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.
The following diagram shows some potential paths for business case development.
SSBCs, and indicative business cases (IBCs) and detailed business cases (DBCs) are sometimes called activity-level businesses cases, because they focus on the details of an activity.
Activities indicated in a previous phase of business case development will need to be developed further to demonstrate that:
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:
An SSBC may also be appropriate for an individual activity that has been identified:
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:
You can use the BCA Q&A tool to guide your critical thinking about the phase of the BCA you should progress to next.
The table below summarises the requirements for each phase.
Low–medium risk and/or complexity proposals
High risk and/or high complexity proposals
Summary of requirements
Single-stage 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:
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.
The purpose of the DBC is to confirm the preferred option through more detailed analysis of the costs, risks and benefits by:
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:
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 business case assessment 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.
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:
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.
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.
Online learning modules have been developed by the Transport Agency, and are available to our partner organisations. To request access to the modules, email email@example.com with your name, title, organisation and manager’s name.
The ‘Activity-level business cases’ course covers single-stage, indicative and detailed business cases.
To open the course, click the link above and then click ‘enrol’. You will be prompted to enter your log in. 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’.
This information sheet is designed to accompany the learning module.
Other relevant information sheets: