A strategic approach to business case development

Ricardo regularly works with government clients to develop business cases for the investment of public funds in policy initiatives and programs. This experience has helped us identify recurring challenges clients face during this process.

These challenges, and the solutions to them, might be seen as logical or widely known. However, our experience has shown us that business cases remain challenging to develop, and that the effort required to do so effectively is often greater than anticipated.

Ricardo has prepared this insight piece to provide you with key tips for managing the overall business case process. Ricardo will also be providing subsequent insights that will cover topics that address important components of the business case process, such as analytical tools to assist you assess the best options to consider in more detail in the business case.

Business cases are complex and challenging and they will always require a concerted and coordinated effort to deliver on time and to the quality required. The business case process is often viewed as a separate and isolated task to be started and completed in two to three months. However, developing a business case is not a one-off event. Business cases are one component of a continuous investment cycle, which reflect the strategic and policy context of the organisation and government.

In simple terms this cycle involves strategy development, business case preparation and implementation. Each of these stages involves relationships and interaction with a range of stakeholders, as shown in Figure 1.

By actively considering the investment cycle your organisation can set up your investments for success and make the business case process more efficient and more pain free. Thinking of business cases in this way will ensure you are able to:

• Prepare early: you can give yourself, your team and your partners the time required to build a robust, evidence-based business case with minimal stress.
• Focus on what’s important: identify what will sell your investment, the narrative behind it, and the data and information needed to appropriately communicate the problem and the solution, in accordance with the assessment process and evidence-base required by the funding agency.
• Establish and maintain relationships: start the conversation early and demystify the process by getting to know the key contact at the funding agency (e.g. your portfolio contact at Treasury) and those partners that will be affected by and help to deliver the investment.

To assist you to navigate the investment life cycle and business case process Ricardo has developed the following set of key tips based on our experience preparing business cases to help you make your next business case more likely to be successful.

Developing business cases involves engaging with multiple parties including those within your organisation, funding agencies (which is often Treasury), and your delivery partners. Building relationships with these stakeholders allows you to build a strong case for investment through understanding and responding to their views, perceptions and needs.

Within your organisation there are ‘gatekeepers’ whose role is to ensure the right business cases are presented and they are aligned with the broader organisational strategy and context, which includes consideration of government policies and priorities. It is vital to engage them early to ensure your business case meets these requirements.

The relevant funding agency should not be simply seen as silent arbiters of business case success. If engaged early, the funding agency can be a key partner by providing advice on process as well as how to structure and articulate your business case to best meet the needs of government.
It is also important to maintain relationships with your delivery partners and communicate early with those who are required to implement, or will be affected by, the investment. Your delivery partners will also be fundamental throughout the business case development process. The more partners there are, the more time and process it will take to effectively engage with them.

A business case will often succeed or fail on the basis of its narrative. Without a clear strategy for the investment it is very difficult to build a strong narrative for the investment with clear purpose and scope. Strategy development is part of business as usual, not limited to budgetary processes. Developing a coherent strategy involves answering questions including:

• What is the problem we are trying to address?
• What is the role for government in addressing this problem?
• What are we trying to achieve?
• What would occur if government did not intervene?
• What are the most appropriate options for addressing the problem and achieving our objectives?

Some of these questions are embedded in the business case template but they take time to answer. Developing strategy involves engaging subject matter experts and influential decision-makers, collaboratively developing policy or program options and considering their merits. Too often this step is compressed into the short business case process leading to poorly articulated or ill-defined narratives and investment options, which may in turn delay delivery if the business case is successful.

Business case documentation is prescriptive. It is designed to assist government to consistently compare proposals to ensure investments are aligned with government priorities and maximise community wellbeing. It is designed to help facilitate your thinking about exactly what the problem is and how best to address it.

Business case templates can require a number of inputs that can be time consuming to develop. The more complex or high-value the proposed investment, the greater the scrutiny. For example, the development of a robust cost-benefit analysis is important, and can be critical, to the success of a business case. However, if the cost-benefit analysis is left to the last minute it can mean that there is a lack of agreed appropriate information and data, which is essential to ensure it is sufficiently robust.

To adequately prepare, a business case readiness assessment is recommended to be undertaken to determine what the key inputs are going to be and their status of development. If the business case is for a lapsing program, some of these inputs may already be available (noting that a lapsing program evaluation will need to be undertaken). If it is a new initiative, it may take significantly more time to develop the necessary inputs.

Understanding the business case template itself will help you to determine what is required and when you need to start preparing the necessary inputs to maximise the chance of success.

A successful business case can mean starting implementation quickly, particularly if only one or two-years of funding have been allocated. However, businesses cases can result in fundamental changes to your organisation’s culture, relationships and business partnerships. Ensuring you understand the impacts the delivery of the investment can have, and when they need to occur, will enable you to be ready to deliver once funding is approved. Demonstrating a clear understanding of implementation requirements and a realistic process to begin implementation will is also an important component of a business case. Business cases that do not provide confidence for timely and effective implementation can often be rejected or limited to shorter funding timeframes.

Program evaluations, when done well, identify improvements to implementation effectiveness. Program evaluation (including mid-term or lapsing) can often be seen as a tool to criticise the delivery of a program, rather than an opportunity to understand how you can improve the delivery of the program in the future, or lessons for the design and delivery of other programs. If used as an opportunity to identify insights, program evaluations can be used as an effective tool to implement an adaptive management approach to program design and delivery. In this way, program evaluations also become a key input to the development of future strategy.