The economic case answers the questions:

   What are the options?

   What is the best option to achieve the sought benefits?

Why is the economic case important?

The economic case is the second of the cases from the five-case model and it builds on the foundation created in the strategic case. The strategic and economic cases are the most substantive of the five cases, as they play a key role in setting the direction of the investment.

The purpose of the economic case is to find the best value-for-money approach to addressing the issues identified in the strategic case. It must show how the problems will be addressed and how the benefits will be achieved. It must also do this in a way that fits with the strategic context for the investment.

Strategic case
Developing the strategic context

Key actions for the economic case

The economic case has four key actions, which build on the findings from the strategic case:

  1. Identify a range of ways that the problems could be addressed, and the benefits realised. These are often referred to as a longlist and shortlist of alternatives and options.
  2. Identify the criteria that will be used to help choose between alternatives and options. These must include the investment objectives (critical success factors), but will involve other criteria as well typically covering implementability and externalities.
    Developing investment objectives
  3. Using informed analysis, decide which of the alternatives and options represents the best value response.
    Engagement and the Business Case Approach
  4. Recommend the best-value option.

In completing these actions the economic case must consider risks and uncertainties, including how they affect the robustness of the (shortlist or) recommended option.

Appropriate decision-makers should be involved at critical milestones throughout and need to agree the preferred option before the business case continues. Depending on previous decisions, delegations or emerging complexity, this may include project directors, sponsors or investors.

Each of these steps are needed in some form for all investments. However, the amount of work involved in each step can vary a lot from one business case to another – following the Business Case Approach (BCA) principle of fit-for-purpose effort, it should be right-sized depending on how much complexity, risk and uncertainty are involved.


A key role for the economic case is the in-depth consideration of the possible ways of responding to the issues raised in the strategic case, to find the alternative or option that represents the best value for money. We call this process optioneering.

The economic case needs to start by considering an appropriate range of alternatives and options, which will be narrowed down through the development process. We will increasingly need to consider innovative responses to transport issues and not simply assume that an ‘obvious’ or tried-and-tested approach will suffice. Encouraging creative thinking about possible ways to respond, and not applying judgement too early, are important factors that can help achieve innovation.

Information sheet on innovation and creativity in business case development [PDF, 107 KB]

Intervention options usually fall into three categories:

  • Demand – focuses on reducing the need for something. Potential options could include more compact land use, work travel planning to spread peak demand, flexible working options and so on.
  • Productivity – focuses on optimising existing assets or services. Potential options could include use of high-productivity freight vehicles, increasing seating on buses and trains, or optimising traffic control measures to increase network throughput.
  • Supply – focuses on the physical capacity of assets or services, for example roading infrastructure or bus services.

It is important, especially in early phases, to look for alternatives and options under all of these headings, and not simply assume that a supply-side response is needed. In later stages optioneering may include staging, sequencing, financing and procurement.

You should also use the intervention hierarchy to help generate ideas for alternatives and options.

Intervention hierarchy

Once a range of options have been identified, the economic case must identify a recommended option. To do this, the listed options are compared to a number of carefully selected criteria, through a process called multi-criteria analysis (MCA).

Multi-criteria analysis

Other optioneering tools include:

  • early assessment summary table (EAST), which helps with coarse screening when there are a large number of alternatives and options to consider
    Early assessment sifting tool
  • appraisal summary table (AST), which presents decision-makers with an overview of monetised, quantitative and qualitative benefits and costs.
    Appraisal summary table

Risks and uncertainties in the economic case

A key focus throughout the five-case model is to identify and manage risks and uncertainties.

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 and templates for risk and uncertainty registers, see our detailed guidance.

Risk and uncertainty in the five-case model

Risks and uncertainties can arise within each of the five cases. As work on the business case progresses, risks and uncertainties must be identified, recorded and tracked. You should also capture the proposed approach to managing each risk or uncertainty, which will ultimately form a key focus for the management case.

It is good practice to set up registers to track risks and uncertainties from an early stage in the business case. The registers continue to be used throughout development of the business case to capture risks and uncertainties from all of the cases.     

