Creating business opportunities through the Victorian Government Budget May 2015 – An industry perspective

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There are two ways to win government business:

  1. By winning a competitive process (quote or tender), or
  2. Creating an opportunity that, within procurement rules, results in a direct engagement.

Obviously the best outcome for any business is to engage directly with the government. On a large scale this can be achieved through the development of a Market-Led Proposal. On a smaller scale this can be achieved through pitching the right solution to the right audience.

Regardless of your method of creating a direct engagement, to be successful you must demonstrate:

  • The ‘why you?’
  • A strong match with government policies
  • A government need

The recent Victorian Government Budget 2015 provides information on the best direction for government spending over the next two to three years – and thus ‘the need’. In conjunction with government policies (such as the Back to Work policy and departmental policies), the budget informs more than 50% of the basis of your direct proposal to government.

Furthermore, this new Labor Government budget provides a high level of clarity of intent (government direction), with key initiatives outlined therein. When you review Budget Paper No. 3, which lists by department the funding and initiatives they intend to deliver, businesses can see clearly where the procurements and engagements will happen in this coming financial year.

How to read the budget

The first and most important stage of any review of government material is to identify which department you want to do business with. Budget and policy papers can be long and detailed, so focus on the groups you want to work with (and that are best matched to your products).

The next step is to read the Budget Overview and then Budget Paper No. 3, the service delivery paper. Budget Paper No. 3 provides an overview of the goods and services funded by the government and delivered by departments, and how these support the government’s strategic objectives.

Budgeted opportunities for industry

The overall focus of the budget is on state economic development. As such, the large projects funded for the next financial year (2015 to 2016) fall across a range of sectors, with a focus on schools, hospitals, jobs and transport.

Here is a list starting with the largest 17 initiatives, all for $50M or more for the first year:

  • DHHS-Meeting hospital services demand -$248.8M for FY15/16
  • DEDJTR-Premier’s Jobs and Investment Fund (including the ‘start-up’ initiative) -$170M for FY15/16
  • DET-School enrolment based funding-$156.9M for FY15/16
  • DHHS-Social and Community Services equal remuneration order-$156.3M for FY15/16
  • DET-Education State -$146.7M for FY15/16
  • DEDJTR-Regional Jobs and Infrastructure Fund-$125M for FY15/16
  • DEDJTR-Melbourne Metro Rail Project -$122.4M for FY15/16
  • DEDJTR-New VLocity carriages for the regional network-$87.4M for FY15/16
  • DET-Delivering new schools -$84.3M for FY15/16
  • DEDJTR-Better Roads for More Communities – Road Surface Replacement Program -$80M for FY15/16
  • DET-School modernisations-$77.5M for FY15/16
  • DHHS-Elective surgery boost -$60M for FY15/16
  • DJR-Critical infrastructure and services – supporting recent prison expansion-$52.8M for FY15/16
  • DEDJTR-Future Industries Fund (including New Energy Jobs Fund)-$50.5M for FY15/16
  • DELWP-Interface Councils Infrastructure Fund-$50M for FY15/16
  • DET-TAFE Rescue Fund-$50M for FY15/16
  • DHHS-Hospital Beds Rescue Fund-$50M for FY15/16

This focus of this government represents a shift in direction away from delivering large road projects to delivering larger rail projects. There is strong focus too on:

  • Education, with the continuation of the capital works program for 10 new school builds and 67 school upgrades
  • Health, with a large portion of funding for hospital upgrades and a new western women’s and children’s hospital, mental health support services and ambulances, including facility upgrades and ambulance support services
  • Economic development, through a focus on job creation (100,000 new jobs) and investment and start-up schemes such as Start-Up Victoria, Premier’s Jobs and Investment Fund, the Future Industries Fund focused on supporting the six industry sectors poised for economic growth, and the North Innovation and Investment Fund.
  • Community services, environmental initiatives and creative industries (including the State Library redevelopment) are funded as well.

A next level analysis of a snapshot of budget initiatives is provided in the list below:

  • DEDJTR-Bridge strengthening for freight efficiency (c)(d)-$47.8M in FY15/16
  • DEDJTR-Conventional signalling upgrade – Caulfield to Dandenong-$45M in FY15/16
  • DEDJTR-M80 Upgrade – EJ Whitten Bridge to Sunshine Avenue-$40M in FY15/16
  • DET-Land acquisition-$39.7M in FY15/16
  • DEDJTR-New E-Class trams-$37.3M in FY15/16
  • DJR-Victorian Responsible Gambling Foundation-$36.5M in FY15/16
  • DET-Camps, Sports and Excursions Fund-$36.3M in FY15/16
  • DET-Relocatable classroom program-$35M in FY15/16
  • DHHS-Medical equipment replacement program-$35M in FY15/16
  • DHHS-More support for people with disabilities and their families-$35M in FY15/16
  • DHHS-Simonds Stadium redevelopment – stage 4-$35M in FY15/16
  • DJR-Country Fire Authority trucks-$33.5M in FY15/16
  • DEDJTR-Homesafe – 24 hour public transport on weekends-$25M in FY15/16
  • DELWP-Planned burning and fuel management-$25M in FY15/16
  • DHHS-Engineering infrastructure replacement program-$25M in FY15/16
  • DHHS-Community Sports Infrastructure Fund-$25M in FY15/16

For business engaging with government, these meaty initiatives can be daunting, especially for the one or two person companies who see government as a growth option, but who baulk at the big amounts mentioned. For example, how do we play in a $25 million initiative by DHHS for ‘Engineering infrastructure replacement program’?

The initiatives at the big end of the scale are often programs of work that involve many sub-industries. So the next step is to look into the detail behind a heading such as ‘More support for people with disabilities and their families’ to see what sub-industries might be needed.

For example, will there be a component for building access ramps for wheelchairs? So a building contractor could work up a ‘solution’ for multiple configurations, meeting some specific as well as generic government building requirements.

The opportunity requires qualification and validation, so a few targeted calls to the right person in DHHS to find out more details are required. And soon you are on your way to building awareness with the department and the credentials to win the business. A targeted solution within an engagement strategy for a targeted audience in the ‘access unit’ of DHHS would see you well prepared, known to the department and ready to tender well.

Furthermore, I maintain that any large infrastructure program requires support from a number of industries, including:

  • Environmental consulting
  • Finance
  • Commercial support
  • Planning
  • Technology
  • Project managers
  • Communications
  • Stakeholder management

(to name a few)

Small to large initiatives

If you wish to cut your teeth on the smaller initiatives, then here is how many you will find in Budget Paper No. 3.

  • 5 to 10 M expenditure range — 34 initiatives
  • 1 to 5 M expenditure range — 108 initiatives
  • 500K to 1M expenditure range — 36 initiatives
  • Less than 500K expenditure range — 75 initiatives
  • No funding as yet — 25 initiatives

 

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