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Categories: business case
The UK government (HM Treasury and the Welsh government) has developed the Better Business CasesTM model which as you can guess by the name, aims to help people write business cases that are better. The model has been around for a few years but I have only come across it recently.
It prompts teams to review the investment decision from 5 different angles. Overall, looking at business cases in the round should give you a holistic view of whether the investment is worth it, enabling teams to make the right decision.
The 5 dimensions recommended by the model are:
- Strategic
- Economic
- Commercial
- Financial
- Management
Let me explain what each of those are about, so you can see if using this lens might be useful for your own business case evaluation.
Strategic
Under this dimension, you would look at the drivers for change. We assess projects for strategic fit, which is how closely they align to the vision and objectives of the organisation.
Not all projects are strategic, but the more strategic the initiative, generally, the more likely it is that the business would benefit from making the investment. If a project moves you closer to your strategic goals, then it’s probably worth doing.
Economic
Under the economic dimension, look at the business case for value for money. Does it make economic sense to choose this option?
The model shoehorns in environmental and social considerations under this economic heading. I’m not sure that they fit well here and I wonder if it wouldn’t have been better to call out sustainability and social responsibility in a different segment to bring more attention to these domains.
This is the lens through which to scrutinise the option that represents the best value, however you define value.
Commercial
The commercial case should stack up for any business case. In other words, can we do it? is it viable? Do we have the supplier relationships (or can we get them) that would make this possible? Is there a market for the solution we are going to build?
You’re considering whether it makes commercial sense to invest in this way. The business case might be sound in all other respects, but if customers don’t want what you are making, then commercially it might not be the right decision.
Financial
The financial lens is probably what we most associate with business cases. Have we got the money? Do the numbers stack up?
This is where you review return on investment, return on capital employed, net present value, budget, internal rate of return, resource costs and all the other financial measures that your business case template makes an allowance for.
These monetary decisions may be heavily weighted in your organisation, especially if you aren’t cash-rich. Many business cases are fully decided on the financial aspects (rightly or wrongly) because I think managers expect the other points to have already been taken into account when the recommendations and solutions are put together.
Management
The final dimension of the model is management. This area reflects how the work is going to be delivered and whether the project is being started in the best possible way to set the organisation up for success.
In this section, you’ll be reviewing the proposed project management approach, delivery methods, whether the team is already in place, what resourcing is required, how the governance and oversight will work and so on.
I think this section is most important for projects where more than one organisation is involved as it should set out the terms for any joint venture or partnership.
Overall, the point of actively reviewing each of these dimensions is to make sure that the business case stacks up from all angles and that the investment is truly worth it.
Do you use these categories, themes, lenses (whatever you want to call them) when you are putting business cases together for projects or reviewing them? If not, do you think they would be useful additions to specifically call out to ensure that a case is a rounded, holistic, representation of the work and the decision required? Let me know in the comments!
Posted on: October 03, 2022 08:00 AM |
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