Business Case Assurance Resources
Why Business Cases Get Denied
The information in this guide is intended for general purposes only. For more specific guidance around your organisation’s projects, please get in touch with our team.
- It’s not clear how delivery will be managed
- The commercial engagements haven’t been properly considered
- The financial analysis is out of step with the organisations’ own financial position
- The business case doesn’t tell the story of why
- The options to solve the problem are too narrow
- The initiative looks too risky
- It’s not the right time
- Discuss your business case with us
- Where to next?
- Latest Business Case Articles
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.
It’s not clear how delivery will be managed
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
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
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
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
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
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:
The Better Business Case framework explained
What is the Better Business Case Framework? We explain this in our guide.
Learn More >>
Business Case Sign off process
Progressing a business case through approval involves a number of stakeholders and considerations. We discuss these in our guide.
Learn More >>
Guide To Writing A Compelling Business Case
Writing a business case should provide a clear, engaging argument for business activity that will drive positive outcomes.
Learn More >>
Business Case Checklist
Download Business Case Checklist.
Learn More >>
How To Present A Business Case In Person
Presenting a business case in person is usually a part of any proposed investment for an organisation.
Learn More >>
Why Business Cases Get Denied
Sometimes a business case doesn’t get through the proposal stage. We share some reasons why.
Learn More >>
Reviewing A Business Case
Checking a business case is ready for presentation and approval is more than crossing t’s and dotting i’s. We suggest some ways to ensure a thorough check.
Learn More >>
Latest Business Case Articles
Maximising Project Success: Crafting Effective Business Cases
Discover how a well-crafted business case can enhance project success, align stakeholders, and provide strategic guidance from start to finish.
Researching before business case writing
Not all business cases are accepted. We provide some useful tips on how to get things back on track if this happens.
What to do when a business case is denied
Not all business cases are accepted. We provide some useful tips on how to get things back on track if this happens.
Does Your Business Case Match The Organisation’s needs?
Misalignment of a business case and what the organisation actually needs commonly prevents projects from getting off the ground.
Business case features required for a public sector project
Preparing a business case for investment by a government agency requires some key considerations. Learn what some of these are in our article
5 Common Mistakes Made When Writing A Business Case
Writing a business case that provides a compelling argument for an investment can be tricky. We discuss some pitfalls to avoid as you craft yours.