Vaughan S.
Vaughan Stemmett

Infrastructure investment is essential for improving and maintaining economic, social, and environmental wellbeing. Queensland’s public sector entities and local governments are responsible for investing in, and managing and maintaining, a large and diverse infrastructure asset base.

To ensure they provide assets that align with Queensland’s future requirements, entities need to balance the level of investment, the benefits and costs that arise, and managing and maintaining the assets well.

This blog discusses what entities should consider when deciding to invest in assets and why robust business cases are vital.

Where should we start?

Before deciding to invest in an asset, entities should create a compelling business case. A business case should demonstrate that the investment aligns with the entity’s strategic intentions and outline how the investment will be achieved, including value for money.

Entities need to properly evaluate options, take into account all costs and benefits over the asset’s life, and incorporate an explicit analysis and determination of an acceptable level of risk.

The Queensland Government has frameworks, policies, and guidelines to help entities develop, assess, and deliver projects. All entities can use Queensland Treasury’s Project Assessment Framework to ensure they consistently and rigorously assess projects at critical stages in their life cycle – from the initial assessment of the service required through to final delivery.

What are our strategic intentions?

When the government makes early announcements about infrastructure investment, particularly before completing a business case, it can create community expectations about the viability and likely success of a project. By identifying a preferred solution first, the business case may suffer from momentum bias – with the entity’s focus on justifying a pre-conceived or preferred outcome or solution rather than providing an objective analysis.

We highlight examples of this in our report Evaluating major infrastructure projects (Report 14: 2019–20), where the timing of announcements affected the value of developing business cases. Of the 5 business cases we reviewed, the Queensland Government publicly announced 2 project investments  before developing and completing business cases. Doing so creates pressure that infrastructure proposals should progress because government has announced them.

Likewise, our report Market-led proposals (Report 12: 2018–19), emphasised the importance of completing a thorough analysis of proposals before publicly announcing them.

Business case definition

Guarding against optimism bias – does our planning inform the investment decision?

When preparing business cases, entities need to be aware of and guard against optimism bias. This is the tendency to expect better than average outcomes from a set of actions. Optimism bias can result in a scenario whereby costs can be under-estimated and benefits over-estimated. Business cases need to make use of assumptions, based on objective underlying data and information. That way, entities can make sound decisions about whether to invest.

In our report Traveltrain renewal: Sunlander 14 (Report 8: 2014–15), we note that the financial analysis of the Sunlander 14 project included key assumptions about future patronage and revenue. Neither market research nor actual experience supported these assumptions.

The optimism bias evident here supported the original project and was not challenged. Challenging the data would have revealed the lack of rigour behind the assumptions at the feasibility and asset acquisition planning phases.

Strategic assessment

Have we considered all options?

Options assessments inform decision-makers on the most appropriate form and location of a project to ensure the government makes the most effective and efficient infrastructure decisions.  

The purpose of the project assessment framework is to assess and support projects for investment. In some cases, priorities may change during the business case process. One example is where technology developments or changes in the community mean the investment need is no longer the same. By carrying out an options analysis before finalising the business case, entities ensure they have appropriately considered all possible solutions to a service need.

In Evaluating major infrastructure projects, we found that the business cases we reviewed generally aligned with Queensland Treasury’s Project Assessment Framework. However, there were areas for improvement, such as options analysis, economic assessments, and financial assessments.  

Extent of options analysis

Are we confident we can deliver on our plans?  

It can be difficult to plan for the future, especially in an environment of increasing complexity and uncertainty. Effective planning should cover the asset’s entire life – from identifying the need for it, to creating, operating, and eventually replacing and disposing of it. This gives a complete picture and supports better decision making.   

Local governments plan for infrastructure in many ways, including via local government infrastructure plans. Local context, the council’s strategic direction, statutory requirements, and community aspirations all influence this planning.

In our report Improving asset management in local government (Report 2: 2023–24), none of the 5 councils we audited assessed their asset management plans to see if they needed updating. This means they may not have adequate information to support effective asset management and related investment and budgetary decisions.

Entities should revisit asses investment planning.

Have we realised the investment benefits?    

It’s important that entities document any benefits they expect from investments in assets, and have ways of tracking and measuring the benefits as they are realised. This helps them understand what is desired, and ultimately, if they are achieving this. It also provides insights into issues they need to address, including any lessons for future investments.

Our reports and audit work across entities have highlighted 2 recurring themes that may potentially undermine any measurement of benefits:

  • a focus on asset delivery as the end point of a project
  • being overly ambitious and optimistic when estimating benefits and timescales, combined with a lack of external challenge.
Managing benefits extends beyond the life cycle of a project.

Where to from here?

Quality proposals, well-developed business case documentation, and transparent and robust assessment processes facilitate good decision making.

As entities better understand and plan for the infrastructure they own, they are equipped to make long-term decisions. This will ensure the right infrastructure is delivered in the right place to meet current and emerging needs.

Look out for the next blogs in our asset management series, which will discuss asset maintenance and how to approach reporting.


Reports to parliament where we mention or cover asset management:

Prior blog posts that mention asset management:

Related article