What is the purpose of the detailed business case phase?

The purpose of the detailed business case (DBC) phase is to build a complete understanding of acceptable risks, uncertainties and the benefits associated with the investment, so that a final decision can be made on whether to implement it. DBCs focus on an activity rather than a programme – that is, they are an activity-level business case.

A DBC involves more detailed analysis of the costs, risks, and benefits of the recommended option(s) and the do-minimum option – rather than all the options listed in an indicative business case (IBC). Sometimes the IBC identifies more than one recommended option and is difficult to distinguish between them based on the IBC level of analysis. In this case the DBC will explore more detailed analysis of both options alongside the do-minimum so the best option can be identified.

The DBC risk mitigates the recommended option from the IBC to ensure that the activity can be confidently delivered to the agreed scope and cost, while achieving the agreed outcomes. The DBC further readies the recommended solution for implementation. Due to the ever-changing nature of risks and uncertainty, projects should generally only progress through to detailed business cases when the timeline for beginning implementation is within the five-year period. A detailed business case should fully and clearly specify the recommended option. It should be clear what is in scope and what is not. The option should also be scoped to a minimum of preliminary design. Depending on the procurement model, scope may need to be taken to a specimen design.

It is important that the full extent of business changes are visible to the decision maker. There should be no hidden or unexpected additional costs needed to make the solution work.

The diagram below shows where the DBC phase fits within the framework of business case development pathways.

View larger image [JPG, 218 KB]

The five-case model and the detailed business case phase

The NZ Transport Agency Waka Kotahi (NZTA) Business Case Approach (BCA) is based on New Zealand Treasury’s Better Business Cases five-case model.

The table below shows which of the five cases are completed in the DBC.

Strategic case
What is the compelling case for change?
Economic case
Does the preferred option optimise value for money?
Commercial case
Is the proposed deal commercially viable?
Financial case
Is the investment proposal affordable?
Management case
How can the proposal be delivered successfully?

Refine and confirm

Refine and confirm

Refine and confirm

Refine and confirm

Refine and confirm

The DBC builds on the detail completed in the IBC. In developing the commercial, financial and management cases, the DBC will also continue to develop and confirm the strategic and economic cases (for example confirming costs, contextual evidence, benefit achievement etc). The DBC involves a detailed analysis of the costs, risks and benefits of the preferred option, and the do-minimum option identified in the IBC (for economic comparison purposes). It is aimed at building an agreed scope and scope parameters, and complete understanding of the acceptable risks, uncertainties and benefits associated with the investment, so that a final decision can be made whether to implement it.

For more information about each case in the five-case model, see our detailed guidance.

Five-case model

What is expected of a detailed business case?

The main purpose of the DBC is to provide assurance that the preferred option identified in the IBC is the right approach to deliver the desired outcomes and is an effective solution to the identified problems.

The DBC must provide detailed analysis of the costs, risks and benefits of the preferred option, including evidence that it:

  • is the right investment, is affordable and provides value for money
  • will deliver the outcomes identified in the strategic case
  • puts in place plans for successful delivery.

Keep talking to your NZTA investment advisor, who should have been engaged with from the beginning of the business case. By this phase, it is expected that the approach and early signals about the degree of alignment with the Government Policy Statement on Land Transport (GPS) and NZTA investment principles are clearly understood by everyone.

Putting your detailed business case together

The DBC will build on the strategic and economic cases from the IBC. It is always important to review what has changed since the previous phase to ensure the case for investment remains accurate. This is particularly important when there has been a delay between the IBC and DBC phases.

Refine the strategic case

Refine the strategic case to ensure that it remains accurate. Consider:

  • Have any strategy or policy documents been updated or issued since the completion of the IBC?
  • Are there any changes in the physical location that may affect the strategic context, or the problem being addressed?
  • Are there any additional stakeholders that need to be involved?
  • Have any additional risks, uncertainties, issues, constraints, or dependencies identified?
  • If it is an activity that was identified in a PBC, test whether the investment is still needed – if other activities in the programme have already been implemented, have they had the desired effect?

For more about the strategic case as part of the five-case model, read our detailed guidance.

Strategic case

Progress and refine the economic case

In the DBC you will further refine the options developed in the previous phases. The level of assessment should be appropriate and proportionate for the scale and risk of the initiative.

