Business case study – Studies Examples & Template

What is a Good Business Case?

A Business case study is brief of actual business scenarios of existing situation of a business. This analysis may help to describe technical, financial, organizational with written and graphic presentation.

• A compelling argument for change.
• Selling & Communication Tool –Tells the what, why, when, and how…and why not
• Analysis Tool–Required to define and document the “best” solution given the “agreed upon” reality.
• Contextual Anchor–Provides basis for making and defending decisions & changing direction.
• Expectations Manager–Defense against the “inevitable” questions.

Why Business Cases?

• Responsibility to spend taxpayer money wisely
• Increased demand and opportunities
• Limited state resources –financial and human capital
• Gauge the appropriate solution based on the size of the issue and risks/rewards of the solution
• Consistent basis for prioritizing and funding projects

Elements of the Business case

Strategic fit: the strategic case

This aspect of the business case explains how the scope of the proposed project fits within the existing business and IT/estate strategies (where relevant) of the organization; and the compelling case for change, in terms of the existing and future operational needs of the organization.
Minimum content needed for this section: description of the business need and its contribution to the organization’s business strategy, objectives, why it is needed now, key benefits to be realized, key risks, critical success factors and how they will be measured; main stakeholders.

Questions you must address:

• How well does the proposed way of meeting the requirement support the organization’s objectives and current priorities?
• If it is a poor fit, can the scope be changed?
• Is the project needed at all?
• Have the stakeholders made a commitment to the project?

Business Case Examples Point:

Business need

Describe the business need that will be met by the project and why it is needed now – e.g. a new building to accommodate a call center – to meet the needs of citizens requiring telephone support for inquiries; needed now because current facilities cannot cope with demand.

Organizational overview

Describe the organization’s main aims, organizational structure and key responsibilities.

• Describe the main aspects of the business strategy: strategic vision, strategic plan and continuing aims.
• Outline the main themes of the IT or estates strategy, where relevant (such as delivering information electronically to the public), key programmers and projects.

Contribution to key objectives

Describe how this project will contribute to key objectives – e.g. ‘supports PSA target for X by providing Y’; ‘supports modernization agenda by providing expert training for key staff in front line delivery’.

Stakeholders

Outline the main stakeholder groups and their contribution to the project; note any potential conflicts between different stakeholder groups and their demands.

Existing arrangements

Outline the current service delivery arrangements, major contracts with service providers, the in-house function, where applicable. Include details of technical standards where relevant and/or technical constraints that need to be addressed (such as refurbishment of a listed building; requirement to integrate with existing infrastructure).
Scope: minimum, desirable, and optional

Summaries the potential scope of the project:

• Does minimum (the minimum scope to meet the immediate business need) intermediate option/s
• Full scope of proposed change (the widest potential change that would meet the need, perhaps taking a longer term view).
• Suggested number of options: up to seven at a high

Constraints

Summaries the main constraints, such as the willingness of senior management to absorb fundamental business change, the affordability of proposals, existing contractual commitments

Dependencies

Outline the internal and external factors upon which the successful delivery of this project are dependent, such as other projects and programmers already underway.

Strategic benefits

Outline high-level strategic and operational benefits such as better use of workspace, more reliable service to citizens. Show how these benefits are linked to key objectives – e.g. better use of workspace is one of the contributory factors that support more efficient workforce, which contributes to key objective of better services to citizens.

Strategic risks

Outline the main business risks such as continuing need for the project and changes in business direction; service risks such as the lack of internal skills to implement the required projects; external environmental risks such as changes in the supplier marketplace. These should be captured in the project risk register.

Critical success factors

Define the critical success factors for the project – what will constitute success? e.g., citizens will want to use the new service in preference to the previous way of delivering it. Determine how success will be measured e.g., percentage take up of a new service over x years, with milestones for each annual improvement in take up.

Options appraisal: the economic case

This aspect of the business case, in accordance with HM Treasury’s Green Book, documents the wide range of options that have been considered within the broad scope identified in response to the organization’s existing and future business needs. It aims to arrive at the optimum balance of cost, benefit and risk.

