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Five case model

Programme Business Case Preparing the Strategic Outline Case (SOC) Planning the scheme and preparing the Outline Business Case (OBC) Procuring the solution and preparing the Full Business Case(FBC)

Programme Business Case

Spending proposals (projects), should not appear ‘out of the ether’ and should be grounded within an over-arching policy, portfolio and programme that provides synergy and holistic fit with a well documented and clearly understood business

The Programme Business Case (PBC) should directly relate to the policy and business strategy.  Its purpose is to:

  • Make a compelling case for change
  • Clearly outlines the expected programme outcomes
  • Consider a range of programme options and recommends the package of projects that will best deliver the programme outcomes to optimise public value
  • Determine the critical path for the constituent projects
  • Determine the funding envelope for the programme

The title ‘Programme Business Case’ is the new name for ‘Strategic Outline Programme (SOP)’ – a welcome change made by the Better Business Case Standards Board in 2013.  That said, the terms are often used interchangeably, but they refer to the same product.

This stage maps onto the Cabinet Office Gateway Review point 0 (strategic fit) and comprises “Step 1” of the business case development framework; which is “ascertaining strategic fit.”

Value People Tip

A well developed Programme Business Case does not increase bureaucracy and workload – quite the contrary, it enables decision makers to clearly see the scope of investment at a high level and how individual investments fit together to deliver a product that is greater than its constituent parts.  It makes the production of project business cases within the programme easier – often allowing the Strategic Outline Case to be merged with the Outline Business Case stage as strategic justification has been made at the programme level – resulting in reduced bureaucracy, not least by decreasing the burden of approval on sponsors and approval authorities

Preparing the Strategic Outline Case (SOC)

This is the scoping stage for the spending proposal which results in the production of the Strategic Outline Case (SOC).

The focus at this stage is very much on the strategic and economic cases to confirm the strategic context of the proposal and to make a robust case for change, providing stakeholders and customers with an early indication of the “preferred way forward” (typically a short list of four options which can be subjected to more detailed economic analysis).

The SOC should identify a wide range of available options, together where possible with an early analysis of the shortlist based on indicative costs and benefits and application of allowances for optimism bias and risk.

This stage aligns with the Gateway Review point 1 (business justification) and comprises of the following business case development framework activities:

  • Making the case for change
  • Exploring the preferred way forward

The SOC represents the first cut of the business case and provides management boards, accounting officers and political portfolio holders the opportunity to pause, reflect and consider whether the scheme is developing in the right direction, as they and wider stakeholders expect it to.  It prevents nugatory work on detailed analysis and procurement and its approval gives the sponsor of the business case the confidence and a mandate to commit further time and resource to developing the case to Outline Business Case stage. 

This reflects the nature of the SOC in determining the direction of travel. At this stage it is not possible to provide the detailed economic analysis, commercial, financial and management arrangements, hence these aspects are relatively under-developed.

Value People Tip

Communication is key throughout all stages of business case development, but it is particularly important when developing the SOC.  This is the stage where extensive consultation with key stakeholders should be undertaken to ensure the proposal will deliver their requirements – this is critical to the success of the scheme – it can be the most rational, well written business case ever, but it won’t go anywhere without the buy in of key stakeholders!

Planning the scheme and preparing the Outline Business Case (OBC)

This is the detailed planning phase for the spending proposal which results in the production of the Outline Business Case (OBC).

The purpose of this stage is to revisit the shortlist developed in the SOC, undertaking more detailed economic analysis, considering the costs, benefits and risks of the shortlisted proposal in the round by calculating a Net Present Value (NPV) or Net Present Cost (NPC) for each option, identifying a “preferred option” which demonstrates value for money by optimising the balance of cost, risk and benefit.

The OBC also sets out the likely ‘Deal’; demonstrates affordability; and details the supporting procurement strategy, together with management arrangements for the successful delivery of the proposal.

This stage aligns with the Gateway Review point 2 (delivery strategy) and comprises of the following business case development framework activities:

  • Determining potential Value for Money
  • Preparing for the potential deal
  • Ascertaining affordability and funding requirement
  • Planning for successful delivery

The OBC summarises the results so far and sets out the facts seeking formal approval to proceed to a formal Procurement Phase.

Value People Tip

A convincing OBC hinges on the credibility of the cost model and procurement strategy.  Despite being separate cases, the economic and commercial cases are inextricably linked at this stage – you need to have a clear understanding of the potential costs and benefits for your shortlisted options based on the best available evidence.  This can mean researching similar schemes, targeted market engagement and considering local factors that might affect the deliverability of a project (such as scale or geographic location).  If you can build confidence in your costings and feasibility with key stakeholders (including approval authorities), your OBC is much more likely to be successful!

Procuring the solution and preparing the Full Business Case(FBC)

This is the procurement phase for the spending proposal, following detailed negotiations with potential service providers/suppliers prior to the formal signing of contracts and the procurement of goods and services.

The purpose of the FBC is to revisit and where required rework the OBC analysis and assumptions building in and recording the findings of the formal procurement.

This case at its conclusions recommends the “most economically advantageous offer”, and documents the contractual arrangements, confirms funding and affordability and sets out the detailed management arrangements and plans for successful delivery and post evaluation.

The FBC aligns with Gateway Review point 3 (spending/investment decision) and comprises of the following business case development framework activities:

  • Procuring the VfM solution
  • Contracting for the deal
  • Planning for successful delivery

At conclusion of the FBC, the development of the business case across the
five dimensions of the Five Case model is complete as illustrated by the following diagram which also shows its development relative to the SOC and OBC.

Value People Tip

The FBC records the procurement process and subsequent deal.  Commercial negotiations can be complex, are constrained and guided by legislation and usually take longer than expected.  So, plan realistically for the time it takes to go through the process (manage stakeholder expectations) and use specialist advice and support judiciously to reduce delays and improve the chances of success of the project.  Finally don’t forget to put in place arrangements for post project evaluation and benefits realisation – we only get better by learning from experience!

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