The UK experience in using the 5 Case Model approach for the preparation, appraisal and approval of investment proposals

Infrastructure and Projects Authority
UK-Caribbean
Infrastructure Conference
23 November 2023

The UK experience in using the 5 Case
Model approach for the preparation,
appraisal and approval of investment
proposals
Javier Encinas
Deputy Head of International
Project and Structured Finance Group
HM Treasury and Cabinet Office
UK-Caribbean
Infrastructure Conference

Case Study Fictional Example: Background
Infrastructure and Projects Authority: 5 Case Model
3 |
■ The small region of Littleland has 4 principal cities where
economic activity is focused
■ Workers, students and tourists travel between the cities each day
■ City A is the largest and economically most significant, followed by
cities B, C and D respectively

Case Study Fictional Example: Status quo
4 |
■ Very poor quality roads:
▪ Low Capacity
▪ High congestion
■ Result in
▪ Long journey times
▪ Costly transportation
▪ Severely limited flow of workers into commercial centres, of
students into academic centres and of tourists into cultural
centres.

Case Study Fictional Example: New Transport Strategy
5 |
■ The Ministry of Transport has developed the transport strategy
“25 / 2025” to improve the transport network between these cities.
■ The transport strategy aims to facilitate economic growth by:
▪ reducing travel time between the principal cities of the
country (A, B, C and D) by 25% by 2025
▪ Reducing congestion and increasing the capacity of transport
network by 25% by 2025
▪ Reducing the cost of travel to business and the public by 25%
by 2025.

Case Study Fictional Example: New Transport Strategy
6 |
City A
City B
City C
City D
Existing project
Proposed project

http://publications.worldbank.org/17863

Genesis of the 5 Case Model

9
Cost-overruns in Traditionally Procured Projects
Guy’s Hospital
Budget: £36m
Guy’s Hospital
Outturn cost:
£124m
Faslane Trident
Submarine Berth
Budget : £100m
Faslane Trident
Submarine Berth
Outturn cost : £314m
Scottish
Parliament
Budget : £40m
Scottish
Parliament
Outturn cost
:£431m

10
Reasons why Projects fail (National Audit Office) and UK Government
Response
The scope of the projects is poorly defined or is not
aligned with the general objectives or the strategy of
the national or local government, thus spending
resources on non-priority projects.
Timetable constraints and cost estimates are not
taken into account, leading to unrealistic promises and
unaffordable projects.
Many programmes include multiple targets,
contributors, and interdependencies, often
inefficiently managed, thus diluting the anticipated
VxD.
The governance, supervision and management of the
programmes tend not to adapt or change as the
projects are developed, thus compromising the
effective implementation of the projects.
Is the project feasible with the
resources in time, money and
personnel that the authority has?
Is the project financially affordable?
Is the project commercially bankable?
Is the project desirable in terms of
VxD?
Is the project necessary and is it
aligned with the Government's
priorities?
Strategic
Case
Economic
Case
Commerc
ial Case
Financial
Case
Managem
ent Case
Inadequate commercial arrangements and insufficient
understanding of the requirements and capabilities of
potential commercial partners result in unfeasible
projects.

5 Case Model: Characteristics
■ The 5 Case Model is a management toolfor preparing,appraising and approving investment proposals. It has the following
characteristics:
▪ Structured: - it shows in a step-by-step way what to do and how to do it;
▪ Multidimensional: - it covers in a holistic way all the steps through 5 key lenses / dimensions:
strategic, economic, commercial, financial and management;
▪ Iterative: - it analyses all the 5 dimensions simultaneously;
▪ Multi-stage: - it develops the analysis in 3 main stages:
Strategic Outline Case (SOC), Outline Business Case (OBC), and Full Business Case
(FBC);
▪ Dynamic/ Living document: - it accompanies the development of the project throughout its lifecycle.
■ The mainobjectiveof the 5 Case Model is to ensure that the right projectsare selected and delivered in theright way.
11 |