The economic case should focus on informing the optioneering process, for example by identifying the risks or uncertainties associated with each alternative and option. These could be risks or uncertainties relating to the cost, scope, timing or effectiveness of each alternative or option.

It’s important to account for these risks and uncertainties throughout the optioneering process, and to use that understanding to describe any residual risk or uncertainty associated with the recommended option.  

You may need to develop an understanding of these risks or uncertainties for each alternative or option to inform the optioneering process, and also to determine any residual risks or uncertainties associated with the recommended option.

Developing your economic case

When is the economic case developed?

The economic case follows on from the strategic case, and is typically developed as a step within one or more phases of business case development, such as:

  • a programme business case (PBC) – to determine the programme of interventions that represents the best value approach
  • an indicative business case (IBC), to identify the recommended option from a longlist of options
  • a detailed business case (DBC), to understand and evaluate risk and confirm robustness of the recommended option
  • within a single-stage business case (SSBC), which may require more than one iteration of the economic case as options are identified and evaluated through longlist and shortlist stages, to identify and risk mitigate the recommended option.

The development of the economic case is iterative, as it continually refines previous work and evolves from ongoing work. As further information is obtained, for example during engagement, consenting, or sensitivity testing, previous assumptions may need to be confirmed or revisited.

Within each development phase, work on the economic case must begin after the strategic case has been developed. This is because the economic case takes its direction from the strategic case.

Keeping good documentation during the economic case is crucial in order to support decision making and transparency. For example, you may need to provide clear documentation relating to the optioneering process as in input into consenting or for engagement purposes.

As with the strategic case, whether or not you develop the economic case in one go depends on whether the investment is simple or complex:

  • very simple investments, with low risk and low uncertainty, may only need one iteration to develop the economic case
  • more complex investments, or ones where risk or uncertainty are high, will almost certainly need the economic case to be revisited from time to time as the business case develops.

If you are working on a business case for a programme of investments, you will need to develop the economic case in more than one phase.

For more complex investments, especially programmes, you will need to start by developing the economic case at a system level. Then, as you start work on each activity in the programme, the economic case will need developing further to make it specific to that activity.

Can existing work be used as an economic case?

As with the strategic case, it’s common to find when you start a phase of a business case that some of the work needed to develop the economic case has already been done. For example, this could be where:

  • the need for a business case is indicated in an activity management plan (AMP), which has indicatively signalled the best programme-level response
  • there are already some ideas or suggestions for alternatives or options, arising from previous work
  • previous public consultation has highlighted community expectations of solution.

It’s important to look at existing work objectively: consider how much is suitable for use in the business case and check if it covers everything that an economic case needs to cover. For example:

  • Has the strategic case been revisited since the initial work was done? Has further information become known that may alter the strategic case?
  • Does it consider a reasonable range of ways to respond to the problems in the strategic case, and achieve the desired benefits?
  • Is there a clear recommendation for the response, and a clear explanation of why that response is the best-value one? Is the option selection process defendable?
  • Is the work based on clear, measurable investment objectives, that have been used to make informed choices about the best option?
  • Do we understand and accept the risks associated with the recommended option?

If the answer to any of those questions is no, you will need to address the gaps. That doesn’t necessarily mean starting over, but you need to complete the work to address those gaps before trying to move on. It’s important to carry out this gap analysis when you are scoping the next phase of business case development, for example when you are completing a point of entry (PoE) phase.

Another way to check if existing work meets the standard required for a business case is to use the ‘16 investment questions’ (see ‘How do I know if the economic case is complete?’ below).

What level of detail does the economic case need in each phase?

A key principle of the BCA is that business cases are developed progressively, one step at a time. This means there will sometimes be more than one place where work is needed on the economic case, because the business case will need different things from the economic case as it develops and as understanding of the investment grows.

Within each phase of development, the key actions you need to focus on for your economic case will depend on a number of things, including:

  • the business case phase you are in
  • the pathway being used to develop the business case, from start to finish, and
  • the complexity, risk and uncertainty associated with the business case.

The table below illustrates how the focus and level of detail needed in the economic case can change as the business case progresses from one phase to the next. For more information on each phase, please select the relevant link from the first column.

