11.08.2015 : Graham Spargo

Doing better at business cases

Through my project work I’m already seeing greater consistency in business case thinking and language emerging. An example is in local government, where transport funding applications are being crafted using business case guidance.

Having to make the case for investing in projects or services is nothing new. Writing business cases has been around for a long time. So what is the current big deal about them?

I see growing recognition from a ‘NZ Inc’ perspective that our public and private sector investments in infrastructure and services stand to benefit significantly from decision-makers being better able to make ‘apples with apples’ comparisons, and to be confident they have suitably rigorous assessments.

Ultimately that is what a business case is. A thinking tool.

I see help at hand with the introduction and promotion within New Zealand of the ‘better business case’ approach. This guidance is rapidly being picked up by a range of organisations and entities. Guidance can be found at the Treasury website.

This better business case approach, I think, is a no-brainer. Major benefits will flow from sharpening public and private sector practice affecting the billions of dollars of investment decisions made annually. Improvements of just a few percentage points can translate into significant sums.

When well applied it provides a strong platform for guiding priorities and judgements on getting ‘best bang for buck’. It obliges a focus across all the elements that need to come together. These span strategic, economic, financial, management and implementation dimensions.

In my opinion the variety of business case approaches used historically has hindered comparability across similar types of investment decision. This has led to variability in the rigour of thinking and decisions.

The feedback I have received from clients suggests the idea of a more consistent approach resonates strongly with them. They can also see how it helps at the national level.

New Zealand has drawn upon lessons and guidance from overseas, particularly from the United Kingdom and Australia. The NZ Treasury, with backing from the NZ Cabinet, has a programme to promote consistency in practice starting with the bigger and riskier Central Government projects and programmes. The idea is to build a common understanding and use of language at all levels from those developing and writing business cases, to those making decisions on them.

Through my project work I’m already seeing greater consistency in business case thinking and language emerging. An example is in local government, where transport funding applications are being crafted using Business Case guidance.

My recent experience on a range of recent major transportation and land use business cases tells me that the transition to the new approach will take time. It will not always be straightforward.

Working with clients I’ve recognised and needed to factor in that the move from their previous decision-making frameworks has to be treated as you would any significant change management process. What I mean by this, is you need to address ‘hearts and minds’ in addition to the subject matter.

What is really encouraging is how clients are saying they already see the benefits of the better business case approach. From earlier key stakeholder involvement to help better define what actually needs to be tackled, to the facilitated replicable processes providing value in drawing out and communicating the key problems, success factors and means of resolving them.

One of the most potent benefits is the questions now being asked – some of which were missing from the earlier processes. They are helping to improve the probability of coming up with smart solutions and achieving value for money.

In an environment of increasing pressure on public expenditure across a variety of infrastructure assets and programmes, having the best tool for the job – in this case the thinking tool framework provided under Better Business Case – is something that matters to all New Zealand in my view.

Better business cases are ‘on their way to a decision near you’. I fully support them being here to stay!

About the Author

Graham Spargo

Business Director - Investment Decision Support

Graham is a highly skilled specialist in strategy and policy development, infrastructure, transportation and land use. As well as evaluation work, he has lead statutory authorisation processes including at the nationally significant project level. He has completed the NZ Treasury business case practitioner, reviewer and trainer modules and Facilitating Investment Logic Mapping workshops.

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