Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.

Major investment projects


1. This section provides general guidance on procuring, managing and monitoring the delivery of major investment projects. The guidance should be considered mandatory by the core Scottish Government (SG), SG Executive Agencies, non-ministerial departments and SG sponsored bodies. Other organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable should follow procedures consistent with the guidance.

Key points

2. An appropriate Senior Responsible Owner must be appointed at the earliest possible stage of a project and all project roles, responsibilities and delegated authorities must be clearly identified, agreed and documented in formal letters of appointment.

3. Accountable Officers must be kept informed of progress and Ministers, or governing boards as appropriate, must be informed of any developments that could undermine the business case for the project.

4. The SG's Risk Potential Assessment (RPA) Form(s) must be completed to determine the type of assurance support the project should have. Those projects assessed as potentially high risk should have SG Gateway Review support.

5. Arrangements must be put in place to identify and evaluate benefits and to capture lessons learned from the project's delivery.


6. A major investment usually involves the creation, acquisition, development or maintenance of an asset with a lifespan beyond the current financial year. For the purposes of this guidance, a major investment can be defined as one that:

  • has a total anticipated whole-life cost of £5M+ inclusive of fees and VAT or is above your delegated authority limits or
  • could create pressures leading to a potential overspending on portfolio budgets or
  • would entail contractual commitments to significant levels of spending in future years for which plans have not been set or
  • could set a potentially expensive precedent or
  • will be challenging to deliver within existing resources and capability and/or represents a material level of expenditure and/or will have a material ongoing financial impact or
  • is novel, and/ or contentious and / or complex, or
  • could impact on the delivery of a Programme for Government commitment or
  • requires primary legislation 

The key principles of this guidance should however be adopted in relation to all investments.

7. A good practice approach to the management of a major investment project will guide the project through a visible set of activities - from controlled start-up to review, through well managed milestones and resources - identifying stakeholders and interdependencies, and keeping all parties clear about their goals and individual responsibilities.

Related guidance

8. Related guidance designed for specific sectors must be adhered to as appropriate:

  • the delivery of all construction projects must adhere to the guidance in the Client Guide to Construction Projects
  • the delivery of all projects in the Scottish Health sector must adhere to the guidance in the NHSScotland Scottish Capital Investment Manual
  • the delivery of all SG ICT projects must adhere to guidance issued by the Information Services Information Systems Division
  • Scottish Government’s PPM-CoE provides a range of guidance, support and development in the field of project delivery
  • the Government Functional Standard for Project Delivery was updated in July 2021 and provides direction and guidance for all projects irrespective of approach or size


9. The basic governance structure for a major investment project includes the following roles. Information on each role is contained in the Government Functional Standard for Project Delivery, this represents good practice and applies to both construction and non-construction projects.

Investment Decision Maker

(About SG Director General level)

Project / Senior Responsible Owner

(About SG Director / Deputy Director level)

Project Sponsor (Optional)

(About SG Deputy Director level)

Project Manager

10. The Investment Decision Maker (IDM) must:

  • appoint an appropriate Senior Responsible Owner for the project at the earliest opportunity
  • ensure that the Accountable Officer (if different from the IDM) and Ministers, or governing boards where appropriate, are kept informed of progress and any developments that could undermine the project's business case

11. The Senior Responsible Owner (SRO) must:

12. Project roles, responsibilities and delegated authorities must be clearly identified, agreed and documented in formal letters of appointment between the IDM and the SRO (see supporting documents and the SRO appointment letter), and between the SRO and the various post holders within the project's management structure. The roles must be set out in the project's business case and be subject to scrutiny as part of the appropriate project approvals process.

Assuring delivery

13. With the exception of Local Government and Scottish Water, all SG funded capital and revenue financed investment projects fall within the remit of the SG's Infrastructure Investment Board (IIB). One of IIB's key roles is to provide strategic scrutiny of high-value major infrastructure projects at an early stage of development. IIB provides assurance on issues such as strategic fit, business need, commercial aspects and funding considerations in relation to projects.

