The purpose of a programme business case (PBC) is to find the combination of activities that represent the best-value-for-money response to the case for change identified in the strategic case.
A robust PBC provides NZ Transport Agency Waka Kotahi (NZTA) and all stakeholders with assurance that:
Business Case Approach principles
The PBC needs to follow the key BCA principles of investing for benefits, fit-for-purpose effort, clarity of intent, progressive development and informed discussion.
The following diagram shows where the PBC phase typically fits in the framework of business case development pathways.
View larger image [JPG, 218 KB]
The NZTA BCA is based on New Zealand Treasury’s Better Business Cases (BBC) methodology, which is a five-case model.
The table below shows the focus of the five cases in a PBC phase
| 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? |
|---|---|---|---|---|
 |
|
 |
 |
 |
| Develop (or refine) |
Develop |
High-level only – completed in activity-level business case |
High-level only – completed in activity-level business case |
High-level only – completed in activity-level business case |
From a five-case model perspective, the PBC focuses on developing the strategic case (the case for change) and the economic case (optioneering), with the aim of indicating a preferred option.
The PBC phase is used to develop an in-depth understanding of the problems, opportunities and strategic context that form the case for change, using evidence-based data, information collection and analysis.
For more guidance on developing the strategic case within the five-case model, please see our guidance.
In most cases, the PBC will be the first business case development phase following the point of entry (PoE) phase, so work on the strategic case will start here. During the PBC the strategic case will be developed to a reasonably complete state, which is sufficient to give direction to the development of a programme of activities.
In some cases initial work will have been done on the strategic case in a previous phase, for example:
Where an initial strategic case already exists, the PBC must review the work done to date, identify any gaps, then address them so that the strategic case forms a good foundation on which the rest of the PBC can be developed.
It is important to complete the strategic case before attempting to start work on the economic case. This is because any changes to the strategic case are likely to mean that some or all of the work you have done on later cases will need to be revisited as well.
A PBC identifies a range of alternatives and options as a response to the issues identified in the strategic case. The aim is to identify the preferred response at a strategic level, then to recommend a programme of activities. The PBC does not look at detailed solutions, but should consider a broad mix of activities that might be delivered over a period of time.
For more guidance on developing the economic case within the five-case model, see our guidance:
It is important to realise that in most cases, each intervention, or activity that makes up the programme will need further development of the business case. This can include further work on all five of the above cases.
A PBC is typically used for business cases that have a higher level of complexity, risk or uncertainty.
For investments where complexity, risk and uncertainty are low to medium, and where it is clear at the PoE that investment will be limited to a single activity, business case development can usually be progressed through a single-stage business case (SSBC) or indicative and detailed business cases (IBC + DBC).
However, there are circumstances where a PBC phase is needed to enable the right level of analysis and development to more fully understand the problems, opportunities and constraints identified in the strategic case. These can include proposed investments that, for example:
It is important to consider these points carefully at the PoE phase, before deciding whether or not the business case should be progressed using a PBC phase. You will need to discuss this with your NZTA investment advisor before making decisions on how to progress.
Keep in mind that a PoE conversation is used to explore the correct starting point for business case development, and should include consideration of the above points. If in doubt, seek advice from your NZTA investment advisor.
For further advice on assessing complexity, risk and uncertainty, and finding the appropriate investment development pathway for a business case, see our guidance.
Right-sizing your business case
Determining your pathway through the business case phases
You can also use the BCA Q&A tool to help you decide whether a PBC is the best phase to use to develop your business case.
Business Case Approach Q&A tool
It’s now possible to seek funding for programmes of similar interventions under limited circumstances. For more information see our guidance.
Activity management plans (AMPs) can fulfil the role of the business case (up to and including the PBC) for continuous programmes such as road maintenance. They should be developed in accordance with industry good practice for AMPs and in a manner consistent with BCA principles.
AMPs need to analyse network alternatives and options in developing a preferred programme and demonstrate how the options considered as part of the programme address these issues. Some guidance to help you to develop your AMP in alignment with the BCA includes:
One-off activities that are included in another programme, for example an AMP that has been developed using BCA principles, are unlikely to require a further PBC, provided it can be demonstrated that they are:
This means that, provided the AMP has been developed in a fit-for-purpose way that meets the requirements and expectations of the BCA, many activities will be able to start at the single-stage business case phase. If, during the development of the strategic assessment, it becomes clear that the problem is more complex or widespread than initially thought, then a PBC should still be considered as the way forward.
Remember that the PBC needs to follow the key BCA principle of informed discussion. Depending on the complexity of the investment proposal, it is worth spending time and money in this phase to hire good workshop facilitators and specialist consultants, where you need them. This will help in getting a good outcome from the PBC as you keep developing the investment story.
The ‘pre-work’ effort required in developing a PBC should not be underestimated. Before any workshops are held, it is crucial to spend time revisiting and testing the assumptions made in the PoE entry or, where one already exists, the strategic case, to ensure the discussion is well informed.
You will continue to apply critical thinking throughout this process to ensure the integrity of the business case. This is not simply an exercise in confirming initial views about the nature of the problems and benefits; it is about using informed discussion to develop a detailed understanding, then objectively testing them against evidence to make sure they are well-founded before continuing further. If analysis of the evidence shows the initial problems or benefits to be incorrect, you will need to alter the strategic assessment accordingly (and keep stakeholders informed of the reasons for any changes).
It’s important to engage early with stakeholders and have a clear plan for stakeholder engagement. Getting the groundwork right means you should be in the best possible position to develop the business case further and explore alternatives and options with your stakeholders.
Find out more about engagement in the BCA in our detailed guidance.
Engagement and the Business Case Approach
It is good practice for large, complex and/or high-risk proposals to formally check in with investors once the problems and benefits have been reviewed and investment objectives are being drafted. A discussion about where things are at can help avoid heading down a wrong or expensive track.
The simplest and clearest way to approach development of the PBC is to approach it as three stages, as outlined below. Note that this is a suggested methodology, not a strict requirement; users will need to adopt an approach that works for their specific context. As always, use the BCA principle of fit-for-purpose effort to help right-size the work needed.
The first priority is to develop the strategic case that will guide the programme.
Strategic case
The critical actions include:
Government Policy Statement on Land Transport(external link)
In most cases, the PBC phase will directly follow a PoE phase. Development of the strategic case will be more-or-less starting from scratch, although any assumptions or pre-existing work from the PoE phase must be carefully checked.
Occasionally the PBC may be directly preceded by a standalone phase of strategic case development, meaning that an initial strategic case will already exist. When this happens, the initial strategic case must still be tested and any gaps addressed, to make sure it forms a reliable foundation for the rest of the business case. The amount of work needed will depend on several factors, including:
In either case, the strategic case must be substantially completed before attempting to start on developing the economic case. Once later stages of PBC development begin, any significant changes to the strategic case will result in re-work.
Clearly defined problems and benefits are the cornerstones for the rest of the business case, so it is important to put appropriate effort into their development. This is a key action for developing the first section of the PBC document, and must follow the key principle of informed discussion.
Typically, one or more facilitated workshops are used in this step, although the actual number and format will depend on what work has preceded the PBC phase. Either:
For detailed guidance, see our page on defining problems and benefits.
Defining problems and benefits
NZTA strongly recommends the use of investment logic mapping (ILM) to define and communicate the problems and benefits that underpin an investment. For detailed guidance, see our page on ILM:
It is important to have the right people at this workshop, and to organise it around the availability of key participants. Workshops should be kept to around two hours if possible.
However, remember to keep it fit for purpose; lower complexity, risk and uncertainty programme workshops may be facilitated by a staff member with the appropriate skills and experience, while high complexity, risk or uncertainty issues are best led by an external, accredited facilitator.
Once the problems and benefits are clearly captured and tested against evidence, the next key step is to develop investment objectives, which play a key role in helping choose between programme alternatives and options. They will be used together with other criteria to determine trade-offs and a recommended programme.
For more information on developing investment objectives and their role in optioneering, read our guidance on developing investment objectives:
Developing investment objectives
For a robust business case, it’s important that all possible responses are captured and recorded. This encourages innovation, ensures the best alternative or option is chosen and reduces the risk of the recommended programme being challenged further down the track.
Think about how you will encourage a broad range of alternatives and options to be explored, even if they initially seem counterintuitive. Avoid drawing preconceived solutions to peoples’ attention, as once a potential solution is ‘on the table’ it will be harder for people to imagine alternatives.
An alternative is the broader level of the solution, for example, a bypass or an intersection; the option could be what kind of intersection, such as a roundabout or a grade-separated intersection. Some alternatives and options will come from partners and stakeholders through a formal workshop, while others may come from public consultation. All potential responses should be given meaningful consideration and not dismissed out of hand; valid reasons need to be given for not continuing further with any response option.
Responses can fit into three broad categories, which should address:
You should apply an intervention hierarchy approach to the optioneering of all investment proposals, at both programme and activity levels.
For more information about optioneering, see our guidance on the economic case page.
Optioneering in the economic case
This workshop should be a big brainstorm of possible alternatives and options – to start with, all ideas should be considered, without critical analysis or judgement, otherwise there’s a risk that innovation will be discouraged. The project team should continue to develop the investment story, getting the right level and pitch, and opening it up for creative alternatives and options. The PBC phase is where innovative, outside-the-box ideas can be raised and explored. This can work in a number of ways to suit the attendees and project, but is a great way to bounce off each other, spark ideas and challenge thinking.
Evaluate these factors at the same time as trade-off discussions. For example, an option that isn’t lowest cost, or doesn’t deliver against all objectives, may be chosen because it has a more acceptable risk level than a lower-cost option that meets objectives. These conversations recognise that the investment is seeking multiple outcomes and that it may not be possible to achieve them all at the same time.
Once you have a shortlist of possible programmes to investigate in more detail, a stakeholder workshop will be an important component in shaping the decision making and deciding on the recommended programme.
You may not require as many workshops, or you may have used a different approach, to arrive at a recommended programme, but you will still need to have gone through the same thinking to arrive at your recommendation.
The investor(s) and other stakeholders will need to understand why the proposed strategic response was selected out of those considered. This should include details of how the alternatives and options have been evaluated. As always, apply fit-for-purpose effort to the range of factors considered and the degree of analysis supporting the assessment of options, based on the complexity, risk, uncertainty and potential value of the proposed investment.
The PBC must include an assessment of the feasibility of the recommended programme to give the investor(s) confidence that it can be delivered.
An information guide is available as an option for you to use and adapt when writing your PBC document, to help you tell your investment story.
Programme business case document information guide [DOCX, 4.4 MB]
You should be working on the PBC document throughout the process, adding to it and refining it as your knowledge grows. This includes continually applying the business case assessment questions to ensure you have covered the key issues that will form the NZTA assessment of the business case. In addition, regular discussions with your NZTA investment advisor helps to ensure that the business case is robust, and there are no surprises when it is assessed.
The PBC document should:
Consider creating an A3 summary page that tells your investment story graphically and succinctly.
This will depend on which phase you are working on, how complex the investment is and how much risk or uncertainty is involved.
However, there are a few things that can help you, including:
How to self-assess your business case
Moving to the next phase of business case development is never a foregone conclusion. Each phase must include an assessment of whether it is worth continuing to develop the proposed investment at this time, and by this organisation(s).
As well as checking against the 16 questions, the business case developer and the problem owner should evaluate the investment proposal against the Investment Prioritisation Method (IPM). The results of this self-assessment should be recorded in the PBC document.
Investment Prioritisation Method
Problem owners should form an objective view on whether to recommend continuing development of the business case. If the decision is to proceed, the PBC must identify the scope of the next phase.
Send the PBC document to all participant stakeholders for comment before submitting it to NZTA for assessment of the business case. If there are co-investors, you will need to seek their support, which will likely involve going through their internal approval processes. The decision-making needs of each co-investor must be clear in the project plan and governance section of the PBC document.
When you decide that the PBC is ready for assessment by NZTA, request support via Transport Investment Online (TIO). If you are seeking either:
through the National Land Transport Programme (NLTP), you must submit an accompanying application in TIO. Both the scope and the application must demonstrate that the level of effort proposed is appropriate to the scale of the problem. Also remember to keep your NZTA investment advisor in the loop when you are ready to seek a formal decision.
Transport Investment Online(external link)
When the request for PBC support is received in TIO (or via your investment advisor for NZTA projects), 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 on whether to support the PBC or not. If your NZTA investment advisor has been involved throughout development of the business case, there shouldn’t be any surprises that result from the decision.
Once the investor(s) has signalled support for the recommended programme, it becomes the ‘preferred’ programme. However, PBC support does not indicate blanket approval for the individual activities signalled in the preferred programme. Each activity proposed for inclusion in the NLTP must still be accompanied by an individual funding application. Because activities within a programme may be implemented over a prolonged period of time, individual funding applications must be made at the appropriate time. It is expected that at least one application for funding for the next phase will usually be made at the same time as PBC support is requested.
In addition to timing, the management case will need to include appropriate next steps for each activity in the programme. This should be done in a fit-for-purpose way meaning that, in practice, next steps can include:
You can use our guidance on determining the pathway through BCA phases and the BCA Q&A tool to guide your critical thinking about the phase of the BCA you should progress to next.
Determining your pathway through the business case phases
Business Case Approach Q&A tool
If the decision is to not progress the PBC for now, or the assessment indicates that the problem doesn’t align with current priorities and therefore the proposal will not be funded, the decision is recorded in TIO. The PBC entry will remain in TIO, allowing problem owners to return to the PBC in the future, for example, if government priorities change and the problems then align with the IPM.
If NZTA doesn’t support the case for change, the problem owner may choose to continue to explore the proposed investment with funding from other sources.
Make sure the PBC document is filed where it can be retrieved easily for future reference.
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.
Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
