIONS FOR MINISTERIAL APPROVAL

Submissions seeking Ministerial approval should include details
similar to the contents of a Cabinet submission. Where applicable,
submissions may also need to include written statements from the
Department of Treasury and Finance and DAIS (Services SA).

The Department of Treasury and Finance will include comments
on:

• the budgetary provision for the project;
• the justification of the proposal;
• costs to other agencies; and
• any other relevant issues.

DAIS (Services SA), where it has a role in the project, will include
comments on:

• risk assessment and management of risk;
• specific issues raised through the value management
studies, including compliance with the brief, buildability,
statutory requirements and agreed standards for building
design and construction;
• life cycle implications, including ongoing maintenance
requirements; and


The Department of Treasury and Finance and Services SA are to
be given a minimum of three clear working days to provide
agencies with these reports.

1.8.3 Financial threshold for project approval

The financial threshold for submission of projects for approval
will be based on the capital cost of the project, regardless of
whether the funds are provided by the public or the private sector.
This requirement is for all built assets, including those leased
from the private sector.

The estimated cost to be used when seeking approval will be
based on the capital cost on completion (ie it will include an
estimate for inflation).

The estimated capital cost also refers to the cost when all stages
of construction are complete. While staging of projects needs to
be considered to ensure the efficient provision of services, agencies
must not stage projects in a manner which avoids submitting the
proposal for approval at a higher delegation.

In addition to the capital cost, the submission will include the
calculation of whole of life costs associated with the project.

1.8.4 Responsibilities for specific components of the project
initiation process

Individual agencies have the primary responsibility for all assets
under their control. This includes responsibility for the planning
of specific projects to meet service delivery needs.

The Department of Treasury and Finance has the responsibility
to advise Government on the implications for expenditure on the
Government’s assets and to ensure that appropriate policies and
processes are in place to assist agencies in the management of
their assets.

DAIS (Services SA) provides a central policy and advisory role
to Government for asset and risk management of Government’s
built assets. DAIS (Services SA) will undertake risk management
for specific projects for those non-commercial agencies required
to use its services. This applies to all projects over $150 000.

More details of the responsibilities and roles of the stakeholders
in the project initiation process are included in Appendix 2.


2. IDEAS TO MEET NEEDS
The project initiation process provides a structured and accountable approach
to the planning and delivery of state services. It aims to improve the ability of
all agencies to clearly demonstrate the needs and benefits of a particular
project, and ensure the delivery of essential services in the most appropriate
and cost efficient way.

The asset management process

The asset management process includes activities ranging from the
identification of the government’s key directions and strategies for the delivery
of services to the divestment of an asset when it is no longer required. The
project initiation process is a key element in the overall process which includes
the initial planning of assets, the delivery, and evaluation of their use.

The importance of good planning in the early stages

The greatest potential for identifying and achieving capital and recurrent savings
is in the early planning phases of a project (see the diagram below). Significant
savings can be made by government if the need for built assets is analysed
carefully from the outset, exploring a wide range of options, before any
commitment is made.


2.1 SCOPE OF THE PROJECT INITIATION PROCESS

The process outlines the principles and the processes which follow from
a decision that built assets may be required to meet service delivery
needs.

It describes the strategic planning to be undertaken prior to initiating a
proposal for the procurement of built assets.

It requires agencies to develop strategies to meet service delivery needs,
to seek government approval of the concept as the preferred option,
and to secure formal agreement to proceed to design, documentation
and delivery if the concept is endorsed.

The basic principles of the process apply to all aspects of asset
management and procurement.

2.2 APPLICATION OF THE PROJECT INITIATION PROCESS

2.2.1 Provision of new services

In the past, planning for built assets has been based on the
assumption that this will be the most appropriate way to provide
services to the community. Now agencies are required to undertake
a more rigorous process to determine needs, explore options
and identify the most appropriate action. This process provides
the framework and defines the responsibilities.

All non-commercial sector agencies are expected to follow the
project initiation process when planning and developing assets
required to deliver services (refer to Non-commercial sector
agencies, Appendix 1). It will be appropriate, however, for agencies
to tailor the process to fit in with the management and planning
processes applying within individual agencies.

While commercial sector agencies are not required to follow the
process, it is considered that the basic principles underlying the
process can be applied for commercial projects although some
aspects of project evaluation and approval are likely to be
different.

The process is designed primarily for major projects costing more
than $150 000. Where the total project cost is less than
$150 000, agencies should follow the Minor Works Guide, Checklists
and Manual published and distributed by DAIS (Services SA).


2.2.2 Existing assets

An agency’s prime asset management responsibility is to maximise
the service delivery potential of existing assets in the most cost
effective ways.

This document describes the process to follow when planning for
the creation of additional service capacity and when considering
the replacement or upgrading of existing assets.

Asset rationalisation provides opportunities for government to
restructure and reallocate resources. Agencies are required to
review asset performance and utilisation and ensure that any
assets retained are essential to the delivery of high priority services.

Agencies are also required to identify and address building related
hazards in accordance with legislative requirements under the
Occupational Health, Safety and Welfare Act.

2.3 RESPONSIBILITY, ACCOUNTABILITY AND MANAGEMENT

The process identifies primary responsibilities and indicates where to
seek advice for each phase of the process. It also indicates the key
points at which approvals to proceed must be sought from the Minister
or Cabinet and when review by the Parliamentary Public Works
Committee is required.

The process assumes that agencies have well-developed corporate
plans. However, agencies are at different stages in the development of
corporate plans and it is accepted that some agencies may need time
to achieve the level of planning required by this process.

Agencies are expected to work through each phase of this process for
each project and to develop documentation which will provide an audit
trail for future reference.

The degree of detail to be documented will vary. Major high cost
projects, those with a high degree of risk and projects of critical
importance to the government will require intensive scrutiny while
repetitive projects may only require routine checking to ensure that
due processes are followed.

A project may be progressed through different phases simultaneously.
The agency will be responsible for the progress of its project through
the phases and for seeking necessary endorsements at the
appropriate times.


3. CORPORATE PLANNING PHASE

In this phase, an agency systematically analyses the demand for its services,
considers methods for delivery of the service and prepares a five year or longer
service delivery strategy or a long term corporate plan.

Agencies should have a range of ideas about the ways they can deliver the
services which the community requires, but no specific options will have been
confirmed.

Govt Strategies Ideas to Corporate Concept Concept Project Project
& Key Directions 1 Meet Needs 2 Planning 3 Development 4 Evaluation 5 Definition 6 Delivery 7 Review 8
Process Gov't Treasury Agency DAIS
Action can be taken in various phases at the same time Cabinet & Finance (Services SA)
Minister

3.1 Review corporate plan for consistency with Government priorities

3.2 Define service delivery needs and broad time frames

3.3 Examine demand management and non-asset strategies
c
3.4 Examine existing asset performance
c
3.5 Establish project concepts by rigorous testing of assumptions
c
3.6 Project concept to be considered for the Government's Forward
Program

3.6.1 Use criteria for ranking of project concepts
c
3.6.2 Ranking of project concepts c
3.7 Ministerial approval of the Agency's five year strategic asset
procurement plan

3.8 Modifications to plan in response to State wide priorities
c
3.9 Authorisation of expenditure for planning and design

Code: c
Responsibility In Consultation Partnership


DETAILS OF DOCUMENTS AND WRITTEN APPROVALS FOR THIS PHASE

AGENCY’S CORPORATE PLAN
Each agency needs to have a corporate plan which outlines the scope and direction of the core services
and the assets and resources required to meet service delivery needs.

DAIS (Services SA) can contribute to the development of the plan, especially in the development of asset
management plans and the asset performance and rationalisation plan which involve long term strategic
planning as well as the development of ideas and options to meet immediate service delivery needs
and the use of BLAMS data.

An agency’s corporate plan will include:

• key assumptions (eg service demand, policies etc);
• mission/role/service charter; and
• resource implications.

It will include a strategic asset management plan which makes reference to:

• the Metropolitan Development Plan which includes the Urban Development Coordinating
Committee (UDCC) projections of demography, land releases, urban renewal programs, etc;
• an asset performance and rationalisation plan, land purchase and disposal plan;
• the agency’s five year strategic asset management plan;
• an ongoing maintenance plan arising from data provided through BLAMS; and
• the current financial year capital works program for the agency, including the assets to be
procured.

PROJECT CONCEPT ARISING FROM THE IDENTIFICATION AND QUANTIFICATION OF SERVICE DELIVERY
NEEDS
The project concept arises from the ideas which have been developed to meet the agency’s service
delivery needs. Design details for the preferred concept option will not have been developed at this
stage and precise costings will not be available.

It details the functions or services to be provided by an agency for the community or a particular section
of the community. The project concept also describes the extent and nature of the services and the
justification for all aspects of the proposal.

CRITERIA FOR ALLOCATING PRIORITY TO PROJECTS (A WEIGHTED INDEX FOR PROJECTS)
Agencies need to use a recognised system which describes the criteria and methods used to allocate
priority to projects. The method used should ensure projects of highest priority are identified and that
an accurate record of the criteria used for allocating priority to projects is available for future reference.
The range of criteria is likely to vary from agency to agency and reflect the priorities which are important
to the individual agencies. There is also a need to consider overall government priorities such as
economic development and broader community benefits (or costs) in developing appropriate criteria.
The development of appropriate criteria with relative weightings will enable each agency to rank its
projects in a consistent and objective manner. This will assist Treasury and Finance when it develops the
State-wide program.

PRIORITISED 5 YEAR CAPITAL PROGRAM, INCLUDING CAPITAL WORKS PROCUREMENT
The agency formulates a five year plan, based on the projects which have priority and the order of
priority. Some projects will not require capital works solutions (“no build”, use of technology etc) while
others will follow the capital works procurement process outlined in this document.

The program will draw together all of the elements of an agency’s capital works requirements. This is
expected to include committed and uncommitted major works and minor works, plant and equipment
purchases, land purchases, motor vehicles and information technology acquisition and development.


The Corporate Planning Phase involves the following activities:

3.1 REVIEW CORPORATE PLAN FOR CONSISTENCY WITH
GOVERNMENT PRIORITIES

Well executed corporate management processes should result in a
corporate or business plan that defines the agency’s service delivery
objectives and strategies, including:

• government policies and priorities applicable to that agency;
• program statements;
• the service delivery charter;
• long term strategic directions (five to ten years); and
• the current business plan.

3.2 DEFINE SERVICE DELIVERY NEEDS AND BROAD TIME FRAMES

Service delivery strategies need to be supported by reliable data on
present and future demand for services. This will require an agency to:

• provide evidence of demand for services from the community,
substantiated by research and analysis;
• describe the nature of the service demands;
• detail its statutory service obligations (eg provision of schools,
prisons);
• describe community service obligations;
• analyse other relevant services within government; and
• quantify levels of service that can be achieved.

Specific attention should be given to the agency’s strategic asset
management plan. This should take into account asset maintenance
and replacement forecasts and asset upgrading programs. It will also
nominate any additional assets to be provided. The additional capacity
provided, and any new policies being developed which will have an
impact on the need for assets and resources, should be detailed as part
of the plan.

