Infrastructure procurement is the process of seeking market offers and engaging one or more tenderers to deliver a capital investment.
The business case should include a robust procurement strategy that establishes the procurement outcomes being sought and identifies the optimal strategy for realising these outcomes and achieving value for money.
The procurement process commences when Government decides to invest in an infrastructure initiative. It follows six key steps to implementing the procurement strategy, beginning with procurement planning, due diligence and documentation scaled to address the size, type and complexity of the project. It includes a process for engaging the market, evaluating offers and negotiating a successful procurement outcome with the preferred proponent. It culminates in awarding a contract to deliver the works.
Each of these procurement phases needs to be clearly understood to achieve the best commercial outcomes for the State.
The Procurement Investment Lifecycle and High Value High Risk Guideline explains the context and authority for government procurement, including guiding principles and relevant legislation and policies.
It explains the types of procurement models approved for use by Victorian Government agencies and outlines available policy guidance and contracts that support each model.
It highlights mandatory requirements that must be addressed and provides good practice guidance to support practitioners step through the procurement process.
- Part one details the principles, legislative and policy context and assurance requirements that underpin government infrastructure procurement.
- Part two details the development of a procurement strategy that supports optimal project structuring, packaging, bundling and procurement model selection. It also provides an overview of the three categories of procurement and eight defined procurement models.
- Part three details the implementation of the procurement strategy, which includes preparing for tender, developing documentation, conducting tenders, evaluating market responses and negotiating and awarding a contract.
Awarding a contract to the successful tenderer is the key deliverable of the procurement stage of the investment lifecycle.
Other important outputs of this stage include tender documentation and design and due diligence (including pre-tender cost estimates).
Project reporting commences for departments and delivery agencies who are required to submit quarterly project status reports on budget, time, scope and risks to the Department of Treasury and Finance.
The Victorian Government uses three categories of procurement for all infrastructure projects:
- Whole of Life
- Lump Sum
- Cost Reimbursable.
Each category has a defined set of procurement models, each with standard form deed or contract and accompanying guidance.
Further information about each category, including its procurement requirements, defined set of procurement models, contracts and accompanying guidance, is detailed on the pages below.