8.2.2 Benefits approach
An alternative high level way to approach the question of optimisation is by determining the relative benefits that different program and project scenarios offer, as illustrated in Case Study 7. This approach offers a more qualitative means of establishing program priorities than the more analytically focussed optimisation method in the last section.
Over the last few years VicRoads has embarked on a significant culture change, based on a move from a largely condition-driven program in 2010 to a benefits-driven program today. This change recognises the importance of optimising investment in the network based on the value of the investment to road users and the wider community.
The new Benefit Management Framework (BMF) has a problem-solving and outcomes focus, enabling a consistent approach to identifying, monitoring and evaluating the success of VicRoads investments. It provides a ‘line of sight’ from investment-level indicators to the benefits and outcomes that VicRoads, and ultimately government, aims to achieve. The framework is structured around the approach to investment management promoted by the Department of Treasury and Finance (DTF) and detailed in its Investment Life-cycle and High Value High Risk Guidelines (DTF 2014). It applies to planning, prioritisation and evaluation of all investment decisions in VicRoads, which fits in the plan and learn phase of the investment cycle shown in the diagram.
The Victorian Government’s Investment Management Standard (DTF 2012) establishes the logic of investments and identifies community benefits through the development of Investment Logic Maps (ILM) and Benefit Management Plans (BMP). In VicRoads, an ‘investment’ includes all activities which require resources (either in funding or staff time), in the development of projects, programs, policies or strategies.
Central to the IMS and BMF is the hierarchical alignment of investment-specific indicators, organisational benefits and broader government outcomes, with decision-making facilitated through three key processes:
Investment planning – identify appropriate benefits and KPIs which are critical elements of any investment development process. These benefits are captured in the BMP.
Investment evaluation – the BMP then becomes the basis for assessing the effectiveness of the investment as part of post-completion evaluation. Lessons learnt from this process are captured and used to inform future decision-making.
Investment prioritisation – the set of organisational benefits also provides a valuable input in selecting and prioritising investment proposals. The approach is outlined in the Investment Prioritisation Framework (DTF 2017). It focusses on the actual merit of each investment as the core criteria: the cost, benefit, and the criticality of the investment, so that resources are always allocated to investments that deliver the benefits/outcomes sought.
The Government’s outcomes link to five strategic outcomes in the VicRoads BMF. Each of these outcomes then links to a number of specific benefits, which are used to determine how a specific investment contributes to the outcomes. This is described in more detail in later Case Studies.