A key principle of the NZ Transport Agency Waka Kotahi (NZTA) Business Case Approach (BCA) is the use of informed discussions to ensure that the rationale for a potential investment is adequately understood.
One technique for informed discussion is investment logic mapping (ILM), which is included in the New Zealand Treasury’s guidelines for public sector business cases. ILM ensures ‘that robust discussion and thinking is done up-front, resulting in a sound problem definition, before solutions are identified and before any investment decision is made.’ (NZ Treasury) ILM is used to draw out and test the investment logic, around which the business case is written.
Investment logic mapping information NZ Treasury website(external link)
ILM typically uses facilitated workshops to draw out the investment story. Workshops can be used to understand and agree four critical parts of the logic behind an investment:
The actual number of workshops needed depends on how complex the investment is, including the levels of risk and uncertainty involved.
There are two main outputs from the initial ILM workshops:
Other outputs may be used, depending on whether you are using ILM workshops to develop your strategic response and/or solutions.
All business cases are required to use informed discussion to identify clear, easily understandable problem and benefit statements. ILM is specifically designed to use best-practice informed discussion, so it’s a great way to help you meet this BCA requirement.
For most business cases, ILM will be the best way to quickly understand the problems and benefits that are driving an investment.
For more information on defining problems and benefits as part of the strategic case, see our detailed information.
Defining problems and benefits
Many business cases will use ILM to define and test problems and benefits, but may use other methods to explore alternatives and options, and to identify a recommended solution. You can still use the ILM template to record what’s been decided about the strategic response and the solutions that will be implemented. This is good practice, as it allows you to tell your investment story simply and clearly, on a single page.
Following the ILM process is highly recommended, particularly for complex, high-risk, high-uncertainty investments. However, the use of ILM is not compulsory for the BCA. If there is a more fit-for-purpose approach to defining problems and benefits, exploring alternatives and options, and deciding on a solution, then use it. This is about ‘right-sizing’ the effort to develop the business case.
If it is considered that an ILM is not required, you should note the reasons for this, and show how informed discussion will be used to define the four critical parts of the logic that your business case will need. The point of entry (PoE) is a good place to capture this reasoning.
ILM uses a series of facilitated workshops to progressively build the logic behind the investment, as shown in the following table:
| Workshop | Purpose | Helps to build (five-case model) | Outputs |
|---|---|---|---|
|
Problem definition |
To define the problems or opportunities that are the reason investment is being considered |
Strategic case |
Investment logic map (ILM) |
|
Benefit definition |
To identify the expected benefits from investment, and show how they will be tracked |
Strategic case |
Benefits map |
|
Response definition |
To identify the preferred strategic response from a range of potential responses |
Economic case (Also relevant to financial, commercial and management cases) |
Early assessment analysis tool (EAST) Multi-criteria analysis (MCA) report Appraisal summary table (AST) |
|
Solution definition |
To confirm the preferred response and define the recommended solution from a range of options |
Economic case (Also relevant to financial, commercial and management cases) |
Early assessment analysis tool (EAST) Multi-criteria analysis (MCA) report Appraisal summary table (AST) |
Which of the workshops you use for your business case will depend a number of factors, including:
Typically, a minimum of two workshops will be used for less complex investments, these being the problem definition and benefit definition workshops. More complex investments will need to also use response and/or solution workshops to fully explore the available options and recommend a solution.
Note that even where response and solutions workshops are not used, the BCA still requires business case developers to consider an appropriate range of options and provide the rationale behind the selection of the recommended option.
Defining problems and benefits
Optioneering in the economic case
Successful ILM relies strongly on effective engagement. For each of the workshops, it is important to carefully consider who should be invited, and to be clear on the reasons for inviting them. This guidance should be read together with our guidance on engagement in the BCA.
Engagement and the Business Case Approach
It’s important to get the right people in the room; only schedule workshops when you know those people are available. Problem owners, investors and other stakeholders all need to participate fully in the workshop discussions.
Your engagement planning should have started in the PoE phase, so review the stakeholders you identified there. Consider inviting any partners or key stakeholders you have identified to collaborate with or involve in your engagement plan. Involving people in ILM workshops can be an effective way to collaborate, as this provides opportunities for partners or stakeholders to help shape the investment in a meaningful way.
In particular, remember that Māori have a special relationship with the Crown as Treaty of Waitangi partners and NZTA has a role to develop Māori capacity in decision making. Check your engagement plan to make sure you include any specific needs for engaging with Māori when planning workshops. The NZTA Māori engagement framework, Hononga ki te iwi, may be a useful guide for other organisations as well.
Hononga ki te iwi – our Māori engagement framework
Also, think about the context of the issues involved when selecting workshop participants. A strategic issue could require a different set of participants than a more activity-related/operational problem.
As the business case progresses and you move from one workshop to the next, you may need to involve different participants. Continue using your engagement planning to inform decisions about who to involve in each workshop.
You should aim to keep workshop attendees to a minimum. This helps to make sure the discussion is focused and there is opportunity for everyone present to be heard. It also helps to avoid placing unnecessary demands on busy people.
Depending on the nature of the investment, workshops will typically involve between five to 10 people, although this could be up to 15.
Remember, it’s important to invite participants because you believe they can make a meaningful contribution to the ILM process; inviting people to attend for political reasons or simply to ‘keep them in the loop’ is best avoided.
When selecting workshop participants, keep the problem and/or opportunity in mind and remember that the ILM process is not a consultation exercise. It is information gathering, so you need to bring people who are accountable for benefit realisation together with those who hold the most knowledge about the subject. Key participants include:
Participants should be familiar with the topic and be prepared to actively contribute to the workshops.
Facilitators play a critical role in using ILM successfully. For all but the simplest investments, it is essential to engage a facilitator who is experienced in the BCA and familiar with NZTA’s ILM requirements.
