Build your critical thinking skills to support self-assessment
Self assessment is one kind of critical thinking that is central to the Business Case Approach. Our critical thinking learning module outlines the way critical thinking skills help build better business cases, as well as how you can put them into practice.
NZ Transport Agency Waka Kotahi (NZTA) assesses business cases at the end of each business case phase. In advance of this assessment, it is best practice to complete a self-assessment of the business case. The 16 business case assessment questions and the Investment Prioritisation Method (IPM) are helpful tools to check how your business case is tracking.
The 16 questions ensure that the business case will be effective and the IPM checks alignment to the strategic priorities outlined in the Government Policy Statement on Land Transport (GPS).
Government Policy Statement on Land Transport(external link)
You should use these assessments to test your own investment proposal at every phase of the Business Case Approach (BCA).
By answering these questions, you can check that development of your business case is on track. They don’t all need to be answered at each phase, but the more advanced the business case is the more questions need to be answered.
| Problem | Benefits | Strategic response | Solution |
|---|---|---|---|
|
Is it clear what the problem is that needs to be addressed (both the cause and the effect)? |
Have the benefits that will result from fixing the problem been adequately defined? |
Have a sufficient range of strategic alternatives and options been explored (demand, productivity and supply)? |
Consistent with the strategic alternatives and options, have a reasonable range of project options been analysed? |
|
Is there evidence to confirm the cause and effect of the problem? |
Are the benefits of high value to the organisation(s) (furthering its (their) objectives)? |
Is it clear what strategic alternatives and options are proposed and the rationale for their selection? |
Is the proposed solution specified clearly and fully (all business changes and any assets)? |
|
Does the problem need to be addressed at this time? |
Will the key performance indicators (KPIs) that have been specified provide reasonable evidence that the benefits have been delivered? |
Are the proposed alternatives and options the most effective response to the problem (comprehensive and balanced)? |
Is the proposed solution the best way to respond to the problem and deliver the expected benefits? |
|
Is the problem specific to this investment (or should a broader perspective be taken)? |
Are the KPIs both measurable and totally attributable to this investment? |
Are the proposed alternatives and options feasible? |
Can the solution really be delivered (costs, risks, timeframes, governance, etc)? |
Considering how you will answer each of these questions can be helpful when scoping each business case phase. Below we explore some additional questions we can ask ourselves at each phase to consider if our business case is effective.
For information on business case right-sizing see our detailed guidance.
Right-sizing your business case
A good strategic case (whether it is undertaken as a standalone phase or not) should answer the first eight of the 16 questions.
The problem:
Do you know what problem you are trying to solve? Are you clear on the root cause of that problem and the effect of not solving it?
A problem is the reason action needs to be considered at this time. A clear statement of the problem(s) to be addressed is critical to understanding the need for, and the level and significance of the investment.
Problem statements should be written in plain English and identify a clear cause and a consequence.
The consequence should be significant enough to warrant investing in, at least to the extent of further investigation.
Defining problems and benefits
Is there clear evidence that there is a problem that needs to be solved, what the underlying cause is for that problem, and of what the consequence is for not solving it?
Evidence is needed to give the investor some confidence that the problem is real, and that the consequences are significant enough to justify funding the next stage of business case development.
Any gaps in evidence or areas needing further analysis should be clearly identified in the strategic case, as they will need to be addressed if the investment proceeds to the next stage.
Why does the problem need to be addressed now rather than in one year, five years, or 10 or more years?
Understanding the urgency can help firstly to decide whether it is appropriate to continue to the next stage at this time, or whether the proposed next steps are appropriately scoped.
Is the problem a ‘stand-alone’ issue, or part of something more systemic? Can the problem be solved with a programme/project level investment or does it require changes to policy? Is the problem just occurring within the scope of this activity or is wider reaching?
If the problem is part of something wider or more systemic, then a different approach might need to be taken.
The benefits:
Is it clear what the benefit is of solving the problem? Is it quantifiable?
The reason public investments are made is to achieve some form of benefit. Any investment proposal must be able to demonstrate what benefits will be delivered, and how those benefits will contribute to overarching strategic goals and objectives. A clear statement of the benefits that are expected (from addressing the problem), is critical to understanding the level and significance of the investment.
Is it clear that this is a benefit the relevant organisation wants to buy? Is the benefit well aligned to the organisational strategy?
Investment proposals should only be pursued where there is good alignment with an organisation’s strategic goals and objectives. The strategic assessment of a business case must include consideration of how good this alignment is, for the benefits identified. Decision makers will need to understand the level of alignment and make a decision as to whether this is the best way to invest, to achieve the overall desired results.
Are the key performance indicators identified measurable? Can a baseline be calculated? Will it be clear in the future if the project has delivered the intended outcomes?
KPIs are required to demonstrate that it will be possible to track whether the benefits expected from the investment are being realised.
At least one KPI must be identified for each benefit. However, longlists of KPIs should be avoided as it is unlikely they will all be tracked in practice.
Do the KPIs represent benefits that are being delivered in their entirety by this project? Are there other projects or policies likely to impact the outcomes of this investment?
The KPIs for each benefit must be effective in demonstrating, over time, that the expected benefits have been achieved. To do this, they have to be:
In the programme business case phase (PBC) you will retest the assumptions made in the point of entry (PoE) – and in the strategic case if it has been developed in a standalone phase – filling any gaps in evidence as required to answer the first eight questions. Then the following questions can be considered.
Strategic response:
Does the optioneering consider alternatives to a pure infrastructure solution? Has the intervention hierarchy been applied? Have options that change demand, productivity and supply been considered?
It is important to widen the consideration of possible strategic responses beyond the obvious ‘fix it’ solutions, particularly in the PBC phase. Initial development of alternatives needs to test whether there is a smarter/more innovative way to address the problem. Focusing on demand- and productivity-based approaches in addition to supply-based ones, can help achieve this broadening of thinking.
It is important not to narrow the range of possible responses too early (this links to RMA requirements as well). Give thought to how workshops and other stakeholder conversations can be held in a way that invites innovative thinking and creativity.
An important question to ask at this stage is: ‘is the network running optimally?’ It may be necessary to use tools such as the network operating framework to ensure this.
Is it clear what options have been considered, and why options and alternatives have been selected or not selected?
The investor and other stakeholders will need to understand what strategic response is proposed (out of those considered) and the reasons for its selection. Typically, this will include details of how the alternatives/options have been evaluated in terms of ability to deliver objectives, cost, time, risk, dependencies and dis-benefits, together with an indicative benefit cost appraisal.
Is the recommended programme the most effective way of resolving the problem? Is there an easier and cheaper solution that would deliver some of the benefit that should be considered? This includes if risks and uncertainties can be manged?
Evidence that a trade-off discussion has taken place to identify the proposed response, is also important; the investor(s) are key to this discussion and must be effectively involved. The investor(s) need to be offered a range of suitable programmes to enable this trade-off discussion to take place, and have the opportunity to select a programme to take forward.
Does the recommended option represent value for money?
The investor needs to have confidence that the preferred programme can be delivered in practice.
For the first 12 questions we retest the assumptions made in the PoE, strategic case and/or PBC phase(s), filling any gaps in evidence as required. The remaining questions can then be considered, noting that they may be developed further through the DBC phase or the corresponding part of a single-stage business case (SSBC).
Solution:
Is it clear that a range of sensible options have been considered rather jumping to a solution early?
One of the requirements for the IBC is to ensure that options, including less obvious ones, are not excluded too early. A longlist of options must be developed, even if some of these options are later ruled out on grounds such as cost or feasibility. It is also important to record options that have been ruled out, with reasons for their exclusion.
The costs, risks, dependencies, and dis-benefits of each option must be explored, together with the benefits.
At the end of the IBC, it should be possible to determine if there is a case to take a preferred option to a DBC for further development. It is possible at this stage that no option should be taken further.
Is the scope of the proposed solution clear?
If a preferred option is identified to take forward, the IBC must present a clear, compelling story as to why this is the ‘right’ option. (Note that this may not be the final option for implementation; that will only be known once more detailed design, economic analysis etc. has been done as part of a DBC.) The reasons for rejecting options must also be clear.
Is it clear why the recommended programme has been selected over the alternatives? Is it the best way of solving the problem for the best cost?
The investor will want to understand the reasons why this option has been identified ahead of others, as the best way to respond to the problem and deliver the benefits.
At end of an IBC the shortlist may still include more than 1 option, although it should be clear what the preferred option is. This might occur, for example, where further work is required to fully understand the risks associated with two or more shortlisted options. A do-minimum option must also be taken through to DBC for comparison.
Is the management case sufficiently developed to understand the scope of the next phase? Do we understand potential timing for delivery and governance requirements? Are the assumptions, risks and uncertainties well documented and is it clear how these will be quantified or mitigated through the next phase?
Indicative business case phase
Single-stage business case phase
For all the 16 questions we retest the assumptions made in the PoE, strategic case, PBC and/or indicative business case (IBC) phase(s), filling any gaps in evidence as required. In a detailed business case or SSBC particular focus is to be given to the last four questions
At an activity level, have a range of sensible options have been considered rather jumping to a solution early?
This will typically be addressed in the IBC; however, if multiple shortlisted options have been brought forward for further analysis in the DBC phase, there must be a clear rationale for selection of the proposed solution.
Sometimes, a number of iterations will be needed to give a high degree of confidence that the best value for money option has been identified for further development and detailed analysis; this is preferable to spending time and resources developing a sub-optimal option.
Is the scope of the proposed solution clear? Is the proposed solution sufficiently developed to move to the next phase?
The investment decision maker will want to give a clear stop/go decision at the end of the DBC, preferably without further hold points or pre-conditions. It is important that the full extent of business changes is visible to the decision maker at this point, and that there are no hidden or unexpected additional costs needed to make the solution work.
Is it clear why the recommended programme has been selected over the alternatives? Is it the best way of solving the problem for the best cost?
A key part of this will be to articulate why the proposed solution represents genuine value for money. This must demonstrate whether and how the solution:
While the first three of these requirements will be progressively built throughout the strategic and programme business case phases, they form a key part of the story that the investment decision maker needs to understand in order to make a decision on implementation.
Is the management case sufficiently developed to understand the scope of the next phase? Do we understand potential timing for delivery and governance requirements? Are the risks well understood
The investor needs to have confidence that the proposed solution can be delivered in practice. Is there adequate information for the investor around outcomes and cost risk to enable them to assess whether to proceed to delivery through pre-implementation/implementation?
If possible, the investor needs to be able to give a clear ‘yes’ or ‘no’ to proceed to delivery. Is a pre-implementation stage required (for example to address land purchase, consenting, or other risk areas?
A ‘yes’ will only be given if the investor is satisfied that all risks are adequately understood and can be avoided/managed/ mitigated to an acceptable level.
Detailed business case phase
Single-stage business case phase
NZTA uses the Investment Prioritisation Method (IPM) to prioritise investments proposed for the National Land Transport Programme, giving effect to government priorities and direction as outlined in the GPS.
For the 2021–24 period the IPM uses three prioritisation factors to give effect to the 2021 GPS. The three factors are:
More information on how the IPM can be applied can be found on the IPM web page.
Investment Prioritisation Method
Contact either your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
