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The NZ Transport Agency is taking a more tailored approach to how investment proposals are developed. Whether or not a proposal needs to go through any particular phase of the Business Case Approach (BCA) depends on its cost, risk and/or complexity.

In practical terms, that means that proposals with low to medium cost, risk and/or complexity will likely progress straight from the strategic case or a programme business case (PBC) to a single-stage business case (SSBC), or even implementation.

Watch the video below to see how activities identified in a previous phase of the BCA can be advanced.

What are the requirements of a single-stage business case?

Activities indicated in a previous phase of business case development will need to be developed further to demonstrate that:

  • the strategic assessment and context have been reviewed and confirmed (and modified as appropriate)
  • the appropriate range of options has been considered and evaluated to identify a preferred option that represents a value for money approach to delivering the intervention
  • a detailed analysis of the costs, risks and benefits of the preferred option has been carried out, including detailed reporting of the financial, commercial and management aspects of the activity
  • measures for monitoring the performance of the investment when it is implemented have been finalised.

The following diagram shows some potential paths for business case development.

Business Case Approach phases diagramClick for larger image [JPG, 207 KB]

When is a single-stage business case appropriate?

At the end of the strategic case or PBC phase, you need to think through the levels of effort and detail involved in the investment proposal in terms of cost, risk and complexity to determine whether:

  • you need to develop a separate indicative business case (IBC), followed by a separate detailed business case (DBC), or
  • you continue developing the business case in a single stage.

An SSBC may also be appropriate for an individual activity that has been identified:

  • as part of a preferred programme of activities in a PBC, or
  • in an activity management plan (AMP), for example a road maintenance programme.

The table below summarises the requirements for each phase. Note that it is anticipated that the majority of business cases will be able to be developed through to implementation in a single stage. However, in some instances it is expected a business case will need to be progressed as separate IBC and DBC phases, for example because:

  • it involves high risk and/or complexity, for example because of uncertainty, political and/or public interest or technical issues it involves high cost, or a likelihood of a very wide range of options that includes high cost ones
  • it triggers your organisation’s significance policy
  • other circumstances where seeking a formal decision from the Transport Agency at the end of option selection will help to manage investment risk.

Low–medium risk and/or complexity proposals

High risk and/or high complexity proposals

Summary of requirements

Single-stage business case

Indicative business case

The purpose of the indicative business case (IBC) is to provide decision makers with early indication of the preferred option (activity level) by:

  • confirming fit with strategic context
  • developing a longlist of options
  • determining potential costs, risks and dis-benefits of options
  • identifying a shortlist, including a preferred option
  • demonstrating the effectiveness of the activity in achieving programme objectives
  • identifying requirements for further development of the business case
  • developing a funding application to proceed to detailed business case (DBC), unless following the single-stage business case (SSBC) path.

Investment decision gate

Required for high risk and/or high complexity activities.

Optional for SSBC, for example, if the problem owner wishes to use the Investment Assessment Framework (IAF) to check alignment with the Government Policy Statement on Land Transport (GPS) and receive an investment signal from the Transport Agency.

Detailed business case

The purpose of the DBC is to confirm the preferred option through more detailed analysis of the costs, risks and benefits by:

  • revisiting the IBC case and confirming strategic need/outcomes sought
  • confirming and developing the preferred option
  • completing whole of life analysis of costs, benefits, risks and uncertainties
  • confirming benefit-cost appraisal
  • preparing delivery, consenting, procurement and property strategies
  • establishing risk allocation
  • confirming affordability/funding availability
  • developing a funding application to proceed to implementation (or pre-implementation if required).

You can also use the BCA Q&A tool to help you guide your critical thinking about what the next stage of the BCA you should progress to.

Go to the BCA Q&A tool

What are the investment decisions for low to medium risk and complexity proposals?

The Transport Agency expects that, where risk levels show it is appropriate, most activities seeking National Land Transport Programme (NLTP) investment will follow the single-stage business case path, which applies the principle of fit-for-purpose effort to help keep development times and costs to a minimum. In these cases, a single NLTP funding decision will be made by the Transport Agency to enable the activity level business case to be developed up to (but excluding) the implementation phase.

Although this is referred to as a single-stage business case, it effectively includes the same broad requirements that would typically be carried out as part of an IBC and a DBC (summarised above). However, in an SSBC, there is no formal NLTP funding decision requirement following identification of a preferred option.

Although funding for an SSBC will include work up to (but excluding) the implementation phase, a hold point will normally be required at the end of shortlisting. This is to enable the problem owner to check with the Transport Agency, before further costs are incurred in developing detailed analysis of the preferred option(s), that:

  • the proposed investment is still aligned with GPS priorities, using the IAF
  • risks are adequately understood and measures are in place to manage them effectively
  • decision makers are informed following option selection and a ‘no surprises’ approach is being followed.

In this sense, the hold point is being used as a tool to manage investment risk.

The hold point will not require an application via the Transport Investment Online (TIO) system, although the Transport Agency may request specific information to accompany the proposal. Essentially this information will need to address the requirements shown in the indicative business case section of the table above, and should be guided by the 16 investment decision questions.

As a guide, use the ‘What does a good indicative business case include?’ document to ensure you have included the information required at the hold point.

Read ‘What does a good indicative business case include?’ [DOCX, 64 KB]

What are the investment decisions for high risk and complexity proposals?

In some cases, for example where high levels of risk or complexity are associated with the activity, either the problem owner or the Transport Agency may require a further investment decision before releasing funding to develop the DBC. This will normally be once options have been shortlisted and a preferred option (including a do-minimum option) has been identified at the end of the IBC.

In such cases, the Transport Agency will have made an initial funding decision to cover the work needed to develop the IBC, but the decision regarding further release of funding to complete the DBC phase will be subject to the problem owner demonstrating that:

  • an appropriate range of options has been considered
  • there is at least one preferred option that represents value for money, is aligned with the strategic context, and has the potential to meet investment objectives as assessed through the IAF
  • the risks and uncertainties associated with the preferred option are acceptable (to the extent they are defined at this stage) and can be managed effectively.

How should a single-stage business case be presented?

Think about how you will present your business case to investors, demonstrating that you have built the case for investment progressively. You need to tell the investment story in a clear, logical and compelling way so that investors understand the cause and consequence of the problem or opportunity, the benefits of addressing it, how alternatives and options have been evaluated and why the preferred option has been selected.

To help you develop an SSBC document, refer to the document information guides for the IBC and DBC phases and combine the required elements into a single document.

Find out more about the IBC

Find out more about the DBC

Tools and templates

Template

There is currently no document information guide for the SSBC, but you can use and adapt the document information guides for the IBC and DBC.

Note that these are for guidance only, and should be adapted as necessary.

Tools

Learning modules

Online learning modules have been developed by the Transport Agency, and are available to our partner organisations. To request access to the modules, email nltp@nzta.govt.nz with your name, title, organisation and manager’s name.  

The ‘Activity-level business cases’ course covers single-stage, indicative and detailed business cases.

Go to the activity-level business cases learning module (external link)

You will be prompted to enter your log in if you click the link above. Once you have logged in, you should be taken directly to the course. You can also find it by going to the catalogue and searching for ‘activity-level business cases’.

Information sheets

This information sheet is designed to accompany the learning module.

Need support?

Use our contact form to send us a question, or get in touch with your NZ Transport Agency investment advisor.

Go to the contact and support form

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