Project Preparation translate concept into bankable project
Most infrastructure investment plans and government policies rely on the delivery of projects and programs. To achieve these and unlock the real benefits of infrastructure, it is vital that projects and programs are delivered well.
A structured approach to preparing, appraising and approving projects will help. This typically involves three steps:
- Early-stage pipeline screening and pre-feasibility assessment;
- Rigour in feasibility evaluation; and
- Periodic review and approvals.
Chapter 5 of the Global Infrastructure Hub’s (GI Hub) Reference Tool on Leading Practices in Governmental Processes Facilitating Infrastructure Project Preparation identifies frameworks, processes and mechanisms for translating project concepts into procurement-ready projects.
The GI Hub has collaborated on this blog topic with Alex Barton, Policy Advisor at the United Kingdom’s (UK) Infrastructure and Projects Authority (IPA), the UK Government’s centre of expertise for the delivery of infrastructure and major projects. The IPA is part of the UK’s infrastructure system that aims to ensure the right projects are identified and funded, and then delivered, and IPA’s work targets the projects, people and processes that enable this. This blog outlines some of the lessons that have been learned in the UK, as well as international examples from the GI Hub’s Reference Tool.
Translating a policy or concept into a bankable project requires rigorous evaluation and appraisal of the project’s feasibility.
Consider feasibility from the start
Decisions made at the start of the project preparation process, for example, on scope, technical solutions or procurement routes, are key to the success of a project. To avoid failure, it is important to make sure that project concepts are feasible and deliverable before specific commitments to delivery, including time, objectives and cost, are made.
Bringing in expertise in these areas into the policy development and early project concept stages will help to develop better projects that are more likely to achieve their intended benefits, with realistic objectives, cost and timelines.
Launch projects in the best way
Building government capacity to develop feasible projects is crucial. As projects move to definition and pre-feasibility, it is important to ensure that projects are launched well, with rigorous assessments on deliverability, including the capacity of the public and private sector.
Structured tools for early stage project evaluation can help to form well-defined project concepts. For example, the Project Initiation Routemap has been used on some of the UK’s most important infrastructure programs, worth over £200 billion, to provide an objective and systematic approach to project initiation, assessing the complexity and context of the delivery environment, the current and required capability of the organisations involved in delivering the project, and the steps needed to bridge any gaps and set the project up for success.
A further example of good practice in the feasibility stage is detailed in the GI Hub’s Reference Tool. The Netherlands have developed a holistic approach to project feasibility through the Multi-Year Programme for Infrastructure, Spatial Planning and Transport framework, which sees a project taken from the early concept definition stages through to the final stages of approvals.
A structured approach to project evaluation and approval
As projects progress, more detailed analysis and gathering of evidence is needed to support informed and transparent decision-making.
A comprehensive feasibility report typically addresses a multitude of different dimensions. The G20 Principles for the Infrastructure Project Preparation Phase outline five critical aspects to be considered: project rationale, options appraisal, commercial viability, long-term affordability, and deliverability.
In the UK, for example, the Five Case Model methodology maps directly to these G20 Principles. Used across government departments and the private sector, it provides a standard format for developing business cases, helping to structure project development. The business case is developed over time to provide a record of project development and decisions. The model provides a framework to enable more comprehensive and consistent project development and review, supporting informed and efficient decision-making:
- The Strategic Case demonstrates why the project is needed and how it fits with relevant infrastructure and development strategies;
- The Economic Case provides an analysis of all available options, including making better use of existing assets, and demonstrates the value for money of the preferred way forward;
- The Commercial Case demonstrates commercial viability and project ‘bankability’;
- The Financial Case demonstrates affordability and how the project will be funded over its life-cycle; and
- The Management Case demonstrates whether the project is deliverable and how risk will be managed.
Efficiency and rigour in project review
Efficient and rigorous review and approval processes can not only ensure quality projects are developed, these processes can also help to avoid administrative delays that increase costs and time for project preparation.
Independent assurance, reviews and audit processes (with separate roles for the project sponsor and independent reviewers) should be embedded into infrastructure project preparation to drive transparency, accountability and efficiency improvements and make use of learning from previous projects. This is crucial to ensure that the processes and standards outlined above are met and followed to a high standard.
The IPA coordinates independent reviews of the UK’s largest projects. This supports the UK’s Gateway Review process for project appraisal, evaluation and approval, which provides a comprehensive and mandatory peer review process at key decision points to enhance the quality of project preparation and set government expectations for project delivery (see the UK case study in the GI Hub’s Reference Tool for more detail on the UK’s Gateway Review process).
This should be a multi-stakeholder process to ensure that all key challenges in the project are dealt with comprehensively. An example detailed in the GI Hub’s Reference Tool is Rwanda, where the utilities regulatory authority (RURA) is consulted at the feasibility stage on user tariffs, given sensitivities in increasing tariffs and user chargers across sectors. RURA’s recommendations also form a critical input in the approval of feasibility reports.
More detailed guidance for project feasibility, reviews and approvals can be found in Chapter 5 of the GI Hub’s Reference Tool.
You can read our previous blog in the series on the benefits of well-planned and prioritised infrastructure investment here.