Take time to brief your facilitator on the issue(s) that your business case needs to explore, although avoid pointing them towards pre-determined solutions. Facilitators are expected to be ‘content-free’, that is, have no stake in the outcome of the discussions, and to:
They may be trained or accredited ILM facilitators, as appropriate. Accredited ILM facilitators are recommended for complex multi-party issues.
Problem owners should ensure that facilitators have read this guidance and the NZTA benefits management guidance when they are engaged and before the workshops. They should also be fully briefed about the topic, especially if there is likely to be disagreement among participants.
The problem owner is the person who is accountable for the business problem, and responsible for achieving the benefits.
They:
Investors need to:
Where multiple funding sources are involved, there will be more than one investor. Each co-investor needs to understand why the problems need addressing and what outcomes they are ‘buying’. Recognising each other’s decision pathways and understanding the interdependencies are critical.
Investors’ representatives should have sufficient authority/delegation to confirm the necessary investment for the next phase, or signal the proposal’s viability through their interest in proceeding beyond the strategic case.
These are the stakeholders who will be important to the success of the investment. This can include stakeholders who will be significantly impacted by, or be able to influence, the problem. They:
Other participants include people who hold knowledge or specialist skills that are needed to understand the investment, such as people who have a strong understanding of the problem, operational environment or benefits relevant to the business case.
Knowledge holders are expected to support informed discussions with evidence-based views.
While it is not expected that new work is done in the lead up to the workshops, participants should come to an ILM ready to take part in discussions and offer their opinion and expertise. This means participants are expected to give some thought to the potential problem or opportunity beforehand and be ready to share any relevant existing work or data they have at the workshop.
A good practice for participants is to canvass others in their team or organisation before they come to the workshop.
The problem definition workshop focuses on identifying the problem or opportunity that is the main reason for considering investment. It is designed to help answer the following questions:
A note about opportunities …
Problems and opportunities can be thought of as opposite sides of the same coin; solving problems can create opportunities, and ignored opportunities can create future problems.
For simplicity, the word ‘problem’ is used in the BCA to mean ‘the gap between the current state and the desired future state’. Business cases can consider opportunities as well as problems, but they still need to be framed in terms of the gap to be addressed, including underlying causes and consequences.
In the workshop, the problem owner sets the scene and introduces the potential investment that has led to the workshop. The facilitator will then lead participants through the process of identifying the main problems or opportunities that are driving the need for investment. By the end of the workshop, the participants will have developed a number of problem statements which will be presented in an investment logic map. The workshop should identify at least one problem and no more than four.
Investment logic map template [PPTX, 59 KB]
Each problem statement:
Developing problem statements is an important early step in your business case – but it doesn’t end there. After the workshop, the business case developer needs to follow up the evidence quoted, decide whether it supports the problem statements or not, and write a more detailed explanation to support each simple, single-sentence problem statement.
It can help to think of this like a newspaper article – the problem statement is the headline: it’s there to get the attention of the reader and convey an overall sense of what the problem is about – but not the detail. To communicate a full understanding of the problem, you need to support this headline with the article – a clear and concise description of the problem, including the evidence that supports it.
More information about defining problems and/or opportunities and benefits, and developing problem statements is available on our website and in information sheets.
Defining problems and benefits
BCA Practice Notes 2: How problem statements are used in practice [PDF, 78 KB]
BCA Practice Notes 3: Root cause analysis in business case development [PDF, 120 KB]
The benefit definition workshop is used to identify the outcomes that the investment needs to achieve in order to be successful. It is designed to help you answer the following questions:
Aim to hold the benefits workshop around one week after the problem definition workshop, and ideally no more than two weeks. It is good practice to have continuity of participants from the problem workshop, however you may need to make some changes as well. For example, if you have a benefit specialist available, it can be helpful to have them at the benefit workshop.
At the workshop, participants will:
NZTA has developed the Land Transport Benefits Framework, to support quicker and more consistent identification of benefits that are relevant to transport. For all business cases that seek funding through the National Land Transport Programme, it is a requirement to consider benefits and measures from the benefits framework. Alternative benefits and measures can only be used if they are materially different from those in the framework. Alternatives may be finalised after the workshop in consultation with NZTA investment advisors.
Note that other community benefits linked to non-transport outcomes can be reflected alongside transport benefits in the ILM and benefits map. For more information about NZTAs benefits management framework see our guidance.
The benefits and measures identified in the workshop are recorded on a benefits map.
Benefits map template [PPTX, 64 KB]
The benefits map is a key document as it is used throughout the rest of the business case, for example to derive investment objectives, evaluate options and to guide benefit realisation under the management case.
Think about adding extra time at the conclusion of any benefits workshop to work with a sub-group of key stakeholders, including the investor(s), to map out the strategic case, key points and messages. These are stakeholders who are likely to contribute to the strategic case directly.
Under the ILM approach, facilitated workshops can also be used to:
Further details of how workshops can be used to explore the strategic response and the solution are provided in the relevant page for each business case development phase.
Programme business case phase
Single-stage business case phase
Indicative business case phase
Detailed business case phase
After the workshops have been held, the facilitator will typically:
When they have received participant feedback, the facilitator will, as relevant:
The maps form a key input into developing a strategic case. If the result of the workshops is a decision to proceed to a strategic case, it should progress promptly.
The main outputs from problems and benefits definition workshops are simple, single-page flowcharts that tell the story of a possible investment and expose its underpinning logic. They are the start of the conversation about whether it is necessary to invest time and money into looking into the problems or opportunities for potential investment.
A map format is not always necessary, but the problems, opportunities and benefits must be clearly articulated however they are presented.
Typical outputs from each workshop include:
The answer to 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
Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
