• Bernard van Biljon

Novus3 assists local government with defendable capital investment planning

There is no universal approach to Capital Investment Planning by Local Governments, not least because the frameworks for local financial management vary greatly from country to country, and even within one country.” – Guidebook for Capital Investment Planning, World Bank (October 2011).

Within the public sector environment, the cycle of infrastructure planning and prioritisation has many challenges. The merit of infrastructure projects (capital projects) competing for priority and subsequent capital investment is usually determined through tried and tested financial methods, such as the calculation of a benefit-cost ratio, the internal rate of return (IRR) or other related financial methods.

The short-comings of this clinical and somewhat aged approach create a number of challenges. Politicians and executive leadership often take issue with the disjoint between politics, strategy and the way that infrastructure investments sometimes fail to align with their objectives, strategies and commitments. Furthermore, spatial priorities, economic impacts, social impacts, environmental impacts, perspectives on affordability, perspectives on the project preparation process, and a host of other important considerations are mostly ignored.

The complexity of the process is compounded by the diversity of sources from which the infrastructure needs originate. This diversity of important considerations in the project preparation journey, renders the required process to evaluate and appraise projects across a spectrum of seeming unrelated needs extremely challenging. Some projects have an impact where it gets implemented whilst others may have a wider impact, unrelated or only partially related to the actual location of the infrastructure investment (or social investment). Without an appropriate solution to this issue, reporting on how the capital relates spatially, remains largely inaccurate.

Depending on the context, the CP3 (Comprehensive Programme Prioritisation & Implementation Platform) process can deliberately be tweaked towards favouring topical pain points such as stimulating the economy, job-creation, social issues, financial prudence or a weighed combination of such metrics. The CP3 Capture module facilitates the process of capital project needs solicitation and ushering such projects through the project preparation process. The process continues with a flexible prioritisation process (CP3 Prioritise module) that draws on a range of metrics such as spatial alignment, qualitative or quantitative considerations. The prioritisation process culminates in a defendable and accountable process, that reflects the needs, objectives and priorities of the organisation/government department/municipality. A tried and tested budgeting process follows prioritisation. The CP3 Budgeting module has been used over the past four years to develop and finalise draft budgets for some of South Africa’s largest cities. This dynamic budgeting tool combines a configurable, rule-based process and a multitude of conditional funding sources.

All inputs and outputs culminating from this process are set up to align seamlessly with the local standard accounting charter rules. Lastly, the tracking of project implementation is accommodated with the CP3 Tracking module to ensure that the accountability and project governance loops are closed. Reporting and dash-boarding allows for executive and technical leadership to access instant insights into possible areas of concern that may require intervention.

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