To help address these issues, agencies will need to consider:

• government policies and stated objectives (eg economic
development for the state);
• the strategies and forecasts included in the government’s
metropolitan and regional planning strategy, the Metropolitan
Development Program and other relevant local and regional
planning documents;
• information from key stakeholders (including consultation with
the community as well as agencies);


CORPORATE PLANNING PHASE

• the key assumptions being made;
• emerging issues and trends identified through research,
from reviews, and examples of best practice;
• agreed service standards and benchmarks;
• market research; and
• financial forecasts.

Assumptions and assertions about the demand for services will need to
be tested and supported by empirical evidence.

If the need for additional services has been substantiated, consideration
should be given to alternative delivery options. These include:

• market solutions such as BOO/ BOOT schemes
(Build Own Operate/Build Own Operate Transfer);
• leasing; and
• greater community involvement and ownership (eg the capital
works assistance scheme which requires financial commitment
from the community).

3.3 EXAMINE DEMAND MANAGEMENT AND NON-ASSET
STRATEGIES

The project initiation process requires agencies to consider other ways
of managing demand or satisfying or redefining service delivery
objectives to minimise or avoid demand on capital and its associated
debt servicing.

Examination of demand management and non-asset strategies includes
options such as:

• resource sharing with other agencies or levels of government
or community groups;
• the use of technology instead of infrastructure;
• modifying pricing policy to reduce, redirect, delay or eliminate
demand;
• changing service standards;
• the redesign of service delivery;
• rescheduling of service delivery;
• changing policy or legislation;
• education programs to reduce demand on service delivery;
and
• private sector provision of services essential to the agency.

Agencies should always ensure that the “do nothing” option is fully
investigated and that the consequences are outlined, costed and
documented for future reference.

These strategies will begin to define the real options for service delivery
and to test the need for additional assets.



Broad estimates of capital and recurrent costs can be assessed in this
phase, based on standards such as the cost per hospital bed, or cost
per student place in a school.

3.4 EXAMINE EXISTING ASSET PERFORMANCE

To meet service delivery demand, agencies should:

• review existing asset performance in terms of function, quality
and utilisation rate across the agency’s portfolio;
• investigate options to better utilise existing facilities to meet
additional demands; and
• identify and rationalise under-utilised facilities.

Agencies will require an up-to-date asset register and an asset
management information system to examine existing asset performance
and rationalise facilities. Most asset management information
requirements for built assets can be met through the use of the Building
Land and Asset Management System (BLAMS) which is managed by
DAIS (Services SA).

Agencies should note that Cabinet has confirmed (in July 1995) that
prior to any development of an alternative asset information system to
BLAMS, the agency will be required to obtain agreement from the
Department of Treasury and Finance and DAIS (Services SA).

3.5 ESTABLISH PROJECT CONCEPTS BY RIGOROUS TESTING OF
ASSUMPTIONS

The agency, as a result of the reviews described, will have established
whether there is the need to provide additional or replacement services.
Further investigations will determine the optimum service delivery solution
and whether the service delivery need is best met by built assets or
through “no build” solutions.

Rigorous testing of the ideas put forward to meet service delivery needs
will be required.

Value management techniques can greatly assist agencies to develop
and prioritise projects according to need, to identify program and project
risks and to test assumptions about service delivery requirements. The
process can help present a clear set of client/customer objectives for a
project and define the key functional needs early in the planning process.



3.6 PROJECT CONCEPT TO BE CONSIDERED FOR THE
GOVERNMENT’S FORWARD PROGRAM

Following this review process in the early phases, the project concept
should be developed to a stage where the proposal can be included in
the agency’s forward program and consideration can be given to the
proposal’s priority at government level.

3.6.1 Use criteria for ranking of project concepts

Agencies, particularly those with large procurement programs,
need to rank project concepts from the most important to the
least important. Weighted decision-making criteria based on the
key outcomes relevant to the agency should be developed and
used in a consistent and objective manner.

Knowledge of the decision-making criteria and their weighting is
most helpful to Treasury and Finance when they advise on priorities
across government and recommend a forward program to
Cabinet.

3.6.2 Ranking of project concepts

Agencies with several concepts under consideration should rank
them through the use of the weighted decision-making criteria.
This process should include a revision of the priority of proposals
already included in agency procurement plans.

The ranking of individual projects will assist each agency in the
development of a five year strategic asset procurement plan and
provide a clear indication of priorities.

3.7 MINISTERIAL APPROVAL OF THE AGENCY'S FIVE YEAR
STRATEGIC ASSET PROCUREMENT PLAN

Each agency’s five year strategic asset procurement plan
(capital works forward plan) is to be revised annually as part of
the normal budget cycle.

The plan will provide the government with a strategic view of future
plans and priorities.

Prior to providing strategic asset procurement plans as part of the budget
process, agencies will obtain Ministerial approval, ensuring that any
Ministerial priorities are reflected.



3.8 MODIFICATIONS TO PLAN IN RESPONSE TO STATE WIDE
PRIORITIES

After Cabinet has determined the budget allocations and forward
estimates, agencies will need to review their strategic asset procurement
plans to ensure that they are in line with the approved estimates and
reflect any changes in project priorities determined by Cabinet.

3.9 AUTHORISATION OF EXPENDITURE FOR PLANNING AND
DESIGN

At the completion of this corporate planning phase, the proposal will
have been developed to the stage where work can commence on the
development of the concept.

Before proceeding to the next stage, agencies should formulate a budget
for the subsequent planning and design phases and seek approval of
proposed expenditure from the Minister or delegate, in accordance with
Treasurer’s Instruction 302 - Authorities for Expenditure.


4. CONCEPT DEVELOPMENT PHASE

In this phase an agency moves from its broad, strategic asset development
plan to individual concepts and projects which may need to be included on
the agency’s strategic asset procurement plan.

The feasibility study for the project includes the Concept Development and Concept Evaluation phases.

Minister

4.1 Appoint the project steering committee to develop and manage the
concept phase
c

4.2 Appoint the project team to develop the concept

4.3 Develop project concept to meet service delivery needs c
4.3.1 Analyse needs and market research in detail c
4.3.2 Clarify the functional objectives of the project concept c
4.3.3 Identify statutory, planning and environmental issues
c
4.3.4 Identify cultural and heritage issues c
4.4 Define project parameters, quality standards and budget estimate c
4.5 Identify all reasonable service delivery options (including "no-build"
option) c

4.6 Identify procurement options finance delivery options c

contract method options c

Code: c

* Note that a strategic value management study is to be undertaken during the concept development phase and that a strategic value
management report is required when seeking approval of concept.



PROJECT DEMAND STUDY
Demand management aims to reduce asset creation by influencing the community’s demand for
services and by identifying those services which are essential (ie public needs rather than wants).
The responsible agency undertakes research to ensure there is a justifiable need for the proposed
project. This research is documented as part of the information to justify the proposal.

COST BENCHMARKS
Cost benchmarks for services arise from the costing of comparable services or from calculations
of the cost of delivery in new and innovative ways. Cost benchmarks for construction arise from
construction standards and from comparisons with the level of service delivery and construction
costs provided by comparable organisations.

RISK MANAGEMENT PLAN
Risk management is a structured way of identifying potential risks, analysing their consequences,
devising responses and implementing strategies to manage the successful delivery of the project.
DAIS (Services SA) is the government’s risk manager for building assets and is responsible for
developing a risk management plan in conjunction with the service delivery agency.

STRATEGIC VALUE MANAGEMENT STUDY REPORT
A strategic value management study is a structured, systematic and analytical process undertaken
in the concept development phase to quantify and verify need and assist with the concept evaluation.
Value management studies are undertaken by qualified independent experts who work in
conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic
value management study will question underlying assumptions about need and require evidence
to substantiate the need for services. It will provide a documented report which will form part of
the information required in subsequent stages.

EVALUATION BRIEF (PRELIMINARY CONCEPT PLAN)
The evaluation brief (preliminary concept plan) describes the concept and establishes criteria for
the specific project. This is a refinement of the project concept following the development work in
the concept development phase including the strategic value management study.

The evaluation brief sets the parameters for the proposed project, and provides information
which is used in subsequent phases. It is prepared by the agency in conjunction with Services SA.
The information required includes:

• defined needs, consistent with the corporate business plan;
• concept objectives for the project;
• concept description for the project (relationship diagrams, plans etc); and
• a preliminary estimate of the capital and operating costs for the project concept.

FUNCTIONAL ANALYSIS
A functional analysis is undertaken by DAIS (Services SA) or an appropriate consultant to determine
whether the client’s requirements as described in the client brief have been met.

ACTION PLAN
The action plan outlines the key activities which have to be undertaken and sets timelines for
these events. Each project requires cost and timeframe targets for each element. The cost and
time plans are used to control all design and development activities and are measured against
the standards established early in the life of the project.


4.1 APPOINT THE PROJECT STEERING COMMITTEE TO DEVELOP
AND MANAGE THE CONCEPT PHASE

In the corporate planning phase, the project has generally been
supported by the agency's senior executive or a senior manager
responsible for implementing the agency’s asset program.

At this stage, large and complex projects require the appointment of a
project steering committee while routine projects may only require a
project team. It is also an appropriate time to provide any other liaison
or support arrangements.

The project steering committee provides general direction to a project
team of professionals who will develop concept options and costings.

The role of the project steering committee and project team is to assign
project responsibilities, seek all relevant approvals and control the project
to its completion.

The project steering committee ensures that the necessary skills are in
place to assist in undertaking the concept development and concept
evaluation phases and subsequent steps in the project initiation process.

o DAIS (Services SA) will be represented on the steering committee as
it has responsibility for management of building construction aspects,
on behalf of government.

o The Department of Treasury and Finance, the Economic Development
Authority and the Crown Solicitor, may be represented, particularly if
private sector provision or financing is being considered or where
specific legal issues may arise.

4.2 APPOINT THE PROJECT TEAM TO DEVELOP THE CONCEPT

The project team is responsible for development of the concept and the
daily administration of the project. It allocates project responsibilities,
seeks all relevant approvals and generally supervises the project to its
completion. Where applicable, it reports to the project steering
committee.

DAIS (Services SA) is responsible for the management of the government’s
building and construction related risk. It also manages the engagement
of all private sector consultants (eg consultants for architecture,
engineering, cost management etc) including those on the steering
committee and the project team.


CONCEPT DEVELOPMENT PHASE

DAIS (Services SA) is developing and will maintain a register of all
consultants who undertake work on behalf of government for urban
planning, building design and construction. The Consultants’ Register
will enable the selection of professionals with relevant expertise and
experience and is part of an agreed quality assurance process.

Consultants’ registers for other infrastructure services such as roads,
water and power are maintained by the respective agencies.

4.3 DEVELOP PROJECT CONCEPT TO MEET SERVICE DELIVERY NEEDS

A perceived need by an agency for an asset is translated into a service
delivery concept. The development of the concept with reference to
agency service delivery requirements is critical to the achievement of
value to government over the life of the asset. This assumes that strategic
planning for the business enables a comparison of measurable concept
objectives with broad program objectives.

The agency should develop the concept detail so that the project can
be compared with its strategic directions, and so that it is able to quantify
the difference that the project is expected to make.

