Project Makeover: A new look for the Infrastructure Australia Assessment Framework

Infrastructure Australia has published a revamped Assessment Framework which has undergone a major refresh, simplifying and streamlining the process used to assess major infrastructure proposals for inclusion on the Infrastructure Priority List. The revised Assessment Framework seeks to provide clear and concise instructions on how to develop strong business cases and greater clarity on the factors.

Following an 18-month consultation period with stakeholders and experts from federal, state and territory governments, Infrastructure Australia (IA) has introduced changes to its assessment criteria to align with current industry trends and expectations. The broadened criteria allow for a more holistic review of a proposal's potential benefits, in addition to the traditional cost-benefit analysis. The inclusion or otherwise of such potential benefits has long been a point of contention for business cases, and these changes have responded to community expectations for the consideration of broader community benefits.

Consideration for broader social and community outcomes

• Further guidance on assessment criteria: The Assessment Framework identifies three overarching assessment criteria to assess the merit of every proposal:
  
  • Strategic Fit questions whether there is a strong case for action, if the proposal aligns to the achievement of stated goals, and if there is a clear fit with the community: "Is there a clear rationale for the proposal?"
  • Societal Impact (previously "social, economic and environmental value") aims to assess all impacts holistically, not just those that have been monetised: "What is the value of the proposal to society and the economy?"
  • Deliverability focuses on how to analyse the capability and capacity of the market to deliver the proposal: "Can the proposal be delivered successfully?"

• New supporting themes for assessment criteria: There are now five themes under each of the three criterion that highlight key considerations during assessment. Detailed explanations on each theme are provided, seeking to improve transparency and ease of use.
• Agreed definition of "socially beneficial": The Assessment Framework now clearly identifies how a proposal is regarded as "socially beneficial". This includes whether the proposal contributes to relevant national, state and local government goals, objectives and policies relating to social welfare or if the proposal significantly influences the behaviour and sustainability of our communities.
• Focus on health and education benefits: The Assessment Framework now includes an updated cost-benefit analysis methodology with new guidance on measuring health and education benefits.
• Broadening of assessment criteria: IA has broadened its assessment criteria to now enable proposals to be considered holistically and beyond the benefit-cost ratio.

Improved transparency and useability

Calls for greater guidance and transparency from the industry have also influenced several of the key changes incorporated in the Assessment Framework, including:

• setting out a pragmatic approach for defining a base case that accommodates all state and territory practices;
• clearly defining the recommended approach to cost estimates and requirements for disruption costs;
• providing a clear definition for how a proposal is determined to be nationally significant;
• removing templates for Stages 2 to 4 and replacing these forms with submission checklists to reduce the volume of documentation and increase transparency of information requirements; and
• providing specific guidance and examples setting out how to measure and account for the benefits and costs (monetised and non-monetised) associated with projects in regional and remote areas.

Streamlining project assessment to align with federal, state and territory guidelines

• New four-stage project development: IA has introduced a simpler, four-stage process that aligns with State and Territory frameworks (as opposed to the five stages detailed in past editions). The stages are:

• Stage 1 – Defining problems and opportunities
• Stage 2 – Identifying and analysing options
• Stage 3 – Developing a business case
• Stage 4 – Post completion review

• Business case options: The Assessment Framework only recommends, and no longer requires, that a business case submitted at Stage 3 includes at least two options (that is, two possible responses to the identified problems and opportunities) in addition to a 'do-minimum' base case (which reflects the continued operation of the network or service). There are no new mandatory requirements which is consistent with the majority of state and territory guidelines. Proponents are expected to demonstrate a rigorous and defensible Stage 2 process to identify and analyse an appropriate range of potential options – particularly if a business case includes only one option over and above the base case.

• New technical guidelines: IA has created four new technical guidelines that provide proponents with greater detail and guidance on the following areas to assist with the development of a proposal for submission: risk and uncertainty analysis, program appraisal, multi-criteria analysis and economic appraisal. IA is also working to develop new training materials to support stakeholders.

• Standardising terminology: Previously, there was inconsistency between the use of the terms "initiatives" and "projects" in the Priority List. Now, the Priority List has adopted the term "proposal" consistently to remove any confusion. The Priority List will now identify which stage each proposal has reached, in line with the Assessment Framework stages.

When do these changes take effect?

Proponents are expected to adhere to these new guidelines in accordance with the following timeframes:

• Stage 1 submissions are expected to adopt the new guidance immediately; and
• Stage 2 and Stage 3 submissions are expected to align with the new guidance from 1 January 2022.

The challenge for project proponents

Governments of all levels have pitched infrastructure projects as a key plank in Australia's economic recovery. But selection of the optimal projects to take forward will continue to be critical. The broadened assessment criteria under the revamped Assessment Framework enable better account to be taken of benefits such as sustainability, resilience and quality of life. However the challenge for project proponents will be to do so in a manner that meets the transparent requirements of IA and demonstrates the merit of the proposal.