Purpose and structure of the business appraisal documentation in the UK

1. 21 May 2016

2.  Riadenie
◦ HM Treasury
◦ Cabinet Office
◦ Departments
 Kontrola
◦ Parliament -> Public Accounts Committee
◦ National Audit Office
 Annual Accounts Audit
 Ad-Hoc Value for Money Audits
“All expenditure requires approval by
Treasury unless Treasury has delegated
this authority to the department. Typically
delegated limits will be set in line with an
assessment of risk…”

5. •That the intervention is supported by a compelling case for change that
provides holistic fit with other parts of the organisation and public sector
Strategic Case
•That the intervention represent best public valueEconomic Case
•That the proposed spend is affordableFinancial Case
•That the proposed Deal is attractive to the market place, can be procured
and is commercially viable
Commercial Case
•That what is required from all parties is achievableManagement Case

6. Strategic Economic
Financial
Commercial
Management

7.  Strategic Context
◦ Organisational Overview
◦ Current Business Strategies
 The Case for Change
◦ Objectives
◦ Existing Arrangements
◦ Business Needs – current and future
◦ Potential Scope
◦ Benefits and Risks
◦ Constraints and Dependencies

8.  Critical Success Factors
 Long listed Options
 Short Listed Options
◦ including do minimum
◦ three or four is the recommended number
 Status quo; do nothing option
 Economic Appraisals of Costs and Benefits
 Optimism Bias adjustment
 Risk Assessment
 The Preferred Option

9.  Procurement Strategy
 Service Requirements
 Charging Mechanism
 Risk Transfer
 Key Contractual Arrangements
 Personnel (TUPE) Implications
 Accountancy Treatment

10.  Public Capital and Revenue Requirements
 Impact on Balance Sheet
 Impact on Income and Expenditure Account
 Overall Funding and Affordability

11.  Programme and Project Management Methodology
(PPM) and Structure
 Programme and Project Management Plans
 Use of Specialist Advisers
 Change and Contract Management Arrangements
 Benefits Realisation
 Risk Management
 Monitoring during implementation (proportionate)
 Post Implementation Evaluation Arrangements
 Contingency Arrangements

12.  “It is important to note that “five case model”
is a framework for “thinking” and that the
supporting methodology is flexible and can
be applied at both strategic (macro) and
tactical (micro) levels.”
„Firm boundaries on the
outside, flexible inside“

13. Minor spending
Major spending
Major Policy
Strategic Outline
Programme BC
Strategic Outline Case (SOC)
Outline Business Case (OBC)
Final Business Case (FBC)
Business Justification
Case (BJC)

14. SOC
60%
40%
20%
30%
10%
OBC
80%
70%
60%
60%
50%
FBC
100%
100%
100%
100%
100%
Strategic
Economic
Commercial
Financial
Management
• Case for change &
Objectives
• Scope
• Preferred way forward
• Longlist Options & SWOT
• Short list (incl. “Do
Nothing”)
• Risk identification
• Indicative CBA
• Benefits appraisal (cash
releasing, financial,
quantifiable, qualitative)
• Economic appraisal of
shortlisted options
• Risk assessment
• Identifying the preferred option
• Demonstrate affordability
• Procurement plan, draft OJEU &
criteria
• Risk assignment
• Plan delivery (strategies, plans)
• Update OBC based on
procurement
• Document contractual
arrangements
• Finalise delivery
• Plan evaluation

15.  Chose a policy initiative and prepare the
Strategic Outline Case
 Time: 45’
 Tip: don’t worry too much about the detail.
The goal is to learn the BC structure, not to
get it all right.

16.  Strategic Case
◦ Strategic fit
◦ Objectives
◦ Existing arrangements
◦ Business need
◦ Business Scope for the required
business needs (min / medium / max)
◦ Benefits (financial, non-financial
quantitative, qualitative, outcomes)
◦ Risks
 Economic Case
◦ CSFs
◦ Long list options (scoping, delivery,
finance)
◦ Preferred way forward
◦ Short list
◦ Indicative economic costs
 Commercial Case
◦ Procurement Strategy
◦ Risk transfer
◦ Contract length
 Financial Case
◦ Affordability
 Management Case
◦ Programme fit
◦ Methodologies
 Recommendation

17. hargas.jan@gmail.com