Large organisations and the public sector are regularly undergoing change and strategic developments. To get investment of capital or operational expenditure for a non-BAU activity, a compelling business case needs to be put together. Developing your business case typically needs to include careful planning, research and analysis of the benefits and logistics around delivery.

It’s not uncommon for business cases to be turned down. Knowing what might prevent approval can help future business case development. In this guide, we look at some of the common reasons we see project business cases being turned down and what you might do to avoid this.

Treasury has developed guidelines for public sector business cases which is a fantastic resource for ministries and state entities to create consistent, robust proposals. 

In this guide, we’ll talk about the key aspects of the Better Business Case framework that Treasury created, and how you can apply it to your own business case.

 

Managing risks in a project portfolio IQANZ

It’s not clear how delivery will be managed

A business case needs to provide a clear pathway from the status quo to the desired outcomes. That means establishing the mechanism in which the change will be delivered – oftentimes a project or a larger-scale programme. When we help our clients develop their business case, this part of the process is what we refer to as the ‘management case’; outlining things like the governance structure, project teams, timelines, dependencies and other project-related considerations.

The business case doesn’t need to actually create the governance structure, but it should detail the way in which this will be approached. Some organisations will set up a core of the governance to support the business casing process, but setting up too much of the project mechanism before approval could be spending money you might later regret.

Providing decision-makers with confidence in project management helps to illustrate the practical elements to change. We sometimes see business cases that do a great job of the aspirational business impact or strategic imperatives but don’t quite put this into a concrete plan. If you can create this in your business plan, you’re helping the audience envisage how this would look in practice. Otherwise, your audience may make up their own assumption of what it would take to deliver and may even be unable to see how it would work.

The commercial engagements haven’t been properly considered

When a business is considering an investment of time and money into an initiative, they won’t simply be looking at the capability in their own organisation but what’s available in the market through vendors. For example, a new IT transformation project may require a range of platforms and service providers to bring to reality. Then there will be ongoing support requirements as well. One of the areas that can see budget blowouts is in the costs associated with project vendors. These specialist resources are typically essential but come with large costs. If the business case hasn’t outlined a way to engage with vendors and determine the commercial viability, then it may be a blindspot of the senior responsible owner (SRO) that decision-makers believe creates too much risk to proceed with.

Another commercial consideration that will impact any project or programme business case is the manner in which procurement will be conducted. Organisations should have a procurement process and team or at least a role that takes care of this. It’s important to engage your procurement team as the business case is developed so there’s a clear indication of the process that will be followed to vet potential suppliers, the RFP approach and other details that could impact the quality of the investment.

Your business case needs to be able to demonstrate how it will engage with the market and how ready the market is to respond to your needs. It’s often beneficial to do some form of market testing as part of your business case to show where the commercial strengths and weaknesses might be.

The financial analysis is out of step with the organisations’ own financial position

If there’s one surefire way to getting a business case shot down it’s an unrealistic or uninformed view of the organisation’s ability to pay for the initiative. Without the proper engagement with the stakeholders responsible for managing financials, there’s no way to frame the investment in the context of everything else happening in the business. The business case needs to recognise other large costs the business may be incurring and demonstrate the potential return on the investment. Bear in mind that this ‘return’ isn’t always financial, especially in the case of public sector projects, but rather will deliver upon strategic outcomes deemed highly important by the business.

Establish all the likely costs associated with the project. Take the time to identify potential cost risks – and how these might be mitigated. When your business case shows clear evidence of the homework being done on what’s involved, it gives decision-makers far more confidence in the investment’s worth. Remember, those who will be making the call – senior management or above – are typically very time-poor and have many things on their plate. If your business case requires them to go and find answers to what should be standard information, you’re already starting from a difficult position.

Our advice? Don’t be afraid to go and do some fact-finding with decision-makers as to what financial elements they really need to know about within the business case. At the end of the day, everyone’s on the same team in your business; doing the groundwork before crafting the business case should be seen as a positive.

The business case doesn’t tell the story of why

Plenty of business cases provide plenty of detail around the practicalities of doing the project or programme but lose sight of illustrating the benefits of the project itself. Why should this investment be made? Who will it benefit? What are the downsides or threats associated with not conducting this investment?

These are all questions that those responsible for the organisation’s strategic delivery will need to know about. What makes this proposed activity a better investment than the others being suggested? It’s the business case’s job to tell that story. To show why doing the thing the business case presents is something the organisation needs to do now, over and above all the other things it’s doing.

Sometimes a business case will have a compelling reason for investment, but it’s not well-articulated. This means your readers have to work to understand why they should make a “yes” decision. Sometimes it’s well-articulated but not well-evidenced. It might seem to you to be a no-brainer, but showing your readers why they should say yes is the total reason for the strategic case component of a business case.

The options to solve the problem are too narrow

One of the key reasons for doing a business case is to show decision makers that the organisation has thought about all the ways the problem can be solved, or the opportunity be addressed, and has a good reason for choosing one of them.

It’s quite a process to go through to work out what the problem/opportunity is, and what can be done to address it. And it’s human nature to jump to a solution that seems intuitive or self-evident. Our IT system is old and slow. The fix must be to build or buy the new shiny thing and have it do what we’ve always done with the old system, right? But there could be a lot of different ways to solve our IT system problem. We need to think about them all and work out which one gives us the best balance of cost, time, benefits, risk, change and a host of other metrics we might make our decision on.

A business case should show how the various options to solve the problem may or may not get the organisation to the outcome it needs. And it needs to show why one option is better than the rest. We too often see business cases with maybe three options for addressing the opportunity, one of which is there only to provide the counterfactual “if we do nothing, this is what will happen”. That’s just not enough information for decision-makers to know that they’re making the best decision they can. NZ Treasury recommends 4 to 6 shortlist options for a big investment. Which means you need to have thought about 8 to 12 all up to whittle it down to the best of the bunch.

The initiative looks too risky

Risk. It’s unavoidable in any organisation. But the absence of risk analysis and mitigation will prevent a business case from giving decision makers the degree of confidence they need to proceed with it. Risk assessment takes time, but it’s worth it not only to build a compelling business case, but to help determine the best way about going forward with the project or programme. Doing this up front will help post-approval when the project gets underway. The more foresight project teams and the sponsor have about certain risks, the better they can plan for ways around them.

If the business case is pushing for a considerable investment that creates other risks to the organisation with no clear mitigation plan, there’s a high chance the business case will be denied.

Incorporate risk management and analysis into your business case from the very start. Before any part of it is written, ensure that the idea has been stress tested against known risks and there’s been research to uncover any potential new risks that the business would need to know about and manage.

It’s not the right time

Sometimes it’s just not your time. We’ve worked with organisations where they have a great business case that tells a convincing story about why an investment is desirable. And they’ve been pushed back, told to wait, or told not now. It’s frustrating, but in government there are so many investments competing for a limited pot of money that not everything can be done.
It’s important in these circumstances to shut the business case project down well. If the idea’s a good one, there’s a high likelihood it will get picked up again in the future. When it does, even if the original team isn’t around anymore, the new business case team will be grateful for the work already done. It gives them a starting point for a new business case. In many instances, the strategic justification hasn’t changed, and even some of the economics remain the same. Refreshing existing work is much easier, faster, and less expensive than starting from scratch. Do future you a favour and preserve what’s been done for the next time.

Discuss your business case with us

We’re experts at both business case development and the programmes and projects that come after them. By getting assurance across your business case, you’ll be able to produce a more thoroughly considered output to provide to decision-makers. Start by contacting our team to discuss your business case needs.

Where to next?

Read our other business case resources:

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The Better Business Case framework explained

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