4.3.1 Analyse needs and market research in detail

Systematic and accurate needs analysis is critical to determining
what is really required to deliver the essential services.

Most market or service needs analysis has historically relied on
basic information such as:

• historical trends (eg past enrolments or past history of
service delivery);
• comparable area standards (eg square metres per office
worker, student or prisoner); and
• forecasts including demographic data from the ABS
census (which may not reflect changes which have
occurred since the last census).

The real purpose of the needs analysis in the project initiation
process is to ensure that only those projects that meet the criteria
for demonstrated need will be provided. This process involves
asking the following types of questions.



o What are the concept/project objectives, including service
delivery life?

o What is the state of the market (in terms of price/demand, etc)
and in particular what are the expectations and plans of likely
users and client/customers?

o Which business or service needs are met by the concept/
project?

o How will the claimed benefits of the project be measured over
time?

4.3.2 Clarify the functional objectives of the project concept

All parties need to clearly understand the objectives of the project.
The strategic value management process can be used as a way
of presenting a clear set of client/customer objectives for a project
and to address the key functional requirements early in the process.
For all major projects, in particular those in excess of $4 million,
a strategic value management study needs to be carried out to
assist agencies to clarify their requirements.

DAIS (Services SA) will assist agencies to carry out strategic value
management studies.

Needs assessment requires a ranked set of functional objectives
which describe what the project must do.

Analysis of objectives will result in the following documentation.

o A service delivery needs analysis.

o Detailed function needs and outcomes (what the asset
must do).

o Prioritisation of objectives and functions.

o An explicit evaluation of project objectives against strategic
business or service plans.

o An action plan for the following phases, identifying both actions
and gaps; as well as risk assessment and a risk management
plan.



4.3.3 Identify statutory, planning and environmental issues

At this point, agencies should also be aware of other similar
activities being planned and should consult with Commonwealth
Governmnent, Local Government and other State Government
agencies and relevant organisations about their medium-term
strategies for related service provision. This consultation will enable
the agency to review again any possible sharing arrangements
(eg sharing a school site between the government and non-
government sectors).

In addition, agencies should consider ways in which a whole of
government approach can be enhanced.

Proper identification of any other constraints at this stage can
help test alternative concepts and identify the impact of
environmental and planning approval procedures on the timelines
for the program. The questions to be asked include:

o Does the concept completely conform with planning policies
and regulations?

o Does the concept require changes to planning policies and
regulations?

o Will the project require utility or infrastructure adjustments?

o Is the project environmentally sensitive and subject to forms of
environmental evaluation?

Long timeframes can sometimes be associated with evaluation
of these issues and may limit the development of some options
and/or identify additional cost elements.

4.3.4 Identify cultural and heritage issues

Any plans for significant work on - or adjacent to - buildings,
gardens or public places may involve heritage issues, including
those relating to Aboriginal people.

In these instances, the agency should contact the appropriate
government authority.



4.4 DEFINE THE PROJECT PARAMETERS, QUALITY STANDARDS AND
BUDGET ESTIMATE

Benchmark standards can be used to define the parameters of the
proposed project from the earliest stages of a project’s development,
including:

• the quality standard to be adopted;
• project cost; and
• project time frame.

Benchmarks developed by DAIS (Services SA) for a range of building
types can be used in this process.

For example, if there is a need for fifty new prison places in a particular
location, it is possible to quickly define (within a range) building and
site size, total project cost, operating costs and likely project timeframe.

The work undertaken to define the scope of a project becomes part of
the evaluation brief to be assessed in detail in the evaluation phase for
each project.

4.5 IDENTIFY ALL REASONABLE SERVICE DELIVERY OPTIONS
(INCLUDING “NO BUILD” OPTION)

For almost every problem there is more than one solution and in most
cases a range of variations within a solution.

However, the one-off nature of projects often results in the “one right
answer” being locked in too early in the process.

Sometimes there is a reluctance to spend time and money on the
development of options when the solution seems obvious, but the
development of meaningful options can be used to identify real needs
and viable solutions, saving both time and money.

Group processes, expert input and the project management team should
use well defined project objectives and functions to help them generate
a range of options for analysis and consideration.

Not all options will require detailed examination but consideration of
some meaningful options may provide a means of assessing the risks
associated with the project and help add flexibility. Different options
can have significantly different levels of risk, which need to be identified.



Agencies should refer to DAIS (Services SA) for risk management advice
and assistance in the development of a risk management plan for
building projects. Where the cost of the project is estimated to be in
excess of $150 000, risk management by DAIS (Services SA) is
mandatory for those non-commercial agencies required to use these
services.

The identification of options is very important and requires input from
members of the agency and DAIS (Services SA). Community consultation
forums may sometimes be appropriate. A brief assessment using strategic
value management techniques may assist.

4.6 IDENTIFY PROCUREMENT OPTIONS - FINANCE DELIVERY AND
CONTRACT METHOD OPTIONS

Within each option there may be a range of sub-options for financing
and delivery. For example, options could include the design and building
of a new regional office, the purchase of an existing office or a developer
lease-back arrangement.

Private sector funding of capital investment in community assets is an
important consideration. A broad range of private sector financing
options is available. Agencies need to consider the “build, own and
operate” options in various combinations, and whether or not assets
will transfer to the government at some future time.

All costs to government need to be identified and documented to
demonstrate the “whole of life” cost of the proposal and enable proper
analysis of the value of the project to be undertaken. “Whole of life”
costs include construction, maintenance, and refurbishment as well as
equipment, operating and disposal costs (including salaries and utilities
costs).

The documentation of these costs forms part of the probity and
accountability requirements of government.

The project initiation process is applicable to all built asset projects,
regardless of whether the funding is provided by the Commonwealth,
private sector or funding from internal or recurrent sources.

Commonwealth/State financing arrangements can represent multiple
combinations requiring evaluation. Where there are Commonwealth
funding and approval processes, agencies must ensure that Cabinet is
fully informed and able to make its decisions before any commitments
are entered into with the Commonwealth.



Contract delivery options should be considered at this stage as the
method of delivery can affect other decisions including the appointment
of the project team and the risk management process. Delivery options
for built assets include:

• the traditional form of government finance, and a plan, design,
and construct process;
• construction management process;
• design development/construction and novation packages;
• developer lease-back arrangements, which must include
capital and all recurrent cost implications;
• developer funded initiatives for the built component only; and
• purchase of existing properties or services, including any costs
associated with refurbishment or upgrading.

Options such as BOO/ BOOT (Build Own Operate/ Build Own Operate
Transfer) or a leasing option need to be considered and a preferred option
recommended.

Where private sector provision or financing of infrastructure is being
considered, agencies need to be aware of the Economic Development
Authority (EDA) publication Guidelines for the Private Sector Provision
of Infrastructure. Reference should be made to the Department of
Treasury and Finance publication Contracting Out Financial Guidelines.
Early consultation with the EDA, the Department of the Premier and
Cabinet (Office of Project Coordination) and with the Department of
Treasury and Finance is desirable.

Agencies should note that contracts for the construction or acquisition
of major assets must be certified by the Crown Solicitor or the Crown
Solicitor’s delegate as being commercially competent and sound.

DAIS (Services SA) has several approved standard form contracts to
assist agencies. The standard contract currently in use is NPWC Edition
3. This is under review and it is anticipated that a suite of standard form
contracts based on Australian Standard 2124 -1992 will be introduced
in 1996.

Government has adopted the Code of Practice for the South Australian
Building and Construction Industry. This Code and its Implementation
Guidelines applies to all building and construction projects that are
fully or partially funded or managed by the Government of South
Australia.

Treasury and Finance can advise or assist agencies to undertake the
detailed analysis required in the evaluation phase with reference to the
Treasurer’s Instruction 9105 - Guidelines for Evaluation of Public Sector
Projects and Treasury Information Paper No. 90/1 Guidelines for Evaluation
of Public Sector Projects.


5. CONCEPT EVALUATION PHASE

This phase involves quantifying and costing the difference a project will make
to the community by analysing the benefits of the options in terms of program
or sub-program objectives and performance indicators, and selecting the most
cost effective option.


Process: Gov't Treasury Agency DAIS
Minister

5.1 Agree on the scope of the evaluation brief (preliminary concept plan) c

5.2 Evaluate concept options

5.3 Analyse short-listed options c
5.4 Select the preferred project concept option c c
5.5 Describe the preferred option in an evaluation brief (final concept plan)

5.6 Seek Ministerial endorsement of the concept proposal
>$150,000 to <$4.0m; Minister or delegate to approve c c

5.7 Seek Cabinet approval of the concept,
$4.0m and >$4.0m c c

5.8 Referral to the Parliamentary Public Works Committee,
if > $4.0m c

Code: c

* Note that approval at the Concept Evaluation phase is a change in procedure, and that the threshold for approval by Cabinet has been
increased to $4 million cost on completion, with all stages included.



STRATEGIC VALUE MANAGEMENT REPORT
A strategic value management study is a structured, systematic and analytical process undertaken
in the concept development phase to quantify and verify need and assist with the concept evaluation.
Value management studies are undertaken by qualified independent experts who work in
conjunction with the client agency, DAIS (Services SA) and other interested parties. The strategic
value management study will question underlying assumptions about need and require evidence
to substantiate the need for services. It will provide a documented report which will be form part
of the information required in subsequent stages.

RISK ASSESSMENT AND A RISK MANAGEMENT STRATEGY, INCLUDING ALLOCATION OF RISK AND
RESPONSIBILITY
Project risk assessment aims to ensure all risk variables are identified and managed. DAIS (Services
SA) is the Government’s risk manager for building assets and operates in conjunction with specific
agencies to identify risks and develop a plan for the management of risks associated with
procurement of assets.

ECONOMIC/FINANCIAL ANALYSIS OF OPTIONS, INCLUDING LIFE CYCLE COSTING OF OPTIONS
This is a systematic way of analysing all the costs and benefits of the various methods by which a
project objective can be met. It takes into account all major costs associated with the project,
including capital and recurrent costs.

The economic and financial analysis will identify the option which is most cost effective when all
costs and benefits are taken into account. This analysis is part of the value management process.
Reference should be made to Treasurer’s Instruction 9105 Guidelines for the Evaluation of
Public Sector Projects and Treasury Information Paper 90/1 Evaluation of Public Sector
Projects.

PROJECT PLAN (OR FINAL CONCEPT PLAN) FOR THE PREFERRED OPTION
The project plan provides precise details about the specific project. The following details should
be included in submissions for approval of the project (eg submissions to the Minister, Cabinet,
and to the Parliamentary Public Works Committee). The service delivery agency and DAIS (Services
SA) are major contributors to the project plan.

The project plan (or final concept plan) for the preferred option will include:

• the project definition brief (schedule of accommodation, site works etc);
• the proposed procurement method (lump sum contract, design/construct, construction
managed);
• financing arrangements (agency or alternative funding);
• a detailed cost estimate (based on established benchmarks);
• a time estimate (based on previous experience and the market); and
• a land acquisition/rationalisation plan confirmed by the agency.

MINISTERIAL ENDORSEMENT OF CONCEPT
Ministerial endorsement of the project concept is required. Projects which are within the Minister’s
delegations will be approved for ongoing work. Projects requiring higher levels of approval
require Ministerial endorsement for referral to Cabinet.

