When is a Better Business Case™ required?

Treasury’s Better Business Cases (BBC) supports government investment decision-making by providing a common language and a systematic way for stakeholders to think and work together to give decision-makers the information they need to invest with confidence.

The Treasury recommends the BBC framework for all types of business cases, regardless of who has the decision rights.

In the State Sector

Cabinet Office Circular CO (19) 6: "Investment Management and Asset Performance in the State Services" states Cabinet expectations with regard to capital expenditure, asset disposals, lease arrangements, and "as a service" investments.

The Circular requires the use of the Treasury business case guidance for all significant investment proposals from relevant state sector agencies[1].  The circular defines significant as:

• [having] a high degree of importance in terms of its likely impact on, and likely consequences for the Crown or the agency or sector, customers or clients, or the capacity of State services agencies to perform their functions; or the government’s fiscal strategy; or the government’s investment or infrastructure strategy – or –

• any investment proposal that requires Cabinet or Ministerial approval as set out in Annex 1 of the circular, that is:

  • high risk proposals  – or –

  • Any public private partnership (PPP) investment proposals, or any significant innovative or non-traditional approaches to procurement or alternative financing arrangements, even if funded from agency baselines and balance sheets  – or –

  • investments that require new Crown funding or support  – or –

  • proposals with whole-of-life costs (WoLC) in excess of $15 million, however funded.

The thresholds for significance for a given agency or sector may vary according to the agency’s Investor Confidence Rating.

Chief Executives are to ensure agencies adopt and apply, as good management practice, Treasury guidance on investment management, including business cases.

Boards of Crown entities and companies should adopt and apply, as good management practice, Treasury guidance on investment management, including business cases.

Sharing good practice and results

CO (19) 6 requires agencies to provide the Treasury with a copy of Cabinet-approved business cases (taking account of grounds for withholding information under the OIA), so that these can be shared with other agencies.  These business cases should be sent to [email protected] after redactions have been made.

Relationship with policy decisions

Where an investment decision is required in support of a policy decision, the agency should engage the reviewer (Treasury Vote Analyst, or Monitoring Agency) at the earliest possible time. This will ensure the approach to the policy and investment decision is fit-for-purpose.

The approach to the business case will depend on whether it is to assist in informing the policy decision (that is, augment a Regulatory Impact Analysis) or to support a policy decision that has already been made.

If the policy decision has been made, much of the Strategic Case and elements of the Economic Case will already be included in the policy work and will not need to be revisited through the business case; a summary will likely suffice. The business case should validate the Strategic Case, complete the Economic Case and focus on developing the Commercial, Financial and Management Cases. The Strategic and Economic Case may be developed in detail if there is a desire by the Senior Responsible Owner (ie, Sponsor) or Reviewer is concerned that the strategic or economic drivers lack sufficient robustness to carry the policy decision, or if they determine that they are sufficiently flawed that a poor investment decision has been made.

Alternative procurements

Agencies that are planning any significant investments (including any arrangements with Local Government Authorities seeking Crown funding or support) should evaluate all procurement options, including considering the use of Public Private Partnerships (PPPs) where appropriate and consistent with Government policy. Note that current government policy precludes initiating the use of new PPPs in the education, health and corrections sectors.