Business Plan Development

Capital asset management is the process of identifying current and future capital needs and developing strategies and projects to address those needs. A business plan is a key element of the capital asset management planning process. In each step of the business plan, outlined below, we are able to offer vital technical, schedule and costing input to ensure the plan meets the required definition and accuracy:

Identifies the need and rationale for investing in the project;
Reflects relevant government/state priorities and strategic direction;
Outlines the service delivery options and recommends the best option to address the project need;
Analyzes the procurement options and presents the most appropriate and effective procurement model;
Outlines the procurement implementation plan, project budget, funding/financing sources and the timing of cashflows; and
Requests formal approval to proceed with the project and project budget as described in the business plan.

Does the project require a concept plan first? Does the project already have a concept plan? If so, how does this affect the analysis and information required in the business plan?

Project Leadership

At minimum, the project team should include the following roles. We are experienced and capable of undertaking the roles highlighted below:

Chief Project Officer or Project Director: Takes ultimate responsibility for the project scope, budget and delivery schedule. Represents the project team to the ministry and agency executive, other decision makers (e.g. Boards of Education) and user groups, and reports to the project’s governance body;
Program Lead: Manages the project’s associated public program or the development of the program if applicable and coordinates user group sessions; [Provide Support]
Technical Lead: Manages the team of architects and engineers during the development of the indicative design (or equivalent); [Full Responsibility] and
Administrative Coordinator: Assists in managing schedules, consultant contracts and provides other administrative support. [Full Responsibility]

Does the project team include staff with the required expertise? Have roles and responsibilities been clearly defined and communicated?

Advisory Consultants

During the development of the Business Plan, it will be necessary to engage specific Advisory Consultants, in order to provide specific input to the Plan. At this stage of Plan Development, it in not common to engage any Legal Advisory Service.

Our role in this part of the plan development, comprises:

Taking on specific Technical, Schedule or Cost Estimating activities
Sourcing, engaging and managing Specialized Advisory Consultants.

Have the required consultants been determined and engaged to help develop the business plan development?

Work Plan Development

The development of the Business Plan requires that the Project Leadership team identifies the key deliverables and milestones needed to complete the business plan, usually in consultation with user groups, advisory consultants, key stakeholders and Indigenous representatives.

As support to the Program Lead and assuming full responsibility for the Technical and Administrative activities, we would identify the key activities and deliverables, plan, and develop. We would also develop a Business Plan Matrix of Responsibility, to show both internal and external responsibilities, and develop a preliminary Business Plan Development Schedule.

Has the project work plan been developed in consultation with relevant stakeholders and consultants? Does it outline key deliverables and milestones?

Service Delivery Options

Within the conceptual phase of the project, the team are required to perform various Service Delivery Options, and for each option, perform a qualitative risk assessment, scope definition (main equipment) and a order of magnitude cost estimate and schedule, and to determine the recommended option. Where necessary, we would formulate the scoring methodology to determine the most suitable option. In some cases, we would perform qualitative and quantitative supplier / EPC assessments to rank the various options. Additionally, we would perform risk identification and mitigation studies, where risks are identified. This final Service Delivery Option (Candidate) is transferred to the Business Plan.

A focus area that we are experienced in, is the overall execution plan of Engineering, Procurement and Construction.

Our team can provide valuable input and analysis of the options, as it refers to the Technical and Administrative functions.

Has an build (EPC Phase) and operational (Operating Phase) risk assessments been performed and summarized in the business plan?

Market Sounding

Market sounding is a process used to test project assumptions (e.g. procurement model options, construction schedule) to determine if the market is supportive of the project. The market sounding process is generally conducted through meetings with private sector design and construction contractors, who may later participate in the proposal processes of the procurement phase. Market sounding might also include amongst the EPC activities, other factors such as optional execution models, and risks related to schedule and cost.

We record all meetings, subject matter and results, that serve as support to the Business Plan, specifically as it refers to Technical and Administrative.

Would the project benefit from a market sounding to reduce risk in any assumptions made, to tighten up execution plan, cost and schedule estimates, or other new and relevant factors to be considered?

