Guide to developing the Project Business Case

GUIDE TO DEVELOPING THE PROJECT BUSINESS CASE

BETTER BUSINESS CASES:

for better outcomes

2018

? Crown copyright 2018

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ISBN 978-1-5286-0460-4 CCS0518648068-1 PU2145

GUIDE TO DEVELOPING THE PROJECT BUSINESS CASE

BETTER BUSINESS CASES:

for better outcomes

2018

Contents

Forewordv

Editors' Note

vii

Chapter 1. Introduction1

What is a project?

1

How does a project align with the strategic planning process?

1

What is the importance of the Project Business Case using the Five Case Model? 2

What are the advantages of the Project Business Case?

3

When should the Project Business Case be developed?

3

What is Project Assurance?

4

Chapter 2. An Overview of the Five Case Model

7

Introduction7

The Strategic Case

7

The Economic Case

8

The Commercial Case

9

The Financial Case

9

The Management Case

10

Chapter 3. The Business Case Development Process

11

Introduction11

The Business Case Development Framework

11

Determining the strategic context and undertaking the Strategic Assessment 12

Stage 1 ? Scoping the scheme and preparing the Strategic Outline Case (SOC) 13

Stage 2 ? Planning the scheme and preparing the Outline Business Case (OBC) 13

Stage 3 ? Procuring the solution and preparing the Full Business Case (FBC) 14

Implementation and monitoring

15

Evaluation and feedback

15

Other interested parties

15

Smaller Schemes and the Business Justification Case (BJC)

16

Responsibility for producing the business case

16

Business Case template

16

Chapter 4. Determining the Strategic Context and undertaking the Strategic

Assessment17

Introduction17

Step 1: Determining the Strategic Context

17

Chapter 5. Scoping the proposal and preparing the Strategic Outline Case (SOC) 19

Introduction19

Step 2: Making the case for change

19

Action 2: Agree strategic context

19

Organisation Overview

19

Alignment to existing policies and strategies

20

Action 3: Determine spending objectives, existing arrangements and business

needs20

Guide to developing the Project Business Case

i

Contents

Determining spending objectives

21

Determining existing arrangements

22

Identifying business needs

22

Action 4: Determine potential business scope and key service requirements 22

Action 5: Determine benefits, risks, constraints and dependencies

23

Identifying the main benefits

23

Identify the main risks

24

Identify the constraints

25

Identifying the dependencies

25

Workshop 1 ? Case for Change

26

Step 3: Exploring the preferred way forward

27

Action 6: Agree critical success factors for the project

27

Action 7: Determine the long-list options and undertake SWOT analysis

28

Identifying options

28

The Options Framework

29

Using the Options Framework to identify the long-list

30

Drafting the long-list

35

Action 8: Recommend a preferred way forward

35

Drafting the short-list

36

Workshop 2 ? Identifying and assessing the options

39

Referencing the Commercial, Financial and Management Cases

40

Chapter 6. Planning the scheme and preparing the Outline Business Case (OBC) 43

Introduction43

Step 4: Determining potential Value for Money (VfM)

43

Action 9 ? Revisit the SOC and determine the short-list

43

Action 10 ? Prepare the economic appraisals for shortlisted options

44

Action 11 ? Undertake benefits appraisal

51

Action 12 ? Undertake risk appraisal

52

Action 13 ? Select preferred option and undertake sensitivity analysis

57

Workshop 3 ? Assessing the Short-listed Options

60

Step 5: Preparing for the potential Deal

61

Action 14: Determine procurement strategy

61

Action 15: Determine service streams and required outputs

62

Action 16: Outline potential risk apportionment

63

Action 17: Outline potential payment mechanisms

64

Action 18: Ascertain contractual issues and accountancy treatment

66

Workshop 4 ? Developing the Deals

67

Step 6: Ascertaining affordability and funding requirement

68

Step 7: Planning for successful delivery

75

Action 20: Plan project management ? strategy, framework and plans

75

Action 21: Plan change management ? strategy, framework and outline plans 77

Action 22: Plan benefits realisation ? strategy, framework and outline plans 78

Action 23: Plan risk management ? strategy, framework and outline plans

79

Action 24: Plan project assurance and Post-Project Evaluation ? strategy,

framework and plans

81

Workshop 5 ? Successful Delivery Arrangements

82

Chapter 7. Procuring the proposal and preparing the Full Business Case (FBC) 85

Introduction85

Step 8: Procuring the VfM solution

85

Action 25: Revisit the case for change

85

Action 26: Revisit the OBC options

86

ii

Guide to developing the Project Business Case

Contents

Action 27: Detail the procurement process and the evaluation of Best And Final

Offers (BAFOs)

87

Step 9: Contracting for the Deal

88

Action 28: Set out the negotiated Deal and contractual arrangements

88

Action 29: set out the financial implications of the Deal

89

Step 10: Ensuring successful delivery

90

Action 30: Finalise project management arrangements and plans

90

Action 31: Finalise change management arrangements and plans

90

Action 32: Finalise benefits realisation arrangements and plans

91

Action 33: Finalise risk management arrangements and plans

91

Action 34: Finalise contract management arrangements and plans

92

Action 35: Finalise Post-Project Evaluation arrangements and plans

92

Chapter 8. Reviewing the Business Case: SOC, OBC and FBC

95

Introduction95

The Strategic Outline Case

95

The Full Business Case

99

Annex A: Case Study showing the relationship between strategy, programme and project103

Annex B: Overview of how to develop the Project Business Case

105

Annex C: Project scoping document

107

Annex D: Overview of steps and actions for the preparation of Project Business Cases111

Glossary113

The Author:

116

The Editor:

116

Bibliography117

Guide to developing the Project Business Case

iii

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