The purpose of the detailed business case (DBC) phase is to build a complete understanding of acceptable risks, uncertainties and the benefits associated with the investment, so that a final decision can be made on whether to implement it. DBCs focus on an activity rather than a programme – that is, they are an activity-level business case.
A DBC involves more detailed analysis of the costs, risks, and benefits of the recommended option(s) and the do-minimum option – rather than all the options listed in an indicative business case (IBC). Sometimes the IBC identifies more than one recommended option and is difficult to distinguish between them based on the IBC level of analysis. In this case the DBC will explore more detailed analysis of both options alongside the do-minimum so the best option can be identified.
The DBC risk mitigates the recommended option from the IBC to ensure that the activity can be confidently delivered to the agreed scope and cost, while achieving the agreed outcomes. The DBC further readies the recommended solution for implementation. Due to the ever-changing nature of risks and uncertainty, projects should generally only progress through to detailed business cases when the timeline for beginning implementation is within the five-year period. A detailed business case should fully and clearly specify the recommended option. It should be clear what is in scope and what is not. The option should also be scoped to a minimum of preliminary design. Depending on the procurement model, scope may need to be taken to a specimen design.
It is important that the full extent of business changes are visible to the decision maker. There should be no hidden or unexpected additional costs needed to make the solution work.
The diagram below shows where the DBC phase fits within the framework of business case development pathways.
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The NZ Transport Agency Waka Kotahi (NZTA) Business Case Approach (BCA) is based on New Zealand Treasury’s Better Business Cases five-case model.
The table below shows which of the five cases are completed in the DBC.
| Strategic case What is the compelling case for change? |
Economic case Does the preferred option optimise value for money? |
Commercial case Is the proposed deal commercially viable? |
Financial case Is the investment proposal affordable? |
Management case How can the proposal be delivered successfully? |
|---|---|---|---|---|
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 |
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| Refine and confirm |
Refine and confirm |
Refine and confirm |
Refine and confirm |
Refine and confirm |
The DBC builds on the detail completed in the IBC. In developing the commercial, financial and management cases, the DBC will also continue to develop and confirm the strategic and economic cases (for example confirming costs, contextual evidence, benefit achievement etc). The DBC involves a detailed analysis of the costs, risks and benefits of the preferred option, and the do-minimum option identified in the IBC (for economic comparison purposes). It is aimed at building an agreed scope and scope parameters, and complete understanding of the acceptable risks, uncertainties and benefits associated with the investment, so that a final decision can be made whether to implement it.
For more information about each case in the five-case model, see our detailed guidance.
Business Case Approach principles
The DBC needs to follow the key BCA principles of investing for benefits, fit-for-purpose effort, clarity of intent, progressive development and informed discussion.
The main purpose of the DBC is to provide assurance that the preferred option identified in the IBC is the right approach to deliver the desired outcomes and is an effective solution to the identified problems.
The DBC must provide detailed analysis of the costs, risks and benefits of the preferred option, including evidence that it:
Keep talking to your NZTA investment advisor, who should have been engaged with from the beginning of the business case. By this phase, it is expected that the approach and early signals about the degree of alignment with the Government Policy Statement on Land Transport (GPS) and NZTA investment principles are clearly understood by everyone.
The DBC will build on the strategic and economic cases from the IBC. It is always important to review what has changed since the previous phase to ensure the case for investment remains accurate. This is particularly important when there has been a delay between the IBC and DBC phases.
Refine the strategic case to ensure that it remains accurate. Consider:
For more about the strategic case as part of the five-case model, read our detailed guidance.
In the DBC you will further refine the options developed in the previous phases. The level of assessment should be appropriate and proportionate for the scale and risk of the initiative.
In the economic case it is important to ensure that the following is completed:
For more about the economic case as part of the five-case model, read our detailed guidance.
The commercial case in the DBC should demonstrate that the recommended programme is commercially viable and meets contractual and other requirements.
Commercial viability requires the DBC to assess whether the marketplace can deliver the preferred option efficiently and safely. This will require the DBC to assess whether the marketplace can supply:
When developing a commercial case within a DBC you should consider:
For more about the commercial case as part of the five-case model, read our detailed guidance.
The purpose of the financial case in a DBC is to demonstrate that the preferred option is affordable. Being affordable requires a robust estimate of the preferred option’s cost.
The key actions for the financial case are:
A funding agreement should be developed to outline funding arrangements for the recommended option.
NZTA-led investments require cost estimations to comply with the Cost estimation manual (SM014). Approved organisations may use their own cost estimation methods; however, these must be robust and incorporate best practice. The cost estimation should be confirmed and reconciled with estimations developed in earlier business case phases and be consistent with similar projects developed elsewhere.
Cost estimation manual (SM014)
Good cost estimation requires clear scoping of the project and its buildability. This means that what is included in the project scope and what is out of scope is clear. The project site must also be well understood through reliable technical investigations so risks can be accurately understood and priced.
For more about the financial case as part of the five-case model, read our detailed guidance.
The management case within a DBC needs to demonstrate that the recommended option can be delivered successfully.
When developing a management case within a DBC you should consider:
For more about the management case as part of the five-case model, read our detailed guidance.
Management case
A key role of the DBC is risk mitigating the recommended option and detailing the risk management arrangements to support successful implementation of the project. The risks, uncertainties and assumptions must be understood, mitigation strategies explained and priced in order for a DBC to be considered complete.
All estimated benefits, costs and timeframes are subject to risk and uncertainty which can influence the choice of the preferred option. Given the choice between two competing shortlisted options with similar estimated costs and benefits, a decision maker will more likely prefer the option that provides greater certainty of costs, benefits and timings of key deliverables.
Before approaching NZTA for a formal assessment of your business case, you should make a self-assessment to check the document is ready.
How you answer this will depend on how complex the investment is, and how much risk or uncertainty is involved.
The key questions to answer is: Is the preferred solution clearly defined and risk mitigated? Am I confident the scope of this activity can be delivered for the estimated cost?
There are a few things that can help you answer this question, including:
How to self-assess your business case
When assessing applications to fund business case phases from the National Land Transport Fund (NLTF), NZTA will seek assurance that the DBC has been adequately developed.
As a principles-based approach, there is no checklist of specific actions to follow to ensure that NZTA’s expectations regarding the DBC phase are being met. However, when assessing DBC, there are some general questions that assessors will consider, to ensure the principles relating to the DBC are being followed, including:
If you are seeking funding from the NLTF, you must submit a robust funding application for implementation in Transport Investment Online (TIO) (or via your investment advisor for NZTA projects), with the DBC uploaded as the supporting document. You need to have a clear understanding of the funding requirements for the next phase. A pre-implementation phase will likely be required to undertake any required work to lodge consent, purchase property or complete detailed designs (depending on procurement model).
Transport Investment Online(external link)
When the request for DBC support and funding approval is received in TIO, NZTA assesses the business case and applies the Investment Prioritisation Method (IPM) to determine whether:
A recommendation is then made to the delegated decision maker to support the DBC or not. If your NZTA investment advisor has been involved throughout development of the business case, there should not be any surprises that result from the decision.
Make sure you communicate with key stakeholders about the reason for the decision. Consider holding a report-back session for all stakeholders, especially if you planned for one in your engagement plan.
It is important to talk to us throughout the development of your business case. Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
