Transcript Better Business Cases Development Course

Better Business Cases
“Investing for change”
Foundation Course
© The Treasury
1
Foundation Course objectives
•
Sufficient awareness to understand:
–
–
–
–
–
–
–
–
•
the background and why we introduced BBC
what BBC is and when it applies
the five case model
the BBC process and its fit with other processes
where to get support
planning the business case development approach
the national evaluation and the way forward
the types of business cases
Able to actively participate in further training:
– Practitioner Course
– Reviewer Course
2
9am
Welcome, housekeeping, introductions and expectations setting
9.15am
Background, why, what, and when
9.30am
The 5 case model, the BBC process and its fit with other processes
10am
Morning tea
10.15am
Where to get support
10.30am The national evaluation and way forward
10.45am
Planning the approach to developing the business case
11am
Types of business cases (Programme and project approach)
11.45am
Top ten lessons learnt, examples and questions (Lunch 12 noon)
12.50pm
Expectations close out and evaluation forms
3
Expectations
© The Treasury
4
Background
© The Treasury
5
Background
Original Cabinet “capital” directive in 2007 wanting:
•
visibility to future capital investment intentions
• options and confidence that proposal is
best value and will deliver benefits- confidence !
Treasury response:
•
Portfolio planning
•
Better Business cases
6
Visibility to inform the portfolio
Opportunity for greater
influence through
better strategy and
planning
10 year view of
intentions
Better
Business
Cases
Projects and
programmes underway
Benefits
Aligning and balancing with direction (govt priorities)
Individual intentions fit under a wider lifecycle, that can be influenced and balanced
within constraints before business cases on programme and projects start to be
7
developed
State Sector -Balanced portfolio planning of intentions
needing investment
6
5
Alignment
4
3
2
1
1
2
3
4
5
6
7
8
9
10
BENEFITS
Implementation risk = Low
<$25
m
$25m to
$100m
Implementation risk = Medium
>$100m<$500
m
$500m or greater
Implementation risk = High
Keep the business running
Transformational change
Grow the business
6
6
6
5
5
5
4
4
3
Alignment
Alignment
Alignment
4
3
3
2
2
2
1
1
1
1
2
3
4
5
6
7
8
9
10
BENEFITS
1
2
3
4
5
BENEFITS
6
7
8
9
10
1
2
3
4
5
BENEFITS
6
7
8
9
10
Why BBC
© The Treasury
9
Value of Better Business Cases?
•
Decision makers/Investors-confidence !
•
•
Strategic alignment and value for money
Management-confidence !
•
Influencing the direction early
•
When submitting to decision makers
•
Business case developers-fit for purpose !
•
Reviewers- fit for purpose !
10
Why one thirds of programme and projects fail?
•
Lack of strategic fit
•
Lack of senior management engagement
•
Lack of stakeholder engagement
•
Focus first on funding then value-for-money
•
Lack of supply side engagement
•
Lack of systematic approach
BBC mitigates these risks, prior to the investment decision
11
What is BBC
© The Treasury
12
What is BBC and what is expected
What is Better Business Cases?
•
•
•
•
•
•
Based on UK Government approach
Common Language to support stakeholder engagement
Thinking not writing
Fit for purpose analysis-smart procurement consultancy support
Thinking is challenged and brings coherence and cohesion
Campaign to deliver benefits, not a document to get money
What is expected?
•
•
Effort and engagement depends on scale and risk of the
project or programme
5 case model is the core of BBC
“I didn't have time to write a short letter, so I wrote a long one instead”
13
When BBC applies
© The Treasury
14
When does it apply?-Mandated
2010
Cabinet directive for State Sector high risk and/or large scale
intentions requiring capital investment (whether or not self
funded) and all intentions requiring new funding:
–
Government Departments
–
National Health Board for District Health Boards
–
Crown Entities (only if require new funding)
2012
Cabinet directive for all intentions in the Canterbury
Earthquake Recovery Strategy requiring crown investment in
projects and programmes
15
When does it apply? - Voluntary
2012
Auckland Council adopted for Auckland Plan capital investments
2013
NZTA adapted for National Land Transport Programme across Local
Government
Tertiary Education Commission for tertiary education sector borrowings
Public and private sector organisations adopting as good practice
National NGO Federation to transform service delivery
Auckland Policy Office piloted for Better Public Services socio-economic
programmes (linked to Auckland Plan)
2014
Society of Local Government managers for Local Government (non
transport)
MFAT considering for Pacific Island Countries
World Bank considering for developing countries
16
The 5 case model, the BBC process and
its fit with other processes
© The Treasury
17
The 5 Case Model
Any business case addresses 5 key questions:
1. Is there a compelling case for change?
2. Does the preferred investment option optimise value
for money?
