As part of our Business Case Refresh, we're in the process of updating this Business Case Approach (BCA) page to make sure it reflects the most up-to-date guidance.
This page contains the answers to a number of frequently asked questions about the Business Case Approach (BCA). If your question is not answered, try the:
Principles-based means that the way the BCA is applied can be very flexible in practice, and is scalable so that the level of effort needed to develop an investment case matches the size and risk of the problem and the proposed investment.
The BCA is not a prescribed, mechanistic process that must be followed; instead it means critical thinking must be used at each phase to make sure the investment case is being developed in a fit-for-purpose way. Although the Waka Kotahi has set out a framework to help in identifying what needs to be done to develop a business case, in practice simply completing the relevant phases will not ensure the business case is accepted. It is more important to ensure that at each phase of development the relevant principles have been met.
Similarly, there is considerable scope for how a principle or minimum expectation can be met; while our sets out advice or recommends tools to use (for example, investment logic mapping or ILM), these are often not mandatory and practitioners are free to use alternative approaches if these are more fit for purpose.
Five key principles underpin the BCA:
For more information:
Because the BCA is principles-based, it is entirely possible to scale the level of effort so that it is easier to develop business cases for smaller, less complex investments. The principles apply regardless of scale, although there will be big differences in the amount of detail provided and the work that needs to be done, depending on the level of risk and complexity.
The important question to ask (and keep asking) is, ‘What is the fit-for-purpose way to apply the BCA principles to this investment proposal?’
For example, a low-complexity, low-risk proposal can often be developed in a single-stage business case (SSBC), requiring only two National Land Transport Programme (NLTP) investment decisions: one at the end of strategic case, and one before implementation. In contrast, a major programme of investments for a large, complex urban area may require an extensive programme business case (PBC) and involve many individual business cases at an activity level to implement over several years.
Regardless of size or complexity, there are key things that every investment must be supported by, based on the principles. These are:
What changes from case to case are the level of effort put into understanding each of these key elements, and the level of detail that accompanies them.
Note: While the BCA is more flexible than most people realise, it’s important to reach agreement up front with your Waka Kotahi investment advisor on the approach to be taken. This is a key part of the thinking needed in the point of entry phase.
For more information:
CloseIt’s not realistic to adopt a rules-based approach to the level of effort needed for each business case, because at the outset we often don’t have clarity on the scale of the problem, let alone the value of the solution. This is one of the reasons for the step-by-step approach to developing each business case, as it allows subsequent phases to be scoped and resourced properly.
That said, all investment proposals seeking funding from the National Land Transport Programme (NLTP) must at least be able to demonstrate that they are supported by:
Very low risk/complexity investments should be able to demonstrate the above requirements quite simply, using an appropriate level of effort.
For more information:
CloseThere’s nothing in the BCA that prevents you from planning now to address or avoid an anticipated problem in the future – in fact there have been recent examples in Auckland, Waikato and the Bay of Plenty. In these areas, the BCA has been successfully used to focus on the problems that are anticipated to arise in future from strong growth pressures, and to plan ways to address them over time. In fact, the BCA is a very powerful tool for helping us deal with future problems as it focuses on the benefits that we want to deliver over time, especially where those support long-term strategic goals or objectives.
Exploring problems can also help to highlight opportunities; they can often be thought of as two sides of the same coin. Describing opportunities can show what an investment could deliver, while articulating problems as the gaps between ‘where we are’ and ‘where we want to be’ helps to explain why investment is needed. For example, there may be an opportunity to support a regional development initiative, but only if certain infrastructure is improved or upgraded. In such cases, decision makers will still want confidence that the need for investment is justified.
CloseBased on the key principles and behaviours, an underlying requirement is that business cases are founded on a clear understanding of a problem, including its causes and its consequences. They must also be able to deliver measureable benefits that align with strategic goals or objectives.
For many business cases, the best way to gain a good understanding of both problems and the benefits of addressing them is to develop an ILM. The thinking process used in an ILM is a really effective tool to help practitioners meet the key BCA principles and communicate the investment proposal clearly on a single page. While the evidence and analysis supporting the problems will need to be developed further in subsequent phases, building an ILM is a very effective way of deciding whether the investment proposal is strong enough to continue with.
