Overcoming key challenges
Delivering investor confidence
Delivering investor confidence requires a robust business case to demonstrate a light rail project:
Addresses the identified problems and needs of the government and community
Delivers benefits that are linked to the identified problems and aligned to the government’s stated policies and strategies
Has a clearly defined scope and cost
Is justified on the basis of the net triple-bottom-line benefits
Can be delivered as planned to ensure the intended benefits are realised
The business case must be underpinned by the strategic argument for the project.
The business case should clearly describe why the project is needed, and have a clear and specific statement outlining the overall benefits to customers as a result of the development.
Is light rail the best option?
Comprehensive strategic modal options analysis (e.g. more efficient buses, light rail, train, demand management, better use of existing system) is critical to any business case and strengthens the argument for the chosen solution. More detailed project options analysis around the preferred strategic option (in this case light rail) including the transport corridor alignment, land-use interaction and stop locations can then be undertaken.
The project options analysis should be followed by a detailed, transparent, evidence-based appraisal of preferred options requiring the quantification of the transport, economic, financial, environmental and social benefits to demonstrate why this project is justified and delivers value for money.
The overall business case narrative should then draw on this evidence base to provide clarity around the need for the project (i.e. why do we need it now, why the benefits are important and why is a light rail project the best option).
Containing scope creep
The development of a value management scope framework that clearly defines scope inclusions and exclusions is a critical communication tool, and clarifies to all stakeholders the basis of the business case/funding ask and the economic appraisal. This framework is a must for all projects and, when properly constructed, brings great clarity to multi-faceted stakeholders with competing interests and requirements.
The value management scope framework will ensure there is clear definition around the scope, cost and risks of the preferred light rail project.
The period of greatest potential to influence scope and cost occurs in the early phases of projects so it is essential that significant time and effort is spent in this phase to capture the opportunity, to ensure clarity and to make sure that ultimate costs may be contained.
How will the light rail project be delivered?
Large-scale projects are fragile and can be sensitive to seemingly small decisions that can significantly erode benefits over time. Benefits management is an ongoing process that ensures decisions taken at each project stage are not only technically and commercially prudent, but also set the project on course for delivering at least the value on which economic justification was predicated. Benefits therefore need to be managed strategically and dynamically throughout the life of the project.
Details of how the project will be delivered and installing the appropriate governance are critical here. Governance must be robust - including separate client, sponsor and deliverer - to give the project its best chance to realise the intended benefits.
The sponsor is responsible for active pursuit of the business case and ongoing achievement of the planned benefits throughout the project lifecycle. The sponsor can operate at arm’s length of the project deliverer, as the project deliverer will need solely focus on successfully delivering the project.
The project sponsor should focus on the different phases of benefit management throughout the project life cycle, including:
Strategic assessment - benefit identification
Business case - benefit quantification
Procurement/delivery - benefit assurance
Operations - benefit realisation
Benefits should be identified and quantified during project planning and development. This is so benefits align with and support the higher order plans that capture policy objectives of government. The drivers and critical success factors underpinning these benefits must be kept within the project scope during the procurement and delivery phases. The decision to move forward on an option must be based on a consistent and balanced evaluation, with thorough consideration of alternatives and their costs and benefits over time.
Firm resolve from the outset as to when it is desired to deliver the project will have a powerful effect on the business case and planning phases. Clarity on timing provides greater focus and speed in the delivery of the business case, planning and approvals. Though, care should be taken when integrating light rail systems with dense, high-profile, CBD streets with potentially major impacts on surrounding streets and transport.