Business case in the UK govt
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This document summarizes the key elements of the five case model used for business case development in the UK public sector: 1. The strategic case establishes the case for change and objectives, existing arrangements, business needs, scope, benefits and risks. 2. The economic case identifies critical success factors, develops a long list of options that are scoped and evaluated, and selects a preferred shortlisted option with indicative costs. 3. The commercial case covers procurement strategy, risk transfer, and contract length. 4. The financial case demonstrates affordability. 5. The management case ensures program fit and defines methodologies. Flexibility is emphasized in applying the five case model at both strategic and tactical
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Business case in the UK govt
- 1. 21 May 2016
- 2. Riadenie ◦ HM Treasury ◦ Cabinet Office ◦ Departments Kontrola ◦ Parliament -> Public Accounts Committee ◦ National Audit Office Annual Accounts Audit Ad-Hoc Value for Money Audits “All expenditure requires approval by Treasury unless Treasury has delegated this authority to the department. Typically delegated limits will be set in line with an assessment of risk…”
- 5. •That the intervention is supported by a compelling case for change that provides holistic fit with other parts of the organisation and public sector Strategic Case •That the intervention represent best public valueEconomic Case •That the proposed spend is affordableFinancial Case •That the proposed Deal is attractive to the market place, can be procured and is commercially viable Commercial Case •That what is required from all parties is achievableManagement Case
- 7. Strategic Context ◦ Organisational Overview ◦ Current Business Strategies The Case for Change ◦ Objectives ◦ Existing Arrangements ◦ Business Needs – current and future ◦ Potential Scope ◦ Benefits and Risks ◦ Constraints and Dependencies
- 8. Critical Success Factors Long listed Options Short Listed Options ◦ including do minimum ◦ three or four is the recommended number Status quo; do nothing option Economic Appraisals of Costs and Benefits Optimism Bias adjustment Risk Assessment The Preferred Option
- 9. Procurement Strategy Service Requirements Charging Mechanism Risk Transfer Key Contractual Arrangements Personnel (TUPE) Implications Accountancy Treatment
- 10. Public Capital and Revenue Requirements Impact on Balance Sheet Impact on Income and Expenditure Account Overall Funding and Affordability
- 11. Programme and Project Management Methodology (PPM) and Structure Programme and Project Management Plans Use of Specialist Advisers Change and Contract Management Arrangements Benefits Realisation Risk Management Monitoring during implementation (proportionate) Post Implementation Evaluation Arrangements Contingency Arrangements
- 12. “It is important to note that “five case model” is a framework for “thinking” and that the supporting methodology is flexible and can be applied at both strategic (macro) and tactical (micro) levels.” „Firm boundaries on the outside, flexible inside“
- 13. Minor spending Major spending Major Policy Strategic Outline Programme BC Strategic Outline Case (SOC) Outline Business Case (OBC) Final Business Case (FBC) Business Justification Case (BJC)
- 14. SOC 60% 40% 20% 30% 10% OBC 80% 70% 60% 60% 50% FBC 100% 100% 100% 100% 100% Strategic Economic Commercial Financial Management • Case for change & Objectives • Scope • Preferred way forward • Longlist Options & SWOT • Short list (incl. “Do Nothing”) • Risk identification • Indicative CBA • Benefits appraisal (cash releasing, financial, quantifiable, qualitative) • Economic appraisal of shortlisted options • Risk assessment • Identifying the preferred option • Demonstrate affordability • Procurement plan, draft OJEU & criteria • Risk assignment • Plan delivery (strategies, plans) • Update OBC based on procurement • Document contractual arrangements • Finalise delivery • Plan evaluation
- 15. Chose a policy initiative and prepare the Strategic Outline Case Time: 45’ Tip: don’t worry too much about the detail. The goal is to learn the BC structure, not to get it all right.
- 16. Strategic Case ◦ Strategic fit ◦ Objectives ◦ Existing arrangements ◦ Business need ◦ Business Scope for the required business needs (min / medium / max) ◦ Benefits (financial, non-financial quantitative, qualitative, outcomes) ◦ Risks Economic Case ◦ CSFs ◦ Long list options (scoping, delivery, finance) ◦ Preferred way forward ◦ Short list ◦ Indicative economic costs Commercial Case ◦ Procurement Strategy ◦ Risk transfer ◦ Contract length Financial Case ◦ Affordability Management Case ◦ Programme fit ◦ Methodologies Recommendation