CABINET ENDORSEMENT OF CONCEPT
Cabinet endorsement of the project concept is required if the estimated cost is $4 million or more.

INQUIRY AND REPORT BY PARLIAMENTARY PUBLIC WORKS COMMITTEE (IF REQUIRED)
Projects with an estimated capital cost exceeding $4 million are referred to the Public Works Committee.
The report from the Committee forms part of the essential documentation for the project.


5.1 AGREE ON THE SCOPE OF THE EVALUATION BRIEF
(PRELIMINARY CONCEPT PLAN)

From the information and ideas developed in the corporate planning
and concept development phases, an agency should develop an
evaluation brief, outlining the:

• concept definition;
• concept objectives;
• impact of the concept on program and service delivery
objectives;
• financial/economic evaluation approach to be pursued; and
• accommodation needs (where relevant).

To complete the evaluation brief (preliminary concept plan) the agency
should seek agreement from Treasury and Finance on the scope of the
proposed evaluation.

5.2 EVALUATE CONCEPT OPTIONS

An agency first needs to evaluate each option in terms of its total impact
on the community and the government system. Economic evaluation
aims to take a perspective which goes beyond any one agency and
seeks to place values on costs and benefits to the community.

Economic evaluation includes two types of analysis:

• cost benefit analysis which is the preferred technique provided
the major benefits and costs of a project can be valued in
money terms; and
• cost effectiveness analysis which is the technique to be applied
where the major benefits or costs are of an intangible nature.

Selection criteria have to be established to determine the most promising
options. Agencies need to reach agreement and document the selection
criteria after careful debate to avoid problems further into the process.

The options can be ranked by a process of weighting functional objectives
and rating each option’s performance. This is an extension of the value
management techniques used in the concept development phase.

5.3 ANALYSE SHORT-LISTED OPTIONS

Short-listed options need to be subjected to further analysis to determine
their cost impact.


CONCEPT EVALUATION PHASE

o Prepare project option cash flows. These cash flows should be based
on a life-cycle basis to reflect both capital and recurrent costs
associated with the project.

o Prepare indicative project management information including project
time schedules.

o Prepare present value analysis of the project options including
sensitivity analysis.

o Complete risk assessment of project options, and a risk management
plan.

5.4 SELECT THE PREFERRED PROJECT CONCEPT OPTION

Having considered benefits, function, value, cost and delivery options,
the best option is selected from the short list, based on the analysis of
the data.

o Well described, quantified and documented decision-making criteria
is required.

o The process and results are to be described in sufficient detail to
enable the criteria to be externally verified.

o The balance between quantitative and qualitative factors needs to
be clearly explained to demonstrate the validity of the selection.

All this provides project definition and a check to confirm how well the
preferred project option fits the previously agreed business plan and
functional objectives.

If the option is other than build (eg lease existing space, make use of
existing infrastructure or make use of technology) the agency should
consult with the relevant government agencies such as the Real Estate
Management unit of DAIS (Services SA), the Department of Information
Technology and the Department of Treasury and Finance.

5.5 DESCRIBE THE PREFERRED OPTION IN AN EVALUATION BRIEF
(FINAL CONCEPT PLAN)

This involves describing the option in the following terms:

• program objectives;
• asset function objectives;
• scope and quality of proposed works;
• capital and recurrent financing requirements;



• impact on the State Budget;
• economic evaluation of the preferred option including
quantified non-financial costs and benefits;
• delivery and procurement method;
• cost and time estimates;
• land acquisition plan;
• statement of risk to government, including risk assessment and
a risk management plan;
• rationalisation plan where appropriate (eg plan for disposal
of various schools, following rationalisation and upgrading
of the remaining schools);
• statutory planning and environment issues; and
• cultural and heritage issues.

5.6 SEEK MINISTERIAL ENDORSEMENT OF THE CONCEPT
PROPOSAL

Agencies need to obtain Ministerial endorsement before a project can
proceed. This requirement is subject to the Ministerial delegation, as
detailed in Treasurer’s Instruction 302 - Authorities for Expenditure.

The submission needs to be accompanied by independent reports from
the Department of Treasury and Finance, and, if it is a building project,
from DAIS (Services SA).

The Department of Treasury and Finance will include comments on:

• the budgetary provision for the project;
• the justification of the proposal;
• costs to other agencies; and

DAIS (Services SA) will comment on:

• risk assessment and management of risk, including the
procurement method, the program of works and the impact of
the proposed works on the construction industry;
• specific issues raised through the value management studies,
including compliance with the brief, buildability, statutory
requirements and agreed standards for building design and
construction;
• life cycle implications, including ongoing maintenance
requirements; and

The Department of Treasury and Finance and DAIS (Services SA) are to
be given a minimum of three clear working days to provide agencies
with their reports.



5.7 SEEK CABINET APPROVAL OF THE CONCEPT

At this stage agencies are required to submit all proposals estimated to
cost $4 million or more (cost on completion, with all stages included)
to Cabinet for approval to proceed.

Approval at this stage will enable the proposal to proceed to the tender
acceptance stage without further formal approval. However the project
must remain within the limits of the approval, in particular the costs and
the budget provision.

The following contents are expected to be included in the Cabinet
submission:

• a statement of the objectives for the proposed project, including
details of the underlying assumptions and measurable
objectives;
• description of the proposed project;
• a justification for the proposal, including an economic
evaluation in accordance with Treasurer’s Instruction 9105 -
Guidelines for the Evaluation of Public Sector Projects;
• estimates of capital and recurrent costs required to operate
the asset over the whole of its life;
• estimated construction commencement and completion dates;
• procurement method and tender process;
• a report by DAIS (Services SA), where applicable, commenting
on the proposal; and
• a statement on the sources of funds including the impact on
the Budget.

5.8 REFERRAL TO THE PARLIAMENTARY PUBLIC WORKS COMMITTEE

The Parliamentary Committees Act 1991 under which the South Australian
Parliamentary Public Works Committee operates, requires that any public
work with an estimated value in excess of $4 million when all stages of
construction are complete must be referred to the Public Works
Committee by the proposing agency or instrumentality, and that no
amount may be applied for construction until the Committee has reported
on the work to the Parliament.

The Parliamentary Public Works Committee can inquire and report on
the project at the concept evaluation phase. In addition it may also wish
to review the project at any future stage, including when the final design
and costs have been confirmed.


6. PROJECT DEFINITION PHASE
The Project Definition Phase develops and documents the preferred project
concept option as a design to bring the project plan (including cost plan and
time schedule) to a point where the agency’s Minister or delegate can consider
whether the project should proceed.

The Project Definition Phase requires significant professional involvement which
is coordinated by DAIS (Services SA).

The sketch phase of the project includes developing and documenting the preferred option

Minister

6.1 Appoint project design team utilising the consultants' register c
6.2 Provide the project design team with the detailed definition brief c
6.3 Confirm contract method c
6.4 Develop a cost plan for the project c
6.5 Develop detailed project timelines c
6.6 Confirm that the proposal satisfies endorsed concept parameters c
6.6.1 Project design value management study

6.6.2 Analysis for best value solution

6.6.3 Significant deviation from the original plan c
6.7 Check to confirm that the project meets the needs of the agency c c
6.8 Identify approvals required for the project

6.8.1 Development approval and certification

6.9 Endorsement to proceed to the delivery phase c c

Code: c



AGENCY STANDARDS FOR DOCUMENTATION
Agencies are required to develop and maintain details of the standards they require. This
information is made available to DAIS (Services SA) for the briefing of the consultants responsible
for design. This ensures they are aware of specific requirements to meet the agency’s needs.

PROJECT DESIGN VALUE MANAGEMENT REPORT (INDICATING BEST PRACTICE AND VALUE FOR
MONEY)
A strategic value management study is undertaken to determine whether the need for the project
can be substantiated. The project design value management study provides a similar opportunity
to analyse the design and to determine whether it meets the needs. The objective analysis aims
to determine whether the design is functional, in accordance with agreed standards and policies
and represents value for money. The agency has responsibility for the project value management
study which will involve DAIS (Services SA) and the design professionals as well as agency
representatives.

ECONOMIC ANALYSIS INCORPORATING LIFE-CYCLE ASSESSMENT
An economic analysis is undertaken by the agency in conjunction with DAIS (Services SA). The
economic analysis should include a “whole of life” cost which takes into account the initial
capital cost, the recurrent cost of operating, staffing costs and any residual value of the asset.

DELIVERY BRIEF (THE PROJECT BRIEF AND PROJECT DEFINITION REPORT)
The project delivery brief is a key document confirming that the project can be delivered within
agreed parameters. It includes the following details:

• schematic design (completed sketches);
• reliable cost plan and cash flows (based on existing benchmarks); and
• reliable time plan (based on previous experience and the market).

The service delivery agency has responsibility for ensuring the accuracy of information provided.
DAIS (Services SA) contributes significantly to the delivery brief through its project management
and risk management role.

PARLIAMENTARY PUBLIC WORKS COMMITTEE REVIEW
The project concept may have been referred to the Public Works Committee in the concept
evaluation phase. If further information is required, it is most likely to be when the design has
been developed, the estimated cost is known and a program of works has been developed (ie
the project definition brief).

UPDATE THE CONSULTANTS’ REGISTER
The consultants’ register is maintained by Services SA and is updated regularly to reflect the
quality of the work undertaken on specific projects.



6.1 APPOINT PROJECT DESIGN TEAM UTILISING THE
CONSULTANTS’ REGISTER

The steering committee or agency reviews the team structure for the
concept phase and determines any new team requirements.

The project team will include representatives from the service delivery
agency and DAIS (Services SA).

Utilise the DAIS (Services SA) Consultants' Register (refer section 4.2).

6.2 PROVIDE THE PROJECT DESIGN TEAM WITH THE DETAILED
DEFINITION BRIEF

The project brief (definition brief) is the basis for the design professionals
to develop detailed schematic designs (sketch plans).

The detailed schematic design process includes:

• drafting a detailed brief, defining all areas, services and
finishes;
• architectural and engineering design to establish form,
functional relationships, area definition, site plans, sketch plans,
elevations, materials selection etc;
• documentation and drawing of the project to a schematic stage,
including all services and civil engineering designs
(eg car parks, ovals and retaining walls);
• a specific project timeline;
• a limit of cost plan and cash flows;
• a quality plan;
• confirmation of delivery options; and
• project risk analysis.

At the same time a fully developed project plan including an action
plan is prepared for the management of the project delivery phase.

6.3 CONFIRM CONTRACT METHOD

Contract method options have been considered in the concept
development phase and will need to be discussed further when
determining project timelines.

The contract method is confirmed by DAIS (Services SA) in consultation
with the agency responsible for the project.


PROJECT DEFINITION PHASE

6.4 DEVELOP A COST PLAN FOR THE PROJECT

Professional advice should be sought to develop a cost plan for the project.

The cost plan will include a break down of costs for the project and an
estimate within an order of accuracy of ten per-cent (plus or minus) for:

• building works;
• site works;
• engineering services;
• furniture and equipment;
• statutory and legal insurance fees;
• professional fees;
• contingency allowance;
• associated works; and
• sundries.