Procurement

Objectives

As part of, or in support of the Project team, the procurement objectives and level of assessment would be established. We would consider the following to determine which are applicable and to what extent assessment is required:

Schedule certainty: how the option affects the ability to complete the project on schedule;
Cost certainty: how the option provides the project owner with price certainty during the design and construction phase, as well as over the long-term operations;
Opportunity for innovation in design: how the option affects the ability to encourage innovation ?
Market / Public interest and capacity: how robust the market is across the various options;
Optimizing risk management and allocation: how the option affects the ability to optimize risk allocation, including risk management, between the project owner and the contractor;
Operational efficiency: how the option ensures long-term maintenance;
Optimization between capital, maintenance and life cycle costs: how the option affects the ability to optimize upfront capital cost investments with long-term operating and life cycle implications;
Service disruption and transition: how the option influences the delivery of services during procurement, construction and transition;
Functionality and flexibility: how the option meets key functionality specifications and the option’s adaptability for future changes and growth, for instance, the process and cost of change orders;
Facility commissioning and completion of deficiencies: how the option affects the ability to successfully complete commissioning and resolve deficiencies on schedule and on budget; and
Staff impact: how the procurement option allows for the recruitment, training and retention of new staff and how the procurement option impacts existing staff both directly and indirectly.

Which of the recommended procurement objectives are suitable for the project? Are any unique procurement objectives needed to align with the overarching project objectives?

Model Options

Project teams may use several different types of procurement models. These models are grouped into traditional and partnership procurement model categories, with many procurement models existing along the spectrum (depending on where risks and responsibilities are allocated).
Two of the more common models include:

EPC (Engineering, Procurement and Construction). In this model, the EPC is for the most part responsible for the entire project (Turnkey). The Owner's Team will perform the tasks of verification and request payment releases.
EPCM (Engineering, Procurement and Construction Management). In this model, the construction contract is segregated form the EPCM contract. It is common for the EPCM to manage high level construction activities, and make certain reports to the Owner's Team, for the release of payments for equipment (Purchase Orders) and labour costs (Manhour reimbursable or milestone accomplishments).

These two models offer a number of variations, some of which include incentives and penalties, with the sole purpose of maintaining the project schedule and cost commitments.
Fur a further explanation of the differences between the two can be found here: Contracts

Were all viable procurement models considered for preliminary analysis? What models were not considered and why?

Procurement Options Analysis

In a similar manner to the Service Delivery Options, the procurement options analysis also includes a more robust quantitative analysis that focuses on a financial assessment. For larger or complex projects, project teams should perform a quantitative risk assessment to provide risk-adjusted project costs.

The procurement options quantitative analysis is comprised of a financial assessment and a risk assessment that ideally results in risk-adjusted project capital costs.

We are competent to analyze the Delivery and Procurement options and perform the necessary matrix, to identify the optimum risk-adjusted delivery.

Does the qualitative analysis frame the project objectives against the procurement options? Were two to three procurement models (representing a range of models) shortlisted and presented for further consideration?

Funding Analysis

The Project Team should identify the funding sources (and timing) and requirements required for the project. This includes a breakdown of all the cost elements that make up the total funding requirements as well as distinguishing between capital, ongoing operating and one-time costs such as land acquisition. In addition to the Gross. Funding requirements should be presented on a total and on an annual basis for each year of the term of the project. Any potential funding gaps or shortcomings should also be identified. Additional considerations to include in the funding analysis are any portion of risks to be held as project contingency within the budget, effect of the project on debt and cash flow and non-cash implications associated with project capital and operating costs. Any limitations to the accuracy of funding requirement estimates should be clearly identified.

In this respect, we would gather and maintain a detailed cost estimate for the various portions of the Work Breakdown Structure, for input into the overall Cost Calculation. In the event that there are any changes to the project that need to be updated, and that are under our responsibility, we would provide a revised cost estimate. Under normal conditions, and providing all prior activities have been thoroughly completed, any change at this time is expected to have a minimal impact on the cost / funding plan, since it would be covered in planned contingency money.

Does the funding analysis include the funding sources, breakdown of the cost elements and distinguish between capital, operating and one-time costs (if applicable)? Are the any commitments or agreements needed to access funding? Are there any timing or other restrictions in the funding? Are there any funding gaps?