The attached three pages of text summarise a series of Guidelines covering a program of initiatives to Capital Works Management procedures, particularly to improve the planning and assessment of capital works projects and programs.

Premier's Memorandum 90-10 was issued on 23/2/90 and covered the revised Guidelines for Economic Appraisal and a Value Management Manual. On 15/8/90 Memorandum 1990-42 was issued covering Guidelines for Private Sector Participation in Infrastructure Provision.

The final 4 guidelines are also attached. They cover:

• Simplified Procedures and Principles on Economic Appraisals
• Guidelines for Capital Expenditure Strategic Plans
• Planned Maintenance Systems
• Post Completion Reviews

Updated May 2004: This memoranda has been superseded by M2002-10

CAPITAL WORKS MANAGEMENT INITIATIVES DEVELOPMENT AND ISSUE OF GUIDELINES

In December, 1989 the Capital Works Committee of Cabinet approved a series of initiatives to Capital Works Management
procedures, particularly to improve the planning and assessment of Capital Works projects and programs.

The initiatives are:

• Capital Expenditure Strategic Planning (Attached)
• use of Value Management Techniques (Issued February 1990)
• a review of the existing Guidelines for Economic Appraisal (Simplified version attached)
• a revision of, the existing Guidelines for Private Sector participation in Infrastructure Provision. (Issued August 1990)
• Introduction of Planned Maintenance Systems in Agencies. (Attached)
• Post Completion Reviews of Capital projects by Agencies. (Attached)
• Assessment of recurrent cost implications of new projects. (Treasury Instruction)

It was decided to introduce these initiatives by developing a series of printed guidelines to be issued under the authority of Premier's Memorandum to Ministers. The Guidelines developed, printed and issued so far have been for Economic Appraisal, Value Management and Private Sector Participation in Government Infrastructure.

Premier's Memorandum 90-10 was issued on 23/2/90 and covered the revised Guidelines for Economic Appraisal and a Value Management Manual. On 15/8/90 the Premier issued Memorandum 90/42 covering Guidelines for Private Sector Participation in Infrastructure Provision.

The assessment of recurrent cost implications of new capital projects was covered by a Treasury Instruction to agencies also issued in the first half of 1990. Also during the year, the Property Services Group issued Guidelines for Property Asset Management to agencies.

As some time has elapsed since the issue of the Economic Appraisal Guidelines, the Value Management Manual and the Private Sector Participation Guidelines, the following notes encompass all the Guidelines and presents them to Ministers and agencies as an integrated program to improve Capital Works management in agencies.

COMMENT ON INITIATIVES

Guidelines for Capital Expenditure Strategic Plans

The Guidelines for Capital Expenditure Strategic Plans require all NSW Government agencies to develop a Capital Expenditure Strategic Plan for 1991/92 which will present a detailed five year program and a broad strategy spanning at least ten years.

It is proposed that agencies submit their Strategic Plans to the Capital Works Unit by 31 July, 1991. After review, they will be presented to the Committee for endorsement. In subsequent years, if agencies revise their strategic plans in any way they will submit them in February together with their bids for funding. After endorsement, the Capital Expenditure Strategic Plans are also to be produced in a simplified public format which covers objectives, priorities and programs.

Guidelines for Planned Maintenance of Assets
The Guidelines for Planned Maintenance of Assets require agencies to prepare a Maintenance Plan by 31 October 1991. This Plan is to be regularly updated and submitted when funding bids are made. The Guidelines state that major real increases in funding for asset maintenance is not envisaged and Maintenance Plans should be met within current budget levels. Where Catch-up maintenance is considered essential, this work may have to take priority over other Capital Works projects. The Guidelines also indicate that agencies without current maintenance systems should make use of the extensive experience in maintenance planning within major Government agencies. This would enable more effective use of private sector consultants.

Guidelines on Post Completion Reviews
The Guidelines on Post Completion Reviews cover the two categories of Project Reviews and Post-Occupancy
Evaluation which agencies are to introduce as an integral part of their ongoing management of Capital Works
programs. The Guidelines do not specify formal reporting requirements for post completion reviews but indicate that
by the 1992/93 program, improvements which have been directly identified through formal reviews, will be referenced
in funding submissions and that about 20 per cent of projects in any year should be subject to either a Project Review
or a Post Occupancy Evaluation.

Value Management Manual
Value Management is a structured and systematic procedure to achieve the essential functions at the lowest possible cost consistent with needed performance, i.e., to maximise value. Underlying the VM theory is the principle that there is always more than one way to achieve a function and that examination of the alternatives will produce the most acceptable conclusion.

The Capital Works Committee requires all new works over $5M submitted for the Committee's consideration in 1991/92 to be subject to a value management study.

Private Sector Participation in Public Infrastructure
Guidelines on private sector participation in public infrastructure were revised and issued under a Premier's Memorandum to Ministers in August 1990. The revised guidelines have been widely disseminated to the private sector. The Capital Works Committee requires that by 1991/92 all new Capital Works over $5M submitted for the Committee's consideration include supporting information demonstrating that potential for Private Sector involvement has been investigated. 

Guidelines for Economic Appraisal
Economic appraisal is a systematic means of analysing all the costs and benefits of various ways in which a project objective can be met.

In essence, economic appraisal shows:

• whether the benefits of a project exceed its costs
• which among a range of options to achieve an objective has the highest net benefit, or
• which option is the most cost effective if project benefits are equivalent

Guidelines for Economic Appraisal were first issued in December 1988. A revised edition was issued to agencies in February 1990 and a simplified summary document is attached to this memorandum as part of the package of Capital Works Management Initiatives.

Property Asset Management Guidelines
The Property Asset Management Program aims to substantially improve the management of property assets. The Guidelines, issued in June 1990, establish procedures for:

• planning and co-ordinating all future property disposals;
• co-ordinating proceeds of disposal with the capital works program;
• monitoring agency performance in regard to property management; and
• providing agencies with information on surplus properties available for acquisition.

The Guidelines establish that properties with a value in excess of $5M will be disposed of by the Property Services Group.

Update May 2004: This memorandum has been superseded by M2002-10