Focus of the economic case in business case development phases

Phase Focus of the economic case

Point of entry phase

  • The point of entry (PoE) does not require optioneering (for example ILM), however, if work on optioneering has already been done elsewhere then summarise that work in the PoE, along with a clear statement of any gaps that are still to be addressed.
  • Include any known risks or uncertainties and show how the scope of work for next phase allows for these to be clarified and managed.  

Programme business case phase

  • Identifying a range of system-level alternatives and options, as potential responses to the problems identified in the strategic case.
  • Selecting the criteria that will be used to evaluate alternatives and options.
  • Selecting the recommended system-level response.
  • Optimising the mix of activities that make up the system level response.
  • Optimising the staging and sequencing options (also informed by the commercial, financial and management cases).
  • Identifying a recommended programme

Indicative business case phase

and early single-stage business case phase

  • Developing a longlist of options to address the problems identified in the activity-level strategic case.
  • Selecting the recommended option or shortlist of options for more detailed analysis

Detailed business case phase

and late single-stage business case phase

  • Undertaking a detailed analysis of the recommended option (or shortlisted options) against a do-minimum option to identify the proposed solution.
  • Undertaking a detailed analysis to understand and mitigate (or cost) the risks to outcome, scope and cost.

What does engagement look like in the economic case?

Engagement with stakeholders has a key role to play in the development of the economic case. There can be real value in seeking to collaborate with or involve those stakeholders in more meaningful ways, especially where the potential impact on a stakeholder or stakeholders is likely to be significant. For example:

  • Rather than simply informing stakeholders of the outcome of an option selection exercise, consider whether there are any stakeholders who could be involved in identifying potential options before they are evaluated, or included in an MCA process.
  • Remember that the option identification step needs to encourage creative, innovative thinking. One way to help that is to brainstorm ideas with people who aren’t part of the core team, and who may be able to bring their own unique perspective.

More information about engagement in the BCA is available on our website.

Engagement and the Business Case Approach

Assessing the economic case

How do I know if the economic case is complete?

This will depend on which phase you are working on, how complex the investment is and how much risk or uncertainty is involved.

However, there are a few things that can help you, including:

  • Talk to your Waka Kotahi investment advisor. It’s important to work with your investment advisor throughout the economic case. They will be able to help you get the level of detail right, and avoid missing any important steps.
  • Check against the 16 questions, which have been developed to help business case practitioners understand when they have done enough. Questions 9–12 are directly relevant to the economic case, and are designed to test whether:
    • enough work has been done to identify the preferred response from a range of alternatives and options, and
    • the reasons for choosing the preferred response are clear.
  • Understand the residual risks, and challenge your confidence in delivering the recommended option within the cost range (PBC/IBC) or for the cost estimate (DBC).

How to self-assess your business case

What does Waka Kotahi look for in an economic case?

When assessing applications to fund business case phases from the National Land Transport Fund (NLTF), Waka Kotahi will seek assurance that the economic 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 economic case are being met. However, there are some questions that assessors will consider to ensure that the principles relating to the economic case are being followed:

  • Have a range of options been considered, appropriate to the phase of development?
  • Do the options encompass the three main response types of demand, productivity and supply?
  • How has the intervention hierarchy informed the identification of options?
    Intervention hierarchy
  • Does the range of options include low-cost options or alternatives alongside higher-cost ones?
  • Are the options essentially multiple versions of the same solution (therefore only testing affordability), or is there a range of genuinely different approaches (considering trade-offs and innovation)?
  • Do the options flow logically from the problems and benefits? It’s important to not constrain thinking too much when initially generating ideas about options, but equally there is little merit in evaluating options that are unlikely to achieve the investment objectives.
  • Has the assessment of options and alternatives followed a robust selection framework, for example MCA? Do the criteria used in the MCA allow a meaningful comparison of options? Have any key factors been overlooked? The MCA guidance provides a detailed description of how to select MCA criteria.
  • Is there a clear narrative for why the preferred option has been selected?
  • Has risk to outcome, scope and cost been appropriately identified, and managed?
  • Do we understand the residual risks that remain for future phases, and what consequence these may have?

Resources and further information



Need support?

Contact your Waka Kotahi investment advisor or email the Business Case Process team at