Best Practices for Prioritization of Capital Projects

www.pwc.com/ca

September 2016

Joe Hickey

Vancouver

Infrastructure and Project Finance

PwC

Outline

Importance of Effective Capital Prioritization 3

Background to Capital Prioritization 7

North American Best Practice 12

2

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Current Outlook

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Current Outlook

4

Consistent Themes Across Municipalities

• Budgetary Pressures

• Increased Scrutiny

• Understanding the Value of Effective Investment

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Current Outlook

5

Changing Environment

• Improved Data Access

• Growing Research Base

• Appreciation of value of effective capital investment

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Current Outlook

6

Governance

Federal-Provincial Interface

Citizens

Regulation

Corporate Memory

Staff and Resources

Politics

Environment

Funding

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Our Brief

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Our Brief

8

“Go to the market and talk to them. Through the experience of municipalities across North America develop best practice in the field of capital investment planning and prioritization”

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Our Approach

9

Evidence Base

Literature Review

Themes Interview Format

Identify Cities

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Our Themes

• Strategic Policy Foundation

• Portfolio Management Plan (PMP)

• Investment Allocation and Categorization

• Project Evaluation and Selection

10

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Our Cities

• A blend of US and Canadian

• Those selected had been identified as having a story to tell

• A range of approaches employed

• 15 identified 10 Approached 8 Participated

11

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Best Practice

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Strategic Policy Foundation

• Clear and consistent alignment between strategic goals and investment strategy

• Measuring and monitoring the effectiveness of investment strategy should be prioritized

• Inclusive strategic goals

• Long term planning – regular refresh

13

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Portfolio Management Plan

• It is vital to have a PMP that outlines the process – but the plan should be unique to the city

• The PMP should address risk at a project and portfolio level – and include external risks

14

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Investment Category

• Using predefined investment allocations by agreed categories is effective and ensuring strategic alignment

15

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Project Evaluation

• Performance management encourages cities to identify what data to use and how it can be used

• Review evaluation criteria on a regular basis as new measures are continually available and new “hot topics” will arrive

• Where possible use quantitative measures if they are effective

• Thorough Benefit Cost Analysis is generally used for all projects above a threshold of cost or importance

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Joe Hickey Director

PricewaterhouseCoopers Place 250 Howe Street, Suite 700, Vancouver BC V6C 3S7 : +1 604 806 7165 | C: +1 604 360 0523 : joseph.b.hickey@ca.pwc.com