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Defence Estate Quality Management System (DEQMS) Davis Langdon Certification Services

Government and Departmental Project Approvals

Cost Agreement - Overview

All First and Second Pass submissions (for projects over $20m) require Cost Agreement with the Department of Finance (Finance).

Cost Agreement can occur at any time but must be prior to the Exposure Draft of a Cabinet Submission or prior to the Defence Minister requesting the Finance Minister's agreement for a 'Two Minister' project.

The overarching principle of Cost Agreements is to show how a project represents value for money for the Commonwealth and that the associated project schedule accurately represents the cash flow that is required. An agreed costing ensures that the financial impact presented to Cabinet/Two Ministers, should the project be agreed; is reasonable, realistic and comprehensive.

Finance will only issue Cost Agreements for projects that have authority to come forward - i.e. the project is listed in a Government approved MCF Program or projects that have otherwise received the Prime Minister's authority to come forward.

First Pass

The First Pass submission is supported by an Initial Business Case (IBC), and seeks 'in principle' Australian Government approval of the project, and funding to develop a Detailed Business Case (DBC) for Second Pass consideration. The First Pass Cost Agreement will be for the development phase costs for First to Second Pass activities.

For remediation projects, First Pass approval normally seeks funding for further due diligence studies and risk management activities with the aim to increase the quality of information on the site's contamination and to investigate the different options for decontamination and different levels of decontamination.

Second Pass

The Second Pass submission is supported by a Detailed Business Case (DBC) and associated documents, and seeks approval and funding to deliver the preferred option. The DBC should also include discussions of the other, non-preferred options. The DBC builds on the work completed in the IBC and the Second Pass cost agreement will be for costs needed to deliver the preferred option.

Government and Departmental Project Approvals