Although it is highly recommended to use an ILM in most cases, there are other approaches that may suit very simple problems and require less time and resource. For example, bringing a team together to apply the ‘5 whys’ technique might be a fit-for-purpose way of considering the problems and benefits relating to a simple asset renewal or replacement. The important thing is to make sure the problems and benefits are understood clearly enough to allow good decision making. You must also be able to communicate these aspects of a business case clearly.
For more information:
As with any business case development, an underlying requirement is that an AMP is founded on a clear understanding of the problems to be addressed, including their causes and consequences. Similarly, AMPs must also be designed to deliver measureable benefits that align with strategic goals or objectives.
Using ILM helps to meet these requirements in a timely and cost-efficient way. The ILM workshops will bring together those who know the most about the problems, together with those who are accountable for benefits realisation and key stakeholders (informed thinkers), and allow the investment story to be outlined.
Using ILM also ensures you follow the key behaviour of informed discussion and allows the key principle of clarity of intent to be met, as the output from an ILM workshop is a single-page, plain-English investment story.
So, while it is not mandatory to use ILM for AMP development, it is mandatory for an AMP to:
For more information:
CloseDocumenting a point of entry (PoE) is not a compliance step from a BCA perspective; Waka Kotahi does not use PoE documents to make decisions on whether to fund subsequent phases of a business case.
However, carrying out a PoE step should be done before further work on any business case is started; this is just good practice, and helps avoid getting off on the wrong foot. The PoE is a quick, cost-effective step to explore the appropriate starting point in the BCA process, and look into whether there is any related or existing work that might influence the scope of what you are doing. It also allows early conversations with colleagues, including appropriate Waka Kotahi staff, to help get the initial scoping for the next phase right. Experience shows that when these things are not considered right at the start, the business case often goes ‘off track’ very quickly and leads to further delays while a reset takes place.
The results of the PoE step should be documented simply, in a record of point of entry. A template is included in the PoE guidance.
It is also good practice to revisit the PoE at the end of each phase of a business case; this is not a compliance requirement imposed by Waka Kotahi, and should not be a major exercise. It is simply good practice to check ‘where we are’ against ‘where we thought we’d be’, and decide whether any changes are needed in how the business case will continue to be developed. It is also a good opportunity to check in with others, including stakeholders and Waka Kotahi staff, to make sure everyone is still on the same page.
The main requirement before starting any business case phase is to make sure there is a good understanding of the information needed to carry out that phase.
Before starting any IBC or single-stage business case (SSBC), it is important to revisit the strategic case to ensure that it is still fit for purpose. This includes making sure that the problems and benefits are understood in enough detail to:
This need arises because the early phases of a business case, such as a programme business case (PBC), typically consider problems at a strategic level. They do not usually include enough detail to understand a specific intervention, such as improving a single intersection within a programme of corridor improvements.
If the SSBC or IBC immediately follows the initial strategic case phase, all that will normally be required is a brief check of the existing work to make sure there is enough detailed understanding of the problems and benefits, and that the strategic context is still valid. This can often be done simply by updating the original strategic case document to support a request for National Land Transport Programme (NLTP) investment.
If, however, the SSBC or IBC is being carried out to develop an intervention as part of a PBC, a further strategic case phase may be needed before seeking NLTP investment. This is because:
In these circumstances, it is usually necessary to build on the original strategic case by revisiting the strategic assessment and strategic context at an appropriate level, before seeking funding for the next phase.
For more information:
CloseThe purpose of shortlisting in the IBC, or the early stage of the SSBC, is to narrow down options on which detailed analysis and evaluation will be carried out, avoiding the need for such analysis of each and every option in a longlist.
As with many such questions, there is no hard-and-fast rule specifying how many options to take forward at the end of an IBC. However, there must be at least:
Often the best way forward won’t be clear even when the shortlisted options have been evaluated, in which case more than one shortlisted option should be taken forward for more detailed analysis.
It is also good practice to check in with decision makers at the end of shortlisting, since they may require that a particular option is developed further alongside the preferred option and do-minimum. For example, one of the options may deliver against wider organisational goals and objectives and an informed decision is needed as to whether this should be chosen ahead of the preferred option.
