The term strategic case is used throughout the Business Case Approach (BCA) to refer to the first of the five cases within the five-case model. This is distinct from a strategic case phase, which is an uncommonly used phase of business case development used solely for the purposes of developing the strategic case.
Within the BCA:
This page should be read in conjunction with our guidance on the strategic case in the five-case model.
The strategic case phase is when the strategic case – part of the five-case model – is undertaken as a standalone phase, before the business case progresses to a programme business case (PBC), indicative business case (IBC) or single-stage business case (SSBC) phase. It is rarely used, but the situations where you might consider using it are outlined below.
The strategic case is about defining and understanding the problem and/or opportunity and showing there will be substantial enough benefits to justify investment to investigate the problem and/or opportunity further. It is the foundation on which the rest of the business case is built and, essentially, it asks ‘Is there a case for change?’
The strategic case phase, when used, is a quick, low effort, minimal-cost phase and should use existing evidence and internal resource. It is not the time to explore options or solutions or formulate an implementation plan.
Where used, the strategic case phase follows the PoE phase, and is completed before any other development phases.
While uncommon, in some circumstances it is useful to develop the strategic case as a standalone phase to clarify the case for change, before committing significant resources to develop the business case further.
You’ll decide whether to use a standalone strategic case phase as part of your PoE. There are no hard and fast rules, and you will need to use your critical thinking and judgement, and work in consultation with your Waka Kotahi investment advisor.
Situations when it may be appropriate to develop the strategic case as a separate, stand-alone phase of business case development include:
When deciding whether to use a strategic case phase, remember that a strategic case phase can help avoid wasted effort where agreement is not reached, or where stakeholders agree that the case for change is not strong enough to proceed at this time. This decision can be made at any point during development of the strategic case – whether that is developed as a stand-alone phase, or as part of another business case phase.
Whether you develop your strategic case as a stand-alone phase or as part of another phase, you will need to revisit it throughout the development of the business case. This iterative approach is needed because your understanding of the strategic case will keep on improving throughout the business case. Each new phase of development is an opportunity to revisit the strategic case, and make sure the case for change is still fit-for-purpose as the foundation for your business case.
The Waka Kotahi BCA is based on New Zealand Treasury’s Better Business Cases (BBC) methodology, which is a five-case model.
You can see below which case relates to this phase of the BCA.
What is the compelling case for change?
Does the preferred option optimise value for money?
Is the proposed deal commercially viable?
Is the investment proposal affordable?
How can the proposal be delivered successfully?
Developed in later phases
Developed in later phases
Developed in later phases
Developed in later phases
Under the five-case model, the purpose of the strategic case is to determine whether there is a valid case for change.
Business Case Approach principles
The strategic case phase needs to follow the key BCA principles of investing for benefits, fit-for-purpose effort, clarity of intent, progressive development and informed discussion. Keep applying critical thinking and the BCA principles as you develop the strategic case, in particular when evaluating the case for change and your evidence base.
Under the five-case model, the strategic case uses four key actions to establish the strength of the case for change:
|Key action||When completed|
Develop the strategic assessment (the problems to be addressed and the benefits to be achieved)
Included in a strategic case phase
Determine the strategic context within which the investment is being considered, including whether addressing the case for change is well aligned to strategic priorities
Undertake an initial assessment of risks and uncertainties
Develop the investment objectives that will inform decisions about the best-value option
Normally completed early in the next phase of development (eg PBC, IBC or SSBC)
The strategic case phase focuses on the first three of these key actions. Investment objectives are usually developed in the next phase, after any specific evidence-gathering or analysis has been carried out and the problems and benefits have been thoroughly tested.
The strategic case phase also sets out the scope of the next phase of development, including a brief rationale for why that is the appropriate next phase.
A key action in developing the case for change is to carry out an assessment of what is driving the need for investment. This strategic assessment centres on understanding the problems and benefits that have been developed with stakeholders (see Defining problems and benefits’ below) and testing of those against the evidence base.
It’s important to think about how you will need to engage with partners and/or stakeholders before you start planning your approach to problem and benefit definition. This is especially true for business cases where there are opportunities to collaborate with or involve stakeholders, with the aim of giving stakeholders a greater ability to influence the direction of the investment.
Engagement throughout the BCA is guided by the BCA engagement principles. For more information on how you should follow these principles for your business case, see our guidance.