Minimum content needed for this section: high level cost/benefit analysis of (ideally) at least three options for meeting the business need (where applicable); include analysis of ‘soft’ benefits that cannot be quantified in financial terms; identify preferred option and any trade-offs. Note that options appraisal must be carried out in detail before selecting a preferred option.

Questions you must address:

• Has a wide range of options been explored?
• Have innovative approaches been considered and/or collaboration with others?
• If not, why not?
• Has the optimum balance of cost, benefit and risk been identified? If not, what trade-offs need to be made e.g. foregoing some of the benefits in order to keep costs within budget; taking carefully considered risks to achieve more substantial benefits?

Business Case Examples Point:

Long and short list of options

Outline options identified for analysis (described more fully below); where appropriate, each subjected to SWOT analysis against contribution to key objectives and critical success factors; includes a do minimum option - at least two but no more than seven other options. Follow HM Treasury’s advice on options appraisal in the Green Book.

Opportunities for innovation and/or collaboration with others

Describe the opportunities for innovative approaches such as a new way of providing a particular service or exploiting new ways of saving running costs on buildings.

• Outline opportunities for collaboration with others – perhaps sharing the costs of developing a new IT system or collaborating with private sector partners to share costs.
• If no opportunities exist and/or there are essential business reasons for avoiding innovation and/or collaboration with others, outline the reasons.

Service delivery options – who will deliver the project?

Investigate options ranging from in-house delivery to degrees of partnership with the private sector and with others in the public sector: with brief description of each, advantages/disadvantages and conclusions. Include options for collaboration where appropriate (see 2.2 above).

Implementation options

Examine options for the pace at which the project could be implemented, in terms of the timescales and degree of business change required; consider whether the project could be broken down into more manageable components e.g. implemented in incremental phases or introduced on a small scale to start and then rolled out to a larger community.

Detailed options appraisal

Provide an explanation of the general approach taken to the calculation of costs and benefits, together with overview of the key findings that result from each of the short-listed options. Include details of ‘soft’ benefits, these are benefits that do not have a direct financial value, such as improved quality of service (see the supplement to the Green Book on e-government benefits, which has guidelines that apply more widely than just e-government).

Risk quantification and sensitivity analysis

For risk quantification show the cost of each risk, wherever possible – that is, the costs incurred in dealing with a risk if it materializes or putting in countermeasures to ensure that the risk does not occur. Identify who will be responsible for each risk and state why they are the party best placed to manage it. Refer to the project risk register to check that all the risks identified there are covered in this analysis.

For sensitivity analysis show the effect of changes in critical factors to each option. For example, what would be the effect of delayed planning permission for a new building? What would be the impact if a service came on stream much sooner or later than expected?

Benefits appraisal

Show results of identifying key benefits criteria, weighting their relative importance, scoring short-listed options against those criteria; where required derive a weighted benefits score for each option and undertake an analysis of the sensitivity of the assessment to changes in weighting and scoring.

Preferred option

Summaries findings from economic appraisals, benefits evaluation, sensitivity analysis and overall ranking.

Commercial aspects: the financial case

Where there is an external procurement, this section outlines the potential commercial arrangement. Most of this information will be produced for the Outline Business Case.

Minimum content required for this section: proposed sourcing option, with rationale for its selection; key features of proposed commercial arrangements (e.g. contract terms, contract length, payment mechanisms and performance incentives); the procurement approach/strategy with supporting rationale.

Questions you must address:

• Can value for money be obtained from the proposed sources (e.g. partners, suppliers)?
• If not, can the project be made attractive to a wider market?

Business Case Examples Point:

Output Based Specification

Summaries the requirement in terms of outcomes and outputs; supplemented by full specification as annex (see the template in the Toolkit).

Sourcing options

Outline the options for sources of provision of services to meet the business need – e.g. partnerships, framework, existing supplier arrangements, with rationale for selecting preferred sourcing option.

