| 8. |
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Business Cases |
| 8.1 |
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Introduction |
| 8.1.1 |
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Appraisals should be undertaken and presented within a wider business case. A business case consists of an economic appraisal and other information including the proposed arrangements for financing, management, marketing, procurement, monitoring and evaluation of the relevant policy, programme or project. The NI Practical Guide's 10-step approach is specifically designed to provide for this in that the 'other information' is generally covered by completing Step 9 as indicated in Section 2 above. |
| 8.1.2 |
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Development of the business case for any proposal should be a continuous process from inception to implementation. It is not just to be prepared for purposes of obtaining approval and then shelved. The business case document should be a living document, to be revisited and updated regularly during the development of a proposal. For example, in a PRINCE2 project, the business case should be updated at every 'End of Stage' at least. |
| 8.1.3 |
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The Green Book refers briefly to separate guidance on business cases prepared by the Office of Government Commerce (OGC). This advocates developing the business case through a number of stages including High Level Options and Strategic, Outline and Full Business Cases. It recommends a "five case model" i.e. the business case should cover the strategic case, economic case, financial case, commercial case and project management case. For details, see: Office of Government Commerce - Business Case Further guidance should be sought from the appropriate centre of procurement expertise or from DFP's Central Procurement Directorate (CPD). |
| 8.1.4 |
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DFP broadly endorses the OGC guidance but accepts that Departments may need to tailor the development of business cases to suit their particular circumstances. |
| 8.1.5 |
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The terms business case and business plan are not interchangeable. DFP uses the latter term in the context of financially-assisted or commercially-oriented projects, for which a business plan is required in addition to an economic appraisal in order to establish project viability. This is explained in section 4 (see pages 94 - 96).
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| 8.2 |
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Business Cases and Expenditure Approval |
| 8.2.1 |
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The business case is a key document both in the management and development of a project and in the approval process. Expenditure approval should be based on a fully developed business case - i.e. a "Full Business Case" in OGC parlance. It is acknowledged that the terms Outline and Full Business Case can have different connotations in different contexts e.g. they have a particular meaning in the context of PPP cases (see section 5). The important point is that approval should be based on a fully developed business case. |
| 8.2.2 |
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The essential content of a Full Business Case is a complete economic appraisal covering the 10 standard appraisal steps in accordance with section 2 of the NI Practical Guide. |
| 8.2.3 |
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Business cases should normally present the 10 appraisal steps in the order in which they are listed at 1.4 above. However, DFP will accept variations in the style of presentation where they are clearly more suited to a particular type of project, provided all the necessary information is still covered. For instance, business cases for financial assistance to the private, voluntary and community sectors should cover broadly similar ground but with special emphasis on the issues in Section 4 of the NI Practical Guide. |
| 8.2.4 |
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After approval has been given on the basis of an Outline or Full Business Case, the principles of appraisal should continue to be applied to any subsequent options that arise prior to the award of a contract. For example, any bids obtained from the private sector should be appraised using standard appraisal techniques, irrespective of the procurement route adopted. Departments should ensure that they have appropriate documentation of this process. |
| 8.2.5 |
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Sections 5 and Section 6 contain guidance on business cases for PPP and IT cases. Separate guidance on the business cases required for external consultancy assignments is also available (See section 12.2). |