3. Is the proposed deal commercially viable?
4. Is the spending proposal affordable?
5. How can the proposal be delivered successfully?
18
The 5 Case Model
The 5 key elements of good practice business cases
Achievable and
can be
successfully
delivered
Affordable within
available funding
Compelling case for
change - strategic
fit & business needs
Strategic
Management
Financial
Economic
Commercial
Preferred option
optimises value
for money
Commercially
viable
19
The pathway of the phased BBC process can be used to select which
type of business case best delivers the required decision/s
Portfolio or programme
S
S
Planning and scoping
Strategic
Assessment
E
C
The level of
emphasis of each
of the five cases
depends on the
type of business
case
M
F
Programme Business
Case
Confirm case for change, preferred
programme, project tranches, funding
Confirm fit with strategy
and need to invest
Project/s (Large scale and/or high risk)
S
S
C F M
Indicative
Business
Case
Strategic
Assessment
Confirm fit with
strategy and the
need to invest
E
Confirm way forward
with short-listed
options (consider
non-traditional
procurement)
Project/s (Other)
S
S
E
C
F M
Detailed
Business
Case
S
E
C
F M
Implementation
Business Case
Confirm supplier offering
Confirm best value
best value, detailed
for money option,
commercials, confirm
outline potential deal
affordability. detailed
and delivery plan,
management and delivery
assess affordability.
arrangements
S E C FM
Strategic
Assessment
Single Stage Business
Case
Also the single
stage (light)
20
business case
21
BBC Process fit with Policy, Programme and Project
management
Error! Unknown document property name.
22
BBC Process fit with Procurement process
Innovation through procurement
Resourci
ng
& valueadd
24
Where to get support
© The Treasury
25
Where do I get support-on the website ?
Overview information
– Quick Reference Guide
– Presentation
– Overview booklet
– Scoping document (programme or project approach)
Detailed information for each type of business case:
– Scoping document, to agree effort
– Guidance booklets, to understand the standard
– Word Template, to write the business case
– Power point “one pager”, to present the business case
Links to related processes
26
Where do I get support ?
Executive Intensive sessions on demand (45 minutes)
Training (monthly in 5 cities)-book on line
• Foundation Course (4 hours)
• Practitioners Course (Two full days 16 hours)
• Reviewers Course (Full day 8 hours)
Communities of practice by sector for Practitioners
supported by BBC Experts
Endorsed BBC Expert Practitioners and Reviewers pilot
BBC Coach to coach public servants in priority public
sector organisations
27
National evaluation and way forward
© The Treasury
28
2013 National Evaluation-findings
• Overwhelming agreement that BBC has had a positive impact on the
quality of business case thinking
• Generally fit for purpose
• Process most effective when applied by experienced and
knowledgeable people
• Organisations wanted help to develop internal capability and
expertise.
• Range of mechanisms should be considered to help organisations
address the wider capability gaps that have been identified.
29
2013 National Evaluation-MoF’s view
• Been effective in stopping the rubbish
• Can be bit exhaustive when Ministers want to get going
• His level of confidence is growing
• Needs to be aggregation of capability
• Better balance of process and judgment
• Clarify appropriate response when Cabinet decision precedes
BBC
• All agencies need to see as critical and take long term view
30
Way forward
Improve capability of the priority public sector organisations
•
•
•
•
•
To launch case studies to website
To launch communities of practice
Launched Endorsed Expert Pool pilot
BBC Coach-to coach public servants to become experts
To pilot BBC Organisational capability trial-for internal
adaptation
• Piloting 5 case model approach to Strategic Policy
Improve reviewer operating model and capability
31
Planning the approach to developing
the business case
Right sizing the effort and
engagement – the scoping
document
© The Treasury
32
The Goldilocks Zone
In the case of fairy
tales
In the case of life on
planets
In the case of Better
Business Cases
Not too hot/not too
cold
Not too close/not too
far away
Not enough effort/too
much effort
Just right
33
Use the scoping documents to obtain sponsor
and reviewer agreement on how to apply BBC
• What previous decisions have been made
• Programme or project approach and pathway
• For each type of business case within the pathway
– Right sizing the capacity/capability of the team
– Right sizing the effort and engagement
– Right size the assurance/monitoring
• What decision is being sought
34
Business Case
Capability
Subject Matter
Focus
Stakeholder
Engagement
Stakeholder
Focus
Governance
Change mgmt
e.g. service
delivery
e.g. stakeholder
engagement
Business Case
Assurance
and Decision
Making
e.g. Economic
analysis,
Commercial
advice, Financial
modelling etc
Power and Influence
Content
High
Influence
Coproduction
Mass
Communication
Empower
e.g. monitoring
function
Project Management
Low
Change ImpactHigh
35
Key considerations
• Complete the scoping document at the beginning of
each phase
• Fill out what you know - update as you know more
• Use the document to support your thinking,
discussions and recording the agreed way forward
• Involve your monitoring/reviewer function early
• It is a tool to support you – not a prescriptive template
– so modify to meet yours and your monitoring
function’s needs
36
Types of business cases
© The Treasury
37
Strategic Assessment
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
38
Strategic assessment
Purpose:
• Outline the fit with strategy and case for change
• Provide an opportunity for key stakeholders to
influence the direction
Either at project or programme level
39
Strategic assessment
Strategic Case-Making the Case for Change
Outline the strategic context
Strategic
Outline the case for change and need for investment
• Identify the core reason that underpins the service need
by identifying:
- the driver/problem?
- potential benefits?
Senior stakeholders do the thinking together:
If state sector intention requiring capital must use ILM
facilitator to run the problems and benefits workshops
For other intentions use other tools and people which
challenge the thinking, especially for complex problems.
Invite business case writer and reviewer.
40
Programme Business Case
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
41
Programme Business Case
Purpose:
• Confirm the strategic context
• Confirm the case for change
• Recommend a preferred programme approach
• Identify project tranches
• Range of rough order cost estimates and funding sources
• Gain early approval from decision makers for
developing subsequent project-based business
cases
42
Programme Business Case
Strategic
Strategic Case-Making the Case for Change
Revisit the strategic context and confirm case for change
Investment objectives, existing arrangements and business
needs
Potential business scope and requirements
Benefits, risks, constraints and dependencies
Senior stakeholders set the SMART
“Investment Objectives” together in one
or more two hour facilitated workshops,
with a BBC Practitioner (trained) or
endorsed BBC Expert Practitioner.
Invite writer and reviewer.
43
Programme Business Case
Economic
Economic Case-Exploring the Preferred Way Forward
Critical success factors
Programme options systematically identified and assessed by
dimension:
• Scale, scope and location (what)
• Service solution (how)
• Service Delivery (who)
• Implementation (when)
• Funding (how to fund)
Identify mix of projects to achieve the investment objectives
Stakeholders do the thinking together in two or more two-hour workshops
led by a BBC Practitioner or BBC Expert Practitioner :
• Prepare long list, then
• Assess long list to preferred programme
Invite Writer and Reviewer
44
Programme Business Case
Commercial case
• Based on the preferred programme the likely
Commercial
attractiveness to potential service providers
(including high level consideration of non-traditional
procurement)
Financial case
• Based on the preferred programme determine
Range of rough order costs and potential funding
sources
Management Case
• Outline how the programme is intended to be
managed
Financial
Management
45
Indicative Business Case
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
46
Indicative Business Case
Purpose
• Confirm the strategic context
• Confirm the case for change
• Recommend an indicative way forward with a limited
number of short-listed options for further detailed
analysis
• Indicative cost estimates and funding sources
For state sector informs annual Government budget
process for contingency to be set aside
47
Indicative Business Case
Strategic
Strategic Case-Making the Case for Change
Revisit strategic context and confirm case for change
Investment objectives, existing arrangements and business
needs
Potential business scope and key service requirements
Benefits, risks, constraints and dependencies
Senior stakeholders set the SMART
“Investment Objectives” together in one
or more two hour facilitated workshops,
with a BBC Practitioner (trained) or
endorsed BBC Expert Practitioner.
Invite writer and reviewer.
48
Indicative Business Case
Economic
Economic Case-Exploring the Preferred Way Forward
Critical success factors
Long-list options and initial options assessment by
dimension (Do min, Do moderate, Do max):
• Scale, scope and location (what)
• Service solution (how)
• Service delivery (who - including non-traditional
procurement options)
• Timing and staging (when)
• Funding (how much)
Stakeholders do the thinking together in two or more two-hour workshops led
by a BBC Practitioner or BBC Expert Practitioner :
• Prepare long list of options ,then
• Assess long list to short list of no more than 5 options
Invite Procurement expert at procurement planning stage, writer and reviewer.
49
The long list to short list of options (example)
Scoping Options
Reference to
Service Solution Options
Service Delivery Options
SCO1
SCO2
SCO3
SCO4
SOL1
SOL2
SOL3
SOL4
SDO1
Do Nothing
Minimum
Intermediate
Maximum
Discrete
Integrated
Regionally
Integrated
Nationally
Regional
and
National
Network
In house
Full supported netw ork MIMS
available for implementation by
X
Support improved clinical data
and management information
flow s
Improve the functionality and
flexibility of the Pathology IT
system to meet current and
future needs
Critical Success Factors
No
No
Yes
Yes
No
Partial
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
No
Partial
Yes
Yes
Yes
Yes
No
Partial
Yes
Yes
No
Partial
Yes
Yes
Yes
Business Need
No
No
Yes
Yes
No
Partial
Yes
Yes
Strategic Fit
No
No
Yes
Yes
No
Partial
Yes
Yes
Benefits Optimisation
No
No
Yes
Yes
No
Partial
Yes
Potential Achievability
Partial
Yes
Yes
Partial
Partial
Yes
Supply-side capability and
capability
Potential Affordability
Partial
Yes
Yes
Partial
Yes
Yes
No
No
Yes
Description of option
SDO2
SDO3
Im plem entation Options
SDO4
IMP1
IMP2
Phased
nationally
by
discipline
System
phased by
site
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Partial
Yes
Yes
Yes
Yes
Yes
Yes
Partial
Yes
Partial
Yes
Yes
Yes
Yes
Yes
No
Partial
Partial
Yes
Partial
No
Yes
No
No
Yes
Partial
Partial
Partial
Yes
Partial
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No
Yes
Yes
Yes
Yes
Partially
Partially
Fully
managed
managed outsourced
(led by
(led by
to
[MINISTRY]) commercia commercia
l supplier) l suppliers
IMP3
IMP4
System
National
phased by implementa
region
tion
Investm ent Objectives
Summary
Continued Discounted Preferred
for VFM
Partial
Partial
Yes
Possible
Discounted
Possible
Yes
Preferred Discounted Discounted
Options progressed to the
shortlist
As the CSFs are crucial (not
desirable) any options that
had a CSF scoring a "No" are
discounted
Possible
Preferred Discounted Discounted Preferred Discounted Discounted
Refer
Note
below
Option Title
Option 0 Do Nothing
SCO1 Do Nothing
Option 1 Interm ediate
Scope - Regional
Option 2 Interm ediate
Scope - National
Integration
Option 3 Maxim um Scope Regional Integration
SCO3 Intermediate
SOL2 Integrated Regionally
SCO3 Intermediate
SOL3 Integrated Nationally
SCO4 Maximum
Option 4 Maxim um Scope National Integration
SCO4 Maximum
SDO3 Partially managed (led by commercial
supplier)*
SDO3 Partially managed (led by commercial
supplier)*
IMP2 Phased by site
SOL2 Integrated Regionally
SDO3 Partially managed (led by commercial
supplier)*
IMP2 Phased by site
SOL3 Integrated Nationally
SDO3 Partially managed (led by commercial
supplier)*
* A capability analysis of the [MINISTRY} will be
conducted to see if SDO4 Partially managed (led
by [MINISTRY]) is a possibility. Based on present
incomplete information this does not appear to be
a viable option.
