Business case features required for a public sector project

by Nicki Carruth | Sep 13, 2022 | Business Case Assurance

Crafting a proposal for investment is never a small task. In private organisations the considerations are typically more towards the financial feasibility and potential benefit to the bottom line. A business case in the public sector however has different considerations – and ultimately a need to serve the population the best way possible. We help both types of organisations with their business cases and understand all the nuances between them. In this article we will touch on just a few of the elements that a public sector business case needs to incorporate. If you want more comprehensive information on this, feel free to get in touch with us.

Treasury’s Better Business Cases™ Model

The north star that NZ government agencies reference is the Treasury’s own guidelines for business case development, known as the Better Business Cases™ Model, under which the framework of ‘The five case model’ sits. This way of thinking about a business case helps to ensure teams and the senior responsible officer have covered off the most important aspects of a potential investment where tax dollars are used to fund it.

Treasury’s guidelines for the five case model provide information on each of the elements as well as templates and other resources to help businesses craft a best practice document.

The five case types, according to Treasury, are:

Strategic Case
Economic Case
Commercial Case
Financial Case
Management Case

Strategic case talks to the direct alignment of the investment with what the organisation is trying to achieve. Economic case takes into account the investment’s value for New Zealand – is this the best option for the public good? Commercial case talks about the engagement with third party vendors and suppliers that would be required to deliver on the investment. Financial case is about the affordability of such a project. Finally, and crucially, the management case talks to how the work will actually be delivered.

Considering the impact to New Zealand

Something that private enterprise rarely needs to think about on such a general scale is what such an investment will do for the population. Government functions are paid for and designed to serve us as a country. Therefore each decision around the use of funds in government needs to be put under the microscope and be subject to debate on what the ultimate value is to New Zealand. For example, a business case designed to overhaul a public portal log-in to make managing personal details easier will have clear positive outcomes. Less directly public-facing initiatives may require further investigation to ensure there is at least an indirect benefit to the country.

The business case should outwardly express the need for investment in these terms at the start of the document and somewhere in a summary section. Along with the strategic objectives of the organisation, this factor is one of the more important inclusions in your case.

Scrutiny on the costs

While every business case regardless of the sector will require careful thought into the proposed costs for delivery, the scrutiny that public sector organisations are subject to can be huge. When costs fail to pass checks and balances like thorough market research or competitive tender, agencies are exposed to criticism from the public (via OIA requests), ministers and other members of parliament. Not least of all, poor spending decisions will find their way into the media in many cases with the unwanted high profile this creates.

Your business case, consequently will need to demonstrate a careful process to arrive at the costs outlined. Part of this may involve assurance, market analysis and suggestions for delivering aspects of the project through creative use of existing resources.

Careful risk analysis

Risk is part of every business investment – both in the funds it costs to put that project into action and the impacts to the business the actual delivery of the project could have. As such, risk analysis is fundamental to getting a public sector business case over the line.

Senior Responsible Owner is the lead role on a business case (they will also have a normal job title). The SRO needs to work closely with the risk assessment personnel in your organisation to properly undertake a review of the known risks that exist or may materialise throughout the lifespan of the project.

Surfacing risks isn’t enough for a business case to be met with confidence. Risks must be explained in detail and mitigation measures outlined. Along with this there will need to be contingency plans in place when a risk can’t be mitigated. This could mean having a plan B for some elements of the proposed initiative.

Relationship Between Programmes and Projects IQANZ

Procurement strategy

What a decision making group will want to understand is ‘what other parties are going to be involved outside of the immediate organisation to deliver on what’s proposed?’. For a project such as that involving new or complex technologies, a specialist vendor or vendors is likely to be involved. In many public sector projects, there are multiple 3rd parties involved to support delivery.

The business case needs to clearly state how the procurement of such suppliers would be handled. There should also be some indication around potential costs based on initial market research and speaking with suppliers. For large business cases, the costing up of the project will need to be established and captured in the business case itself in order to be accepted.

The procurement information provided needs to include criteria for selection, the scope of their involvement and the personnel responsible for negotiating and securing contracts.

Understanding the mix of BAU and contractor resource

A common push back from leadership teams on proposed costs is ‘don’t we have the internal resources and skills to do this?’. This is a well-justified point to raise and simply reflects the fiscal prudence that senior leaders typically have. But it’s usually asked when there’s a lack of explanation as to the requirements of delivering the project. The business case should expressly outline the existing capacity within the BAU team from both a time and skill point of view, which can then set up the argument for engaging contractors or outside suppliers.
Front footing this in the business case is highly recommended. Outline the consultation with the business on the existing resource and provide assessment of the market cost of skills to bring in on a contract basis. This will comprise part of the overall project costs but should be explained in its own resourcing section of the business case.

Accounting for the other projects and programmes within the organisational portfolio

A portfolio in a large government entity can be quite complex and vast. Projects of many shapes and sizes often coexist, many of which are nestled under long-term programmes. Each of these organisational initiatives have their own governance in place, people involved, and stakeholders they interface with.

Your business case needs to show in a clear and logical way where the initiative would sit within the portfolio and how it will meet strategic needs in a way that’s not currently being met by other projects. There’s a high chance that your project will come into contact with the activities of another – either through the people involved or the deliverables themselves. It’s important to note in the business case what potential overlaps or dependencies could surface between this project and existing ones. Your research stage, if done thoroughly, should highlight any big issues before the business case is even drafted.

Get help with your public sector business case

We work with a large number of public sector agencies and their teams to create business cases that meet the needs of decision-makers and the Treasury’s best practices. Chat to our team to learn more about how we approach business case assurance.