The case for business cases
A clear purpose, a robust justification, consistent messages and accountability are obviously desirable attributes for any undertaking. One way of promoting these attributes is through developing, publishing and reviewing a business case.
The typical private sector business case makes the case for investment by specifying, often quantitatively, return on investment by means of turnover and profit. This article looks at business cases for public sector organisations where a qualitative case for a particular course of action may be more appropriate. It is our experience that business cases are becoming increasingly important for these organisations, but are difficult to write and agree.
The Office of Government Commerce (OGC) define a business case as an aggregation of specific information about a programme, project or service, necessary to support a series of decisions. These decisions, over time, increasingly steer an organisation to the achievement of the outcomes or benefits envisaged as a result of a particular business change. The essence of a business case seeks to answer "what are we doing and is it the right thing to do?"
The value of a properly written and managed business case stems from:
- presenting and communicating the rationale for the purpose of the undertaking;
- presenting the big picture within a single point of reference;
- permitting performance tracking by setting out benefits and envisaged outcomes;
- providing an auditable trail for accountability.
The business case is relevant throughout the lifetime of a programme, project or service. Each update to the business case will add more detail, and increasingly focus on realising the envisaged benefits. The business case will feed into the decision of whether to continue investment: for example, within the UK Government's Gateway Reviews, the validity of the business case is first reviewed for Gateway Review 0 and then re-examined as part of each subsequent Gateway Review.
The OGC, through the Managing Successful Projects and Programmes guidance, and the Treasury, through the Green Book, provide useful documentation on writing and using business cases. However, such documentation must be accompanied by a strong understanding of the proposed undertaking and its strategic context, rigorous reasoning of different options and specialist skills such as programme management and cost modelling.
The challenges
Developing a robust business case is often a difficult process. This is often due to:
- difficulties in quantifying benefits, costs and risks;
- significant uncertainty at the start of a long-term undertaking;
- difficulties in articulating complex business change;
- the case being weaker than first thought.
There is a risk that:
- a lack of data and information leads to an assertion-based business case rather than an evidence-based case;
- the facts or scope of the undertaking change rapidly, requiring substantial redevelopment, or gradually, leading the business case to become out of date;
- updating the business case is considered a burden and not done.
Excellent leadership is required to tackle difficult issues and to articulate vision and strategy. An admission of uncertainty and acceptance of risk is often also necessary. The level of detail and completeness (or maturity) of the business case will reflect the amount of uncertainty in the business case.
Approach
The choice of approach and tools must fit the problem.
Firstly, business cases are best approached proactively. A business case should not be written to justify a decision already made. Preparing a business case will bring out all the issues required deciding on a course of action, so is best done hand-in-hand with the decision-making.
An options appraisal is a common means of objectively weighing up the different merits of different options. Appropriate types of analysis will be required to complete the options appraisal: for example "hard" quantitative modelling of cost-effectiveness, or "softer" use of expert judgement to identify strategic priorities.
Finally, remember that all business cases will come in for critical scrutiny and comparison against other uses of investment. Remaining objective, considering different points of view and keeping a business case up-to-date will head off much criticism and really exploit its value.
Curtis+Cartwright
We have experience in developing and reviewing business cases for a range of public sector organisations. We would be happy to discuss the issues discussed in this article, and our capabilities, in more depth with interested parties.