In the economic case it is important to ensure that the following is completed:

  • consideration of whether the suite of options previously considered was appropriate for any new strategic context – for example new innovations, or new expectations on solutions such as the government’s emissions reduction plan
    Emissions reduction plan(external link)
  • detailed optioneering at an activity level to an appropriate level of design (including considering revocation requirements where options include new state highways)
    State highway revocation: policy and guidance [PDF, 429 KB]
  • detailed benefit–cost analysis of monetary and non-monetary costs and benefits (consistent with the Monetised benefits and costs manual and the Land Transport Benefits Framework measures manual
    Monetised benefits and costs manual
    Land Transport Benefits Framework measures manual
  • finalisation of the environmental screen, as required by Z/19 Taumata Taiao – Environmental and Sustainability Standard for NZTA projects and encourage for approved organisations, which will help you to determine if any additional technical assessments may be required for the project
    Environmental screen
    Z/19 Taumata Taiao – Environmental and Sustainability Standard
  • sensitivity analysis to test the recommended preferred option.
  • quantitative risk analysis
  • consideration of the risks and uncertainties around the option
  • justification of why the recommended option provides the best public value.

For more about the economic case as part of the five-case model, read our detailed guidance.

Economic case

Develop the commercial case

The commercial case in the DBC should demonstrate that the recommended programme is commercially viable and meets contractual and other requirements.

Commercial viability requires the DBC to assess whether the marketplace can deliver the preferred option efficiently and safely. This will require the DBC to assess whether the marketplace can supply:

  • an available workforce that has sufficient capacity and resources (including plant and materials, with the required technical skills and experience to deliver the preferred option (without significantly distorting the marketplaces' ability to resource other activities at a reasonable cost)
  • governance capability and experience to overview the financials, alignment with strategic direction and policy, and monitor the performance of the selected delivery model.

When developing a commercial case within a DBC you should consider:

  • Procurement planning:
    • Does the procurement strategy have sufficient detail for the size and scale of the investment?
    • Is the appropriate delivery model for the preferred option clear?
    • Does the business case outline the procurement plan for procurement of key outputs and activities, and timetable?
      Procurement manual
  • Risk allocation:
    • Is it clear over the lifecycle of the project how risks and uncertainties will be allocated between the client and future suppliers? (This will have significant implications for the financial case. The selected delivery model will form a basis to develop contractual arrangements to deliver this project.)
  • Payment mechanisms:
    • Is it clear that there has been an appropriate level of consideration of pricing and payment mechanisms?
  • Contractual issues:
    • Have the proposed contractual arrangements been outlined including the key issues?

For more about the commercial case as part of the five-case model, read our detailed guidance.

Commercial case

Develop the financial case

The purpose of the financial case in a DBC is to demonstrate that the preferred option is affordable. Being affordable requires a robust estimate of the preferred option’s cost.

The key actions for the financial case are:

  • estimating the whole-of-life costs of investment, both for different alternatives and options during optioneering (at an activity level) and for the recommended option
  • identifying risks and uncertainties associated with funding sources or availability:
    • a robust cost estimate will price in risk, uncertainty and complexity and generate a cost range based around the expected cost and the 95-percentile cost
    • uncertainty analysis may require sensitivity testing so that the cost implications of uncertainties are understood
  • identifying all funding sources that will be needed to implement, operate and/or maintain the recommended option, potentially including third-party funding sources.

A funding agreement should be developed to outline funding arrangements for the recommended option.

  • The funding agreement will outline the contributions made by the various funding parties, their funding sources and what mechanisms are used for payment.
  • Any staging and sequencing of the project should be documented. The financial case will refer to the funding agreement and its content as documented evidence of affordability.

NZTA-led investments require cost estimations to comply with the Cost estimation manual (SM014). Approved organisations may use their own cost estimation methods; however, these must be robust and incorporate best practice. The cost estimation should be confirmed and reconciled with estimations developed in earlier business case phases and be consistent with similar projects developed elsewhere.

Cost estimation manual (SM014)

For more about the financial case as part of the five-case model, read our detailed guidance.

Financial case

Develop and progress the management case

The management case within a DBC needs to demonstrate that the recommended option can be delivered successfully.

When developing a management case within a DBC you should consider:

  • Project management planning:
    • Is it clear from reading the DBC what the project management requirements are for implementation?
    • What interdependencies are there with other projects or programmes?
    • Is there clear project methodology including governance requirements, internal resourcing requirements, project plan and reporting requirements?
  • Change management planning:
    • How will changes to the project be; considered, documented, and communicated?
  • Benefits:
    • Is there a benefit realisation plan with a realistic benefits schedule, benefits map, monitoring, and reporting?
  • Risks and uncertainties:
    • Is there a risk management framework and register that documents risks not just to the phase but to the overall project delivery (timelines, outcomes, and cost)?
    • Are assumptions and uncertainties clearly documented alongside how they will be addressed in the next phase? Although they are closely related, risks and uncertainties are typically managed in different ways within the BCA. For a detailed overview of how risks and uncertainties are treated throughout the five-case model, including definitions, see our detailed guidance.
      Risk and uncertainty in the five-case model
  • Consenting strategy:
    • Has the consenting strategy been developed in accordance with relevant organisational requirements?
    • For NZTA projects, has the environmental planning team been engaged?
    • What Resource Management Act 1991 (RMA) and other approvals are required?
    • What are the key risks to securing them?
    • How will the key risks be managed?
    • Are there any notable consenting and environmental opportunities and, if so, how will those be realised?
    • What consenting approach is recommended, and how does that align with the risks and opportunities? Including:
      • How will the notice of requirement (NOR), consents and other statutory approvals be packaged?
      • What is the proposed consenting pathway?
    • When will the approvals be secured, and what are the key milestones to get there?
  • Property acquisition:
    • Is it clear what property is required and the plan to obtain it or dispose of it (including risks and costs)?
  • Implementation planning:
    • Has staging and timing for delivery been sufficiently planned?
  • Post-implementation planning:
    • Is there an explanation of how post-implementation evaluation will be undertaken, including lessons learnt and debriefing at appropriate stages

For more about the management case as part of the five-case model, read our detailed guidance.
Management case

How do I know if my detailed business case is complete?

Before approaching NZTA for a formal assessment of your business case, you should make a self-assessment to check the document is ready.

How you answer this will depend on how complex the investment is, and how much risk or uncertainty is involved.

The key questions to answer is: Is the preferred solution clearly defined and risk mitigated? Am I confident the scope of this activity can be delivered for the estimated cost?

There are a few things that can help you answer this question, including:

  • Talk to your NZTA investment advisor. It is important to work with your investment advisor throughout the DBC phase. They will be able to help you get the level of detail right and avoid missing any important steps.
  • Check your business case against the 16 business case assessment questions, which have been developed to help business case practitioners understand when they have done enough. Questions 14–16 relate to the DBC, and are designed to test:
    • whether the preferred solution is clearly defined (with a clear rationale for its selection)
    • whether the preferred solution can really be delivered
    • whether the preferred solution represents the best value for money approach.

How to self-assess your business case

What does NZTA look for in a detailed business case?

When assessing applications to fund business case phases from the National Land Transport Fund (NLTF), NZTA will seek assurance that the DBC has been adequately developed.

As a principles-based approach, there is no checklist of specific actions to follow to ensure that NZTA’s expectations regarding the DBC phase are being met. However, when assessing DBC, there are some general questions that assessors will consider, to ensure the principles relating to the DBC are being followed, including:

  • Are there clear descriptions of the problem(s) that are driving the need for investment?
  • Are there clear descriptions of one or more benefits that can be expected, if the problems are successfully addressed, and can they be tracked?
  • Is the strategic context within which the investment will be made clearly described?
  • Are there clear investment objectives, that logically derive from the problem(s) and benefit(s)?
  • Has a range of options been considered appropriate to the phase of development?
  • Does the range of options include low-cost options or alternatives alongside higher-cost ones?
  • Do the options flow logically from the problems and benefits? Have low-cost options been discounted too early?
  • Has the assessment of options followed MCA guidelines, or equivalent robust process?
  • Are the MCA criteria clear and appropriate? Do they:
    • allow a meaningful comparison of options?
    • include criteria to allow risks and uncertainties to be compared for each option?
  • Is there a clear recommended option, with a clear narrative for its selection?
  • Are the commercial, financial and management cases developed enough to gain a sense of whether the preferred solution can actually be delivered?
  • Is the scope of work needed to develop the investment through to implementation clear? Are the estimated costs consistent with that scope?

What happens next?

If you are seeking funding from the NLTF, you must submit a robust funding application for implementation in Transport Investment Online (TIO) (or via your investment advisor for NZTA projects), with the DBC uploaded as the supporting document. You need to have a clear understanding of the funding requirements for the next phase. A pre-implementation phase will likely be required to undertake any required work to lodge consent, purchase property or complete detailed designs (depending on procurement model).

Transport Investment Online(external link)

When the request for DBC support and funding approval is received in TIO, NZTA assesses the business case and applies the Investment Prioritisation Method (IPM) to determine whether:

A recommendation is then made to the delegated decision maker to support the DBC or not. If your NZTA investment advisor has been involved throughout development of the business case, there should not be any surprises that result from the decision.

Resources and further information



Additional references and standards for NZTA projects

Need support?

It is important to talk to us throughout the development of your business case. Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz