Investment objectives have two purposes:
Put simply, investment objectives describe what the investment is intended to achieve. Setting investment objectives is a key action in the strategic case and informs the later assessment of potential alternatives and options in the economic case.
Investment objectives must flow logically from the problems and benefits. Specifically, they must accurately reflect what the investment needs to achieve in order to:
Defining problems and benefits
To fulfil their dual purpose, you should aim to state investment objectives in SMART terms. In other words, they should be:
View larger image [PNG, 252 KB]
Following the process outlined in the diagram above can help you develop SMART objectives that accurately reflect the problems and benefits. This process will be helped if you have previously put the right effort into developing your benefits map, as part of your strategic case.
Benefits map template [PPTX, 64 KB]
In practice, it may not always be possible to develop investment objectives that are fully SMART. A more qualitative approach may be acceptable, provided each investment objective is clearly stated, reflects the intended outcomes of the investment, and is supported by a fit-for-purpose benefits map. Either way, you should discuss investment objectives with your NZ Transport Agency Waka Kotahi (NZTA) investment advisor as you develop them.
For an example of how investment objectives can be developed from the benefits map, download the document below.
Investment objective example [PDF, 121 KB]
Because they flow from the problems and benefits, investment objectives should be developed after you have completed problem and benefit definition. This includes completing any work needed to address evidence gaps and revise the problems and benefits if needed. The completed benefits map will include the details you will need (see diagram above).
Similarly, the investment objectives should be developed before attempting to assess alternatives and options, as they are a key input to that optioneering process. They can also act as a prompt for ideas when initially identifying alternatives and options.
Often an investment objective is developed initially as a range of outcomes that would be acceptable to stakeholders, which is then narrowed as the business case develops until the final investment objective is the commitment to outcome delivered by the preferred option.
Optioneering in the economic case
A key purpose of investment objectives is to clearly communicate the outcomes expected from an investment – or, put simply: What is it we want to buy?
When phrasing your investment objectives, ask yourself:
Following the process mapped in the diagram above is a good way to achieve this, however this is not a fixed process. Developing your investment objectives needs to follow the Business Case Approach (BCA) principle of fit-for-purpose effort. Some investments find it easier to present complex information as a simple qualitative statement, supported by a benefits map that introduces the SMART elements. For example – Increase carbon neutral mode share by 5% – with a benefits map introducing key performance indicators (KPI) for different modes, vehicle types and measures over relevant time frames (including current baselines).
Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