Strategic cases all look and feel slightly different, but it is essential that your strategic case includes a clear and concise description of the problems that the investment will address, and the benefits that can be expected.
As a minimum, your strategic case should provide a clear understanding of:
For more information, see our detailed guidance on defining problems and benefits.
Collaborating with stakeholders to agree on the problem and/or opportunity and the benefits of addressing it is at the heart of the strategic case. Depending on the complexity of the problem and/or opportunity, you could achieve this by:
We strongly recommend the ILM process, especially for more complex issues. It involves a series of structured workshops with stakeholders, and the creation of investment logic maps and benefits maps.
Waka Kotahi has developed the Land Transport Benefits Framework to guide the identification of benefits for investments seeking funding from the National Land Transport Fund (NLTF). For more information on benefit management, see our detailed guidance.
The strategic case must also establish how the investment fits within the existing strategies of the partner organisations, including existing and future operational needs.
The strategic context includes the strategic alignment, which establishes how well the proposal aligns to strategic priorities, such as any specific goals or objectives. As a minimum, for NLTF funding Waka Kotahi needs a clear indication of the main Government Policy Statement on Land Transport (GPS) priority outcome that the investment will contribute to, and an indication of the strength of that contribution.
The strategic context also includes a description of the environment within which the investment will be made, including any key interdependencies, or potential sources of risk or uncertainty.
For more information on developing the strategic context, see our detailed guidance.
Risks and uncertainties are a key consideration in each of the cases in the five-case model.
The strategic case needs to identify key risks or uncertainties that relate to the case for change. These are risks or uncertainties which, if they are realised, could affect:
Consistent with the principle of progressive development, an understanding of risks and uncertainties needs to be built up as development of the business case develops. It’s important to try and identify critical risks and uncertainties as early as possible, however there is always a possibility that new risks or uncertainties will come to light as the business case progresses.
For these reasons, it’s important to set up risk and uncertainty registers early in the development of the business case, and continue to update it as you progress. For a detailed overview of how risks and uncertainties are treated throughout the five-case model, including definitions, see our detailed guidance.
The findings of the strategic case phase, including the case for change and scope of next steps, are summarised in a strategic case document. Your strategic case should be written clearly and concisely. The desire to tell a compelling story that will convince investors to commit limited public funds must be balanced against the need to be objective and maintain the integrity of the business case.
It can be helpful to structure your strategic case document around these components, as follows:
We have developed an information guide to help business case authors write fit-for-purpose strategic case documents.
It is also important to put your investment story in a national context. Your strategic case will be assessed along with many others seeking investment from a contestable national fund that has a finite amount of money. What is it about yours that will make decision makers want to invest in it?
We recommend that the problem owner(s), in collaboration with key stakeholders and the investment decision-maker(s), aim to produce the strategic case document within one month of identifying the problem and/or opportunity and benefits. This ensures the key participants are still engaged with the process and outcomes of discussions are fresh in their minds.
Compiling the document should not be an onerous job. While there is no absolute page limit, you should aim for between 10–15 pages, with any supporting evidence as appendices. Strategic case documents that are significantly longer will most likely undermine your ability to communicate the case for investment.
The strategic context needs to establish how well the proposed investment aligns with your organisation’s priorities, regional and national priorities, other programmes, activities and strategies and other organisations’ priorities, if relevant.
For the purpose of a strategic case phase, you are expected to pull together and considering existing evidence only.
Evidence can be found from a wide range of sources, including:
You also need to consider all strategic plans, including spatial plans, but be mindful that spatial plans may have an insufficient focus on the economic drivers. A spatial plan provides high-level direction or vision for future urban and economic growth and indicates the location and timing for delivering infrastructure over a 30-year timeframe. It will set the overarching strategic objectives for an area.
In addition, National Energy and Efficiency Conservation Strategy (NEECS) and Resource Management Act 1991 (RMA) policy documents, which are core requirements of a regional land transport plan (RLTP), must be considered as part of the business case.
The strategic case should outline the evidence that supports the problem and/or opportunity identification analysis, and reflect on:
A review of the evidence base will highlight the quality of existing evidence and where there are gaps. It is important that the review describes succinctly how the existing evidence either does or doesn’t support the problem statements, providing detail to support the cause and consequence. This will be important for scoping any subsequent phase of the business case, when any relevant information or data not currently available could be obtained.
