Are you facing time pressure to submit an investment proposal?
The point of the business case process is to help ministers make good decisions. On those (rare!) occasions when decisions need to be made rapidly for reasons outside agency control – for example in order to keep attractive options open, or because Cabinet is directing officials to expedite decisions, then the Treasury will work with you to help make it happen.
The Better Business Cases process can be tailored to accommodate time-constrained decisions. If you are operating under an urgent timeframe and don’t expect to be able to meet the standard requirements of the business case guidance, contact your Treasury vote analyst immediately to agree whether an expedited approach is appropriate.
Of course, as the degree of timeframe compression sought increases, or the evidence of alignment with existing strategy is weak, you should expect a greater degree of challenge from the Treasury as to whether it’s possible to make a good decision within such constraints.
Case Study
A government agency wanted to provide Cabinet with the option of taking up an unexpected, but time-limited, opportunity to procure, at a much better price than would have been expected. The investment had previously been identified as a part of a costed strategic investment plan, approved ‘in principle’ by Cabinet, but without funding committed.
Essentially, the agency had three weeks to gain Cabinet’s agreement to fund an $80 million project, before the option disappeared. Using the Better Business Cases framework, the agency worked closely with the Treasury to agree a level of analysis that would be achievable in the available three week window.
The business case highlighted both the benefits of taking advantage of the favourable price, and the risks of making the investment decision based on limited information. Cabinet agreed to fund the project.
Risks of using an expedited approach
You need to plan. Good planning is critical, even if time is short. A good plan can save significant time, and money, in implementation. The Better Business CasesTM framework is a proven way, aligned with international good practice, to cover the bases – strategic, economic, commercial, financial, management.
Our experience and evidence base show that business cases undertaken in compressed timeframes, where some steps have been scaled back or omitted, can result in a negative impact on the overall result of a change initiative. Issues include:
- optimism bias about cost, time and benefits (due to a lack of detailed understanding)
- missed opportunities to integrate with other initiatives (due to an urgency-induced narrowing of focus)
- unforeseen ‘downstream’ effects leading to additional costs and erosion of benefits.
When might an expedited approach be appropriate?
Circumstances where an expedited approach might be warranted include when it’s necessary to:
- meet a Cabinet direction
- preserve the government’s ability to take advantage of a time-constrained opportunity.
In order to justify the risks of an expedited decision-making approach, your agency must demonstrate its commitment to delivering the best possible advice in the time available, through strong, proactive governance and leadership. These should be focused on removing barriers and providing the right resources to the team at the right time, to support going ‘fast and well’.
Principles for using an expedited approach
- Consult early with stakeholders and government partners. Make all the constraints and assumptions of the business case development timeframe explicit, so they can give you the best advice in a limited time.
- The Treasury will work with you to use existing business case processes and collateral to efficiently balance time available against quality of advice.
- Ensure the Preferred Option is fully justified, and outline why you think your recommended option/solution is the best.
- Provide transparent advice to Cabinet about the risks involved and potential implications of making fast decisions. Explain how much (or little) these risks can be mitigated, and how you intend to do so.
Developing the expedited approach
Prompt engagement
You must seek support for an expedited approach from your Treasury Vote Analyst, at the earliest possible opportunity. The Vote Analyst will be supported by an advisor from the Treasury’s Investment Management team if required.
The investment lead agency must:
- complete a Risk Profile Assessment (RPA) and Strategic Assessment for the initiative
- agree with Treasury that there is a genuine need for an expedited process
- plan for the required investment decision – then work backwards from that date, allowing time for consultation and lodgment, to calculate how much time is available for business case development
- agree the appropriate type of business case, based on the nature of the decision sought and the type of investment.
A useful tool for this assessment and recording this agreement is the Business Case Development Plan (Point of Entry) template. Whether using this document or not, you should:
- include the date being targeted for an expedited decision, why it’s necessary to meet this date and the plan for meeting it.
- note what actions in the Business Case Guidance you are planning to drop, in order to be ready by the expedited date
- note the expected risks to the quality of the advice through not undertaking these actions (ie, make the trade-off between speed and reliability transparent).
