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Expediting investment decisions

Background

The business case process is tailorable to accommodate any time constraint. If you are operating under an urgent timeframe and don’t expect to be able to meet the standard requirements of the business case guidance, contact your Treasury vote analyst immediately to agree whether an expedited approach is appropriate.

The point of the process is to help ministers make good decisions. If those decisions need to be made rapidly in order to keep attractive options open or because Cabinet is directing officials to expedite decisions, then the Treasury will work with you to make it happen.

Naturally, as the degree of timeframe compression sought increases, or the evidence of alignment with existing strategy is weak, you should expect a greater degree of challenge from the Treasury, as to whether it’s possible to make a good decision within such constraints.

Case Study

A government agency wanted to provide Cabinet with the option of taking up an unexpected, but time-limited, opportunity to procure, at a much better price than would have been expected. The investment had previously been identified as a part of a costed strategic investment plan, approved ‘in principle’ by Cabinet, but without funding committed.

Essentially, the agency had three weeks to gain Cabinet’s agreement to fund an $80m project, before the option disappeared. Using the Better Business Cases framework, the agency worked closely with the Treasury to agree a level of analysis that would be achievable in the available three week window.

The business case highlighted both the benefits of taking advantage of the favourable price, and the risks of making the investment decision based on limited information. Cabinet agreed to fund the project.

Risks of using an expedited approach

You need to plan. Even if time is short. The business case framework is a proven way to cover the bases – strategic, economic, commercial, financial, management. A good plan can save significant time in implementation.

Our evidence base shows that business cases undertaken in compressed timeframes, where some steps have been scaled back or omitted, can result in a negative impact on the overall result of a change initiative. Issues include:

  • optimism bias about cost, time and benefits (due to a lack of detailed understanding)
  • missed opportunities to integrate with other initiatives (due to an urgency-induced narrowing of focus)
  • unforeseen ‘downstream’ effects leading to additional costs and erosion of benefits.

When might an expedited approach be appropriate?

Circumstances where an expedited approach might be warranted include when it’s necessary to:

  • meet a Cabinet direction
  • preserve the government’s ability to take advantage of a time-constrained opportunity.

In order to justify the risks of an expedited decision-making approach, your agency should be able demonstrate its commitment to delivering the best possible advice in the time available, through strong, proactive leadership and governance. Leadership and governance should be focused on removing barriers and providing the right resources to the team at the right time, to support going ‘fast and well’. 

Principles for using an expedited approach

Consult early with stakeholders and government partners. Make the constraints of the business case development timeframe explicit, so they can give you the best advice in a limited time.

The Treasury will work with you to use existing business case processes and collateral to efficiently balance time available against quality of advice.

Ensure Cabinet can see the range of options available, and why you think your recommended option is the best.

Provide transparent advice to Cabinet about the risks involved and potential implications of making fast decisions. Explain how much (or little) these risks can be mitigated, and how you intend to do so.

Process

Prompt engagement

You should seek support for an expedited approach from your Treasury vote analyst, at the earliest possible opportunity. The vote analyst will be supported by an advisor from the Treasury’s Investment Management team if required.

Negotiation

The investment lead agency and the Treasury should:

  • agree that there is a genuine need for an expedited process
  • identify what investment decision is needed and by when – then work backwards from that date, allowing time for consultation and lodgement, to calculate how much time is available for business case development
  • based on the nature of the decision sought, and the type of investment, agree the appropriate type of business case.

A useful tool for negotiating and recording this agreement is the Business Case Development Plan (Point of Entry) template. If using this document, you should:

  • include the date being targeted for an expedited decision, and why it’s necessary to meet this date.
  • propose the type of business case considered appropriate for the investment
  • note what actions in the Business Case Guidance it’s planning to drop, in order to be ready by the expedited date
  • note the expected risks to the quality of the advice through not undertaking these actions (make the trade-off between speed and reliability transparent).

Negotiating the investment decision pathway

The ideal investment decision pathway is based on the following principles:

  • avoid time and money being wasted on proposals which won’t be supported
  • preserve ministerial decision rights (eg, by giving them visibility to a full range of options)
  • preserve good faith with suppliers, by ensuring requests for information, proposals and tenders, have Cabinet’s support
  • maintaining the feasibility of attractive options through timely decision making.

For a project, this typically translates into the following pathway.

Business case pathway Purpose Investment decision pathway
Strategic Assessment (SA) Is there a problem? Is it worth solving? Agency approval to proceed to IBC
Indicative Business Case (IBC) Confirms the case for change.
Considers feasibility of full range options supported by a limited number of short-listed options for further analysis, including a preferred way forward.
Cabinet approval of options short-list, approach market for information in good faith.
Detailed Business Case (DBC) Confirms the best value-for-money option. Cabinet approval of contingent funding, issuance of request for tenders, delegation of appropriation rights to joint ministers.
Implementation Business Case
(ImBC)
Confirms the best value-for-money option. Recommends a preferred solution. Joint Minister approval to enter into contract; appropriation and permission to drawdown funds.

When time is constrained, the first three principles listed above may need to traded off to a certain degree in order to accommodate the principle of timeliness. This could involve merging some of the pathway stages, and/or reducing the level of analysis within each stage.

Merging of stages could range from:

Slightly constrained
  • Cabinet paper covering the key points in Strategic Assessment/Indicative Business Case
  • Detailed Business Case
  • Implementation Business Case
Heavily constrained
  • Single Stage Business case
Maximum constraint
  • a Cabinet paper with sections considering the investment from each of the Better Business Case framework’s ‘five case model’ lenses – Strategic, Economic, Commercial, Financial, Management.

There is no one-size-fits-all approach to this – the lead investment agency and the Treasury should use judgment to choose an approach which seems best aligned with the principles.

Development

The investment lead agency should develop the business case based on what’s been agreed with the Treasury. Even if the development time is very short, plan to check in a couple of times with your vote analyst during development, to make sure you’re on the right track.

Ensure you make it clear to Cabinet:

  • the benefits of taking an expedited approach to the business case in this situation
  • what analysis you’ve omitted
  • what the risks are of such an approach; these are likely to include:
    • without detailed analysis, estimates regarding time, cost, benefits typically prove to be optimistic, and the best value-for-money option may not be correctly identified
    • less time for looking outwards, which can result in missed opportunities for integration with other government initiatives; ‘point’ solutions that don’t endure well
    • unforeseen ‘downstream’ effects leading to additional costs and erosion of benefits
  • what options are available to reduce those risks.

Tips

Your agency is best placed when there is already some level of agreement from Cabinet that they have a problem they want solved. For example, there may already be a high level description of the project in a strategic plan (e.g. Defence Capability Plan) agreed to by Cabinet.

DPMC can help advise on whether or not it’s a Cabinet priority to expedite a decision.

When timeframes are short, it can be helpful to team up your own staff with a specialist business case writer. Your staff will contribute essential business knowledge and do most of the analysis; the specialist’s familiarity with the framework should help you focus your effort.

Consider the use an Investment Logic Mapping (ILM) workshop as a first step, to de-risk the rest of the business case development.  ILM:

  • helps stakeholders to truly be on the same page about the problem the investment is addressing, and the resulting benefits (stakeholders often discover they’ve been using the same words but meaning different things)
  • generates a robust outline – problem statement, solution, benefits – for the business case.
Last updated: 
Monday, 4 May 2020