Benefits and Better Business Cases

Alan Brown

Stefan Sanchez

Presentation:

• The business case and benefits in practice

• Are we being too scientific about benefits management?

• What is the relationship between the business case process and programme/project management?

What is a Better Business Case?

• A flexible, pragmatic and common sense approach for supporting business decisions in a wide range of contexts

• The Better Business ‘Five Case Model’ jointly developed by HM Treasury and Welsh Government

• Investments £5m+ a Three stage process• Strategic outline case (SOC)• Outline Business Case (OBC)• Full Business Case (FBC)

• Provides decision makers with confidence and assurance that they are making the right decisions (business assurance) and in the correct way (programme and project assurance)

Better Business Cases ask 5 Key Questions

Better Business Cases ask 5 Key QuestionsHigh level benefits identified

Detailed quantification of benefits

Refinement of benefits through market testing

Balance sheet impact and timing of cash releasing benefits

Management of benefits delivery

Practical Application

About the Programme

• £1.4 billion investment programme 2014-2019

• Funding split 50% WG / 50% LA’s

• All 22 Welsh LA’s participating

• Reduce Surplus Capacity

• Improve Educational Outcomes

• Reduce overall running and lifetime costs

150+ New / improved Schools

The business case and benefits in practice

Programme Business Case

(PBC)

Outline Business Cases (OBC) and Full Business Cases (FBC)

Programme delivery

Identify Refine & prioritise

Quantify and profile

Deliver and manage

Programme Business Case

(PBC)

Outline Business Cases (OBC) and Full Business Cases (FBC)

Programme delivery

Identify Refine & prioritise

Quantify and profile

Deliver and manage

Clear identification of high level direct and indirect benefits

Priority benefits identified (20% that represent 80% of value)

Approach to quantification

Benefits strategy content

Strategy reviewed and updated as appropriate

Strategy reviewed and updated as appropriate

Programme Business Case

(PBC)

Outline Business Cases (OBC) and Full Business Cases (FBC)

Programme delivery

Identify Refine & prioritise

Quantify and profile

Deliver and manage

Clear identification of high level direct and indirect benefits

Priority benefits identified (20% that represent 80% of value)

Approach to quantification

Benefits strategy content

Benefits action plan

content Stakeholder engagement plan to commence

‘benefits discussion’

Apply metrics to direct and indirect benefits

Approach to direct and indirect benefits (% claim)

Continued stakeholder liaison and build compelling narrative

Profile priority benefits

Record benefits profiles in economic analysis (and financial analysis where appropriate)

Clear delivery plans set up with SMART actions and clear ownership/responsibility for benefits realisation

Articulation of benefits review cycle and likely changes to action plan over time

Strategy reviewed and updated as appropriate

Strategy reviewed and updated as appropriate

Programme Business Case

(PBC)

Outline Business Cases (OBC) and Full Business Cases (FBC)

Programme delivery

Identify Refine & prioritise

Quantify and profile

Deliver and manage

Clear identification of high level direct and indirect benefits

Priority benefits identified (20% that represent 80% of value)

Approach to quantification

Benefits strategy content

Benefits action plan

content Stakeholder engagement plan to commence

‘benefits discussion’

Apply metrics to direct and indirect benefits

Approach to direct and indirect benefits (% claim)

Continued stakeholder liaison and build compelling narrative

Profile priority benefits

Record benefits profiles in economic analysis (and financial analysis where appropriate)

Clear delivery plans set up with SMART actions and clear ownership/responsibility for benefits realisation

Articulation of benefits review cycle and likely changes to action plan over time

Strategy reviewed and updated as appropriate

Strategy reviewed and updated as appropriate

CRBcash releasing

benefits

nCRBFinancial non-

cash releasing benefits

QBQuantifiable

benefits

nQBNon-

quantifiable benefits

Cannot be counted or valued (£)

Valued (£) but not ‘hard cash’

Can be counted but not valued (£)

‘Hard cash’ (£)

Reflected in: bottom line/balance sheet

(financial case)Economic analysis (economic

case

Reflected in: NPC/V Economic analysis

(economic case)

Reflected in: Economic analysis

(economic case)

Main Stakeholder beneficiaries

Benefit no.

