These uncertainties can impact the: demand for a service (or for the value or benefits derived by providing the service), by influencing and altering the community need and therefore the case for investment; and/or supply or cost of a solution, by influencing the market’s ability and capacity to deliver the required project scope, achieve time, budget and value-for-money constraints, and realise the desired benefits and outcomes. For example, changing demographics can influence the demand for services that target specific community sectors. If the age profile of a region significantly changes, it could impact the community need for investments in maternal health, early childhood and education services as well as for health and aged care facilities. Technological innovations and disruptions can introduce new market participants that radically change consumer behaviour or influence demand trends. Similarly, technological innovations may be able to provide alternative delivery mechanisms that are more efficient and/or effective. Uncertainties can lead to unfavourable conditions, present threats to achieving an investment strategy’s benefits. They can also create favourable conditions, which present opportunities for achieving cost or time savings, greater value-for-money outcomes or enhanced benefits realisation that could not have been foreseen at the time of the funding decision. These unanticipated changes to demand and supply forces can profoundly impact an investment strategy’s feasibility: investment options that are preferred and would be successful under one set of conditions can become unviable (inappropriate, undeliverable or unaffordable) if circumstances change. This can affect an investor’s ability to achieve the desired investment outcomes and benefits (Ofgem, 2012). For example: Increases in desired or required levels of service or service demand can result in investments in assets that do not meet capacity. Decreases in required levels of service or service demand can lead to asset obsolescence, accompanied by perceptions of over-investment or inappropriate investment. Changes to preferred service delivery models and methods or disruptive or unexpected new technologies can result in unsuitable assets, do not meet user needs and expectations.
These uncertainties can impact the: demand for a service (or for the value or benefits derived by providing the service), by influencing and altering the community need and therefore the case for investment; and/or supply or cost of a solution, by influencing the market’s ability and capacity to deliver the required project scope, achieve time, budget and value-for-money constraints, and realise the desired benefits and outcomes. For example, changing demographics can influence the demand for services that target specific community sectors. If the age profile of a region significantly changes, it could impact the community need for investments in maternal health, early childhood and education services as well as for health and aged care facilities. Technological innovations and disruptions can introduce new market participants that radically change consumer behaviour or influence demand trends. Similarly, technological innovations may be able to provide alternative delivery mechanisms that are more efficient and/or effective. Uncertainties can lead to unfavourable conditions, present threats to achieving an investment strategy’s benefits. They can also create favourable conditions, which present opportunities for achieving cost or time savings, greater value-for-money outcomes or enhanced benefits realisation that could not have been foreseen at the time of the funding decision. These unanticipated changes to demand and supply forces can profoundly impact an investment strategy’s feasibility: investment options that are preferred and would be successful under one set of conditions can become unviable (inappropriate, undeliverable or unaffordable) if circumstances change. This can affect an investor’s ability to achieve the desired investment outcomes and benefits (Ofgem, 2012). For example: Increases in desired or required levels of service or service demand can result in investments in assets that do not meet capacity. Decreases in required levels of service or service demand can lead to asset obsolescence, accompanied by perceptions of over-investment or inappropriate investment. Changes to preferred service delivery models and methods or disruptive or unexpected new technologies can result in unsuitable assets, do not meet user needs and expectations.
Victoria%27s%20Economic%20Bulletin%20-%20Volume%202.docx