1  Introduction

Determining the procurement method is a critical step in the project delivery process. It is important to consider which method will best balance the control of project cost and risk against achieving project objectives and outcomes. The key issue is which form of project delivery provides the best value for money in meeting the government's service objectives.

The vast majority of investment in Australian public services has been, and will continue to be, procured through traditional means. However, other innovative approaches, PPPs in particular, have been used to deliver some of Australia's most complex and significant public sector infrastructure projects.

This Guideline explains how to consider and select a suitable procurement method for a public infrastructure project where project characteristics indicate that PPP delivery should be considered. It provides a framework to assess the viability of PPP delivery against other procurement methods.

Governments have no ideological preference between traditional procurement, PPP or any of the other procurement approaches outlined in this document. Major infrastructure projects require detailed and careful planning and it is important that a robust, value for money assessment is made when choosing the procurement option.

A business case is commonly used across jurisdictions to support the investment decision. A Procurement Options Analysis as part of a Procurement Strategy, will  inform the government's procurement decision.

The investment and procurement decisions are separate (although from a timing perspective they can occur concurrently or separately). While individual governments will have specific processes, generally there is a staged decision-making process:

•  governments will consider the investment decision based on the business case (or scoping study or feasibility study as the case may be); and

•  following the investment decision, Government will consider the procurement method decision based on the Procurement Options Analysis (which may or may not be part of the business case).

The investment decision is required before a decision on the procurement method can be approved. Generally for PPP projects and many other projects, the Procurement Options Analysis should be fully developed as part of the business case. This approach may vary across jurisdictions. In all cases the full Procurement Options Analysis is to be finished well before preparation for tendering begins.

The Procurement Options Analysis should also provide details of the preliminary public sector comparator based on the financial analysis from the business case where PPP delivery is an option.

The individual project circumstances must be considered in applying this Guideline.  The advantages and disadvantages of the various delivery methods described in this Guideline may not apply to individual projects and other delivery models may also be considered.