Step 2 - FUNDING APPROVAL

By this step, a decision has been made to procure the goods or service. The procurement process starts with defining the project scope. A preliminary procurement strategy is formulated and preliminary risk, stakeholder and change management plans developed.

The investment decision needs to be justified. Depending on the value of procurement, a business case (investment justification) is developed with relevant information such as project scope, economic and financial appraisals and financial impact statements, implementation strategies and potential suppliers. The preliminary business case includes the evaluation of various procurement options and a cost benefit analysis to identify the optimal strategy for funding approval.

• Key Documents
• TC08-7 Revised Project Size/Risk Thresholds for the Submission of Business Cases and Gateway Reports
• M2006-11 Procurement Policy Reforms (Agency Accreditation for G and S)
• Key Guidelines
• TPP08-5 Guidelines for Capital Business Cases
• Risk Management Guidelines (2006)

Define project scope and objectives

A clear definition of the project is developed. This includes a concise statement of the purpose and scope of the proposed project, along with objectives, resource requirements, proposed timeframes and milestones.

Develop preliminary procurement strategy

A procurement strategy is developed as part of the business case / investment justification.

The procurement strategy identifies the best way of achieving the objectives of the project. It takes into account the risks and constraints, use of the market’s capabilities and the procuring agency's requirements. It includes project timelines, options for engaging the market (approaches for tendering and contracting) and agency capability.

Develop preliminary risk, stakeholder and change management plans

A stakeholder and change management plan is developed to use throughout the life of the project to drive stakeholder buy-in to the project and maintain support. Managing stakeholder demands from the beginning of a project will help to keep it on time and budget.

Every project requires a risk assessment and management plan. This addresses the consequences of the project failing on service delivery, stakeholder considerations, financial implications, and wider business and government context. Plans to monitor and manage risks identified are developed and updated during the project

Develop business case and funding request

Irrespective of the source of funding for the project, eg internal or State Budget, the investment decision needs to be justified. TC08-7 should be followed to determine if Preliminary and Final Business Cases should be produced.

As part of developing a business case, a number of key activities need to be performed:

• cost benefit assessment of options
• market assessment that evaluates economic, social and environmental impact of the procurement and assesses the supply market segment.
• a Gateway Business Case Review, if the estimated cost of the project is $10 million or above, or the project is assessed as high risk using the Gateway Project Profile Assessment Tool.

The business case/investment justification and funding approval request must then be submitted for approval.