Overview of the Business Case Approach

What is the Business Case Approach?

The Waka Kotahi Business Case Approach (BCA) is a robust, principles-based approach for developing business cases for investment through the National Land Transport Programme (NLTP). It is based on the same five-case model as New Zealand Treasury’s Better Business Cases. 

Treasury’s Better Business Cases(external link)

Benefits of the Business Case Approach

Applying the principles of the BCA helps to ensure that business cases are developed in a fit-for-purpose way that demonstrates value for money.

In particular, the BCA supports:

• an outcomes-focused approach to investment
• early, meaningful collaboration between stakeholders
• progressive development of a robust, evidence-based investment case.

It helps business case writers develop robust proposals for investment by:

• breaking the necessary work into phases, with well-defined decision points about whether it is worth proceeding
• starting with exploring the real nature of the problem or opportunity that may need to be addressed, rather than beginning with a solution already in mind
• building up the business case through critical thinking, gathering evidence and engaging with stakeholders before shortlisting and analysing possible solutions
• making sure that outcomes of the proposed investment are clearly linked to government priorities and guiding strategies.

The critical steps of business case development

As a principles-based approach, the BCA involves very few strict requirements. However, there are three critical steps that are required when developing a business case. What changes from one business case to another is the level of detail needed to complete each step.

The three critical steps are:

1. the case for change
2. optioneering
3. refining the preferred option.

These three steps form the basis of every business case. They are developed a step at a time, using the five-case model as a framework.

Five-case model

Within each critical step there are a number of key actions.

For more information on establishing the case for change, read our detailed guidance on the strategic case.

Strategic case

For more information on optioneering, read our detailed guidance on the economic case.

Economic case

For more information on refining the preferred option, read our detailed guidance on the commercial, financial, and management cases.

Commercial case
Financial case
Management case

Principles

Underpinning the BCA are the following key principles.

Investing for benefits

Investments are made to obtain benefits. An investment should contribute to the organisation’s strategic outcomes, represent value for money, and deliver benefits for customers.

Clarity of intent

The intention driving an investment must be clear. Simple concepts and plain language will provide a clear understanding of the problems and benefits.

Fit-for-purpose effort

The level of effort required to develop a business case must be proportionate to the complexity, risk and uncertainty of the problem and the proposed investment.

For more information about matching your level of effort to the level of complexity, risk and uncertainty, see our page on right-sizing

Right-sizing your business case

Gathering information through informed discussions

Successful investment management relies on gathering information through facilitated discussion with appropriate stakeholders who have the most knowledge of a subject. 

Building the case for investment progressively

The BCA relies on a structured, sequential approach to decision making, checking each phase as you go. All investments must follow the same line of enquiry.  

These key principles apply to all investment proposals, as required under the Business Case Policy.

Business Case Policy

These key principles are supported by other more specific principles that you will find from time to time as you go through the BCA. For example, we have identified a set of principles that guide how engagement should be used throughout development of a business case.

Engagement and the Business Case Approach

For a deeper into our principles-based approach, you can read the following practice note.

BCA Practice Notes 1: Understanding what ‘principles-based’ means for business case development [PDF, 80 KB]

The business case phases and determining your pathway

The BCA breaks down 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.

Rather than being a rigid procedure to be followed from point A to B to C, the BCA phases are a way of grouping the critical thinking that needs to happen and the decisions that need to be made to progress the business case. The aim is to complete each case in the five-case model, to the extent appropriate to your business case.

Depending on the complexity of the problem/investment, you may not need to go through all phases, or you may be able to group them together. However you approach the business case, you will need to complete the three critical steps outlined above.

The phases are:

• point of entry (PoE)
• programme business case (PBC)
• indicative business case (IBC)
• detailed business case (DBC)
• single-stage business case (SSBC), which combines IBC and DBC into a single phase
• SSBC-lite, a streamlined version of the SSBC for investments meeting specific criteria
• pre-implementation
• implementation.

Find out more about the phases and when you would undertake them in our guidance.

Business case phases

Roles and responsibilities in business case development

The roles and responsibilities of people involved in the BCA vary as the business case progresses through different phases. The main roles across the whole process are:

• Problem owner – the person who has identified the problem or opportunity, and who initiates the BCA.
• Investors – are responsible for deciding whether to invest resources to address the problems identified. Investors may include the problem owner’s organisation, Waka Kotahi and any other co-investors. Investors are often referred to as decision-makers, as they will ultimately decide whether an investment proposal should progress further at each formal decision point.
• Stakeholders – are the people who have the most knowledge of a subject and/or represent an interested or affected party, for example a local authority, community group or iwi. They may be internal and/or external to your organisation. They may also include partners, who share co-funding, statutory or decision-making responsibilities with Waka Kotahi in the activity being engaged on. In some cases, a formal memorandum of understanding (MOU) or other agreement may be in place to support the partnership. Waka Kotahi is committed to engaging Māori as Treaty partners. Te Tiriti o Waitangi provides the foundation of the special partnership relationship the Crown has with Māori. Stakeholders will be consulted at various stages of the BCA.
• Waka Kotahi investment advisors – are available for support and guidance throughout the BCA process, and will need to approve the business case at each phase.
• Workshop facilitators – are responsible for running the workshops that are usually required during the BCA process. Getting the right facilitator is beneficial in running an effective workshop, and it is worth considering hiring a professional.

Resources and further information

Tools and templates

• Tools and templates for the Business Case Approach

Business Case Approach Community of Practice

• The BCA Community of Practice promotes BCA best practice through mentoring, coaching, knowledge sharing and skills development. Contact bcacommunity@nzta.govt.nz for more information.

Learning modules

• Online learning for the Business Case Approach

Resources

• References and standards for the Business Case Approach 

Need support?

It is important to talk to us throughout the development of your business case. Contact your Waka Kotahi investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz