Business Case Guide

Business Case Guide

? Her Majesty the Queen in Right of Canada, represented by the President of the Treasury Board, 2009

Catalogue No. BT53-15/1-2009E-PDF ISBN: 978-1-100-12900-6

This document is available on the Treasury Board of Canada Secretariat website at .

This document is also available in alternative formats on request.

Acknowledgements

Numerous departments and agencies have been instrumental in the development of this guide. The Treasury Board of Canada Secretariat Business Case Guide (2008) is a direct result of the dedication, contribution, and commitment of the following individuals who support improved investment success rates within the Government of Canada.

Department or Agency Canada Border Services Agency Canada Border Services Agency Canada Revenue Agency Canada Revenue Agency Canada Revenue Agency Canada Revenue Agency Canadian Grain Commission Canadian International Development Agency Foreign Affairs and International Trade Canada Industry Canada Natural Resources Canada Natural Resources Canada Public Works and Government Services Canada Transport Canada Transport Canada Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat Treasury Board of Canada Secretariat

Name Joseph Panek Kelly Dinner Annette Butikofer Martin Sanders Richard Case Wendy Hillier Lorelei Schlick Philipe Girard Yolande Ga?tan Brenda Bowman Gaea Guruprasad Marc Primeau Scott Nichols Donald Cumming Stephen Conrad Ashifa Jiwa Derek Armstrong Don Richardson Donna D?riger Fraser Smith Jan Mattingly John Giraldez Linda Fournier Stuart Pearce

Table of Contents

About this Guide ..................................................................................1

Background ....................................................................................1 Feedback and Questions ...................................................................1 Purpose of this Guide .......................................................................2 Context for this Work .......................................................................2 Supporting Policies, Tools, and Frameworks.........................................3 Outcome Management......................................................................4 Audience for this Guide.....................................................................4 Document History ............................................................................5

Before You Begin .................................................................................6

How to Use this Guide ......................................................................6 Notation Conventions Used in this Guide .............................................6 Business Case Essentials...................................................................6

What Is a Business Case?..................................................................... 7 Involve the Senior Responsible Officer and Engage the Audience ............... 7 Business Case Model ........................................................................... 8 Overview: Phases and Steps of a Business Case................................. 11 Phase 1: Strategic Context ..................................................................11 Phase 2: Analysis and Recommendation ................................................11 Phase 3: Management and Capacity .....................................................13

Creating a Business Case .................................................................... 15

Phase 1: Strategic Context.............................................................. 15 Phase 1 Step 1 .............................................................................. 17 1 Business Needs and Desired Outcomes .......................................... 17

1.1 Strategic Environment...................................................................17

1.1.1 Organizational Overview ................................................................. 17

1.1.2 Business Need ............................................................................... 17

1.1.3 Drivers for Change ......................................................................... 18

1.1.4 Business Outcomes ........................................................................ 18

1.2 Strategic Fit .................................................................................19 1.3 Detailed Description of the Business Need ........................................20

1.3.1 Problem/Opportunity Statement ....................................................... 20

1.3.2 Prioritized Requirements (High Level)................................................ 20

1.3.3 Assumptions.................................................................................. 22

1.3.4 Constraints ................................................................................... 23

1.3.5 Dependencies ................................................................................ 24

1.4 Scope .........................................................................................25

1.4.1 Boundaries.................................................................................... 25

1.4.2 Stakeholder Analysis ...................................................................... 26

Phase 2: Analysis and Recommendation............................................ 28 Phase 2 Step 2 .............................................................................. 30 2 Preliminary Options Analysis......................................................... 30

2.1 Evaluation Criteria ........................................................................30 2.2 List of Possible Options..................................................................32

2.2.1 The Status Quo.............................................................................. 33

2.2.2 Describing the Option ..................................................................... 33

2.3 Screening of Options .....................................................................34 2.4 Rationale for Discounted and Viable Options .....................................35 Phase 2 Step 3 .............................................................................. 38 3 Viable Options ............................................................................ 38 3.1 Alignment....................................................................................38

3.1.1 Strategic Alignment ........................................................................ 38

3.1.2 Alignment with Desired Business Outcomes ....................................... 39

3.2 Costs ..........................................................................................40 3.3 Cost-Benefit Analysis ....................................................................41 3.4 Implementation and Capacity Considerations of Viable Options ...........45

