4. Program development

Program development aims to deliver a clear, well thought out and deliverable pipeline of initiatives over a given horizon taking into consideration a broad range of constraints.

Following prioritisation, an actual program (see Box 2) is developed from the list of prioritised initiatives. The content of the first years of the program is firm, and the content of later years is indicative. Individual initiatives may be scheduled in either earlier or later years of the program, depending on perceived urgency and other aspects of the program development process. Ministers generally have the final say over the initiatives that are included in the program.

Program development is a complex process that links the delivery of individual initiatives with a budget process. It must be transparent, and founded on sound economic and business investment principles that can accommodate the many and varied practical considerations that characterise transport initiatives.

Box 2 What is a program?

A program is defined here as a suite of initiatives to be delivered within a specified timeframe, sequence and budget.

Programs may apply over a number of time horizons. The most common is the annual budget cycle where a program of initiatives are funded for the next 12 months, with indicative funding identified for the subsequent three years (out-years) as well.

Also quite common is the medium term investment plan that typically identifies a medium term (3-10 years) program of initiatives and can also set the direction for a package of initiatives that are of crucial important for the nation, state, region or city.

The infrastructure audit currently being undertaken by IA for the Australian Government aims to develop a 15 year program of initiatives.

Programs come in different sizes and styles. A smaller program may be a ‘routine maintenance’ program that consists of a collection of similar initiatives, each one involving routine maintenance, say, across a network. A similar example is a ‘railway crossing black spot’ safety program, which involves a collection of railway crossing improvements at different locations.

Initiatives in a program may arise from any of the levels of the hierarchy of planning levels (see Step 1 - strategic, corridor/area, route/link). By forming a program consisting of initiatives identified through an integrated and comprehensive planning process, programs will consist of strategically identified interventions aimed at achieving jurisdictional stated goals and objectives.

This section of the Guidelines discusses the entire collection of initiatives to be funded within a single and/or multi-year budget. A program can consist of both investment/infrastructure initiatives, as well as reform/non-investment initiatives. Within this setting, smaller programs can be thought of as sub-programs.

4.1 Level and structure of funding

Governments may make policy choices on funding prior to program development. Relevant funding policy choices may include:

  • Establishing pools of funds by purpose, category or sub-program
  • Providing priority funding for particular corridors, areas, regions or outcomes (e.g. safety)
  • Specifying minimum funding levels for jurisdictions or parts of a jurisdiction to address equity issues
  • Specifying minimum funding levels for maintenance activities
  • Providing specific funding for certain initiatives (e.g. road widening, bridges, landscaping, rest areas and noise barriers).

Where such policy choices are made, they will need to guide program development from the outset. These policy choices may also require prioritisation to be undertaken within sub-programs or categories.

The choice of initiatives to be included in a program is influenced by a number of factors:

  • The total level of available funding is a major factor in choosing the initiatives to be included in a program.
  • Normally, the highest level of commitment, and the first call on funding, is funds to complete existing initiatives with a contractual commitment (e.g. works in progress or a binding contract).
  • The next level of commitment is usually for initiatives that have had funds allocated in agreed budgets or forward estimates, but for which no delivery contract has been signed. While it would no doubt cause problems if these initiatives did not proceed in accordance with previously agreed timetables, they could nevertheless be cancelled or deferred by agreement between agencies if absolutely necessary for policy or other high-level reasons (e.g. a sudden change in a jurisdiction’s financial circumstances).

It is also important for alternative funding scenarios to be considered and negotiated between the delivery agency and the funding agency. For example, prevailing weather conditions on a site may enable construction to be organised under a single contract, but spread across several financial years for funding purposes. Alternatively, it may be practical to adjust the cash flow of one or more initiatives to iron out peaks that occur in years when the requirements of multiple large initiatives overlap.

The level of discretionary funding becomes clear only when all of these considerations have been taken into account.

4.2 Timing and corridor and network considerations

A detailed, preferred strategy for the timing of delivering initiatives should be prepared for a corridor and for the whole network. Such a strategy provides some certainty to stakeholders, delivery agencies and contractors. It also allows orderly planning by all parties, including identifying relationships between corridor strategies. Programs should be developed with the aim of providing this certainty.

Key considerations may include, but are not limited to, the availability of skilled work force, specialised equipment and financing for delivering initiatives. Efficiencies may be achieved through the geographical proximity and sequencing of requirements for skilled work and the utilisation of specialised equipment. It is also generally more desirable to time the financing of initiatives to avoid significant peaks and troughs of varying magnitudes, and encourage a steady flow of spending that better matches the program’s funding.

Corridor and area strategies will largely determine the preferred delivery strategy for maintenance and improvements to transport assets within a corridor or area. These strategies may include plans for systematic, incremental improvement. They identify individual initiatives and their needs, which in turn facilitate the creation of discrete packages of works, where appropriate, to progressively upgrade relevant parts of the corridor or area. Program development should consider the impact of alternative funding allocation scenarios on corridor or area strategies. Efficiencies may be achievable from combining the delivery of new initiatives with the maintenance of existing elements of the network.

4.3 Bundling opportunities

Preferred delivery strategies can highlight relationships between individual initiatives and help to identify potential opportunities for bundling initiatives.

For example, improving the weight-carrying capacity or width of a bridge may appear to improve a route’s freight capacity. However, other works such as road widening or pavement strengthening may also need to be addressed before the whole route can be opened up to heavier freight vehicles. While the initiatives are not strictly interdependent, they are related and the relationships need to be considered as part of an overall program to improve the route[1].

It may not be possible to fund a whole bundle of works in a single budget period. Nevertheless, it should be acknowledged that committing funds to one or more initiatives in a bundle requires the completion of the other works in as short a time frame as possible, to maximise the return on the initial investment.

Bundling can also be an appropriate method to implement transport system strategies in a more cost-effective manner. In contrast, implementing individual initiatives may create scattered activities without any perceptible improvement in the overall performance of any single corridor, area or route.

Furthermore, bundling initiatives for delivery as a single, large-scale package has the potential to provide cost savings from economies of scale and community benefits from co-ordinated delivery of some initiatives. These savings need to be balanced against the likely delay caused to initiatives elsewhere, due to funding the larger package of works. Detailed program development should investigate bundling opportunities.

In rare circumstances, cost savings may be obtained by bundling like-type initiatives for different corridors or areas in a particular region to reduce mobilisation costs. In these instances, the strategies for each corridor or area need to be taken into consideration.

An initiative’s BCR can be affected by assumptions made about the status of other initiatives (see F3 for discussion of interrelationships between initiatives). In extreme cases of interdependence, one initiative is worthless in the absence of another. In this situation, initiatives should be bundled together and treated as a single initiative. Corridor and area studies provide opportunities to explore relationships by testing ‘what if’ scenarios.

CBAs may include sensitivity testing, guided by the findings of corridor and area studies, to show the effects of changed assumptions about the status of related initiatives. Different combinations of related initiatives should be tested to find the best combination.

[1] Provided both initiatives have merit, which should be the situation if they have reached the program development stage.