Investment planning is the second phase in an investment’s life cycle. There are several activities to complete in the planning phase. Steps 2 to 5 have stage gates which require approval (usually Cabinet) to continue to the next step.
This phase involves:
- outlining the rationale and strategic alignment for investment
- identifying the risk profile of the investment
- identifying an indicative cost and time to develop the business case
- identifying the level of external/consultancy resource likely to be required to develop the business case
- identifying and analysing investment options
- confirming the preferred option
- confirming the delivery approach
- confirming funding for the investment to proceed to tender/market, and
- confirming that the investment is ready to proceed to delivery.
These planning processes are outlined in the stages of the business case.
Step 1 – Gather the project team
The following roles are important to fill (and have documented) before continuing with the planning phase.
- Senior Responsible Officer (SRO)
- Governance authority
- Project director or manager
- Project team (as required)
Step 2 – Outline rationale for investment
Risk Profile Assessment
You need to complete a Risk Profile Assessment for investments to get an inherent risk rating for the investment. This will determine whether:
- the investment needs to be included in the Treasury’s quarterly investment reporting to Ministers and Cabinet and
- the investment must complete Gateway reviews.
Strategic Assessment
The Strategic Assessment outlines the rationale for an investment. It sets out how the proposed investment aligns with organisational and government strategic priorities, responds to a true investment need and links to outcomes and benefits that an agency is required to deliver. It forms the basis of the Strategic Case for all later business case stages.
There are no funding decisions at this point; for high and medium risk investments, Cabinet will use the analysis from RPA and the strategic assessment to provide the initial stop/go decision of whether the investment will proceed to business case, to better phase the investment pipeline and to identify any policy issues that need to be addressed.
Gateway review
High-risk investments need to complete a Gateway Review 0 – Strategic assessment at this point.
Gateway reviews are optional for medium and low-risk investments.
Step 3 – Consider the options
Indicative Business Case (IBC)
The Indicative Business Case (IBC) sets out the rationale for investment and outlines the list of options to meet the investment need for decision-makers to confirm and approve. There are no funding decisions at this point; it provides a decision point for Ministers to provide direction and confirm the agency should proceed to the next stage of planning.
For programmes, complete a Programme Business Case (PBC) instead.
Single-stage Business Case (SSBC)
If an investment is low-risk and funded from agency baselines, you can complete an Single-stage Business Case (SSBC) instead. This combines the IBC and DBC (steps 3 and 4) into one document.
Gateway Review 1
High-risk investments need to complete a Gateway Review 1 – Business justification and options – IBC at this point.
Gateway reviews are optional for medium and low-risk investments.
Approval of the IBC or PBC
Cabinet approval is needed for IBCs or PBCs. Requests for approval are submitted via a Cabinet Paper.
If you are completing an SSBC, your Chief Executive can approve this instead of Cabinet.
Step 4 – Identify the preferred option
Detailed Business Case (DBC)
The Detailed Business Case (DBC) outlines more detailed assessment of the short-list options, builds on the preferred way forward articulated in the IBC and recommends a preferred option that offers maximum public value for delivery of the project.
It provides a decision point for Ministers and Cabinet to confirm the preferred option and the delivery approach.
Gateway Review 2
High-risk investments need to complete a Gateway Review 2 – Delivery strategy – DBC at this point.
Gateway reviews are optional for medium and low-risk investments.
Approval of the DBC
Cabinet approval is needed for DBCs. Requests for approval are submitted via a Cabinet Paper.
If an agency is completing an SSBC, the agency Chief Executive can approve this instead of Cabinet.
Step 5 – Secure funding
You are required to follow the Budget process if new Crown funding is needed to deliver your investment. At this stage you should have an approved DBC, and have been reporting your investment through Treasury’s Quarterly Investment Reporting.
As part of the Budget process the Minister of Finance may invite you to submit your investment to the Treasury’s Investment Panel, to review the investment and consider how the investment fits within the broader investment system context. If your investment has been invited to this process you should be prepared to provide a greater level of planning detail from your DBC to the Treasury.
If the investment is funded from your baseline, you will need to ensure this is accounted for in the existing baseline.
Step 6 – Finalise the delivery plan
Complete a Request for Proposals (RFP) process
If an investment needs a significant procurement or contract to deliver an asset, complete an RFP (or similar) process to confirm the cost of delivery before seeking final approval.
Implementation Business Case (ImBC)
The ImBC recommends a preferred supplier and seeks approval from decision-makers to enter a commercial contract for the provision of the selected option. This also forms the basis of the Project or Programme Management Plan (or similar) for the delivery phase of the life cycle.
Gateway Review 3
High-risk investments need to complete a Gateway Review 3 – Investment decision – ImBC at this point.
Gateway reviews are optional for medium and low-risk investments.
Approval of the ImBC
Depending on the conditions of the DBC or SSBC approval, the ImBC may not need Cabinet approval. It may go to joint Ministers, or a Cabinet Paper may be enough.
If the investment is low-risk and funded from agency baselines, your Chief Executive can approve the ImBC.