Mastering the Art of Business Cases
Mastering the Art of Business Cases
Steering Public Sector Change
Happy Tuesday, Transformation Friends. Another week, another opportunity to go Beyond the Status Quo.
Public sector transformation is a complex journey. It requires not just vision, but meticulous planning, strategic investment, and a deep understanding of the challenges.
This week we’re looking at the Business Case: a critical tool in this journey, guiding decision-making and investment in our transformation initiatives. A well-crafted business case provides a clear rationale for the investment, outlines the expected benefits, and presents a roadmap for achieving them.
Today, we’ll look at the importance of business cases, the pitfalls of poorly formulated ones, and the components of a strong business case. We'll also explore the Better Business Cases (BBC) initiative as a model for success.
So, grab your coffee and let’s get started.
The Importance of Business Cases
A well-constructed business case provides a clear rationale for the investment, outlines the expected benefits, and presents a roadmap for achieving them. It provides an objective analysis in a consistent format to decision-makers, allowing for better comparability and transparency. This enables organizations to make sound investment decisions that maximize public value.
But a good business case does more than guide decision-making. It also plays a crucial role in stakeholder engagement. By clearly outlining the value of an investment, a business case can rally support from stakeholders, fostering a sense of ownership and commitment that can drive an initiative to success.
Components of a Good Business Case
What makes a good business case? How do its components contribute to the overall goal?
As someone who works with the largest and most complex transformation initiatives across the Government of Canada, I find it helpful to lean on a framework for Programme Management for some insight.
For those who might not be familiar, a programme (note the "mme" ending in the spelling) is similar to a project in that it’s a temporary structure created to achieve change. However, a programme seeks to achieve major change that cannot be achieved through a single project. It’s an umbrella over multiple interrelated projects and other work to incrementally and progressively achieve outcomes of benefit for one or more organizations. Programmes are concerned with delivering outcomes whereas the projects within a programme are focussed on outputs.
A common framework for programme management, the 5th edition of Managing Successful Programmes, outlines essential aspects of a programme’s business case:
Scope and Objectives: The business case should define the programme’s scope and objectives. These elements establish the direction and boundaries for the projects under the programme. A clear scope and objectives provide decision-makers with a clear understanding of what the programme aims to achieve, enabling them to assess its alignment with strategic goals.
Value of Benefits: The business case should present the value of benefits that the programme will deliver. By quantifying these benefits and ensuring they are attributable to the programme's efforts, the business case provides decision-makers with a clear understanding of the return on investment.
Costs: The business case should outline the costs associated with the delivery of capabilities. By providing a realistic estimate of costs, the business case enables decision-makers to assess the financial feasibility of the programme.
Timing of Investments and Business Changes: The business case should consider the phasing of work. By balancing the size of the investment with the organization's capacity and risk tolerance, the business case helps decision-makers to plan investments effectively.
Risk Analysis: The business case should account for risks to achieve benefits. By identifying these risks and outlining strategies to mitigate them, the business case enables decision-makers to make informed decisions about the programme's risk profile.
Target Operating Model: The business case should define the desired state of operations that the programme aims to achieve. This model should explore broad aspects of the change, including Processes, Culture, Organization, Technology, Infrastructure, Information and Data, and Knowledge and Learning. The business case helps decision-makers assess the programme's feasibility and strategic alignment by providing a clear vision of the target state.
Resources: The business case should identify the resources required to deliver the programme. By highlighting potential resource constraints and how they will be managed, the business case enables decision-makers to plan for resource allocation effectively.
In addition to these core elements, the business case should include an Investment Appraisal that analyzes the relationship between benefits, costs, and risks, providing decision-makers with a comprehensive understanding of the programme's return on investment.
Given the incremental and progressive nature of these large transformational programmes, the business case requires Regular Review and Adjustment. These reviews ensure that the business case remains aligned with the overall strategic direction, that continued investment is justified, and that it provides a solid foundation for the transformation journey.
The Better Business Cases (BBC) Initiative: A Model for Success
Now that we have a high-level idea of what the business case needs to articulate, let’s examine a model that encapsulates these elements precisely and clearly.
The Better Business Cases (BBC) initiative, developed by the UK Treasury and adopted by the G20 as an international standard for infrastructure projects, is a comprehensive framework for formulating business cases. This model ensures every facet of a proposal is thoroughly examined, providing decision-makers with a clear, objective analysis that stimulates smart investment decisions. This is achieved through its Five Case Model, a methodical approach that answers five critical questions.
The Strategic Case: The strategic case articulates a compelling case for change and demonstrates how the proposed initiative aligns with strategic objectives. It requires a clear understanding of the existing arrangements, the potential scope of the proposal, and the associated benefits, risks, constraints, and dependencies.
The Economic Case: The economic case identifies the option that delivers the best public value, considering more comprehensive social and environmental effects. This case involves a rigorous appraisal of a wide range of options, followed by a detailed examination of a short list.
The Commercial Case: The commercial case scrutinizes the commercial viability of the preferred option. It demonstrates that it will result in a feasible procurement and a well-structured deal between the public sector and its service providers. This case requires understanding the market dynamics, potential suppliers, and the procurement routes that will deliver the best value.
The Financial Case: The financial case focuses on the financial aspects of the proposal. It demonstrates its affordability and funding. This case requires a comprehensive understanding of the proposed initiative's capital, revenue, and whole-of-life costs and how the deal will impact the organization's financial position.
The Management Case: The management case ensures that robust arrangements are in place for the initiative's successful delivery, monitoring, and evaluation. It requires evidence that the scheme will be managed following good practice, subjected to independent assurance, and that necessary arrangements are in place for change and contract management, benefits realization, and risk management.
Even if your role doesn't directly involve writing or reviewing business cases, I highly recommend exploring these resources. The thought process required to articulate each of the five cases is a valuable reminder. It helps us consider, regardless of our role or level, how we can ensure we're creating value for our citizens.
Wrap-up
As we wrap up, let's take a moment to appreciate the power of a well-crafted business case. The Better Business Cases initiative and its Five Case Model offer a comprehensive and structured approach to business case development. They ensure that all relevant aspects are considered and that the case presented is robust, compelling, and aligned with strategic goals. They'll guide our decisions and investments, ensuring that every step we take is a step towards a more efficient and citizen-centric public sector.
Remember, transformation isn't just about change. It's about making things better, for us and for the citizens we serve. So, let's keep learning, keep improving, and keep pushing.
Until next time, I'll see you Beyond the Status Quo.
Two the failures I have seen in business cases relate to first, they are built from the singular perspective of the owner of the business problem rather than a whole organizational view hence why the 5CBC is so important. It draws in strategic management financial economic and delivery aspects from the outset and sets into place organizational (and cross governmental) aspects. Second is rigorous challenge.at the gates (see the gating questions in the UK gating model). Third but not finally is the assurance mechanism s that need to be put in place to shepherd these critical artefacts through (from early concept development to the realization of benefits) post delivery. The UK Green Book is excellent guidance