This guidance describes the steps needed to begin development of a business case at an activity level, either as the last part of a single-stage business case (SSBC) or as a separate detailed business case (DBC) phase.
Please note that core elements of this guidance are likely to be needed regardless of whether the business case is developed in a single stage or as a separate indicative business case (IBC) and DBC.
Remember also that the level of effort should be fit for purpose, for example, the effort required to progress an SSBC is likely to be less than for a separate IBC or DBC, since lower levels of risk and complexity are involved in an SSBC.
The DBC develops detailed analysis of a preferred option and a do-minimum option for either:
The DBC involves a more detailed analysis of the costs, risks and benefits of the preferred option and the do-minimum option identified in the IBC. It is aimed at building a complete understanding of the acceptable risks, uncertainties and benefits associated with the investment, so that a final decision can be made whether to implement it.
The DBC usually only involves further detailed analysis of the preferred option and the do-minimum option, not all the options listed in the IBC. Sufficient evaluation of longlisted and shortlisted options should have been done in the IBC phase so that the DBC can focus more effort on optimising the preferred option. However, sometimes the IBC identifies more than one preferred option, and it is difficult to distinguish between them based on the IBC analysis. In this case, detailed analysis may need to be done on more than one preferred option so that the best option can be identified.
If the decision at the end of the DBC is to proceed with the activity, a funding application to proceed to implementation (or pre-implementation, as necessary) is also developed.
The DBC needs to follow the key Business Case Approach (BCA) principles of investing for benefits, fit-for-purpose effort and clarity of intent, and the key behaviours of progressive development and informed discussion.
The main purpose of the DBC is to provide assurance that the preferred option identified in the IBC is the right approach to deliver the desired outcomes and is an effective solution to the identified problems.
The DBC must provide detailed analysis of the costs, risks and benefits of the preferred option, including evidence that it:
The DBC also needs to finalise the financial, management and commercial cases for the proposal, including:
Keep talking to your Transport Agency investment advisor, who should have been engaged with from the beginning of the business case. By this phase, it is expected that the approach and early signals about the degree of alignment with the Government Policy Statement on Land Transport (GPS) and Transport Agency investment principles are clearly understood by everyone.
If the DBC is for an activity that was identified in a PBC, you must show:
Provide a brief summary of the optioneering and shortlisting process undertaken in the IBC.
The Transport Agency expects detailed analysis and reporting to be carried out on the preferred option. This is where you need to confirm and develop the preferred option through detailed whole-of-life analysis of costs, benefits, intangible benefits, risks and uncertainties. Essentially, it’s an in-depth look at how the preferred option will be funded, how it will be run and how procurement will be managed – the financial, management and commercial cases – backed up by evidence.
Think about breaking this work into planning for the preferred option and determining affordability, including:
Add to and refine the DBC document as your knowledge grows. This includes continually applying the business case assessment questions to ensure you have covered the key issues that will form the Transport Agency’s assessment of the business case. In addition, regular discussions with a Transport Agency investment advisor helps to ensure that the business case is robust, and there are ‘no surprises’ when it is assessed.
The DBC should summarise the case for change (strategic case) and demonstrate that it optimises value for money (economic case). It should also demonstrate that the preferred option is commercially viable (commercial case), is affordable (financial case) and can be delivered successfully (management case), for which you will have done the detailed analysis and planning, as above.
A document information guide is available as an option for you to use and adapt when writing your DBC document to help tell your investment story.
The following is a summary of the elements that should be covered in a DBC:
The business case developer and the problem owner make an initial assessment of the strength of the business case, guided by the 16 business case assessment questions, and evaluate the investment proposal against the IAF. The results of this ‘self-assessment’ should be recorded in the DBC document.
Send the DBC document to all participant stakeholders for comment before submitting it to the Transport Agency for assessment of the business case. If there are co-investors, you will need to seek their support, which will likely involve going through their internal approval processes. The decision-making needs of each co-investor must be clear in the project plan and governance section of the DBC document.
If you are seeking NLTP funding, you must submit a robust funding application for implementation in Transport Investment Online (TIO), with the DBC uploaded as the supporting document. A pre-implementation phase may be required to do further work on risk management, consenting, funding, etc.
When the request for implementation of the proposed option is received in TIO, the Transport Agency assesses the business case against the business case assessment questions and the criteria set out in the IAF to determine whether:
A recommendation is then made to the delegated decision maker to support the DBC or otherwise. If the Transport Agency investment advisor has been involved throughout development of the business case, there shouldn’t be any surprises that result from the decision.
Note that this is for guidance only, and should be adapted as necessary.
Online learning modules have been developed by the Transport Agency, and are available to our partner organisations. To request access to the modules, email firstname.lastname@example.org with your name, title, organisation and manager’s name.
The ‘Activity-level business cases’ course covers single-stage, indicative and detailed business cases.
To open the course, click the link above and then click ‘enrol’. You will be prompted to enter your log in. Once you have logged in, you should be taken directly to the course. You can also find it by going to the catalogue and searching for ‘activity-level business cases’.
This information sheet is designed to accompany the learning module.