ANAO - Planning and Approving Projects

1.2 The project lifecycle

Major elements of a project

Projects are time limited initiatives to deliver a project product – for example, a new payments system. The project products may include physical objects, services or information.

The project products will then be used to achieve business outcomes – for example, making payments to eligible Australians. These business outcomes are generally the reason for funding the project, rather than the project products by themselves.

These business outcomes will in turn contribute to longer term or broader benefits – for example, improved employment prospects for those who received payments.

The project products will often need operational inputs for their use – for example, data and staff.

To achieve the desired business outcomes, those involved in project planning and approval should keep in mind the above factors, and how the project products will be developed and delivered during project implementation.

Important roles in project planning and approval include:

the decision-maker – the person or body which decides whether a project will proceed;
the project sponsor – the person who proposes a project, and who will be responsible for its successful delivery; and
the operational manager – the person responsible for using the products of the project to deliver business outcomes.

Other important roles in the project lifecycle include:

the product suppliers – the people who will develop the project products; and
the end users – those affected by the project products, such as the members of the public who receive services and the staff using the project products to provide services.

In practice the same person may not occupy a role for the duration of the planning and completion of a project, and one person may have more than one role. Nevertheless, the responsibilities of each of these roles still need to be fulfilled. If a person is both sponsor and decision-maker, it is prudent to consider independent advice to improve the quality and transparency of decision-making.

The fact that business outcomes are achieved during the ongoing use of the new capabilities means that the real success of the investment in the project may only be assessed well after project implementation, and the business outcomes may be realised by parties who were not involved in the project. This makes it important that the planning and approval stage clearly defines the intended outcomes, and allocates accountability for achieving them.

The typical steps of project planning are:

development by, or on behalf of, the project sponsor of a project concept plan to explore the possibilities and clarify the broad nature of the project;
development by, or on behalf of, the project sponsor of a more comprehensive project business case with details of the proposed outcomes, product requirements and firm costing; and
consideration and approval by the decision-maker of the project business case.

In many cases, there will be subsequent consideration and approval of a more detailed implementation plan, and further approvals at key points during the project.

Effective project planning and approval will also be assisted by having effective support arrangements at the entity level – such as promoting strategic alignment, having the right people and culture, and having effective governance arrangements. This is the responsibility of the chief executive, normally assisted by the Senior Executive team.

The elements discussed above and their relationships are illustrated in the following diagram.

Diagram of project lifecycle, roles and responsibilities and how projects contribute to business outcomes

The objectives of the steps in planning and approval are shown in the table below.

STEPS:	OBJECTIVES OF STEP:³
1. Project concept plan	Clarify and agree the need or problem to be solved Clarify and agree business outcomes Ensure the project concept is sufficient to achieve outcomes Explore broad options and substantiate proposed approach Start building support with interested parties
2. Business case	Specify project deliverables and scope Estimate costs and resource needs Assess related options and justify proposed option Assure feasibility of implementation Develop support of key stakeholders
3. Approval	Decision to proceed or not – often in comparison with other proposals Authorise significant work and expenditure Set key controls to aid executive oversight, particularly for implementation, progress to business outcomes and arrangements for handover to operations Formalise roles and commitments

Executives add value early

“A key reason for having a distinct step for developing the project concept is to help executives focus on the key issues for the project.

Developing the business case is a task the executive manages and is accountable for. However, the business case has detailed information that is often the subject of vigorous debate, which may distract from considering the fundamentals.

The concept stage is about the big picture – deciding what you want to achieve, and which ‘levers’ will actually work. This is the time when executives can really add value: early.”

… Agency planning executive.

3: Note: This table lists the objectives of each step in planning. Chapter 3 of this guide focuses on issues of particular relevance to executives when these steps are being undertaken.

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Related APS planning steps

The following table shows the terminology used for associated APS processes in relation to the language used in this Guide. While terminology may differ, the essence of the steps in effective planning is similar, as are the key issues for executive attention.

THIS GUIDE	ICT TWO PASS REVIEW	GATEWAY REVIEW
Project concept plan	Signal intentions to Finance; gain agreement to develop a first pass business case	Gate 0 – Business need
Business case	Develop a first pass business case, at moderate level of detail; gain agreement to continue; develop a more detailed second pass business case	Gate 1 – Business case
Approval	Approval	Approval⁴
Project implementation		Gate 2 Procurement Strategy⁵ Gate 3 Investment Decision Gate 4 Readiness for Service

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Different types of projects

There are many different types of projects undertaken by government entities, which vary according to their rationale, approach to implementation, and measures of success. Some examples are projects focused on:

implementation of a new government policy – with indicative success measures of timeliness, cost, and accuracy of implementation, and with long-term benefits of the policy usually assessed by separate policy evaluation;
entity internal operational improvements – with indicative success measures of reduced unit costs and increased regulatory compliance;
improved entity capability – with an indicative success measure being the ability to implement new government requirements more quickly or more cheaply; and
research – with indicative success measures of the amount of relevant evidence collected and the reduction of uncertainty on an issue.

The implication of these differences is that there is not a simple, mechanical method of comparing and assessing projects. Allowances need to be made for their different characteristics, and different underlying objectives.

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Variations in focus during planning and approval

The steps in project planning and approval and the focus of review may vary depending on the project. For example:

An entity may develop a business case for a project aimed at internal cost reductions, and then provide a business case to seek government approval and funding. A particular focus would be on the feasibility of the project and its expected rate of return on investment.
As part of the annual Budget process, entities develop new policy proposals. At this stage, the main criteria for assessment will be the overall program policy and cost priorities. If a new policy is agreed, the focus for reviewing the policy implementation project is that it will be able to deliver the policy requirements within the agreed implementation budget and timeframe.⁶
The Government may agree to a project concept and budget and direct an entity to implement the project. In such cases the focus of planning and review will be refining the scope of the project, in consultation with the relevant Minister, to fulfill the announced concept within the budget and timeframe.

4: The Gateway Review process provides independent advice to the decision-maker at key stages. The actual approval is by the decision-makers and is not part of the Gateway process as such.

5: The Gateway Review process refers to a ‘procurement strategy’. Some entities have a substantial internal development capability, with many project products being developed in-house rather than being obtained through a procurement process. In these cases there are logically equivalent assessments to the Gateway procurement strategy review – such as assuring that the project is sufficiently well defined to allow firm costing, and that resources are available.

6: It is useful to reinforce that even where the policy is approved, the implementation project still warrants thorough review. The review of implementation is not a review of the policy decision. However, on occasion information is found during implementation planning which is relevant to the policy decision, and this information should be drawn to the attention of the policy decision-makers. If it appears that the desired outcomes may not be able to be achieved in the approved budget and timeframe it is good practice to offer options to the decision-maker, for example options with limited outcomes that can be achieved within the proposed timeframe and budget, and with the budget and timeframe that would be needed for the desired outcomes. Any risks associated with the options should be appropriately identified.

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