Business case approach

The BCA progressively builds an investment case by:

• identifying the core problem
• identifying the consequences of not addressing it
• identifying the benefits to be gained by investing in its solution
• identifying the range of feasible options to address the problem
• identifying the most appropriate option. 

The approach breaks the activity development process into phases that have decision gateways. This ensures NLTF funding is not wasted by developing low priority activities that poorly achieve, or have diverged from targeted outcomes.

The BCA process is scalable so that the level of effort and deliverables required to develop the investment case is appropriate to the size and risk of the problem and the proposed investment.

The BCA allows a flexible approach to activity development and consideration of a wide range of alternatives, including the potential transfer of solutions to a non-transport stakeholder.

For example, a business case developed to address a transport problem may identify improvements to bylaws, land use policy or contributing factors, such as radio reception, provides the most effective solution. The business case may then be used to support these changes, even though they are not eligible for funding from the NLTF.

Equally, a non-transport business case may identify that the best solution involves transport improvements. In this instance, the transport investment may be justified through transfer of the existing business case.

The BCA's method of problem and benefit identification, stakeholder engagement and option consideration is mandatory, however business problem owners seeking funding from the NLTF do not have to follow the exact process set out in the How to use the Business Case Approach section.

An alternative process may be employed provided the requirements of the business case approach are met at each investment gate as set out in the assessment of the business case. 

The business case approach supports good investment decision making as it:

• generates clear understanding of problems, consequences and benefits at the outset
• improves the strategic and outcomes alignment
• increases responsiveness to changes in expected outcomes.
• builds the case for investment progressively
• involves all stakeholders along the way
• enables consideration of a wide range of alternatives and options to address a problem.

Using a business case approach should lead to:

• better and earlier decisions for funding from the NLTF
• investments targeted to priorities
• improved confidence of investment, with more efficient use of resources
• better value for money
• achievement of desired outcomes.

Throughout all stages of developing a business case, approved organisations and Waka Kotahi (state highways) need to consider how they will measure the performance of their investments. Early in the business case approach, the performance measures will need to be developed.

When the activity or programme has been implemented, its performance will be tracked against those measures. This will ensure an ongoing evaluation of the success of investments. From the lessons learned through performance monitoring, a better understanding can be gained of how improve future investment proposals and decisions.

Information on how Waka Kotahi monitors investment performance should assist approved organisations and Waka Kotahi (state highways) to identify and develop appropriate monitoring measures in the development phase.