- The National Treasury last week published some pretty specific guidance for state actors looking for at least R1 billion worth of project support.
- The “Guideline on Budget Submissions for Large Strategic Infrastructure Proposals” provides a structure, and key questions to be answered, for such pitches.
- The primary submission must be under 20 pages, including budget statement, sensitivity analysis, and details of options considered.
- Here’s how to write a R1 billion funding pitch within the South African government.
- For more stories go to www.BusinessInsider.co.za.
If you want the South African government to give you R1 billion or more for a project, you had better keep your proposal to under 20 pages, not counting supporting evidence.
The National Treasury last week published “Guideline on Budget Submissions for Large Strategic Infrastructure Proposals” – which takes 12 pages to lay out how such a proposal should be structured.
The document guidance is for “very large” initiatives, with a minimum spend of R1 billion for a project, or at last R3 billion for a programme.
They must also be important.
“These are interventions that imply a significant commitment of fiscal resources and which will have substantial long-term impacts on economic growth, social equity and employment creation,” says Treasury.
Deadlines for such project proposals are coming up at the end of May and June, depending on when they are supposed to kick off.
Even though submissions must be brief, they must come with solid numbers.
“It should provide easy and accessible data sources through which the reader can verify calculations and supporting evidence,” says the guidelines.
Assumptions must be “presented clearly and transparently”, and the recommendations need supporting evidence, which don’t count towards the page limit.
Here is how you propose a R1 billion or bigger project within the South African government.
Nine sections are required in the submission.
- A description, with key details in brief: name, location, the entities involved, contact details for the sponsor’s project officer – and the argument as to why it should be a national priority
- A justification statement “to explain the need for the proposal at the highest level in a clear, coherent and logical manner”. The rationale is further broken up into a problem statement; why the project will be cost effective; a description of the beneficiary (“and an explanation for their selection over others”); and the risks and potential negative consequences
- Objectives, in general enough terms that options can be considered, but specific enough that progress towards meeting the objectives can be measured. Three questions are key, Treasury says: What are we trying to achieve? What will be the contribution of the intervention to the economy and society in general? And what would constitute a successful outcome or set of outcomes?
- A summary of the options considered – with proof the homework was done. “Each alternative should be clearly described together with a summary of its associated advantages and disadvantages and a quantification of the preliminary costs and benefits of each option relative to the objectives of the proposal.”
- An overview of the socio-economic analysis, which is likely to be the most extensive part of the submission, says Treasury. It must show the project to be cost effective, via either a cost-benefit analysis (CBA) or a cost effectiveness analysis (CEA), or both. The economic analysis must consider “all major externalities such as social, climate change, gender” and others.
- A budget statement covering expenditure, funding, cashflow, and contingent liabilities.
- A risk statement and sensitivity analysis, including political risks, with estimated probabilities.
- A procurement strategy, showing why the chosen procurement approach offers the best value for money, how it will keep things fair and competitive, and that the procurement route is aligned “with the interests of the government”.
- Details on institutional and operational readiness, down to brief CVs of technical advisors.
There are a couple of common problems with submission, says the Treasury. One is that project outcomes are not always directly related to the project objectives, such as when sponsors bring in broad economic impact.
“While any infrastructure project will create employment, not every project will be economically feasible and, therefore, sustainable. The task is to identify economically feasible projects that will create sustainable employment opportunities.”
It also warns appraisers to look out for optimism bias, with benefits overstated, and timing and costs (both capital and operational) understated.
(Compiled by Phillip de Wet)