Better Business Cases Certification White Paper

This article is an extract from "Better Business Cases Certification White Paper," a publication by APMG International

Public sector bodies around the world invest vast sums of money each year on new or replacement assets such as buildings, equipment and facilities. With so much demand for investment it is essential that we make the right choices and demonstrate value for money.

The Case For a Business Case

Gartner studies suggest that 75% of projects are considered to be failures by those responsible for initiating them, meaning the solutions fundamentally did not achieve the agreed objectives or they missed deadlines and/or came in over budget. Half of projects exceeded budget by 200%!

Putting the Right Foot Forward

The “start” is not the beginning of the project itself, but its point of conception and can be traced back to how the business case for the proposed project is approached.

A research article entitled Building Better Business Cases for Investments focused on how business cases were developed for investments and how those practices related to successful outcomes across 100 European organizations.

The research revealed that while constructing a business case prior to investment is the norm, there are significant problems with the quality of the business cases and the process used to create them.

Despite it being common practice, 65% of respondents said their organizations were not satisfied with their ability to identify all the available benefits, with 69% reporting that they do not adequately quantify and place a ‘value’ on the benefits for inclusion in the business case. 

Although implementation issues frequently reduce or eliminate the achievement of the intended benefits, research suggests that the benefits described in the business case were often never achievable in the first place. These benefits are often either exaggerated to obtain funding, or there was insufficient understanding of the business changes needed to achieve the benefits.

The Five Case Model

The British Government has implemented a Better Business Cases framework for creating successful business cases. In New Zealand, the Treasury created a concise version.

Rodney Barber, The Treasury’s BBC programme lead for New Zealand and a member of the International BBC Steering Committee recently spoke at a project management seminar. He explained BBC as “both a thinking and a stakeholder engagement process”. “It is not a writing process,” he explains emphatically. “It takes you as far as the investment decision so that there is clear agreement between the sponsor and the decision maker on what the scope is and what the best value for money option is and who is going to pay for it. The approach won’t inform policy or strategy, in fact the first thing it will do is test strategy.”

“The heart of BBC is the Five Case Model,” Rodney continues. “There are only ever five questions that any governing body or decision-maker is going to want the answer to if they are going to invest.

Those questions are:

■ The strategic case: Is there a compelling case for change?

■ The economic case: Does the preferred investment option optimize value for money?

■ The commercial case: Is the proposed deal commercially viable?

■ The financial case: Is the spending proposal affordable?

■ The management case: How can the proposal be delivered successfully?

These questions are articulated in the Five Case Model which covers the five key elements of best-practice business cases. Further to the Five Case Model is the pathway of the Better Business Cases process, which can be used to select which type of business case best delivers the required decision. Large-scale and/or high-risk projects require a more in-depth business case than smaller projects.

As much as anything, the framework is a common language that everyone can use when working on a business case. According to Barber it is about “bringing transparency to the trade-offs and giving the key stakeholders visibility to your thinking. The delivery risk is not part of the approach and it will not manage the project past the investment decision – you need good project and programme management to deliver the project once you have got the money,” he explains.

The whole point of the Better Business Cases approach is to help you make the right decision in the first place so that, as long as you have good project management along the way, the likelihood of the project meeting expectations will be greatly increased.

The Five Case Model provides the framework and tools to enable effective decision-making when scoping and planning spending proposals in a robust and thorough manner and can be used at strategic, programme and individual project levels. Its use should always be proportionate to the level at which it is being applied as well as the cost and risk associated with the investment.