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Developing a Business Case
Please read the below in conjunction with the Cost Estimation Toolkit.
What is a business case?
A business case sets out the problem or opportunity, considers options, analyses costs, benefits and risks, and ultimately supports an investment decision. The completion of a detailed business case on investment proposals coming forward is encouraged. The business case should clearly outline the nature of the policy problem the investment is seeking to address that directly links to the goals and objectives of the Government in the market/sector in which the investment is proposed.
A business case is considered the key document to support investment decision-making. To ensure that it achieves its purpose the business case should be continually updated throughout the development and decision-making process to include the best information available, while taking into account whole-of-life cycle considerations.
The essential elements of a business case are outlined below. These have been modified from Infrastructure Australia guidance for application in a broader range of policy proposals. For infrastructure projects where Australian Government funding sought is greater than $250 million please refer to the Infrastructure Australia Assessment Framework .
Essential elements of a business case
1. identify problems and/or opportunities.
The purpose of this stage is to identify current and emerging problems and opportunities and demonstrate the benefits of addressing them.
A ‘problem’ is a cost to be avoided or saved, while an ‘opportunity’ is a benefit to be gained.
The impact of problems or opportunities should be demonstrated using evidence, including:
- the scale of the problem or opportunity, expressed in monetary terms where possible
- the timing of the problem or opportunity - when the costs and benefits will occur, and how this timeframe influences investment decisions
- the underlying or root causes of the problem or opportunity.
Key questions to address include:
- Is the problem/opportunity expressed as a straightforward statement?
- Is the problem/opportunity to link to other problems, programs and projects?
- How does the problem/opportunity align with relevant Government priorities/policy objectives?
- Is the problem/opportunity measured by quantitative and/or qualitative data?
- Has the problem/opportunity been monetised over time?
- What are the assumptions about future trends in drivers (e.g. population, economic growth, technology, climate trends)?
- Have the project/opportunity interrelationships been described?
2. Options analysis
The purpose of this stage is to present a wide range of options, including a base case, to address an identified problem or opportunity. You should then assess each of these options through a rigorous process to determine which are likely to most benefit the Australian community. Options Analysis should identify a longlist of options to address the problems and opportunities that were identified above. The longlist of options should represent a wide range of reasonable alternatives (both capital and non capital) and a detailed and evidence-based assessment to determine a shortlist of these options. You should consider how individual initiatives and options can be packaged together or better coordinated for a more efficient and effective outcome, and how such options can handle future uncertainty if necessary
The longlist of options should represent a wide range of reasonable alternatives (both capital and non‑capital) and a detailed and evidence-based assessment to determine a shortlist of these options. You should consider how individual initiatives and options can be packaged together or better coordinated for a more efficient and effective outcome, and how such options can handle future uncertainty if necessary.
The key deliverables from this stage are:
- a description of each option
- cost information (including capital expenditure and operating expenditure, where relevant), at a high level
- a description of the option’s expected impact in terms of efficiency, equity and productivity, imposed on or gained by stakeholders by the possible initiatives
3. Detailed business case development
The purpose of this stage is to refine and finalise your business case by:
- developing in greater detail the options you shortlisted above to address the problem or opportunity. This includes detail on the costs, benefits, delivery and risks of each option.
- refining options on the basis of your analysis. For example, you may refine route alignments, interchanges or building design standards
- ensuring that all factors relevant to the success of an option are comprehensively addressed. For example, operations, land use planning and governance structures.
- How was the project contingency estimated?
- For each benefit component, how were the benefits estimated? What are the forecast benefits?
- What are the characteristics of the underlying demand model?
- What timeframe has demand been modelled over (month, quarter, year etc.)?
- Who were the capital cost estimates prepared by?
- What are the underlying characteristics of the cost-benefit analysis conducted for each project case?
- What are the ongoing costs associated with the project, including maintenance and operating costs?
- Are costs consistent with best practice cost estimation guidelines?
- What sensitivity analysis has been undertaken?
- Related initiatives or projects – Are the benefits and costs closely related to, dependent upon or potentially influenced by other initiatives or projects?
- Are there any non-monetised costs and benefits? If so, what are the potential project benefits from them?
- What is the Delivery Strategy and Operations Strategy?
- How will the project be funded and financed?
- What are the unmitigated project risks?