To keep the strategic case focused, you should reference supporting documents, rather than repeating detailed content. However, when doing this, there are a few things to keep in mind:
As a final test of the content in the strategic case document, check if it is concise and free of unnecessary detail, and whether it could be easily read and understood by someone with no involvement.
Send the draft strategic case document to all the participants for comment and evaluation. A peer review helps ensure that the case for investment is robust, technically sound and delivers the agreed outcomes.
Consider asking someone who is unfamiliar with the business case to read the draft and reflect on whether it tells a clear and compelling story, and whether they could form an opinion on it.
Summarise the key findings from the evidence review and feedback from key stakeholders.
It is crucial to have locked in the strategic assessment and context with all stakeholders before making a decision to proceed, and especially before beginning to consider the second part of the strategic case – the project plan and funding application.
Remember that a decision not to continue can be made at any point if the case for change and evidence do not support further investigation. You may determine that there is no significant problem and/or opportunity after all, based on a robust examination of initial thinking. That is a perfectly good outcome and demonstrates the BCA principles at work.
Equally, the strength of evidence to support a problem or opportunity may be inconclusive but the potential consequences may be significant enough that further work is required to make an informed decision about whether action is necessary at this time.
Whatever the decision, it should still be written up and saved where it can be easily retrieved for future reference.
If the strategic case determines there is a case for change, and it is necessary to investigate the problem(s) and/or opportunity(ies) further through subsequent business case phases, you will need to develop a project plan for the next steps, along with a funding application. The plan is an opportunity to clearly set out how you will move on to the next phase in a way that would enable someone else to pick up the project from here.
The depth of analysis for project planning and the funding application should be fit for purpose, depending on the relative size, impacts, complexity, risks, uncertainty and cost of the proposal.
If there is a risk that stakeholder organisations might not support progressing to the next phase, think about spending time seeking indicative support for the strategic assessment and context section first. This could avoid the potential waste of effort producing a funding application that isn’t supported.
Planning for the next business case phase also helps with the scope for procurement. For example, what will you need to do for the programme business case or appropriate next phase, and how will you do it?
The scope should include:
You can use our guidance on determining the pathway through BCA phases and the BCA Q&A tool to guide your critical thinking about the phase of the BCA you should progress to next.
Before approaching Waka Kotahi 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.
A key question to ask is: how strong is the case for change?
There are a few things that can help you answer this question, including:
You should be able to answer most of the first eight questions as a ‘yes’ or a ‘maybe’, but remember that the strategic case phase is not about answering all of the questions definitively. Often the strategic case phase will identify gaps in evidence or understanding that need further work to address. This is usually accepted, as long as the scope of work for the next phase clearly includes steps for the outstanding gaps in the strategic to be addressed.
When assessing applications to fund business case phases from the NLTF, Waka Kotahi will seek assurance that the strategic case has been adequately developed.
As a principles-based approach, there is no checklist of specific actions to follow to ensure that Waka Kotahi’s expectations regarding the strategic case are being met. However, when assessing funding applications for subsequent business case phases, there are some general questions that assessors will consider to ensure that the principles relating to the strategic case are being followed, including:
When the problem owner concludes the strategic case is ready for assessment by Waka Kotahi, a request for support needs to be made via the Transport Investment Online (TIO) system.
Waka Kotahi assesses the completed strategic case and determines whether a robust business case approach has been followed, and the proposed investment aligns with the IPM.
If the assessment indicates the strategic case will progress to the next business case phase:
If the decision is to not progress the strategic case for now, or the IPM assessment indicates that the problem and/or opportunity does not align with current priorities and therefore the proposal will not be funded, no further action is required from Waka Kotahi.
Make sure the strategic case document is filed where it can be retrieved easily for future reference. Also make sure you communicate with key stakeholders about the reason for the decision.
If Waka Kotahi doesn’t support the case for change, the problem owner may choose to continue to explore the proposed investment with funding from other sources.
Development of the strategic case through a stand-alone phase cannot be funded through the NLTF.
The strategic case phase is funded by the problem owner’s organisation. The cost is relatively minor and will mainly consist of professional services fees for support from workshop facilitators. You will need to identify a funding stream and resources for any workshops and development/authoring of the strategic case.
It’s important to talk to Waka Kotahi at an early stage. Contact your Waka Kotahi investment advisor or email the Business Case Process team at firstname.lastname@example.org