Example 1:
After alternative and option development, a simple intersection improvement might be found to only have limited options (for example, a do-minimum option comprising changes to markings/signage and sight lines; install a roundabout; install traffic signals; partial or full grade separation).
In situations like this, it may be possible to quickly develop a longlist, then workshop this with stakeholders to qualitatively evaluate options against investment objectives and identify a single preferred option at the IBC stage, without doing a lot of detailed analysis of each option.
Example 2:
Addressing traffic and pedestrian conflicts in a rural town might require more detail (including public consultation, consenting risk, geotech risk, etc) on a number of alternatives and options before a preferred option can be confirmed. For example, it may be hard to distinguish between options that improve the existing street environment against those that bypass the town, based purely on transport considerations.
In that case, the extra work to understand these details will almost certainly be beyond the scope of the IBC, as significant further work is likely to be required. Depending on circumstances, it may be possible to carry out the additional work through a cost-scope adjustment to the IBC, or it may be included in the first stages of the DBC (effectively taking two or three options forward for more detailed analysis).
For practical purposes, the important requirement is to make sure everyone is clear on why a particular approach is being adopted, and that there is a clear focus on understanding risks and using that to inform decisions.
Note: In both the examples above, a do-minimum option must still be taken through to the DBC, along with any preferred option(s), so that a comparison can be made.
For more information:
CloseMeasuring ‘liveability’ can quickly become problematic since it is such a diverse outcome area and can mean different things to different people. However, many of these issues can be avoided by having a strong focus on what’s most important – from the perspective of the investment under consideration.
It also helps to keep in mind that the main reason we identify and measure benefits is to track the effectiveness of our investments in realising the specific outcomes we set out to achieve. In the context of liveability, this means it might be highly relevant to track benefits relating to transport affordability, ease and safety of access to services and amenities, or levels of mode choice, where these are related to the problems we’ve identified. Other outcomes, such as physical appeal or lifestyle opportunities, may be less directly relevant to the identified problems, but form key interdependencies where they are important outcomes in a related strategy or plan. Strategic context will be important in determining how much influence these related outcomes have in selecting the preferred option.
Example: A problem and consequence is identified as: ‘Inability to respond in a timely way to pace and scale of greenfield development will restrict access to jobs, education and other core services in and around growth areas.’
In this example, the consequence we are concerned about relates to access – people’s ability to get where they need to be. So even though the benefit says ‘liveability’, we don’t need to measure all aspects of liveability, only those that relate to access. Again, this isn’t saying other aspects of liveability don’t matter, it is acknowledging that they are not the primary driver behind this business case. Where other outcomes are identified as important by separate strategies or plans, they need to be allowed for in the strategic context and decisions made as to how much influence they will have over selection of preferred options.
Also remember some of the following principles when identifying benefits and measures:
For more information:
CloseThere are some important principles to follow in identifying KPIs and measures:
It’s important to follow these principles, because the benefits map will be used to derive investment objectives – and those form the criteria that will be used to assess alternatives and options. If the benefits map focuses on irrelevant details and loses focus on the important ones, we won’t make good decisions about which alternative/option to go with.
For more information:
CloseA benefits map must include the benefits, key performance indicators (KPIs) and measures that relate to the investment proposal. In defining measures, it’s important to include both baselines (the current state – where we are now) and targets (the desired future state – where we want to be).
Setting targets can be challenging, and may even cause a rethink of the appropriate measures to use to track benefits. In general, it is not necessary to have detailed targets (or baselines) at the end of a strategic case, but these will be needed before SMART (Specific, Measureable, Achievable, Realistic/Relevant, and Time-bound) investment objectives can be identified.
Setting firm targets too early can be counter-productive, as it may set expectations about what the investment can deliver that later turn out to be unachievable or unaffordable. An iterative approach can be used to help avoid this risk, for example by setting an initially qualitative target then making this more quantitative as alternatives and options are identified and evaluated. For example, a safety target for a measure of deaths and serious injuries (DSIs) for a corridor may be initially stated as ‘below existing levels’; it may later be revised to ‘Two or fewer DSIs in five years’, once it has been established there are some realistic options that can reach this level.
For more information:
Close