Negotiating the investment decision pathway
The ideal investment decision pathway is based on four key principles:
- avoid time and money being wasted on proposals which won’t be supported
- preserve ministerial decision rights (eg, by giving them visibility of a full range of options and several opportunities to decline the project)
- preserve good faith with suppliers, by ensuring requests for information, proposals and tenders don’t proceed without Cabinet support
- maintain the feasibility of attractive options through timely decision making.
For a project, this typically translates into the following pathway.
| Business case pathway | Purpose | Investment decision pathway |
|---|---|---|
| Strategic Assessment (SA) | Is there a problem? Is it worth solving? | Cabinet approval to proceed to IBC |
Indicative Business Case (IBC) then Detailed Business Case (DBC) | Confirms the case for change. Considers feasibility of a full range of options, recommends a preferred way forward, identifies short-listed options for further analysis Further analysis to confirm the preferred option that provides the best value for New Zealand1 | Cabinet approval of the preferred way forward and the short-listed options; and approval to approach the market for information in good faith Cabinet approval to allocate contingent funding, issue Requests for Tenders and (usually) delegate appropriation rights to joint ministers |
OR Single-Stage Business Case (SSBC) | Considers feasibility of a limited range of options, recommends a preferred option that provides the best value for New Zealand1 | Cabinet approval to allocate contingent funding, issue Requests for Tenders and (usually) delegate appropriation rights to Joint Ministers. |
| Implementation Business Case (ImBC) | After market engagement and contract negotiation, confirms best option, costs and benefits. Recommends a preferred solution from a preferred vendor. | Joint Minister approval to draw down funds, enter into contracts, and execute the project. |
Note 1 – Not just value-for-money – this also considers Wellbeing impacts of the proposal.
When time is constrained, the first three principles listed above may need to traded off to some degree to accommodate the principle of timeliness. This could involve merging some of the pathway stages, and/or reducing the level of analysis within each stage.
A likely constrained approach:
- Cabinet paper with sections considering the investment from each of the Better Business Case framework’s ‘five-case model’ lenses – Strategic, Economic, Commercial, Financial, and Management.
- Detailed Business Case (or a Single Stage Business Case)
- Implementation Business Case (or an alternative as agreed with Treasury)
There is no one-size-fits-all approach – the lead investment agency and the Treasury must collaborate and use judgment to agree the best approach, aligned with the principles and the required timeframes.
Development
The investment lead agency should develop the business case based on what’s been agreed with the Treasury. Even if the development time is very short, plan to check in regularly with your vote analyst during development, to make sure you’re on the right track.
Ensure you make it clear to Cabinet:
- the benefits of taking an expedited approach to the business case in this situation
- what analysis has been omitted
- what the risks are of such an approach; these are likely to include:
- without detailed analysis, estimates regarding time, cost, benefits typically prove to be optimistic, and the best value option may not be correctly identified
- less time for looking outwards, which can result in missed opportunities for integration with other government initiatives; ‘point’ solutions that don’t endure well
- unforeseen ‘downstream’ effects leading to additional costs and erosion of benefits
- what options are available to reduce those risks.
Tips
Your agency is best placed when there is already some level of agreement from Cabinet that it has a problem it wants solved. For example, there may already be a high level description of the project in a strategic plan (eg, Defence Capability Plan) agreed by Cabinet.
DPMC can help advise on whether it’s a Cabinet priority to expedite a decision.
For any business case but particularly when timeframes are short, it is most effective to engage a specialist business case writer to assist your team. Your staff will contribute essential business knowledge and do most of the analysis; the specialist’s familiarity with the framework should help you focus your effort.
Consider an Investment Logic Mapping (ILM) workshop as a first step, to de-risk the rest of the business case development. An ILM will:
- help stakeholders to be on the same page about the problem the investment is addressing, and the resulting benefits (stakeholders often discover they’ve been using the same words but meaning different things)
- generate a robust foundation – problem statement, solution options, benefits – for the business case.