IMP2 Phased by site
IMP2 Phased by site
50
Indicative Business Case
Commercial, Financial and Management Cases (Outline)
Recommended preferred way forward, if conventional
procurement, with three to five short-listed options,
including a base case option
• Provide range of indicative cost estimates for
each short-listed option and funding sources
• Outline the commercial case
• Outline the management case
Financial
Commercial
Management
51
Detailed Business Case
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
52
Detailed Business Case
Purpose
• Revisit the case for change and the preferred
way forward
• Determine the preferred option that optimises
value for money
• Outline the potential deal
• Assess affordability
• Outline plan for delivering the project
53
Detailed Business Case
Strategic Case (Revisit)
Revisit the indicative business case
Strategic
54
Detailed Business Case
Economic
Economic case
Economic assessment of the short-listed options (or
preferred non-traditional procurement option)
Intangible benefits and costs
Risk and uncertainty
Preferred option and undertake sensitivity analysis
Stakeholders identify, weight and
score the short-listed options
against any intangible benefits
and costs
55
Analysis of the short-listed options
Option 4:
Preferred
Way Forward
Option 5:
Preferred Plus
20
20
20
22.5
23.9
31.6
45.7
24.2
49.7
70.7
90.9
Option 1: Do
Nothing
Option 2: Do
Minimum
Appraisal Period (years)
20
20
Capital Costs ($m)
0.0
14.4
Whole of Life Costs ($m)
Option 3:
Preferred
Minus
Economic
Cost-Benefit Analysis of monetary costs and benefits at the Public Sector Discount Rate
Present Value of Benefits
($m)
2
25
75
115
126
Present Value of Costs
($m)
7
23
40
52
73
0.3:1
1.1:1
1.9:1
2.2:1
1.7:1
(5)
2
35
63
53
Benefit Cost ratio
Net Present Value (NPV,
$m)
Multi-Criteria Analysis ranking of intangible costs and benefits (if any)
Criteria 1
1
3
3
5
1
Criteria 2
5
2
3
2
4
Criteria 3
Preferred option
3
2
5
Yes
1
3
56
Detailed Business Case
Commercial case – Preparing for the Potential Deal
Procurement strategy
Service requirements
Risk allocation
Payment mechanisms
Contractual and other issues
Commercial
Financial case – Ascertaining Affordability and Funding
Requirements
The financial costing model
Financial
57
Detailed Business Case
Management case – Planning for Successful Delivery
Project management planning
Change management planning
Benefits management planning
Management
Risk management planning
Post-project evaluation planning
58
Implementation Business Case
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
59
Implementation Business Case
Purpose
• Identify the supplier that offers the best value for
money
• Detail the negotiated and commercial and contractual
arrangements
• Confirm the proposed
arrangements are affordable
• Organise the detailed management
and delivery arrangements
60
Implementation Business Case
Strategic and Economic Case (Revisit)
Revisit the case for change
Strategic
Revisit the detailed business case options
Economic
61
Implementation Business Case
Commercial case – Preparing for the Potential Deal
Evaluation of best and final offers
The negotiated deal and contractual
Commercial
arrangements
Financial case – Ascertaining Affordability and Funding
Requirements
Financial implications of the deal
Financial
62
Implementation Business Case
Management case – Planning for Successful Delivery
Finalise project management arrangements
Finalise change arrangements
Finalise benefit management
Management
Finalise risk management
Finalise contract arrangements
Finalise post-project evaluation arrangements
63
Single Stage Business Case
Programme
Strategic
Assessment
Project
Strategic
Assessment
Project
Strategic
Assessment
Programme Business
Case
Indicative
Business
Case
Detailed
Business
Case
Implementation
Business Case
Single Stage Business Case
© The Treasury
64
Single Stage Business Case
• Includes all five cases
• Level of analysis and detail is lighter than full process
• Expectations re level of detail and approach to
developing the Business Case (workshops etc) should
be defined in the scoping document.
• Also Single Stage (Light) Business case
65
Top ten lessons learn’t, examples and
questions
© The Treasury
66