Resource Planning

As part of the Business Case, you will need to complete a Financial Analysis spreadsheet for revenue and (where applicable) capital costs of the proposed project.  Your Directorate Finance Lead will be able to help you with this if needed:

  • Adult & Culture Services – Anna Snowdon
  • Children’s Services – Anthony Francis
  • Chief Executive’s Directorate – Julia Vince
  • Environment & Regeneration – Karen Brown

The revenue costs must include the new/additional costs and savings that occur due to any capital investment. For example, for a project to extend a sports centre, the capital costs would show the capital cost of the building work; the revenue costs/income would show the additional rent/repair/heating/lighting due to the increased building; and the funding would show the additional sales due to the new facilities for the public.

The funding of the net revenue costs must also be identified (i.e. grants or identified revenue budgets) and any revenue savings should be shown.  For example, a capital investment energy saving scheme that costs £100k will reduce heating costs by £200k. The £100k would be shown as capital costs and the £200k as a revenue saving.

If a project is getting Prudential Borrowing, you must identify the revenue savings and/or additional income that occur due to the capital investment. This will allow the Incremental Impact Indicators to be calculated as part of the Prudential Indicators reported to Cabinet.

Whole Life Analysis

Make sure that you have considered how much the scheme is going to cost throughout its whole life. You need to think beyond the initial cost associated with establishing the programme or project or the construction phase, but think about how much the facility will cost throughout its lifetime.  There needs to be the foresight whilst developing and costing a programme or project to establish the lowest cost for the whole life rather than focusing just upon the initial delivery of the facility.

Here is an example to demonstrate this concept in simple terms:

  • Option one – a new community centre can be built at a cost of £500K and will cost £200K per year to maintain and run.
  • Option two – a new community centre can be built using a more sustainable and energy efficient construction.  This will cost £1m to build but £100K per year to maintain and run.

If the community centre is expected to last 10 years then option two will actually be the cheaper option, despite having a greater upfront cost.  Option one will have a whole life cost of £2.5m as opposed to option two's whole life cost of £2m.  However, these figures do not take into account discounting (adjusting the value of costs and benefits which occur in the future so that they can be assessed in terms of present day prices). The whole life cost needs to be expressed in total cash and net present value (NPV) terms. 

The whole life analysis quantifies the cost in full capital and revenue terms for the life of the programme, project or asset.  For example, the whole-life costs of a facility are the costs of acquiring it (including consultancy, design & construction costs and equipment), the costs of operating it and the costs of maintaining it over its whole life through to its disposal.

You should be prepared to consider higher costs at the design and construction stages in the interests of achieving significant savings over the life of the facility.  It is essential to consider long-term maintenance very early in the design stage; most of the cost of running, maintaining and repairing a facility is fixed through decisions taken during the early part of the design process.

In addition, you should examine the quality or outcome components of service delivery.  For example, additional capital expenditure on a scheme may not save money over the life of a building but could reduce the impact on the environment or increase service performance.  A whole-life decision may be to increase future expenditure over the life of a building to promote quality outcomes.  Every proposed scheme will introduce a number of quality vs. cost questions that should be evaluated and considered over the longer term.

The accuracy, detail and level of technical expertise required to produce this information will vary depending on the capital value of the programme or project. Officer and technical advisors both internal and external will have to make a number of assumptions. You need to submit these so they can be properly assessed.

Staff and Specialist Support

You will also need to consider the staff and specialist support resources required to deliver the programme or project, for example a full time project manager or administrative support.  Detail any technical expertise that will be needed from Council officers or external advisers. The cost of this will have to be calculated and included in the Financial Analysis.

As the appointment of external technical advisors represents a real cash flow to the Council, it will be necessary to gain approval from the Head of Programmes and Major Projects before any order is placed.  This will help control costs in this area and minimise any unnecessary expenditure. The method of funding these costs will also have to be identified. 

Managing the money

Once your project it underway, it goes without saying that you will need to monitor the project’s finances. It doesn’t matter whether you’re managing a small project to develop a strategy or a complex regeneration scheme; you need to keep track of:

  • Expenditure so far and how it compares to the budget profile in the PID
  • Forecast spend
  • Project cash-flow and income
  • Actions to address under or over spend
  • The project's resources – including people

You might need a person on the project whose job it is to do this, or you might be able to do it yourself. Either way, you need to develop a way of tracking your budget - an Excel spreadsheet is probably the easiest, and again, your Directorate Finance Lead (or for larger projects, the Finance Specialist assigned to the project) will be able to help.

Download an example project development budget template