Better Business Cases “Investing for change” Foundation Course

1. Better Business Cases “Investing for change” Foundation Course

2. Foundation Course objectives • Sufficient knowledge 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

3. 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 Planning the approach to developing the business case 10.45am The national evaluation and way forward 11am Types of business cases (Programme and project approach) 11.45am Examples, top ten lessons learnt, and questions (Lunch 12 noon) 12.50pm Expectations close out and evaluation forms

4. Expectations

5. Background

6. 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

7. Opportunity for greater influence through better strategy and planning Better Business Cases Visibility to inform the portfolio Projects and programmes underway 10 year view of intentions 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 developed

8. State Sector -Balanced portfolio planning of programmes and projects needing investment Transformational change Keep the business running Grow the business

9. Why BBC

10. Value of Better Business Cases? • Decision makers/Investors-confidence ! • Management-confidence ! • Business case developers-fit for purpose • Reviewers- fit for purpose • Private sector service providers-early engagement

11. 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

12. What is BBC

13. What is a better business case and what is expected What is a Better Business Case? • Based on the UK Government BBC approach • Common Language to support stakeholder engagement-way of thinking and working together • Thinking not writing • Fit for purpose analysis • Smart procurement of consultancy support • The thinking is challenged and brings coherence and cohesion • Campaign to deliver benefits, not a document to get money What is expected? • Effort and decision making depends on scale and risk of the project or programme • 5 case model is the core of BBC

14. When BBC applies

15. When does it apply?-Mandated 2010 Cabinet directive for State Sector high risk or large scale capital projects or those requiring funding: • Govt. Dept’s and Crown Entities • National Health Board for DHB’s 2012 Cabinet directive for Canterbury Earthquake Recovery investments in projects and programmes

16. When does it apply? - Voluntary 2012 Auckland Council adopted for Auckland Plan capital investments and being piloted for socio-economic programmes 2013 NZTA adapted for National Land Transport Programme across Local Government Tertiary Education Commission for tertiary education sector borrowing Public and private sector organisations adopting as good practice National NGO Federation to transform service delivery 2014 Society of Local Government managers for Local Government (non transport) MFAT considering for Pacific Island Countries World Bank considering for developing countries

17. The 5 case model, the BBC process and its fit with other processes

18. The 5 Case Model Any business case addresses 5 key questions: Is there a compelling case for change? Does the preferred investment option optimise value for money? Is the proposed deal commercially viable? Is the spending proposal affordable? How can the proposal be delivered successfully?

19. The 5 Case Model The 5 key elements of good practice business cases Compelling case for change - strategic fit & business needs Strategic Achievable and can be successfully delivered Management Economic Preferred option optimises value for money Financial Commercial Affordable within available funding Commercially viable

20. 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 Planning and scoping The level of emphasis of each of the five cases depends on the type of business case S S E C M F Programme Business Case Strategic Assessment Confirm fit with strategy and need to invest Confirm case for change, preferred programme, project tranches, funding Project/s (Large scale and/or high risk) S E C F M S S E C F M S E C F M Strategic Assessment Indicative Business Case Detailed Business Case Implementation Business Case Confirm fit with strategy and the need to invest Confirm way forward with short-listed options (consider non-traditional procurement) Confirm best value for money option, outline potential deal and delivery plan, assess affordability. Confirm supplier offering best value, detailed commercials, confirm affordability. detailed management and delivery arrangements Project/s (Other) S E C F M S Single Stage Business Case Also the single stage (light) business case Strategic Assessment

22. BBC Process fit with Policy, Programme and Project management

23. BBC Process fit with Procurement process

24. Where to get support

25. Where do I get support-on the website ? Overview information • Quick Reference Guide • Presentation • Overview booklet • Scoping document (programme or project) 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) Webinar Communities of practice by sector for Practitioners supported by BBC Experts Endorsed BBC Expert Practitioners and Reviewers pilot

27. Planning the approach to developing the business case Right sizing the effort and engagement – the scoping document

28. The Goldilocks Zone In the case of fairy tales Not too hot/not too cold In the case of life on planets Not too close/not too far away In the case of Better Business Cases Not enough effort/too much effort Just right

29. 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 then the type of business case • Right sizing the capacity/capability of the team • Right sizing the effort and engagement • What decision is being sought

30. Stakeholder Engagement Business Case Capability Subject Matter Focus Stakeholder Focus Governance High Influence Co-production Content e.g. service delivery Change mgmt e.g. stakeholder engagement Power and Influence Mass Communication Empower Business Case e.g. Cost/Benefit analysis, Commercial advice, Financial modelling etc Assurance and Decision Making e.g. monitoring function Change Impact Low High Project Management

31. 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

32. National evaluation and way forward

33. 2013 National Evaluation-findings Positive impact on decision making overwhelming agreement positive impact enabling ‘value for money’ investment decisions, with confidence. process most effective when applied by experienced people current BBC training will not produce mastery strong plea to help develop internally (Governance, writing, modelling, critical thinking, stakeholder engagement)

34. 2013 National Evaluation-MoF’s view • Been effective • 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 • All agencies need to see as critical and take long term view

35. Way forward Improve capability of the priority public sector organisations • To launch case studies to website • To launch webinar 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 Policy/Strategy Provide advice to improve reviewer capability Now part of the State Sector Portfolio Performance function atThe Treasury

36. Types of business cases

37. Strategic Assessment Programme Strategic Assessment Programme Business Case Implementation Business Case Project Strategic Assessment Indicative Business Case Detailed Business Case Project Strategic Assessment Single Stage Business Case

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 Strategic Case-Making the Case for Change Outline the strategic context 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 in the driver/problem and benefits (2 hour) workshops . If state sector capital project must use “Investment Logic Mapping” ILM facilitator, otherwise use other tools and people which challenge the thinking. Invite writer and reviewer.

40. Programme Business Case Programme Strategic Assessment Programme Business Case Implementation Business Case Project Strategic Assessment Indicative Business Case Detailed Business Case Project Strategic Assessment Single Stage Business Case

41. Programme Business Case Purpose: • Confirm the strategic context • Confirm the case for change • Recommend a preferred programme and way forward • Identify project tranches • Estimate cost and funding sources • Gain early approval from decision makers for developing subsequent project-based business cases

42. Strategic Programme Business Case 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 or BBC Expert Practitioner. Invite writer and reviewer.

43. Programme Business Case 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) Economic • Stakeholders do the thinking together in two or more two-hour workshops led by a BBC Practitioner or BBC Expert Practitioner : • Prepare long list (consider inclusion of industry association), then • Assess long list to short list • Invite Procurement Expert, Writer and Reviewer

44. Programme Business Case Commercial Commercial case • Based on the preferred programme the likely attractiveness to potential service providers (including high level consideration of non-traditional procurement) Financial case • Based on the preferred programme determine rough order costs and potential funding sources Management Case • Outline how the programme is intended to be delivered Financial Management

45. Indicative Business Case Programme Strategic Assessment Programme Business Case Implementation Business Case Project Strategic Assessment Indicative Business Case Detailed Business Case Project Strategic Assessment Single Stage Business Case

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 or BBC Expert Practitioner

48. Indicative Business Case Economic Case-Exploring the Preferred Way Forward Critical success factors Long-list options and initial options assessment by dimension: • Scale, scope and location (what) • Service solution (how) • Service delivery (who - including non-traditional procurement options) • Timing and staging (when) • Funding (how much) Economic • 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 short list • Invite Procurement expert re service delivery, industry association re solutions, writer and reviewer

49. The long list to short list of options (example)

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