3.4.1 Contracting and Procurement........................................................... 46

3.4.2 Schedule and Approach................................................................... 46

3.4.3 Impact ......................................................................................... 47

3.4.4 Capacity ....................................................................................... 49

3.5 Risk............................................................................................52

3.5.1 Option Risk Summary ..................................................................... 54

3.5.2 Risk Register ................................................................................. 56

3.6 Benchmark ..................................................................................57 3.7 Policy and Standard Considerations .................................................58 3.8 Advantages and Disadvantages ......................................................60 Phase 2 Step 4 .............................................................................. 67 4 Justification and Recommendation ................................................. 67 4.1 Comparison Summary ...................................................................67 4.2 The Preferred Option.....................................................................73

4.2.1 Recommendation ........................................................................... 74

4.2.2 Deciding Factors ............................................................................ 74

4.2.3 Costs ........................................................................................... 75

4.2.4 Risks ........................................................................................... 75

4.2.5 Implementation Plan ...................................................................... 76

Phase 3: Management and Capacity ................................................. 78 Phase 3 Step 5 .............................................................................. 80 5 Managing the Investment............................................................. 80

5.1 Governance and Oversight .............................................................80 5.2 Project Management Strategy.........................................................81

5.2.1 Project Review Strategy .................................................................. 81

5.3 Outcome Management Strategy......................................................82 5.4 Risk Management Strategy ............................................................82 5.5 Change Management Strategy........................................................83 5.6 Performance Measurement Strategy ................................................83

Glossary of Acronyms and Terms.......................................................... 85

Bibliography ...................................................................................... 87

About this Guide

Background

The catalyst for bringing more rigour to the development of business cases stems from a combination of several factors, including the Treasury Board Policy Suite Renewal and results outlined in Chapter 3 of the November 2006 Auditor General Report. Many consolidated efforts were undertaken to improve how investment decisions are made and supported and business results are measured in the Government of Canada (GC). The development of this guide benefited from directions set out by the Management, Resources, and Results Structure Policy (MRRS), the Policy on the Management of Projects, the Policy on Investment Planning--Assets and Acquired Services, the Standard for Project Complexity and Risk, and the Standard for Organizational Project Management Capacity. Other materials that contributed to this guide include the Enhanced Management Framework (EMF), Management Accountability Framework (MAF), Business Transformation Enablement Program (BTEP), and Expenditure Management Sector (EMS) Business Case Template.

The GC, however, is not the only organization addressing how to optimize benefits from investments. Reference to the work of the following organizations can also be found in this document:

Office of Government Commerce, UK Office of Management and Budget, US Australian Government Information Management Office New Zealand Ministry of Health MIT Sloan Management Review, McKinsey & Co., Inc. Project Management Institute

Feedback and Questions

To help maintain the currency of this document, feedback and questions are welcomed. Please contact:

IT Project Review and Oversight Chief Information Officer Branch Treasury Board of Canada Secretariat Ottawa ON K1A 0R5 Canada

Email: itprod-despti@tbs-sct.gc.ca

Business Case Guide

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Purpose of this Guide

The purpose of this document is to support the development of a strong business case that links investments with program results and, ultimately, with the strategic outcomes of the organization. The primary audience for this reference tool are GC program managers seeking approval for an activity, initiative, or project. The guide is meant to be used throughout the entire life cycle of the investment, including the approval stage, to ensure meaningful dialogue between managers and the approval or funding authority from the earliest possible time. Furthermore, this document is intended to help clarify the purpose and structure of business cases across the GC.

Within a GC context, a project is considered a set of time-bound activities that changes the capability of a program to deliver outcomes and benefits. Throughout this document, the use of the word "project" is understood to mean all activities required to deliver the new capability, including change management, organizational change, legislative change, process change, training, communications activities, and so forth. This guide could therefore be used as a reference tool for a project, initiative, investment, recommendation, or other business event that would not commonly be considered a "project" in the federal public service.

Regardless of the complexity and risk of the proposed investment, and whether or not Treasury Board project approval is being sought, this document should be used to guide the development of the investment's business case.

To develop the content for a business case, the organization will also have to consider, among others, aspects of project management, outcome management, risk management, capacity management, and investment management. Such considerations are necessary inputs for a successful business case.

Context for this Work

The key for developing a strong business case is a fundamental understanding of how each of its elements and concepts fit together. In addition, knowledge of the relevant polices, tools, and frameworks referenced throughout the guide can have a dramatic impact on the strategic positioning of the business case and the subsequent delivery of the project.

Embedded links to those supporting policies, tools, and frameworks and to additional sources of information are provided throughout the guide.

Much reference material on best practices was consulted during the development of the guide. Please refer to the Bibliography for the full listing.

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Treasury Board of Canada Secretariat

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