The Better Business Case 5 Case Model: Explained

With more and more digital technologies surfacing every year, we stray further and further away from the traditional working process of an organisation. Therefore, an organisation needs to adapt to the latest digital trends to keep up with the competition. One of the many examples of digital transformation which organisations have adopted is the Better Business Case (BBC) guidance – and one of its integral components in its structure is the Better Business Case 5 Case Model.  

According to a report by the UK Treasury, as of 2018, more than 3,000 people had taken the BBC training and the approach was used to assess more than 500 business cases. This stat demonstrates the growing influence of Better Business Cases in the United Kingdom. This blog will elaborate on what is a Better Business Case, its structure, and what is the Better Business Case 5 Case Model.

Table of Contents

1) What is the structure of Better Business Cases?

   a) The 5 Case Model

   b) Approval processes

2) What is the Better Business Case 5 Case Model?

   a) The Strategic Case

   b) The Socio-Economic Case

   c) The Commercial Case

   d) The Financial Case

   e) The Management Case

3) Conclusion

What is the structure of Better Business Cases?

The Better Business Cases guidance divides business cases into different:

1) Parts (The 5 Case Model)

2) Approval processes

The 5 Case Model

The 5 Case Model divides every business case into five different parts, namely:

1) The Strategic Case

2) The Socio-Economic Case

3) The Commercial Case

4) The Financial Case

5) The Management Case

Approval processes

In BBC, some business cases need two-stage approvals, while some need just one. High-risk and large-scale projects follow the two-stage approval process where one has to get their business case approved in two stages: the Indicative Business Case (IBC) and the Detailed Business Case. While the IBC focuses most on the Strategic case, it focuses less on the Economic and Financial and even lesser on the Commercial and Management cases.

On the other hand, the lower-risk, lower-cost projects use a single-stage business case. The single-stage business case amalgamates the Indicative and Detailed Business Cases and goes into less detail. It must be noted that both the approval processes have an additional stage. The Implementation Business Case is for the purpose of getting a sign-off on your preferred supplier and planned contracts. The additional business case also reflects all the changes that came out of previous approvals.

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What is the Better Business Case 5 Case Model?

At the core of the Better Business Cases framework, five key questions are answered. This is known as the Better Business Case 5 Case Model. The 5 Case model has been the necessary standard for the United Kingdom since the early 2000s. The G20 adopted the standard as the international standard for infrastructure projects in 2018.

It should be ensured that each component of the 5 Case Model should be satisfied. The objective of the business case is to ensure that the programmes and projects live up to their intended objectives and deliver the benefits that are expected from them. The five cases that make up the organising framework for a Better Business are explained in detail as follows:

The Strategic Case

The Strategic Case answers the question, “What is the compelling case for change? What are the benefits?” The purpose of the strategic case is to propose the need for change and to demonstrate the proposed initiative’s fit with the organisational strategy. To demonstrate the proposed initiative’s holistic fit with projects and programmes within the strategic portfolio, an updated organisational business strategy must be provided. The strategy should reference all relevant local, regional and national policies and regulations. In the Strategic case of the five-case model, one covers:

1) The Strategic Context:

  a) Organisational Overview

  b) Alignment to Strategic Intentions

2) The case for change:

  a) Investment Objectives

  b) Potential scope and services

  c) Main benefits

  d) Main risks

  e) Key Constraints, dependencies and assumptions.

To make a solid case for change, one requires a comprehensive understanding of the rationale and drive behind the proposed change. The rationale behind the proposal must be SMART - meaning it must be specific, measurable, achievable, relevant and time-constrained – to facilitate evaluation on completion of the initiative. The key to making a robust proposal is to have a clear idea of the existing arrangements. The arrangements include business-as-usual (BAU), business needs (related problems and opportunities), potential scope (necessary organisational capabilities), and the potential benefits, risks and constraints associated.

The challenges associated with the Strategic Case are to explain how an intervention will deliver output that improves the organisation’s capability to deliver better outcomes and benefits to stakeholders and customers while identifying the associated risks. It also must be ensured that the organisation’s proposal emphasises well-researched business needs, which are supported by service demand and capacity planning. Another challenge, in this case, is to make sure initiatives are planned and delivered as part of an organisational strategy that is accompanied by a well-defined portfolio of all related programmes and projects. 

The Socio-Economic Case

The Socio-Economic Case answers the question, “What are the options? What is the best option for the organisation/government?” The Economic Case assesses a variety of options to identify which one will deliver the highest public value. One can run these options through a cost-benefit analysis that consists of well-being.