Main Benefit CriteriaBenefit

category

Learners

B1 Improved learning outcomes QB

B2Appropriate pupil-teacher ratio and reduced age ranges within individual classes

QB

B3 Improved social and sporting opportunities Qual

B4 Improved appropriate and flexible learning environment QB

Community

B5 Increased community engagement Qual

B6Opportunity to raise awareness of the Welsh language and Welsh-medium provision in the locality

Qual

B7 Sustainable primary education in the area Qual

Staff

B8 increased staff morale and wellbeing Qual

B9Improved professional development opportunities and job security for teachers

Qual

B10Reduced age range of learners and reduction in current range of abilities

QB

B11 Improved leadership and governance Qual

Local Authority

B12 Reduction in backlog maintenance Non-CRBB13 Reduction in staffing costs CRBB14 Reduction in premises running costs CRB

B15 Less administrative burden, servicing reduced governance Non-CRB

B16 Reduction (and/or mitigation) of pupil transportation costs CRB

B17Meeting best practice and regulatory standards for learning environments

Qual

No. Benefit criteriaweight

Option 1

Option 2 Option 3 Option 4 Option 5

score

W x S

score

W x Sscore

W x Sscore

W x Sscore

W x S

B1 Improved learning outcomes 19 0 0 8 152 9 171 9 171 9 171B2 Appropriate pupil – teacher ratio and reduced age

ranges within individual classes12 0 0 7 84 7 84 7 84 7 84

B3 Improved social and sporting opportunities 

8 0 0 4 32 5 40 5 40 5 40

B4 Improved appropriate and flexible learning environment

9 0 0 7 63 9 81 9 81 9 81

B5 Increased community engagement 6 0 0 3 18 6 36 6 36 6 36B6 Opportunity to raise awareness of the Welsh language

and Welsh-medium provision in the locality6 0 0 5 30 5 30 5 30 5 30

B7 Sustainable primary education in the area 12 0 0 7.5 90 8.5 102 9 108 9 108B8 increased staff morale and wellbeing 9 0 0 8.5 76.5 9 81 9 81 9 81B9 Improved professional development opportunities and

job security for teachers7 0 0 6 42 7 49 7 49 7 49

B10 Reduced age range of learners and reduction in current range of abilities

- - - - - - - - - - -

B11 Improved leadership and governance 12 0 0 5 60 6.5 78 6.5 78 6.5 78  TOTAL 100   0   647.5   752   758   758

BENEFITS

Direct

Indirect

Are we being too scientific about benefits management?• Quantify and claim the 20% of benefits that represent 80% of

the value• Is this the right approach?

Can we legitimately claim the indirect benefits with the highest values?

Invest in Public Health

smoking cessation campaign

Reduced number of

smokersLeads to Leads to

Improved health of x

people Leads to Less GP

visits (£)

Less treatment of smoking

related diseases (£

£)

Improved public

knowledge of the dangers of smoking

Leads to

Reduction in work lost time (££££)

Can we claim these benefits?

Measure public

knowledge before and

after – reasonable to assume majority of

increase due to the

campaign

Assumes increased

knowledge translates

into changed behaviour – tenuous to assume this is due to the

campaign

Assumes health improvement due to smoking cessation but could be due to: • The campaign• Reduction in

disposable income

• Tax increase on cigarettes

• Increased physical activity

Assumes £ benefits due to improved health but could be due to:• Busier at

work• More

effective treatments

• Improved economy and work availability

Solution?

• Focus on paying for the scheme with direct benefits (anything over and above this is a bonus)

• Work with stakeholders to develop a convincing narrative for the large indirect benefits

• Encourage investment decisions to be taken with the full understanding that indirect benefits cannot be controlled

• Measure programme/project success on delivery of clearly articulated outcomes (spending objectives)

Thank you

Questions?

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