1. Better Business Cases
Keith Lord

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3. Introduction The United Kingdom as an example,
Has over 900 public sector organizations,
Typically each planning and procuring around 10 key investments each year.
This equates to a total of over 27,000 business cases,
Typical investment around £50k to produce (including internal and external resources)
UK public sector spends approx. £1.35 billion spent on business cases each year

4. Introduction Continued
Vast sums of money are invested around the world on new or replacement assets.
How can we be sure we make the correct choice?
How can we ensure value for money?
How can we ensure we have selected the correct course of action?

5. One Answer… SCRUTINY via a business case….
This will help to ensure that what is proposed is:
The right sort of investment
Relevant financial and non-financial aspects of a proposed project
Affordable, desirable and viable
Offers value for money for shareholders and/or customers.
Business case preparation can often be underestimated and not given sufficient resource or funding. Organisations find themselves reinventing the wheel despite the range of guidance widely available.

6. Better Business Cases Guidance
Aims to:
Considerably reduce the associated in-house and external consultancy costs of producing business cases to the required standards
Through use of guidance and templates savings envisaged to be 15% - 20%
Translating into £200 - £300 million per year
A good business case provides the evidence to support decision-making and assurance to all stakeholders of responsible action
Demonstrate business cases are equally relevant on large / medium or small projects or developments

7. Are our business cases really that bad?
Jubilee line extension costs underestimated by £1.4bn; project duration understated by 2 years
Channel tunnel costs underestimated by £5.2bn
Scottish parliament 10 times over budget and late.
New aircraft carriers – 3 times over budget

8. Common reasons for projects failing
Lack of clear link to the organisation’s key strategic priorities
Lack of clear senior management ownership and leadership
Lack of effective engagement with stakeholders
Lack of skills and proven approach to project and risk management
Project not broken down into manageable steps
Evaluation of proposals linked to short term affordability rather than longer term value for money
Lack of understanding of and contact with suppliers
Lack of effective integration between the client, supplier and supply chain

9. The case for a business case
The percentage of projects that fail is legendary. Like all good legends, the details vary, but, depending which research you consult, the failure rate can be as little as 20% and as high as 80%.
Some questions that need to be answered in assessing whether a project is fundamentally a success or failure:
Has the project satisfied the business requirements of the primary stakeholders?
Were the deliverables produced on time and within budget (or as amended by agreed change control)?
Do the business owners perceive the project to be successful?
Has the project delivered the business value promised in the original case for doing it?

10. Start as you mean to go on…
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
Their findings while constructing business cases for investment suggested:
Producing business cases was the norm, however:
often of poor quality
Problems understanding the tools / processes to build them
65% of all responders stated dissatisfaction with inability to identify all benefits
69% stated inadequacies in the ‘true’ value of benefits included in the business case
benefits where often unachievable in the first place
benefits often exaggerated
lack of understanding of the business change needed to achieve the benefits
Achieve as

11. Peppard, Ward and Daniel’s research survey
“Our survey confirmed that more successful organizations include a wider range of benefits in their business cases than the less successful, especially benefits associated with innovation and improved co-operation, both internally and with trading partners. Although such benefits are more difficult, but not impossible, to quantify, they provide a more complete view of the business value that many investments produce”.

12. Peppard, Ward and Daniel’s research survey
Key points from research:
Less successful business cases generally focused on financial or efficiency savings
Senior management often only interested in financial benefits
Many stakeholders interested in ‘soft’ or ‘subjective’ benefits
Softer benefits often returned greater commitment from those delivering the projects

13. Better Business Cases – the beginning
The British Government has implemented a Better Business Cases framework for creating successful business cases which it has been using for around 25 years.
The accreditation scheme has been developed by the WAG BBC Programme with APMG International.
The scheme and exam are based on the HM Treasury’s “Green Book Guidance on Public Sector Business Cases Using the Five Case Model”.

14. BBC Delivers….. Better Value for Money
More robust proposals for change
Improved deliverability
Improved management & control
Transparency & accountability
Through the provision of a “5 case” model…..

15. The 5 case model
“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 in a programme”.
Rodney Barber, The Treasury’s lead of the programme for New Zealand and a member of the Standards Board based in the UK
Management
Financial
Commercial
Economic
Strategic
What’s the current situation?
Is there a compelling case for change?
Is there a fit with wider policy?
Does the preferred investment option optimize value for money?
Social impact? - NPV
Is the proposed deal commercially viable?
Can a realistic and credible deal be struck with our chosen partners?
What is the cost to us?
Is the spending proposal affordable?
Financial benefits - NPV
Are delivery plans robust and realistic?
How can the proposal be delivered successfully?

16. The 5 case model
covers the five key elements of best practice business cases
the framework is a common language that everyone can use when working on a business case
provides the framework and tools to enable effective decision-making when scoping and planning spending proposals
can be used at strategic, programme and individual project levels
bringing transparency to the trade-offs and giving the key stakeholders visibility to your thinking
Note:
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

17. BBC Goes Further…..
It’s not just about investment approval. Its levels consider”
Strategy
Plans for the delivery of Organisational vision, portfolio, mission and long-term goals
Identifies the need for larger programmes of change
Projects

18. Different types of business case
The programme level business case or Strategic Outline Programme (SOP) should clearly set the parameters for the programme, the funding envelope, the key work streams or projects which constitute the programme and their critical path for delivery.

19. Different types of business case
Large proposals at the project level are developed in 3 iterations:
The Strategic Outline Case (SOC) – which makes the case for change and refines the long list options into a shortlist
The Outline Business Case (OBC) – developing the SOC to confirm the solution which offers optimal value for money
The Full Business Case (FBC) – expanding the OBC, taking the chosen option through procurement, putting in place delivery plans and providing the final detailed costing of the scheme

20. Different types of business case
Smaller, less complex proposals can be developed with one iteration using the Business Justification Case (BJC) E
The key to scoping, planning and justifying any investment should be proportionate to the risk and value of the proposed investment.

21. Business, Programme and Project Assurance
The Five Case Model and the processes of reviewing business cases at the key stages of development are the key ‘business assurance’ tools.
Each of these stages represent a break point at which the developing proposal can be stopped if it no longer fits strategically.
Programme and Project Management Assurance (PPM) – ‘doing things right’ – is the process of delivering programmes and projects and providing assurance to the Senior Responsible Owner (SRO) leading the delivery of the scheme.

22. Business, Programme and Project Assurance
Best practice PPM assurance tools include Managing Successful Programmes (MSP), PRINCE2 and Agile for project delivery and Gateway Reviews and health checks for programme and project.

23. Links with recognised methodologies
The Management of Portfolios (MoP)
MoP is a best practice framework ensures the effective and consistent use of a business change lifecycle, which provides a review of the continued viability and business value of initiatives via reporting, stage/phase gates and portfolio-level reviews. In this way it clearly highlights which programmes and projects are not adding value to strategic objectives and makes clear recommendations to the relevant decision-making body.

24. Links with recognised methodologies
The Managing Successful Programmes (MSP)
MSP is a best practice framework defines programme management as the action of carrying out the coordinated organization, direction and implementation of a dossier and transformation activities to achieve outcomes and realize benefits of strategic importance to the business. The MSP principles, governance themes and a transformational flow all emphasize the need for stakeholder engagement and benefit realization management.

25. Links with recognised methodologies
PRINCE2
PRINCE2 is a best practice framework states continued business justification as a key principle for project success. For every project, PRINCE2 requires that:
There is a justifiable reason to start the project
The justification should remain valid throughout the life of the project
The justification is documented and approved

26. How do you become accredited?

27. Thank you for listening
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