- What is the Post Completion Review strategy/approach
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Australian Government Department of Health and Aged Care
Business case template – Business Improvement Fund
Residential aged care providers use this business case template to apply for grants under the Business Improvement Fund.
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Business case template
Download [Publication] Business case template – Business Improvement Fund (Word) as Word - 112.91 KB - 5 pages
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The Business Improvement Fund will assist residential aged care providers to improve their business operations. It will help providers ensure they’re meeting senior Australians’ needs.
Residential aged care providers can apply for grants under the fund using this template.
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The business case will help define the scope of the purchase, develop the implementation strategy and ensure the option selected will meet the agency’s requirements.
In the planning stage of the contract, it is one of several templates used when planning your goods and services procurement.
Business Case (DOCX, 56.83KB)
- Goods and services templates
- Procurement guidelines
- Buying for government
- Procurement practice resources
- Procurement Directions
- Western Australian Procurement Rules
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Acknowledgement of Country
The Government of Western Australia acknowledges the traditional custodians throughout Western Australia and their continuing connection to the land, waters and community. We pay our respects to all members of the Aboriginal communities and their cultures; and to Elders both past and present.
The business case stage establishes the investment need, defines its benefits, explores interventions, estimates costs and confirms the preferred solution is deliverable.
The key deliverable for this stage is the completion of a full business case for submission to Government.
Before committing to an investment, the decision-maker needs to be confident that the following questions are answered in the business case:
- What is the problem, issue or service need?
- What are the benefits from addressing the problem?
- Is there a compelling case for investing?
- Can the project be delivered as planned?
High Value High Risk (HVHR) investments
For all HVHR projects, Gate 1 (concept and feasibility) and Gate 2 (business case) reviews must be carried out before the Government considers the full business case.
For projects over $10 million, the Project Profile Model must be submitted with the Business Case.
Investment Lifecycle and High Value High Risk Guidelines - Business Case (WORD 958.84 KB)
Project Profile Model
Guidelines, templates and technical supplements
Procurement Investment Lifecycle and High Value High Risk Guideline (PDF 2.37 MB)
Procurement Investment Lifecycle and High Value High Risk Guideline (WORD 9.6 MB)
Part two of the Procurement Investment Lifecycle and High Value High Risk Guideline details the development of a procurement strategy, as part of business case requirements, that supports optimal project structuring, packaging, bundling and procurement model selection.
It also provides an overview of the three categories of procurement and eight defined procurement models.
Developing ICT Investments (WORD 1.6 MB)
Digital Asset Policy (WORD 24.32 MB)
Digital Asset Policy (PDF 7.12 MB)
The Digital Asset Policy provides clear requirements for digital asset information management to support the planning, design, construction, and operation of Victorian Government projects and assets. It sets consistent information requirements for Victorian Government departments, agencies, and projects to improve productivity and deliver better outcomes for all Victorians.
Economic Evaluation (WORD 1.92 MB)
Investment Management Standard
Long form business case template (WORD 123.59 KB)
Project Assurance Plan template
Project Development and Due Diligence Guidelines (WORD 1.18 MB)
The Project Development and Due Diligence Guidelines (PDDD) provide a guide for project proponents on how to integrate PDDD activities into Victoria’s High Value High Risk Framework and the Gateway Review Process. The guidelines recommend various activities to be undertaken during the project planning and development stages of Victorian Government sponsored infrastructure projects.
Project governance (WORD 3.05 MB)
Real options analysis technical supplement (WORD 2.99 MB)
Risk, Time, Cost and Contingency Guidelines (WORD 7.07 MB)
The new Risk, Time, Cost, and Contingency (RTCC) Guidelines provide consistent cost and schedule approaches across all major Victorian infrastructure projects, incorporating the use of modern statistical methods to define and measure risk. This document supersedes two previous technical supplements; Preparing Project Budgets for Business Cases Technical Guide and Project Risk Management. Additional requirements and expectations are defined based on project scope, stage, and project value and risk context to ensure reporting and management are fit-for-purpose.
Sustainable Investment Guidelines (WORD 5.87 MB)
The Sustainable Investment Guidelines support project teams to incorporate environmental, social and economic sustainability in Victorian government Infrastructure Investments. It is contemporary with sustainability best practice and government priorities and policies including the Victorian Government Climate Strategy, the Recycled First policy, Green Bonds, and aspirations to mitigate project cost escalation by building a more circular economy.
Value Creation and Capture