The cost plan also indicates the cash flow of funds required on a financial
year basis.

6.5 DEVELOP DETAILED PROJECT TIMELINES

Once the detail of a project has been defined, a program (timelines) can
be established to coordinate all the project variables that are time-
dependent. The timelines will be influenced by the method of delivery
chosen for the project. The key items include:

• site acquisition and vesting of ownership;
• design development/contract documentation process;
• tender call and acceptance;
• project approval process;
• construction;
• furniture and equipment purchases;
• staffing arrangements;
• enabling legislation; and
• service delivery deadlines.

6.6 CONFIRM THAT THE PROPOSAL SATISFIES ENDORSED CONCEPT
PARAMETERS

With all aspects of the project defined, the proposed design should be
compared with the parameters of the previously endorsed project plan.
This is done to ensure that the project has not deviated from the original
intent unless there has been justification and approval for the changes.
These changes and associated approvals need to be documented.

6.6.1 Project design value management study

The documentation developed for the project can be used for a
value management study, which confirms the strategic value



management study undertaken in the concept phase and tackles
the specifics of value for money in the design and development.

The value management process is used now to ensure delivery of
the essential functions described earlier, and to eliminate high
cost/low function elements of the design.

The developed cost plan and the project design value
management study will result in documented decisions and may
include ranked trade-offs in the design process. It should be
agreed that any items taken out, will remain out.

Some items may be identified which could be excluded in the
event that cost reductions may be required, but as desirable items
to be included if further cost savings are not required. These
choices should be documented and visible to the chief executive
of the agency, the Minister and Cabinet.

Conducting a value management review confirms that the specific
project represents value for money as well as functional efficiency.
It may identify ranked trade-offs which should be documented to
indicate which items will be deleted and the anticipated saving
and/or effects of the decision.

6.6.2 Analysis for best value solution

It will be necessary to conduct a detailed evaluation of the capital
and recurrent costs of ownership and operation which flow from
the chosen design.

Methods used to evaluate the best value solution include:

• life cycle costing (capital and recurrent costs for the built asset);
• development of a cost of ownership plan which identifies
operating costs (eg staffing, utilities such as electricity, gas
and water); and
• benchmark comparisons (standards and examples of best
practice).

The outcomes of the detailed evaluation include:

• planning approvals identified, so they can be sought at
an appropriate time;
• cost of ownership and operation defined and quantified;
• time schedules in place; and
• financial constraints set.

6.6.3 Significant deviation from the original plan

If the project has deviated significantly from the original plan,
effectively it is a new project with likely variations in the estimated
total cost and subject to a thorough review using the project
initiation process.



6.7 CHECK TO CONFIRM THAT THE PROJECT MEETS THE NEEDS OF
THE AGENCY

The analysis developed and refined in the concept evaluation phase is
reviewed by the agency and further developed to confirm that the project,
which is now defined in some detail, still meets the needs of the agency,
will still perform and deliver agreed outcomes and is within the funds
allocated for the project.

6.8 IDENTIFY APPROVALS REQUIRED FOR THE PROJECT

Government projects are required to have a series of approvals which
must be sought and confirmed before the project can proceed. In
addition, government projects must conform with legislative requirements
including the Development Act and the associated regulations under
the Act.

6.8.1 Development approval and certification

Development approval is required through the Development
Assessment Commission.

Certification for compliance with the regulations under the Act is
also required. Certification covers health and safety matters under
the building rules/code. In addition reference should be made to
other relevant legislation including the Occupational Health, Safety
and Welfare Act. DAIS (Services SA) will supervise this process.

Early consultation is recommended with the Development
Assessment Commission and DAIS (Services SA) to identify issues
which may need to be addressed to ensure compliance.

6.9 ENDORSEMENT TO PROCEED TO THE DELIVERY PHASE

At the end of the project definition phase, the project should be submitted
to the appropriate level of delegation (eg director, chief executive or
Minister) for endorsement to proceed to contract documentation and
tender call.

No further work should be undertaken until this endorsement is given.

While the project usually has a budget allocation, no expenditure can
be incurred until funding has been approved. Agencies need to have
documented evidence of funds approval by the appropriate delegate
before proceeding to the project delivery phase.


7. PROJECT DELIVERY PHASE
The Project Delivery Phase requires significant professional involvement which is coordinated by DAIS
(Services SA).

Minister
Design Development and Contract Documentation
7.1 Review definition phase of the design c
7.2 Approval to proceed with contract documents c

7.3 Prepare contract documentation c
7.4 Define required quality standards for the contractor c
7.5 Confirm the agreed and endorsed parameters c

7.6 Initiate and facilitate approvals related to the Development Act c
7.7 Obtain pre-tender estimate and associated cash flows

7.8 Utilise contractors' register to select tenderers c

7.9 Approval to call tenders c
Tender Call and Contract Award

7.10 Call tenders and obtain tender comparison estimate

7.11 Prepare tender appraisal and recommendation c
7.12 Processing the tender call and final approval for awarding the
construction contract c

$4M and > $4.0M Cabinet approval c c
$0.5M up to $4.0M, Ministerial approval c c
<$0.5M CEO (subject to Ministerial delegation of authority)

Construction
7.13 Award the construction contract c
7.14 Manage the construction contract c
7.15 Commission and hand over of the completed project

Code: c



AGENCY REQUIREMENTS CONFIRMED
The agency in conjunction with DAIS (Services SA) reviews the planning undertaken in the project
definition phase and confirms that the requirements have been met.

CLIENT AGREEMENT CONFIRMED (“SIGN OFF”)
The agency takes responsibility for ensuring that its requirements have been described in the
required briefs and in the value management reports. DAIS (Services SA) assists and ensures that
there is agreement in writing prior to proceeding with contract documentation.

COMPLETED DESIGN AND CONTRACT DOCUMENTATION
The agency and DAIS (Services SA) ensure the design and documentation has been completed
by the consultants prior to tenders being called for construction.

TENDER PRICE CONFIRMED
DAIS (Services SA) manages the tender call and tender appraisal process, leading to a
recommendation and the awarding of the construction contract. The tender price should be
within the cost limits previously identified.

CABINET APPROVAL TO LET CONTRACT
Projects with a capital cost of $4 million or more (cost on completion and including all stages)
require Cabinet approval before awarding the construction contract. The Cabinet submission for
the contract is prepared by DAIS (Services SA) in conjunction with the service delivery agency. The
contract is awarded once the submission has been endorsed by Cabinet.

FUNDS APPROVAL
Prior to letting any contract, the agency must verify that it has sufficient funds available in its
budget to cover the cost of the project, allowing for escalation and contingencies. Approval
must be given by the agency’s appropriate delegate for each project.

CONTRACT AWARDED BY MINISTER FOR STATE SERVICES
In most instances the Minister for State Services acts as the Government’s representative when
entering into construction contracts. DAIS (Services SA) is responsible for accepting the tender,
establishing the contract and executing a formal instrument of agreement. As there are legal
issues arising from construction contracts and their administration, it is essential that this is done
by authorised delegates.

CERTIFICATE OF PRACTICAL COMPLETION
Practical completion is when a project has been completed and is fit for its intended purpose,
except for minor omissions and defects that do not prevent its use. Any testing required under the
contract will have been carried out.

Practical completion is marked by the issue to the contractor of a certificate of practical completion
by the Superintendent responsible for the building construction project.

The owners and the users should be provided with operators’ manuals for plant and equipment
and made familiar with the design features of the building so they are able to use it appropriately.


Prior to commencement of this phase, a review process should ensure that
agreed project parameters are documented and communicated to members
of the project team.

The Government of South Australia is a signatory to an “in principle” agreement
to use Australian standards and benchmarks in relation to tendering procedures
(as detailed in Appendix 3).

7.1 REVIEW DEFINITION PHASE OF THE DESIGN

The key functions to be reviewed at this stage include cost and cash
flow plans, timelines, and quality standards. The roles of the members
of the project team need to be documented and communicated clearly
so there is a common understanding of functions and responsibilities.
At this time options should be again reviewed to ensure that the best
option has been selected for the particular project.

7.2 APPROVAL TO PROCEED WITH CONTRACT DOCUMENTS

Final details and quality standards for all elements of the project must
be agreed before proceeding with contract documents. As documents
are expensive to produce, the service delivery agency should confirm
that all the features required in the project have been identified and
included in the project definition phase and in the budget.

The agency is expected to confirm in writing that all essential features have
been included and that the project can proceed to contract documents.

7.3 PREPARE CONTRACT DOCUMENTATION

The project delivery phase covers design development and the
preparation of contract documentation, proceeding to tender, tender
acceptance and construction, based on the project plan prepared and
approved in the project definition phase.

7.4 DEFINE REQUIRED QUALITY STANDARDS FOR THE CONTRACTOR

Pre-qualification criteria and selection criteria for contractors have been
developed. In South Australia, DAIS (Services SA) ensures that contractors
have the specific skills and expertise to undertake the project and ensure
its completion to the requirements specified by the sponsoring agency.

The quality standards, with which the contractor is to comply and which
will be used in the selection process, must be defined in the


PROJECT DELIVERY PHASE

documentation to ensure best practice standards are achieved for the
project. These standards have been defined in CIDA guidelines and
include aspects such as:

• the management and technical capacity of the construction
team;
• financial capacity and financial control systems;
• quality assurance;
• time performance;
• occupational health and safety;
• human resource management (industrial relations); and
• skills formation.

In addition, consideration is given to the following factors:

• experience on relevant projects;
• track record on contractual disputes; and
• management of the program.

7.5 CONFIRM THE AGREED AND ENDORSED PARAMETERS

The analysis developed and refined in the concept evaluation phase,
and checked in the project definition phase, is quickly reviewed by the
agency to confirm that the project, which is now defined in detail, still
meets the needs of the agency and will still perform and deliver specified
outcomes.

This check is especially necessary for large projects, where a significant
time period may elapse while contract documentation is being prepared.

However all projects require the agency to sign off on a statement of
requirements, confirming the agreed and endorsed parameters of the
project. Any changes to the requirements after the project has been
signed off are considered additional work.

7.6 INITIATE AND FACILITATE APPROVALS RELATED TO THE
DEVELOPMENT ACT

Built asset projects are required to conform with the legislative
requirements of the Development Act.

Development approval, together with certification that the plans comply
with the regulations under the Act, must be sought and confirmed before
tender call.

DAIS (Services SA) can facilitate development approval through the
Development Assessment Commission and has responsibility for ensuring
that certification is provided.



7.7 OBTAIN PRE-TENDER ESTIMATE AND ASSOCIATED CASH FLOWS

Agencies now prepare the pre-tender estimate and associated cost plan.
DAIS (Services SA) provides assistance to agencies in cost management
for building projects.

A limit of cost estimate was established in the project definition phase
and the pre-tender estimate should be within this limit. If additional
budgetary provision is required for a project estimated to cost more
than $1 million, it must be submitted to the Cabinet Budget Committee
for consideration, prior to seeking Cabinet approval.

If the pre-tender estimate exceeds the limit of cost estimate and additional
budgetary provision is not required, the approval of the Minister (or the
Minister’s delegate) needs to be obtained before proceeding to call tenders.