14. IIB generally focuses on projects that have a capital value of over £100m, and those which are at the strategic business case stage. It has sight of overview information relating to all capital projects above £50m and calls in such projects on a case by case basis when there are issues that merit particular attention. IIB may choose to call in lower value projects where these are novel or require separate scrutiny.

15. SROs for major investment projects must ensure that:

  • the SG's Risk Potential Assessment (RPA) Form(s) are completed to determine the type of assurance support the project should have;
  • those projects assessed as potentially high risk are considered for SG Gateway Review support;
  • those projects assessed as potentially low or medium risk are supported with appropriate peer or in-project reviews (which may vary from sector to sector), undertaken at regular intervals as part of on-going monitoring arrangements; and
  • as soon as a major investment project reaches outline business case stage it is recorded on the SG's Infrastructure Projects Database (IPD).

16. Certain major investment projects may require Key Stage Reviews (KSRs) during key procurement stages. This includes those projects over £20m in value, or of critical importance/unusual scale or nature to the procuring organisation, or revenue funded, or procured through competitive dialogue. KSRs are undertaken by the Scottish Futures Trust.

Funding and procuring

17. The SRO must ensure compliance with the section of the SPFM on Procurement, including all relevant SG procurement guidance. All proposed major investment projects should be considered for the Non-Profit Distributing public private partnership model (NPD).

18. The SRO must ensure that the project's business case fully reflects the options for delivery and that each option is evaluated to determine the implications on expenditure and use of resources. The business case and delivery options must be scrutinised as part of the appropriate project approvals process.

19. Where the project is to be jointly funded the appraisal of delivery options may have to be carried out in conjunction with other funders. In such circumstances an overall view of the project, assessing the total costs, benefits and risks must be taken. Only when an overall assessment is favourable, should individual funders assess their proposed contribution against their own particular policy objectives.

20. The SRO must ensure that for jointly funded projects the financial and project management arrangements are clearly documented and agreed with the appropriate partners. This must be completed at an early stage and before significant costs have been incurred. Legal advice must be sought on the terms of such agreements, which include:

  • how the contribution of each funder is to be calculated
  • the monitoring information to be given to funders
  • what approvals are required from individual funders at particular stages
  • change control procedures
  • the arrangements for the apportionment of costs in the event of the project being curtailed or abandoned or increasing in cost
  • the arrangements in the event of any of the funders (including, where applicable, the recipient body) failing to meet its obligations
  • the ownership of the assets and arrangements for the repayment of funds in the event of the asset not being used for the purpose intended; or the surrender of receipts in the event of subsequent disposal
  • a procedure for the resolution of disputes

Assessing the benefits 

21. The SRO must ensure that a rigorous approach is taken to benefits management; that benefits are identified; plans for the realisation of benefits are put in place and delivery of benefits is measured to demonstrate that the intended return on investment is being achieved.

22. The SRO must ensure that appropriate arrangements are put in place to capture lessons learned from the project's delivery. For example:

23. Information on post-project evaluation and post-occupancy evaluation requirements for health sector projects and programmes are set out in the NHSScotland Scottish Capital Investment Manual.

Sponsored bodies

24. SG sponsored bodies undertaking major investment projects must adhere to the guidance in this section of the SPFM. In addition they should ensure that their sponsor units are provided with copies of all relevant progress reports to Investment Decision Makers and Boards. SG sponsor units must:

  • adopt a pro-active approach to ensuring the effective management of projects;
  • monitor the progress of relevant projects by careful scrutiny of reports prepared by the SRO / Project Manager
  • intervene immediately if there is a perceived deviation from plans agreed under delegated authority arrangements or if there are any developments that could undermine the viability of the project
  • in consultation with their SG Finance Business Partner (or equivalent), keep Portfolio Accountable Officers and Ministers informed as appropriate

25. Where, exceptionally, SG sponsored bodies are excluded - either in part or in full - from the requirements of this section of the SPFM this should be specified in the relevant framework document.

Further guidance

26. Detailed guidance on the delivery of major investment projects and related issues can be obtained from Scottish Procurement.


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Page reviewed: July 2021

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