Business Case Methodology for preparing, evaluating and approving
infrastructure projects and programmes
Characteristics
UK
Business Case Approach
Your country’s
Business Case Approach
Structured Step by step guidance covering the
what and the how
Multi-dimensional Structured around 5 dimensions:
Strategic, Economic, Commercial,
Financial, Management
Iterative Assessed simultaneously
Multi-staged At 3 key stages:
SOBC, OBC, FBC
Dynamic / living Covering the whole project life
cycle
Standardised For all investment proposals in all
sectors at all levels
5 Case Model: Characteristics

5 Case Model: Structure
13 |
The 5 Casemodelis a management tool
to prepare, appraiseand approve
projects focusingon 5 key dimensions,
which are produced iteratively (together
at the same time as they are inter-
linked), in 3 stages.
Is the project
necessary?
Is the project desirable
from a Valuefor Money
standpoint?
Is the project
commercially viable?
Is the project financially
affordable?
Is the project deliverable
with the resources
available to the
Authority?
Strategic
Case
Economic
Case
Commercial
Case
Financial
Case
Management
Case

5 Case Model: Strategic Case
14 |
Economic
Case
Commercial
Case
Financial
Case
Management
Case
Strategic Case :
The StrategicCase should cover the rationale
for theproject, its scopeand objectives and
should place it within an overallstrategicand
policycontext.
Development Phases:
SOBC
(Initial BC)
OBC
(Intermediate BC)
FBC
(Final BC)
60-70% Mostly developed Review and update
data after
procurement but
before contract
award.
Strategic
Case

5 Case Model: Economic Case
15 |
Strategic
Case
Economic
Case
Commercial
Case
Financial
Case
Management
Case
Economic Case:
The EconomicCase should demonstrate that
rigorous cost benefit analysis of the project
options has been conducted, in order to
determine the project optionand
procurement routeoption that offer best
valuefor money.
Development Phases:
SOBC
(Initial BC)
OBC
(Intermediate BC)
FBC
(Final BC)
data after
procurement but
before contract
award.

5 Case Model: Commercial Case
16 |
Strategic
Case
Economic
Case
Commercial
Case
Financial
Case
Management
Case
Commercial Case:
The CommercialCase should demonstrate that
the project is sufficiently developed to be
commercially viableand bankable, that the
supplier market has been tested, and that the
contract is well developed with an appropriate
risk allocation. It should set out the procurement
strategy and timetable.
In the United Kingdom it will also explain the
project’s balancesheet treatment.
Development Phases:
SOBC
(Initial BC)
OBC
(Intermediate BC)
FBC
(Final BC)
data after
procurement but
before contract
award.

What the Private Sector Wants in an infrastructure project
• To make a reasonable profit
• To see a pipeline of opportunities which justifies development investment (in bidding capacity and supply chain management)
• To engage with a competent, intelligent and decisive clientduring procurement
• To contract with a substantive public entity able to support its contractual obligations
• To enjoy continuity of relationships in the transition from procurement to contract administration
• To see transparency, consistency of procurement approach, risk allocation and contractual rights and obligations
• To get to contractual certainty rapidly and cost-effectively
• To be penalised reasonably for poor performance but incentivised to rectify the fault
• To avoid hair-trigger termination provisions
• To enjoy reasonable protection / compensation in the event of termination (no windfall for public sector)
UK PPP Experience
17 |
5 Case Model: Commercial Case

5 Case Model: Financial Case
18 |
Strategic
Case
Economic
Case
Commercial
Case
Financial
Case
Management
Case
Financial Case:
The Financial Case must demonstrate that the
project is affordable for the procuring authority,
taking account of public funding allocated to the
project and allowing for contingencies for
unexpected occurrences.
It should also explain what amounts are funded
by theAuthority itself, and what amounts are
sought by way of centralfundingor are payable
by users of the facility.
Development Phases:
SOBC
(Initial BC)
OBC
(Intermediate BC)
FBC
(Final BC)
Indicative cost The best estimated
costs between
project options and
procurement route
options
Costs that have been
negotiated and
agreed with related
parties

The New Blue River Crossing
Affordability
Project financing assumptions
5 Case Model: Financial Case