Payment mechanisms

Outline the proposed payment mechanisms that will be negotiated with the providers – e.g. linked to performance and availability, providing incentives for alternative revenue streams. (See the Achieving Excellence briefing on procurement for advice on payment mechanisms for construction projects.)

Risk allocation and transfer

Summaries an assessment of how the types of risk might be apportioned or shared, with risks allocated to the party best placed to manage them subject to achieving value for money.

Contract length

Outline scenarios for contract length (with rationale) and proposed key contractual clauses.

Implementation timescales

Provide a high level view of implementation timescales. For the Outline Business Case and Full Business Case, provide evidence of providers’ high-level implementation plans, taking into account essential considerations related to benefits realization, risk management and control.

Affordability: the financial case

Assessment of affordability and available funding. Links proposed expenditure to available budget and existing commitments.

Minimum content for this section: statement of available funding and broad estimates of projected whole-life cost of project, including departmental costs (where applicable).

Questions you must address:

• Can the required budget be obtained to deliver the whole project?
• If not, can the scope be reduced or delivered over a longer period?
• Could funding be sought from other sources?

Business Case Examples Point:

Budget based on whole life costs

Produce estimates of the whole life costs of the project (for construction projects, see Achieving Excellence briefing on whole life costs). Include the costs that will be carried by the customer organization as well as those that will be charged by providers. Note that savings or benefits achieved in one part of the organization may add to costs elsewhere in the organization or delivery chain. This is especially significant where the organization has to maintain parallel channels for service delivery.

Provide details of:

• the expected costs
• when they will occur
• how they will be monitored
• who will pay for each cost
• any risk allowance that may be needed (in the event of things going wrong).
• Additional areas that may need to be considered in detail are outlined below.

Achievability: the project management case

This section addresses the ‘achievability’ aspects of the project. Its primary purpose is to set out the project organization and actions which will be undertaken to support the achievement of intended outcomes including procurement activity (where applicable) or detailed study with existing providers.
Minimum content for this section: high level plan for achieving the desired outcome, with key milestones and major dependencies (e.g. interface with other projects); key roles, with named individual as the project’s owner; outline contingency plans e.g. addressing failure to deliver service on time; major risks identified and outline plan for addressing them; provider’s plans for the same, as applicable, skills and experience required.

Questions you must address:

• Can this project be achieved with the organization’s current capability and capacity?
• If not, how can the required capability be acquired?
• Can the risks be managed – e.g. scale, complexity, uncertainty?
• Does the scope or timescale need to change?

Business Case Examples Point:

Evidence of similar projects, where available

If possible, provide evidence of similar projects that have been successful, to support the recommended project approach. If no similar projects are available for comparison, outline the basis of assumptions for delivery of this project – e.g. comparison with industry averages for this kind of work.

Project roles

Set out key roles:

• Who will be responsible for making the investment decision (typically a management group rather than an individual)
• The Senior Responsible Owner (SRO) as the named individual who will be personally accountable for the success of the project
• The project manager
• the main stakeholders
• Key members of the project board, where applicable
• Other essential roles as required.
• Confirm that the SRO and project manager have appropriate skills and experience for the project, with access to specialist expertise to supplement their skills if required (see the checklists in the Toolkit).

Procurement strategy (where applicable)

Set out indicative timetable and justification for the proposed approach.

Project plan

Outline the main phases of the project plan (see the Toolkit for a template). For IT-enabled projects, confirm that there will not be ‘big bang’ implementation (see the checklist in the Toolkit).

Contract management

Outline Business Case: summaries outline arrangements for contract management. Confirm arrangements for continuity between those involved in developing the contract and those who will subsequently manage it (see the Contract Management workbook in the Toolkit).

Risk management strategy

Summarize outline arrangements for risk management (see the Risk Management workbook in the Toolkit).

Benefits realization plan

Summarize outline arrangements for benefits management (see the Benefits Management workbook in the Toolkit).

Business case Study Template