7.8 UTILISE CONTRACTORS' REGISTER TO SELECT TENDERERS

DAIS (Services SA) maintains a Contractors' Register which is to be used
to select tenderers for public sector projects.

7.9 APPROVAL TO CALL TENDERS

Before calling tenders, DAIS (Services SA) will obtain written authority
from the agency to proceed. Approval must be sought at the appropriate
level of delegation.

In seeking the authority, a final check will be carried out to ensure that
the following requirements are addressed:

• a complete set of documents is available;
• the pre-tender estimate has been obtained;
• sufficient budgetary provision is available; and
• all necessary approvals have been secured (including
approvals under the Development Act) and a report from the
Parliamentary Public Works Committee where necesssary.

7.10 CALL TENDERS AND OBTAIN TENDER COMPARISON ESTIMATE

Once documentation for tender call has been finalised and the cost is
confirmed as within the budget parameters, tenders may be called. All tender
calls for projects over $150 000 must be conducted by DAIS (Services SA).



7.11 PREPARE TENDER APPRAISAL AND RECOMMENDATION

The tender appraisal is undertaken in accordance with the principles
outlined in the Code of Tendering (Australian Standard AS 4120 - 1994).
The Code is a statement of ethics and procedures which underpin best
practice tendering. It details the obligations of the Principal in the contract
and the tenderers in the tendering process, and provides a consistent
basis for the calling of tenders among contractors and subcontractors.

Information is prepared in accordance with the principles detailed in
the Code and the agency is presented with a recommendation which is
consistent with the construction industry’s standard.

For public sector projects the Principal in the contract is usually the
Minister for State Government Services. The Minister has been given
this authority for the majority of contracts for public works.

7.12 PROCESSING THE TENDER CALL AND FINAL APPROVAL FOR
AWARDING THE CONSTRUCTION CONTRACT

It is essential to obtain final approval of funds and acceptance of the
tender before awarding the construction contract.

The final approval for awarding the construction contract is sought from
the appropriate level of delegation, which is Cabinet for projects with a
capital cost of $4 million or more (cost on completion and including all
stages), and the agency’s Minister or authorised delegate for projects
less than $4 million.

However if additional budgetary provision is required, projects of
$1 million or more need approval from Cabinet before the contract is let.



7.13 AWARD THE CONSTRUCTION CONTRACT

DAIS (Services SA) is responsible for accepting the tender and establishing
the contract by the issuing of a “letter of acceptance”.

DAIS (Services SA) is responsible for preparing and executing a formal
instrument of agreement. Currently this is done in accordance with
NPWC Edition 3 Conditions of Contract. This contract is well known to
the construction industry in South Australia and is used for major works
projects.

This contract is under review and it is expected that a suite of standard
form contracts based on AS 2124-1992 will be introduced in 1996.

7.14 MANAGE THE CONSTRUCTION CONTRACT

During the construction phase, DAIS's (Services SA) Superintendent
administers the contract on behalf of the Minister for State Government
Services who is the Principal in the contract.

The Superintendent, in turn, delegates the day to day authority under
the contract to the Superintendent’s Representative (usually the project
manager) who is responsible for ensuring that the project proceeds
within the parameters approved by the service delivery agency and its
Minister, and in some instances Cabinet.

The project manager is also responsible for working with the agency to
provide all information necessary to allow the agency to retain
responsibility for the project during the construction phase.

Any increase in the estimated cost limits or any significant design scope
variations arising during the construction period should immediately
be referred to the delegate who approved the project, together with an
explanation.

If any increase in cost is expected to exceed the approved expenditure,
approval of additional funds must be sought from the person with
delegated authority to incur expenditure for the total amount (ie the
initial approval plus the proposed additional amount).



7.15 COMMISSION AND HAND OVER OF THE COMPLETED PROJECT

7.15.1 Commissioning

Commissioning of the works is usually undertaken before hand
over to ensure everything is ready for occupation and use. Any
works outstanding under the contract should be identified and
documented so there is a clear understanding of the work still to
be completed as part of the project.

7.15.2 Hand over

Once the construction works have reached practical completion,
hand over from the contractor to the service delivery agency and
its users can occur. From this time on the agency/user takes
responsibility for the asset.

Hand over includes the provision of operating instructions and
maintenance plans for the built asset and for any specific items
of equipment which require instructions.

7.15.3 Defects liability period of the contract

During the defects liability period of the contract, the contractor
is responsible for completing minor omissions and defects
outstanding at practical completion and for rectifying construction
defects identified during this period, which is usually twelve
months.

Service delivery agencies are responsible for ensuring that their
users understand the legal importance associated with obligations
during the defects liability period, and for ensuring that no work
is carried out by anyone except the authorised contractor.


8. REVIEW PHASE

The Review Phase provides opportunities to refine details and to feed back
into the system information about products, processes and performance. This
information provides market intelligence which is used to benefit other projects.

Minister

On Completion Of Project

8.1 Post completion review c

8.2 Update asset information systems

Post Occupancy - > 12 Months

8.3 Post occupancy evaluation (POE) c

At Any Phase Of the Project, Or After Completion

8.4 Management review c

Code: c


8. REVIEW PHASE

POST COMPLETION REVIEW
A post completion review is carried out by DAIS (Services SA) in conjunction with the agency and
a representative of the group which will be using the asset. Any significant issues identified
through this process have to be documented and a clear delineation made between rectifying
matters under the contract as distinct from additional work which will require additional funds to
be approved and allocated by the agency.

POST OCCUPANCY EVALUATION REPORT
Post occupancy evaluation (POE) is undertaken to determine whether the objectives of the project
were achieved and whether the briefed standards were appropriate. It is a careful and systematic
evaluation of the performance of an occupied facility, measured in terms of user satisfaction,
fitness for purpose (based on the requirements stated in the evaluation brief), technical performance
and value for money.

Information from the post occupancy evaluation is used to upgrade briefing information, to
review standards and benchmarks and to ensure that appropriate processes are in place.

The process may be used to identify design issues which need to be amended or to bring to
attention variations between the anticipated needs and the actual needs once the facility is in
operation. It does not imply any commitment to make changes or to allocate additional funds.

When undertaking the post occupancy evaluation, reference will be made to documented
standards, project briefs and the plans developed and authorised during the project initiation
process.

BLAMS INFORMATION TO UPDATE THE STATE ASSET REGISTER
The physical and financial details of the project (as built), with relevant information about the
nature and location of the asset needs to be incorporated in an agency asset management
information system (usually BLAMS), the agency asset register and the State Asset Register.

CONTRACTOR/CONSULTANT DATA
DAIS (Services SA) maintains a register which provides information about the capabilities and
performance of people engaged on Government projects. This information is used in selecting
consultants and contractors for specific types of work. It is based on financial, technical and
managerial capabilities, especially as demonstrated on past work undertaken on behalf of
Government.

FEEDBACK INFORMATION TO THE PLANNING PHASE.
Information from a post completion review, post occupancy review or management review is fed
back into the planning phase to improve the planning process and provide for continuous
improvement.

MANAGEMENT REVIEW REPORT
A management review report is expected to identify whether due process has been followed and
whether issues of probity and accountability have been addressed. The report is provided to
agency management for action including adjustment or improvement of the processes to be
followed in future projects.


8. REVIEW PHASE

8.1 POST COMPLETION REVIEW

A post completion review should be undertaken as soon as construction
of the project is completed. The purpose of this review is to identify
quickly any features which need to be rectified immediately, any
omissions from the contract and any unauthorised variations. It also
provides an ideal opportunity to identify any details in planning which
need to be amended or updated to improve the process for projects
currently in the design phase, and to amend documented standards, if
necessary.

8.2 UPDATE ASSET INFORMATION SYSTEMS

The agency’s asset register needs to be updated and the information
incorporated in the State Asset Register at Treasury and Finance, as
necessary.

The information also needs to be included in the agency’s asset
management information system which is generally expected to be the
Building and Land Asset Management System (BLAMS) operated by DAIS
(Services SA).

In addition, performance reports on contractors and consultants should
be completed to update the contractors’ and consultants’ registers which
are maintained by DAIS (Services SA) and used as a guide for the
allocation of work.

8.3 POST OCCUPANCY EVALUATION (POE)

Complete a formal post occupancy evaluation on all projects, particularly
those costing more than $4 million, after the asset has been used for
twelve months (when providers and users have had an opportunity to
assess performance through a complete cycle of operation).

Include the following information.

o Determine the extent to which the project is achieving program
objectives and functions as described in the brief and through the
value management process undertaken.

o Identify the key factors which helped achieve the outcomes as well
as the main causes of variances and advise stakeholders.

o Compare the planned versus actual operational costs and report to
stakeholders.

o Identify opportunities for improvement (design, maintenance,
operation) and document substantiated information to the stakeholders.


REVIEW PHASE

A post occupancy evaluation can result in an increase in the expectations
of users and in the briefing requirements for future projects. Stakeholders
need to consider this both as an opportunity to improve service delivery
in response to identified shortcomings, and as a potential problem if
unrealistic or inappropriate standards are being sought. The standards
may be too high (with initial cost implications); too low (with maintenance
cost or safety implications); or unnecessary for the purpose of the project.

The review process includes the opportunity to review best practice
standards and recommend appropriate changes to incorporate the
new requirements as authorised improvements.

Smaller repetitive projects should also be considered for occasional
post occupancy review, especially early in the cycle so that modifications
and improvements can be made to subsequent projects.

DAIS (Services SA) has guidelines for post completion reviews and post
occupancy evaluation to assist agencies.

Agencies are expected to allow for the cost of post completion and post
occupancy reviews as part of the project budget.

8.4 MANAGEMENT REVIEW

In some instances a management review may be required which
addresses specific issues relating to matters of probity and accountability
such as:

• accountability for decisions and outcomes consistent with the
documented plans;
• confirmation that due process has been observed and
documented procedures have been followed;
• evidence that appropriate records have been maintained, and
that an effective audit trail exists;
• documentation which confirms that all costs have been
identified and substantiated, and payments made accordingly;
and
• evidence that all necessary approvals were sought and
confirmed at the appropriate time and at the approved level
of delegation.

A management review is most likely if serious problems are evident
concerning the integrity of the process or project management. However
it may be used as an audit check to ensure that appropriate processes
are being followed and to assure the Government that all aspects of
procurement risk are being managed appropriately.


APPENDIX 1

NON-COMMERCIAL SECTOR AGENCIES
Non-commercial sector agencies are required to use the Project Initiation Process endorsed
by Cabinet in July 1995. These agencies include:

Adelaide Convention Centre
Adelaide Festival Centre Trust
Art Gallery Board of South Australia
Arts and Cultural Development, Department for the
Attorney-General’s Department
Auditor-General’s Department
Australian Formula One Grand Prix Board
Board of the Botanic Gardens
Coast Protection Board
Commissioner for Public Employment, Office for the
Correctional Services, Department for
Country Fire Service
Courts Administration Authority
Economic Development Authority
Education and Children’s Services, Department for
Electoral Office, State
Employment, Training and Further Education, Department for
Enfield General Cemetery Trust
Entertainment Centre
Environment and Natural Resources, Department of
Family and Community Services, Department for
Foundation SA
History Trust of South Australia
Housing and Urban Development, Department of
Industrial Affairs, Department for
Information Technology, Department of
Institute of Medical and Veterinary Science
Joint Parliamentary Services
Legal Services Commission
Libraries Board of South Australia
Lotteries Commission of South Australia
Metropolitan Fire Service
MFP Australia
Mines and Energy, Department of
Multicultural and Ethnic Affairs, Office of
Outback Areas Community Development Trust
Parks Community Centre
Passenger Transport Board
Police Department
Premier and Cabinet, Department of the
Primary Industries, Department of
Recreation, Sport and Racing, Office of
Services SA
Senior Secondary Assessment Board of South Australia
South Australian Government Employee and Residential Properties
South Australian Health Commission
South Australian Housing Trust
South Australian Meat Corporation


(APPENDIX 1 Cont.)

South Australian Museum Board
South Australian Research and Development Institute
South Australian Totalizator Agency Board
South Australian Urban Projects Authority
South East Water Conservation and Drainage Board
State Aboriginal Affairs, Department of
State Governor’s Establishment
State Theatre Company
Tourism South Australia
TransAdelaide
Transport, Department of
Treasury and Finance, Department of
West Beach Trust


APPENDIX 2

ROLES AND RESPONSIBILITIES OF STAKEHOLDERS

The following summary outlines the roles and/or responsibilities of stakeholders involved in the
Project Initiation Process:

o Agency/Service Provider - Responsible for the provision of government services and consequently
defines the extent, quality and location of services. The service delivery agency is primarily
responsible for the initial planning, budgeting and approval elements of the project. Ultimately
the responsibility for the management and operation of the asset rests with the agency.

o Department of the Premier and Cabinet - Provision of “whole of Government” strategic planning
to assist in determining the priorities for agency service delivery and resource allocations. It sets
the requirements for Cabinet submissions and ensures that due process has been observed.

o The Department of Treasury and Finance - Provision of economic and financial advice towards
the efficient management of the Government’s finances and the efficient use of its resources.
This includes the coordination and resolution of asset management policy issues, development
of accounting and financial reporting standards, advice to Cabinet on agency budgets including
capital works proposals and the review of major capital projects, including the assessment of
proposals for the private sector provision and operation of infrastructure.

o DAIS (Services SA) - Operates in conjunction with government agencies to provide professional
assistance for the planning, delivery, maintenance and disposal of built assets. Has responsibility
for property management services and management of the procurement process for the
Government’s built assets, as well as managing the risks related to Government’s building and
construction and performing the industry interface role on behalf of Government. Also maintains
BLAMS, a computer based asset information system with details of public sector built assets
which is used to update the Government property register.

It operates in cooperation with other agencies, through the Infrastructure Agencies Forum, to
develop standardised government contracts, documentation and procurement practices which
reflect best practice through the use of recognised National standards including Australian
Standards (AS) and National Public Works Council (NPWC) policies and procedures.

o Government Office Accommodation Committee (GOAC) - Has responsibility for the
development and implementation of policies for the management of Government office
accommodation.

It is responsible for maintaining a register of all office accommodation owned in the public
sector and its current and future availability. It also maintains a register of all leases of office
accommodation from external sources to agencies and instrumentalities. This register includes
details of the rent payable, length of tenure and other relevant details.

o Department of Environment and Natural Resources (DENR) - Has a responsibility for property
valuations and to undertake the acquisition and the disposal of land and property for those
agencies with a governing statute which excludes the power to acquire and deal in land.

o Department for Housing and Urban Development (DHUD) - Guides and manages land use
planning, and urban, rural and regional development, for the benefit of present and future
South Australians. Responsible for the administration and ongoing review of planning legislation
towards achieving these objectives.

DHUD administers the Development Act on behalf of Government. However for Government
projects, certification of individual project compliance with the building rules is vested with
DAIS (Services SA).


(APPENDIX 2 Cont.)

o Economic Development Authority (EDA): Provision of advice and assistance on infrastructure
issues which have an impact on the economic welfare of the State, including the private sector
involvement in infrastructure provision, in support of the economic priorities of the State.

o Crown Solicitor: The office of the Crown Solicitor provides advice on commercial and legal
matters generally, and assists contract negotiation and development. The office ensures certification
of the adequacy of proposed contractual arrangements, as well as probity of procedures and
the methods proposed for asset acquisition.


APPENDIX 3

REFERENCES FOR THE PROJECT INITIATION PROCESS

The Project Initiation Process for Capital Works, January 1996 has been developed in response to
Government’s requirement for a clear process which will provide consistency in the planning and
delivery of Government’s built assets.

It follows the endorsement of a submission to Cabinet in July 1995. It details the steps to be taken
and allocates the responsibilities of agencies and government in the process.

It accompanies the Strategic Asset Management Framework, January 1996 which addresses the
Government’s policy for asset management of public infrastructure.

It will be complemented by a further publication, Building Asset Management Framework and
accompanying building asset management guidelines.

In addition there will be a publication which describes risk management and risk management
responsibilities.

o Strategic Asset Management Framework, Department of Treasury and Finance/DAIS (Services
SA, January 1996

o Project Initiation Process for Capital Works, Department of Treasury and Finance/
DAIS (Services SA), January 1996
The Project Initiation Process replaces DPC 112 Capital Works Efficiency Measures.

o Treasury Information Paper
• Paper 90/1 Guidelines for the Evaluation of Public Sector Projects, October 1990

o Annual Budget papers
• Financial Papers
- Budget Speech
- Financial Statement
- Estimates of Receipts and Payments
• Financial Information Papers
- Program Estimates and Information
- Capital Works Program

o Treasurer’s Instructions, issued in accordance with Public Finance and Audit
Act, 1987

• Treasurer’s Instructions (TI) re Expenditure for Goods, Services and Works

TI 302 Authorities for Expenditure
TI 304 Service Contracts, Supply Contracts and General Provisions
TI 306 Approval to Incur Liability for Expenditure Under Contracts other than
Contracts under the State Supply Act
TI 308 Calling Tenders for Service Contracts
TI 322 Receipt of Goods, Services or Works
TI 324 Sales Tax Certificate of Exemption
TI 326 Approval for Payment of Recurrent Services
TI 328 Register of Contracts
TI 330 Preparation and Certification of Accounts
TI 332 Payment of Accounts


(APPENDIX 3 Cont.)

• Treasurer’s Instructions re Financial Reporting

TI 1001 Asset Registers

• Treasurer’s Instructions - Miscellaneous

TI 9104 Purchase and Disposal of Government Assets
TI 9105 Guidelines for the Evaluation of Public Sector Projects
TI 9106 Accounting for the Sale of Assets

o Further publications developed by DAIS (Services SA) in conjunction with others

• Code of Practice for the South Australian Building and Construction Industry
published by the Construction Industry Advisory Council and the Department for Building
Managementon behalf of the Government of South Australia , July 1995

Implementation Guidelines Part 1. Implementation Procedures

Implementation Guidelines Part 2. Schedules of Best Practice

• Building and Construction Industry Prequalification and Registration of Contractors
and Consultants
Discussion Paper, Services SA, November 1995

• Building and Construction Minor Works Guide, Manual and Checklist
Services SA, November 1995

• South Australian Whole of Government Built Asset Management Quality Assurance
Policy (draft)
Infrastructure Agencies Forum, November 1995

o Other Relevant Publications

• Charting the Way Forward: Report of the South Australian Commission of Audit:
Improving public sector performance, Vol 1, April 1994

• Guidelines for Private Sector Provision of Infrastructure, Economic Development
Authority, October 1994

• Guidelines for the Private Sector on Contracting Out and Competitive Tendering,
Economic Development Authority, June 1995

• All About Contracting Out, Office of Public Sector Management,
Department of the Premier and Cabinet, June 1995

• Contracting Out Financial Guidelines, Department of Treasury and Finance,
November 1995

• Risk Management Strategy Plan, SA Insurance Corporation (SAICORP), March 1995


(APPENDIX 3 Cont.)

o National Standards and Benchmarks for the Building Construction Industry

o Australian Standards

The South Australian Government is a signatory to an “in principle agreement” which is part of the
National Construction Industry Reform Strategy. The agreement includes an undertaking to develop
and implement National standards and codes of practice which will ensure consistency, equity and
professional conduct in the delivery and maintenance of infrastructure.

The “in principle” agreement by Government supports the implementation of international best
practice and the ongoing monitoring of industry benchmarks to ensure there are acknowledged
examples of best practice.

Australian Standards are used in this process. The relevant National standards include:

• Code of Tendering: Australian Standard AS 4120 - 1994
This is a statement of ethics and procedures which underpin best practice tendering techniques.

The Code details the obligations of principals and tenderers in the tendering process and
introduces a consistent basis for the calling of tenders among contractors and subcontractors.

• Selection of Consultants: Australian Standard AS 4121- 1994
This Standard has been specifically designed for the selection of consultant architects,
engineers, quantity surveyors and other consultants. It sets out the ethics and the obligations
of both the client and the consultants. It also outlines appropriate procedures for the calling
for proposals, evaluation of proposals and the obligations of consultants and principals in
that process.

• Engagement of Consultants: Interim Australian Standard AS 4122 (Int) - 1993
This document provides a general set of conditions to be used when engaging consultants.
It consists of efficient and fair contractual arrangements for the employment of consultants.
This standard has not been finalised, so DAIS (Services SA) is using a standard developed
in conjunction with the Crown Solicitor's Office.

o Construction Industry (CIDA) Guidelines

• Project Management Guide
The Construction Industry Development Agency (CIDA) has published a project management
guide which identifies the principles and practical rules which help to achieve successful
building construction projects.

The guide has been structured for use by owners and principals in contracts, but is of use to
consultants and contractors also.

• Partnering: A Strategy for Excellence
The Commonwealth Government, through the Construction Industry Development Agency
(CIDA) identified the formation of new relationships between stakeholders in the industry as
a vital step in the reform of the construction industry.

CIDA has developed a guide for the development of cooperative relationships between
clients/users, consultants, contractors and subcontractors, suppliers and unions. The guide
provides practical case studies to illustrate the partnering process and the benefits to all
participants.


(APPENDIX 3 Cont.)

• Construction Industry Project Initiation Guide for Project Sponsors, Clients
and Owners; CIDA, Second Edition, Commonwealth of Australia, November 1994
to be read in conjunction with
- Australian Standards 4120 Code of Tendering
- Australian Standards 4121 Code of Ethics and Procedures for the Selection of Consultants

In addition there are further Australian Standards and guidelines which may be used.

o International Standards Organisation (ISO) 9000 Series and associated guidelines

The International Standards are used also, especially for quality assurance.

• ISO 9001: 1994 Quality Systems - Model for quality assurance in design, development,
production, installation and servicing

• ISO 9002: 1994 Quality Systems - Model for quality assurance in production, installation
and servicing

• ISO 9001: 1994 Quality Systems - Model for quality assurance in final inspection and test


GLOSSARY
TERMS RELEVANT TO THE PROJECT INITIATION PROCESS

Accountability
Responsibility for services or functions that have been delegated and/or accepted.