5 Case Model: Management Case
20 |
Strategic
Case
Economic
Case
Commercial
Case
Financial
Case
Management
Case
Management Case:
The Management Case must demonstrate that the
project is appropriately resourced, has appropriate
governance arrangements in place, has been properly
planned, has a realistic timetable, has appropriate
advisers and has a risk register showing what primary
risks face the procurement and how these are
mitigated.
There should also be a benefits realisation plan
explaining how benefits will be captured and
monitored in the ongoing operational phase of the
project.
Development Phases:
SOBC
(Initial BC)
OBC
(Intermediate BC)
FBC
(Final BC)
A framework that
describes the project
management plan,
including the
assurance (appraisal
and approvals) plan
The best estimated
costs between project
options and
procurement route
options
Costs that have been
negotiated and agreed
with related parties

21
Example:
Project Management Structure
The New Blue River Crossing
5 Case Model: Management Case

5 Case Model: Benefits
■ The 5 Case Model approach provides a common frameworkfor:
▪ the transparent scoping, planning and preparation of spending proposals that optimise social value;
▪ the scrutiny and approvalof spending proposals;
▪ evidence based decision making;
▪ the identification, mitigation and management of risk;
▪ the accountabilityfor public funds;
▪ an audit trail;
▪ In sum, the 5 Case Model provides transparency, consistency and continuityto both the public and the private sectors!
22 |

5 Case Model: Adaptation and Adoption
■ The 5 Case Modelis a methodology easy to adapt, adopt and improve to suit the characteristics of any region, sector or
project, because it is:
▪ Proportionate: relating resources to cost and risk;
▪ Scalable: applicable at all levels;
▪ Flexible: adaptable to any sector or project type;
▪ Efficient: productivity gains of 30% to 40%;
▪ Effective: all key questions covered;
▪ Best Practice: tried and tested – adopted by the G20 and many countries around the world
23 |

5 Case Model: Appraisal and Approval points
24 |
Strategic Outline
Case (SOC)
Outline Business
Case (OBC)
Full Business
Case (FBC)
Confirmed
FBC
Procurement
Live
Procurement
Live
Project
Identified
Financial
Close
S1 S2 S3 O1 O2 O3 P1 F1 F2 F3 P2 C1 C2 P3
SOC OBC
FBC

5 Case Model: Appraisal and Approval points
25 |

5 Case Model: Checklist
Infrastructureand Projects Authority:5 CaseModel
26 |
• Strategic Case
▪ Clarity of requirements and scope
• Economic Case
▪ Value for money
• Financial Case
▪ Affordability
• Commercial Case
▪ Risk allocation
▪ Indication of commercial interest
▪ Project information and contract terms prepared
▪ Expected accounting treatment
• Management Case
▪ Project team/processes
▪ Suitability of proposed advisers
▪ Indicative timetable
▪ Commitment of stakeholders/users
▪ Approvals / appropriate powers confirmed
▪ Commitment of sponsors / users

27 |
• Strategic Case
• Clarity of requirements
▪ Are the scope, requirement and term of the project clear and stable? Have they been approved?
• Economic Case
• Options appraisal
• Does the Business Case provide a clear basis for the selection of the preferred option?
• Is there a clear option that represents better Value for Money?
• Financial Case
• Affordability
▪ Is the project scope fully affordable?
▪ Are the user tariffs realistic/are budgets and approvals in place for any public-sector payment (or asset
provision) obligations?
▪ Is the expected accounting treatment clear?

28 |
• Commercial Case
• Risk allocation
▪ Have the project risks been fully identified and their potential allocation assessed?
• Indication of commercial interest
▪ Is there evidence of contractor, lender and investor market interest to justify launching the project on
the proposed terms?
▪ Has a project marketing strategy and prospective bidders list been drawn up?
▪ What are the expected availability and terms of equity and debt finance?
▪ Have the DFIs been approached?
• Project information
▪ What plans exist to publicise the launch of the project to potential bidders?
▪ Has a project information memorandum been prepared by the project team?
▪ Have the bidder qualification and bid evaluation criteria been developed?