These options include:

1) The status quo (“do nothing new”)

2) A minimum achieveable option

3) The favoured way forward

The Economic case of the five-case model will cover the following:

1) Critical success factors

2) The preferred way forward

3) Long-list options

4) The short-list options and assessment of options

5) Economic assessment of the short-list options

6) Testing the robustness of the options analysis

7) Risk and uncertainty

8) Non-monetary benefits and costs

9) Preferred option

The purpose of the Socio-Economic dimension of the business case is the identification of the proposal that delivers the best public value to society, including social and environmental efforts. To demonstrate public value, one must appraise a wide variety of realistic options (the “long list”) in terms of how well they fit the proposed initiative’s objectives and critical success factors. It would then require a detailed evaluation of the reduced number of proposed options (the “short-list”).

The challenges faced in the socio-economic case are to begin by selecting the correct options for scope, service delivery, solution, funding and implementation – or else the options will represent less-than-optimal value from the beginning. It is also a challenge to justify higher cost options related to the status quo and the ‘do minimum’ - as well as to measure and/or monetise the benefits and risks.  

The Commercial Case

The Commercial Case answers the question, “Is the proposed procurement process commercially viable? Can the market deliver?” The Commercial Case of the five-case model shows how one’s procurement process is supposed to work for both the agency and the suppliers. It also demonstrates that the procurement approach is viable in the relevant marketplace. In the Commercial case, one will cover the following:

1) Procurement strategy

2) Risk allocation

3) Contractual agreements

4) Required services and outputs

5) Payment mechanisms

6) Accountancy treatment

7) Personnel implications

8) Evaluation of best and final offers

9) Confirmation of Commissioner’s support

10) The negotiated deal and contractual arrangements

The purpose of the commercial case is to demonstrate that the preferred option from the “short-list” will amount to a viable procurement and a structured deal between the public sector and its service providers. To demonstrate a feasible procurement process, one requires an understanding of the market, knowledge of the suppliers’ realistic achievements, and research of the procurement routes that will deliver the highest value to both parties.

The challenge faced in the commercial case is to be an “intelligent customer” and to anticipate how the highest public value can be secured during the contract phase amidst a phase of inevitable changes to organisational and operational requirements.

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The Financial Case

The Financial Case answers the question, “Is the investment proposal affordable? How will we fund it?” In the Financial case, it is shown that the project is affordable, and the funding for the whole project is set up. In the Financial case, one will cover:

1) Financial costing model

2) Financial implications of the deal

3) Impact on the balance sheet

4) Overall affordability and funding

5) Capex and Opex requirements

6) Confirmation of support

The purpose of the financial case is to demonstrate the fundability and affordability of the preferred option, including the stakeholders’ and customers’ support. To demonstrate the fundability and affordability of the preferred option, one needs a comprehensive understanding of the capital, revenue and costs of the proposed initiative. One also needs a clear understanding of how the proposed deal will impact the balance sheet, income, expenditure and pricing arrangements of the organisation.

The challenge faced in the financial case is to identify and correct any potential gaps in fundability during the proposed initiative’s lifespan.

The Management Case

The Management Case answers the question, “How will the project organise for successful delivery?” The final case is known as the Management case. This case shows how one will deliver, monitor and evaluate the project. The Management case covers the following: 

The Management case covers the following:

1) Programme management governance (accordingly for a project)

2) Project management

3) Change management

4) Benefits management

5) Assurance and risk management

6) Contract management

7) Post-project evaluation

The management case shows that the appropriate arrangements are in place for the delivery, monitoring and evaluation of the initiative. This also includes feedback on the strategic planning cycle of the organisation. To demonstrate that the preferred option can be successfully delivered, one requires evidence that the scheme is to be managed according to the best practices and subjected to independent assurance. One also must provide evidence that the necessary arrangements are in place for contract management, realisation of benefits and risk management.

As with every other case in the 5 Case Model, even the management case has its own set of challenges. The challenges faced in the management case are to manage the risks in the design, build, funding and operational phases of the initiative and to put necessary contingency plans in place. Another challenge met by the management case is to deal with inevitable organisational changes in a controlled environment and to ensure that objectives are met, expected outcomes are delivered, and the benefits are evaluated.

Conclusion

All in all, the Better Business Case 5 Case Model is an integral component of the Better Business Cases guidance. To extract the best public value from a project, one must make sure that every component of the 5 Case Model is satisfied. Projects are much more likely to deliver their intended output and expected benefit if they are properly scoped and planned, and their cost and revenue impacts are understood right from the beginning.

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