Accrual Accounting
Recognition and recording of revenue, expenses, assets and liabilities at the time they arise or are
incurred.

Asset management
• The process of managing demand and guiding acquisition, use and disposal of assets to
make the most of their service delivery potential, and manage risks and costs over their entire
life
(Strategic Asset Management Framework, January 1996).

• A systematic approach to the procurement, maintenance, operation, rehabilitation and disposal
of one or more assets which integrates the utilisation of assets and their performance with the
business requirements of asset owners or users.

Asset management information system
A system for collecting and analysing data on the performance of existing assets, including their
operational costs. (An example in the South Australian context is the Building and Land Asset
Management System - BLAMS).

Asset management plan
Identifies the short and long term requirements of an agency and provides a framework for managing
its asset portfolio. These needs are driven by goals defined in the agency’s corporate plan and
service delivery strategies.

Asset performance
A quantified measure of the contribution an asset makes towards stated objectives or agreed
standards.

Asset register
A record of items considered worthy of identification as discrete assets. A physical asset register
includes information about each asset, such as type of construction and technical details. (Details
include location, value and construction type).

Benchmarking
Identifies a starting point for measuring products, costs, services and practices against those
recognised as industry leaders, in order to improve agency performance.

Brief
Written goals, methods and desired results prepared by project participants at the end of key
phases of the project initiation process, providing sufficient substantiation to approve advancement
of the project to the next phase.

Client brief
The functional and operational requirements for the proposed project, stating the end user’s
requirements and setting out objectives in terms of time, cost, quality, function and scope.

Delivery brief
A report which contains the schematic design, limit of cost estimate, and cash flow plan. A
key document in confirming that the project can be delivered within agreed parameters.
Used in the project delivery phase.


(GLOSSARY Cont.)

Evaluation brief
A written description of the concept, outlining accommodation needs, impact on the program,
service delivery objectives and the financial/economic approach to be pursued. Used in the
evaluation phase of the project initiation process and also in the value management process.

Functional brief
• that part of a the client’s brief that sets out the detailed functional requirements of a project;
• a precise definition of the end user’s requirements, including but not limited to,
anticipated workload, staffing, key relationships, accommodation requirements and
major physical requirements.

Project brief
The brief developed by the client as a result of rigorous evaluation of service delivery needs
and options, and forwarded to the design professionals for interpretation into a design for a
built asset.

Building and construction industry
The industry that provides the services associated with the activities of the building and construction
sectors covering buildings and associated engineering services and civil engineering (sometimes
also referred to as construction).

Capital works
A term which relates to the procurement of physical assets through the expenditure of capital funds.

Certification
A means of documenting compliance with performance or prescriptive building code requirements
by an independent accredited agency or individual not part of the statutory approval authority.

Client
The person or organisation requiring and paying for a building or engineering work or a specific
professional service.

Client brief (see brief)

Code of practice
A statement of the minimal acceptable levels of aspects of behaviour and best practice that are
deemed to be required so as to bring about improved performance through industry reform.

Concept
The idea developed to meet a specific service delivery need.

Consultant
A specialist paid for a service. Often used to refer to ‘the professionals’ such as: architects, engineers,
quantity surveyors.

Consultant register
A register of consultants drawn up using the financial, technical and managerial capabilities and
capacity of the consultant to allocate them into specific categories. Used in selecting consultants to
be engaged on projects.

Contract
An agreement entered into between two or more parties which involves an exchange of specified
goods and/or services for specified financial reimbursement or other considerations. The terms of
agreement are usually set out in writing and specific legal obligations are created by the signing of
a contract.


(GLOSSARY Cont.)

Corporate, strategic or business plan
A written record describing the reason for an organisation’s existence, programs, program objectives,
issues and how it intends to achieve and measure progress to address these issues and objectives.

Cost benefit analysis
A technique for the evaluation of projects, where all costs and benefits (direct and indirect) are
considered. Costs and benefits should be quantified, but where this is not possible they should be
listed.

Cost plan/time plan
Cost and time targets for each element of a project, used for controlling all design and development
activities against these targets.

Design
The development of a client brief into design details prior to documentation (see brief). Includes
conceptual design, sketch design and design development.

Design concept plan
The combination of information gathered in a site assessment and the development of suitable plan
options based on the client brief.

Development plan
A plan showing, in outline, the overall development intentions for an area, including land use,
major transport links, utility networks, drainage, open space and built form.

Estimated total cost (of the project)
All costs of a capital nature which are required to bring a project to completion. Costs include
planning, construction, land and equipment.
As distinct from whole of life costs which will include operating costs, staffing costs and the cost of
maintenance and refurbishment.
Agencies are required to quote the estimated total cost of a project at the time of seeking approval.
The cost is to include the anticipated cost on completion, including escalation.

Financial analysis
A project evaluation technique which is undertaken from the perspective of the individual or agency,
rather than having an economy or system-wide perspective, as used in cost benefit analysis.

Functional analysis
Information generated from a value management study of a concept or project, which details at
different levels the functions required of a facility or its component parts.

Functional brief (see brief)

Indicative cost
A first indication of cost, used as a guide to feasibility and based on an outline statement of needs.
It is intended as a guide for feasibility and planning purposes and should not be treated as a firm
cost estimate or estimated total cost calculation.

Infrastructure
Major capital works constructed to provide a framework for the social and economic development
of the State.

Land acquisition plan
A plan outlining an agency’s known additional land requirements. Where capital funding is required
for the purchase of land, the proposals form part of the agency’s strategic asset management plan.


(GLOSSARY Cont.)

Life-cycle
The cycle of activities that an item (or aggregation of items) goes through while it retains its own
physical identity, comprising planning, design, acquisition and support, including rehabilitation.

Life-cycle cost
The cost of an item throughout its life including the costs of planning, design, acquisition, operations,
maintenance, and disposal, less any residual value.

Life-cycle costing
The evaluation of a project, considering all significant costs of total ownership over the life of the
asset. Costs considered include capital costs of construction, maintenance and upgrading as well
as recurrent costs of operation, maintenance, cleaning, utilities (gas, electricity, water) and staffing.

Non asset strategies
Methods of addressing demand other than by adding asset capacity (ie "no build" solutions, pricing
mechanisms, selective targeting of services).

Performance indicators
Measures of the effectiveness and efficiency of a program, strategy or issue being managed.

Post occupancy evaluation
A careful and systematic evaluation of the performance of an occupied facility measured in terms of
user satisfaction, fitness for purpose (based on client requirements), technical performance and
value for money.

Practical completion
The stage reached when a project has been essentially completed and is fit for its intended purpose,
except for minor omissions and defects that do not prevent its use, and with tests required under the
contract having been carried out. Practical completion is marked by the issue to the contractor of
a Certificate of Practical Completion by the Superintendent.

Principal
The party (owner, client or developer) to whom the contractor is legally bound to construct the
works. The term “Principal” is used in most Australian contracts in lieu of “client” or “proprietor”.
The Principal operates in conjunction with the superintendent and superintendent’s representative.

Procurement strategy
Method of satisfying a service delivery strategy.

Project
Any proposal that requires the weighing up of costs and benefits in order to meet a desired objective.

Project brief (see brief)

Project concept
Asset strategy responding to a service delivery strategy developed to address identified demand.

Project evaluation
A review process during the life of a project to assess the functional efficiency of the design and
documentation process. It may include a performance review of the various parties involved in the
design and construction of a project.


(GLOSSARY Cont.)

Project initiation process
The early phases of a project from the initial idea to the approval to procure, and in these guidelines
including delivery and review. The project initiation process involves strategic planning, project
concept development, option identification, evaluation and definition of the preferred procurement
strategy as well as delivery, performance review and feedback of information into the early planning
phases.

Project option evaluation
Testing the different service delivery or procurement strategies by quantitative methods (ie financial
and economic analysis) and qualitative methods (ie level of consumer satisfaction).

Project risk management
A formal process of checking projects at initiation, engagement of consultants, tender call, awarding
the contract and contract administration to ensure that project and probity risks are identified and
managed by the project manager.

Project steering committee
A group, usually chaired by an accountable officer or senior delegate and comprising major
stakeholders. Established to control a project from inception to completion.

Project team
A group which takes responsibility for ensuring the required work is undertaken in accordance with
the requirements of the steering committee and the project brief.

Risk
The possibility that an outcome is not achieved or is replaced by another outcome or an unforeseen
event occurs. This includes both uncertainty due to future events and the consequences of limited
knowledge, information or experience. The significance of risks is the impact that they may have on
the achievement of proposal objectives, delivery goals or management effectiveness.

Risk analysis
The process of identifying risks, estimating their likelihood and evaluating potential consequences.

A systematic use of available information to determine how often specified events may occur and
their likely consequences. The purpose of risk analysis is to identify the causes, effects and magnitudes
of risk and to provide a basis for risk assessment and treatment.

Risk management
• A structured way of identifying potential risks, analysing their consequences, and devising
and implementing responses so as to ensure that the proposal or project objectives are
achieved. This includes management of on-going risks associated with the ownership of
assets.
• The systematic application of management policies, procedures and practices to the
tasks of identifying, analysing, assessing, treating and monitoring risk.

There is a specific role within the construction process whereby the risks within a construction
project are identified and managed. The term risk management is also used to refer to project risk
management and the activities of the project manager in managing the identified risks.

Schematic design or drawing
A preliminary design drawing, sketch or diagram showing in outline form the general intentions of
the designer. A descriptive and illustrative definition of a preferred option, including a time schedule,
cost plan and schematic drawings, developed to a point where a limit of cost estimate can be
established.


(GLOSSARY Cont.)

Strategic asset management
The comprehensive management of asset demand, procurement, use, maintenance, operation,
rehabilitation, disposal and replacement to maximise return on investment at the required standard
of service.

Superintendent
The project manager or other person appointed in writing by the Principal as the Principal’s agent
and notified to the contractor as such. The Superintendent is responsible to the Principal for all
aspects of the administration of the contract for a project. Some of the functions may be delegated
to a nominated Superintendent’s representative.

Value analysis
A systematic analysis to identify the essential functions of systems, equipment, facilities and procedures
that are consistent with purpose, performance, reliability and manageability. This analysis will facilitate
the achievement of those functions in a way that represents the optimum value.

Value management
A structured, systematic and analytical process, which seeks to achieve value for money by providing
all the necessary functions at the lowest total cost, consistent with required levels of quality and
performance.

Strategic Value Management - A structured, systematic and analytical process undertaken at the
concept evaluation phase of the project initiation process to quantify and verify needs.

Project Design Value Management - A structured, systematic and analytical process undertaken
to ensure the project design achieves value for money while meeting functional objectives.


For further information
If you require further copies of the Project
Initiation Process for Capital Works or any
information about this publication, please
contact:

Department of Treasury and Finance
Debt and Asset Management Branch
Level 6 State Administration Centre
Victoria Square
Adelaide South Australia 5000

Telephone: (08 ) 8226 9618
Facsimile: (08) 8226 9844

Department for Administrative and
Information Services (Services SA)
Level 5 Wakefield House
30 Wakefield Street,
Adelaide South Australia 5000

Telephone: (08 ) 8226 5124
Facsimile: (08) 8226 5077


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Project Initiation Process

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