29 |
• Management Case
• Project team/processes
▪ Is a credible and well resourced team in place to manage the procurement phase and an effective bid
evaluation strategy agreed?
▪ Are project governance structures and processes in place to ensure timely and effective decision-making?
▪ Are credible and experienced advisers appointed?
▪ Has the appropriate assessment be carried out to demonstrate that the proposed approach is expected to
meet any value for money criteria (to the extent required by policy)?
• Commitment of stakeholders/users
▪ Have all relevant stakeholders been identified, are they committed to the project, and are arrangements in
place for continued communication and consultation?
• Key terms and conditions
▪ Has the draft PPP contract been prepared reflecting the project requirements, proposed risk allocation and
payment mechanism?
▪ Have external project interface issues, agreements, terms and conditions been identified and assessed?
• Indicative timetable
▪ Is a realistic procurement timetable in place for the procurement phase?
• Legal processes
▪ Have required approvals been identified / obtained (e.g. environment, planning)?
▪ Is there clarity about site and land issues?
▪ Are all relevant project approvals in place?
▪ Are appropriate powers confirmed for the public authority to award and enter into the long-term contracts?

5 Case Model: International recognition
■ The 5 Case Modelis internationally recognised as the Gold standard for project development.
30 |
GlobalInfrastructureHub – Leading
practices in project preparationReport
• Governmental Processes Facilitating Infrastructure Project Preparation:
https://www.gihub.org/project-preparation/
• Project Preparation – how do you translate a concept into a bankable project?:
https://www.gihub.org/blog/project-preparation-translate-concept-into-bankable-project/
G20 Principlesfor the Infrastructure
Project Preparation Phase
• G20 Principles for the Infrastructure Project Preparation Phase:
http://www.g20.utoronto.ca/2018/principles_for_infrastructure_project_preparation.pdf
• July FMCBG endorsement (para 4) here: http://www.g20.utoronto.ca/2018/2018-07-22-
finance.html
• November Leaders communique (para 10) here:
https://www.consilium.europa.eu/media/37247/buenos_aires_leaders_declaration.pdf
• November G20 Action Plan (para 29) - further endorsement and call to support
implementation: http://www.g20.utoronto.ca/2018/2018-buenos-aires-action-plan.html

5 Case Model: International Guidance
31 |
5 Case Model:
International Guidance for project preparation, assurance, appraisal and approval

32 |
5 Case Model:
International Guidance for project preparation, assurance, appraisal and approval
International
Step-by-step Guidance
International
Case Study
International
Templates
International
Technical Notes
International Infrastructure: Business Case Development Guidance –
https://assets.publishing.service.gov.uk/media/623b24e6e90e07799f0c7c3e/Infrastructure_Business_Case_International_Guidance.pdf
https://colaboracion.dnp.gov.co/CDT/Participacin%20privada%20en%20proyectos%20de%20infraestructu/Guia%205%20Casos.pdf (español)
Infrastructure Business Case: international case study –
https://assets.publishing.service.gov.uk/media/623b2492e90e0779a5e70114/Infrastructure_Business_Case_International_Case_Study.pdf
https://colaboracion.dnp.gov.co/CDT/Participacin%20privada%20en%20proyectos%20de%20infraestructu/Caso%20de%20Estudio%205%20Casos.pdf (español)
Infrastructure Business Case: international guidance annexes –
https://assets.publishing.service.gov.uk/media/623b24d18fa8f540e78ab465/Infrastructure_Business_Case_International_Guidance_-_Annexes.pdf
https://www.dnp.gov.co/programas/participaci%C3%B3n-privada-%20y-en-proyectos-de-infraestructura/asociaciones-publico-privadas/Paginas/documentos-app.aspx (español - abajo de la hoja)

5 Case Model:
International Capacity building and Certification programme for project preparation, assurance, appraisal and approval
D1
Trainer / ATO
Accreditaion
Foundation Level course
D1 D2
Practitioner Level course
D1 D2 D3
Trainer / Accredited Training
Organisation process
Foundation Level
Certifcation exam
Practitioner Level
Certification exam

5 Case Model internationally: Impact and legacy
34 |
International 5 Case Model materials
We have developed 3 internationally adapted and
translated versions of the 5 Case Model Guidance,
Case Study, Templates, Technical notes, Training
Materials and Training Approach.
Capacity built in-country
We have trained formally and informally 1000s of
key overseas decision makers and senior officials
to help them understand, adapt, adopt and
promote the programme tools.
E-learning platform
We are working with the MDBs in the development
of an e-learning platform that will combine face to
face and online training to continue training and
certifying people internationally.
Pre-Investment Fund
We have set up Pre-investment funds to support
the development of infrastructure in partner
countries following the principles of technical
excellence, gender equality, social inclusion and
environmental protection.
Community of Practice
We have developed a Community of Practice as a
LinkedIn Group to connect people across the world
who are participating in training delivered as part
of the UK Government's Global Infrastructure
Programme.
Good recipe for success
We have developed a replicable and scalable
solution that can be applied in other countries, in
other regions and in different programmes.

5 Case Model: Useful Links
5 Case Model international Guidance and Training materials:
■ International Infrastructure: Business Case Development Guidance -
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment
_data/file/935519/International_Infrastructure_Business_Case_Guidance.pdf
■ Infrastructure Business Case: international case study -
_data/file/935523/International_Infrastructure_Business_Case_Guidance_Case_Study.pdf
■ Infrastructure Business Case: international guidance annexes -
_data/file/935520/International_Infrastructure_Business_Case_Guidance_Annexes.pdf
5 Case Model internationally Certified Training:
■ Pleasecontact the IPA for more information on the APMGinternationally Certified 5
Case Model Training
■ https://apmg-international.com/product/better-business-cases
Global Infrastructure Programme Community of Practice
■ To join, if you are already a member of Linked In, just click on this
link: https://www.linkedin.com/groups/13847819/ and then click 'request to join’. If
you are not a Linked In member you will have to join Linked In first.
35 |
International
Guidance
International
Case Study
International
Templates
International
Technical Notes

Project Development Routemap - A capability building tool for projects
Routemap is not an alternative project management methodology. It’s a tool that helps you build the capability needed to
deliver your project.
36 |
▪ 10 Step Process for
application of Routemap
▪ Eight Routemap modules of good practice
In the context of Routemap, capability describes the ability of the sponsor, client, asset manager and market to deliver a
specific project efficiently and effectively. It refers to the capability of all or part of an organisation (including its people,
processes and technology) and not that of the individual.
Routemap can be used to initiate a client conversation, it’s
independent and recognised as a government support tool
UK-Caribbean Infrastructure Conference

Project Development Routemap - Routemap modules
37 |
Rationale
Delivering strategic project
outcomes and realising the benefits
Governance
Establishing clear accountability and
effective decision making
Delivery Planning
Readying the project for transition
into delivery
Organisation Design &
Development
Organising the project team to
deliver successfully
Procurement
Understanding how the project will
buy the goods and services required
Risk Management
Managing uncertainties and
opportunities
Asset Management
Balancing costs and risks to maximize
whole life benefits
Systems Integration
Making multiple systems work as
one
UK-Caribbean Infrastructure Conference

Operational framework in the
Caribbean

4 Key frameworks for infrastructure development
Policy/Regulatory Framework
• Political Commitment
• Polices, laws & regulations
• Investment programmes & pipelines
Institutional Framework
• Central infrastructure Unit
• Sector specific units
• Technical capacity (in-house and external
advisors) or procuring authorities
• Multilateral / public sector funding
Industrial and Financial Framework
• Contractors, operators and facility management
providers
• Legal, technical and financial advisers
• Debt and equity providers
Operational Framework
• Clear processes
• Practical guidance and methodologies
• Standard contracts an project documentation

Infrascope 2021/22

The UK experience in using the 5 Case Model approach for the preparation, appraisal and approval of investment proposals

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The UK experience in using the 5 Case Model approach for the preparation, appraisal and approval of investment proposals