The Business Case Approach (BCA) provides a flexible method of developing your business case using fit-for-purpose effort. One way it does this is by breaking the work that needs to be done for a robust business case into phases, which means the case can be built up progressively, and decisions about whether to proceed can be made at regular checkpoints.
This page introduces the business case phases and describes the various ways business case development can progress through them.
Each of the business case phases:
Funding and scope for the entire phase of work is usually approved at the preceding decision point
Phases are used in the National Land Transport Programme (NLTP) (and therefore Transport Investment Online (TIO)) to describe the overall progress of the activity through to completion.
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The business case phases, as shown in the coloured boxes, are:
Point of entry phase (PoE): involves discussions to reach agreement on whether a potential investment is aligned to strategic priorities and how it should progress through the BCA.
Programme business case phase (PBC): to find the combination of activities that represent the best value for money response to the case for change identified in the strategic case. PBCs typically have a five- to 30-year horizon and take six to 12 months to develop.
Indicative business case phase (IBC): to identify a preferred option to address the case for change for an individual activity. IBCs are typically initiated when an investment will be delivered within a 10-year horizon and take six to 12 months to develop.
Indicative business case phase
Detailed business case phase (DBC): 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 are typically initiated when an investment will be delivered within a five-year horizon.
Single-stage business case phase (SSBC): merges the option identification of the IBC and the detailed analysis of the DBC into one. SSBCs are typically initiated when an investment will be delivered within a five-year horizon. The SSBC lite is a pared-back version of the SSBC for non-complex activities where the whole-of-life cost is less than $15 million.
Single-stage business case phase
Pre-implementation and implementation phases: while the business case is completed and endorsed by these phases, in practice you will need to ensure that any changes and new information is captured in the business case.
Pre-implementation phases are typically initiated when an investment will be delivered within a two-year horizon and may last up to two-years. Implementation phases are when the investment is actively delivered.
Pre-implementation and implementation phases in the business case
In rare cases you may consider undertaking a standalone strategic case phase, to clarify the case for change, before committing significant resources to develop the business case further.
Projects may also go ‘on hold’. Conceptually, this can be thought of as a ‘hold phase’. Projects can go ‘on hold’ for a number of reasons, both planned and unplanned, for example:
Where a project is to be placed ‘on hold’, this needs to be clearly signalled in the management case, together with the criteria for re-activating the project.
Business cases generally develop from top left to the bottom right of the diagram above, however:
The scope of each phase of a specific project is not set in stone, but is informed by the risks and uncertainties of the project. See Right-sizing your business case for further explanation.
Right-sizing your business case
A pathway is the sequence of phases you plan to follow to develop your business case and make the investment.
The path a business case takes through the business case phases depends on a project's specific needs. This animation demonstrates some of the most common pathways you might take.
Your NZ Transport Agency Waka Kotahi (NZTA) investment advisor will help you decide on which pathway is appropriate to recommend for the problem or opportunity you are exploring. This always begins with the PoE phase. In fact, recommending the pathway is one of the outputs of the PoE phase.
Applying the BCA to activities is decided on a case-by-case basis and knowing the individual context and other key aspects of the project is essential. Also, understanding the previous work undertaken in relation to the problem and opportunity is key in determining how to apply the BCA to your investment proposal.
The information gap analysis that you’ll undertake as part of the PoE is a key step in determining the business case pathway, including the approach to be used to fully understand the problem/opportunity and build any case for investment. Some questions to guide this include:
You can use the BCA Q&A tool to guide your critical thinking about the development path for a business case.
Business Case Approach Q&A tool
A PBC will identify a recommended programme of projects that addresses the problem statements and outcomes. Each of those projects will potentially take a different path forward.
Because all projects will have multiple components, it can sometimes be difficult to know whether it is a programme rather than an activity, and therefore needs a PBC level of analysis and development to more fully understand the problems, opportunities and constraints identified in the strategic case. If the problem your business case is addressing has one or more of the following factors, it may indicate that a PBC is appropriate:
Otherwise it may be appropriate to proceed directly to an IBC or even SSBC phase.
The SSBC phase combines the key actions of both the IBC and DBC into one phase. The key distinction between an SSBC pathway and an IBC and DBC pathway is the formal decision point between the IBC and DBC phases.
An SSBC also has an internal hold point as it progresses out of optioneering and into refining the preferred option, but this decision is made by the project sponsor or the governing body of the related programme, rather than by NZTA.
An SSBC pathway does not lead to less effort being required to develop the business case, rather it is the project’s risks and complexities that drive the effort. If the risks and complexities are not high, and in particular there is less risk in the development and selection of the recommended option, then an SSBC pathway may be appropriate.
In general, no. It is possible that there could be enough existing work of sufficient quality around the problems, investment objectives and option selection that the next phase should be a DBC but this is rare. This typically occurs when a PBC or activity management plan has gone into sufficient depth on the activity in question. Another example where progressing directly to a DBC may be appropriate is where an activity had previously progressed through to a DBC phase but work had stopped for a period of time.
In general, no. If there is enough existing work of sufficient quality around the problems, investment objectives and option selection, and that option had been refined and de-risked to an appropriate level, it may be appropriate for the next phase to be pre-implementation or implementation. However, this is rare, and typically occurs when a PBC or activity management plan has gone into sufficient depth on the activity in question.
Different development pathways will have different decision points.
The PoE phase is usually the first decision point. At this phase the problem owner is looking for endorsement of approach captured in the record of the PoE, which describes:
As you build the case for investment across the business case pathway there are key decision points along the way. When a business case endorsement is sought, stakeholders and NZTA need to have assurance that:
For more information on how to check if your business case is ready, see our guidance self-assessing your business case.
How to self-assess your business case
For more on what NZTA looks for at the completion of each phase, see the phase-specific guidance:
Point of entry phase
Programme business case phase
Indicative business case phase
Detailed business case phase
Single-stage business case phase
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
