6. Approval process
Underlying Partnerships Victoria is a commitment to thorough initial project preparation and an efficient Cabinet approval process. In accordance with the national PPP guidelines and these Partnerships Victoria requirements, the key approval steps for budget sector agencies include:
Stage | Approval Required |
Review of project proposal | DTF HVHR Review of initial investment logic and Project Development (including Preliminary Business Case), including Gate 1 Strategic Assessment. DTF HVHR Review of full Business Case (including scope of services), Procurement Options Analysis, preliminary PSC and Public Interest Test, including Gate 2 Business Case. DTF must agree the budget impacts of the project in accordance with the budget process requirements. |
Government approval of project and procurement method | Government to approve: a) the investment decision (budget funding) based on a Business Case (including the Public Interest Test); and b) the procurement model based on the Procurement Options Analysis and Strategy. |
Government approval of Expression of Interest (EOI) | Government to approve release of Expression of Interest document. Following release of EOI and evaluation of responses, Government may approve or endorse the short-list of bidders. |
Government approval of PSC and Scope Ladder | Government to approve the Public Sector Comparator at the same time as RFP approval. This approval step is also to approve the scope ladder and level of PSC disclosure to bidders. |
Government approval of Request for Proposal (RFP) | Government to approve release of Request for Proposal to short-listed bidders, including any modified financing structure and variations to standard tender process (to improve efficiency or address project specific issues).The relevant Gateway Review conducted prior to seeking approval is Gate 3: Readiness for Market. |
Government Approval of Preferred Bidder | Following evaluation of responses, Government may approve or endorse the appointment of a Preferred Bidder, or alternative strategy to reach Preferred Bidder. |
Government approval of contract execution | Following negotiations, Government or the Portfolio Minister in consultation with the Treasurer to approve contract execution. Portfolio Minister to report back to Government to note the financial close outcome or seek approval if any funding implications arise from financial close process. |
Ministerial approval of project summary and contract publication | The Portfolio Minister in consultation with the Treasurer to approve the release of the Project Summary and contractual documents within three months of financial close. |
Ministerial approval of Contract Management Plan | The Portfolio Minister in consultation with the Treasurer to approve the Contract Management Plan within three months of financial close. |
Commissioning | The Agency to consult DTF on final form of Contract Administration Manual and project governance for the operating phase of the project. Gateway Review: Gate 5 Readiness for Service to be conducted. |
Government approval of material variations during operations | There is an ongoing requirement for material contract variations to be considered and approved by Government. Agencies to consult and agree with DTF on all significant PPP related contractual matters. |
Operations | Gateway Review: Gate 6 Benefits Evaluation should be conducted. The Procuring Agency should discuss the timing of these reviews with DTF. |
Additional Government approvals are also required in certain situations, such as where there is:
- a material change to the project including an amendment to the key project objectives, scope of services, or where there is significant change to the conclusions, or major assumptions of the business case (including the economic and financial appraisals);
- a material change in the projects risk profile since last government approval stage (e.g. due to change in market appetite, feedback or responses, or changes in law or policy) which requires Government consideration;
- an amendment to the approved funding is required; and
- a significant issue relating to the public interest.
Unless otherwise declared to suit the requirements of a particular project, this accountability structure and approval process will be applied consistently for PPP projects. Exceptions to this may be considered for GBE's, for example the Partnerships Victoria Non-Metropolitan Urban Water Authority Approval Process which is a streamlined process for smaller capital value projects.
Budgeting for PPPs
PPP project budgets are developed consistent with all other procurement methods for consideration as part of the initial investment decision and business case process (refer Prove Lifecycle guideline).
If approved as PPP delivery, the budgeting for PPPs will differ from other procurement approaches. Procuring Agencies should consult DTF when developing business cases that propose PPP procurement.
Once a project is approved as PPP delivery, the Government will reflect in the Budget the expected PPP capital cash flows for that project as an estimated finance lease liability, and any capital contribution expected to be made by the State consistent with project approval. This differs from the previous practice of budgeting Total Estimated Investment (TEI) as an assumed traditional build in the Forward Estimates up to contract award. The budgeting for other costs such as the asset maintenance, lifecycle and operational costs is to remain consistent with current practice.