Five Case Model
The Five Case Model provides a disciplined, step by step approach that helps to ensure that each of the key aspects of a robust investment proposal is explicitly and systematically addressed as part of the business case development process. The five cases are addressed within the business case development process:
source: NZ Treasury
The Five Case Model provides the framework and tools to enable effective decision making when scoping and planning spending proposals in a robust and thorough manner and can be used at the strategy level, the programme level and individual project level. Its use should always be proportionate to the level at which it is being applied as well as the cost and risk associated with the investment. It requires consideration of:
- the strategic case – strategic fit and clear investment objectives
- the economic case – optimising value for money
- the commercial case – attractiveness to the market and procurement arrangements
- the financial case – affordability
- the management case – deliverability and plans for delivery
Checklist for Assessment of Business Cases Using the Five Case Model 1. What stage has the case reached, is it at the ;- Strategic Outline; Business Outline or Full Business Case stage ? 2. Does the case include all the elements of the 5 case model, i.e.:- Strategic; Economic; Commercial; Financial; Management ? Is the information in each element complete enough for the stage reached ? Is the case Green Book compliant ?
- Strategic Case: (the case for change) should cover rationale, background, policy context and strategic fit.
- Are there clear SMART objectives in terms of outcomes and are dependencies, constraints and risks identified ?
- Economic Case: (Economic Appraisal):
- Is there a reasonable range of options in the long & short lists ?
- Is ruling out of potential promising options clearly justified ?
- Are all economic costs and benefits clearly calculated for each year covered by the proposal with NPV calculated correctly (see over) ?
- Is distributional analysis needed, who benefits, who pays ?
- Are all costs and benefits quantified, if not is this justified ?
- Are there any decisive unquantified cost/benefits and are they clearly explained ?
- Are there appropriate sensitivity analyses, including worst case scenario ?
- Are results of each option presented clearly including do nothing/minimum option?
- Are risks, constraints and dependencies identified and managed ?
- Is optimism bias properly included and aligned with risk ?
- Are wider impacts assessed e.g. sustainability, competition, regulatory impact.?
- Is there a Benefits register; benefits realisation (delivery) plan ?
- If PFI involved is tax properly treated and is risk transfer clearly achieved ?
- Is best VfM = max NPV and if not do unquantified benefits justify the cost ?
- Exchequer impact calculated separately and not included in NPV!
- Are monitoring and evaluation costs included ?
- Commercial Case: s the proposal commercially feasible / deliverable ?
- What procurement is required; goods, services, land, buildings ?
- What is the procurement strategy ?
- What are the key contractual issues ?
- There must be clear contractual key milestones and delivery dates
- There must be clear agreed accounting treatment
- Is risk identified and managed and allocated ?
- Is there a risk allocation table?
- What if any are the personnel implications and is TUPE applicable ?
- Financial Case: (Financial Appraisal)
- Focus on affordability; is full budget funding secured and budgeted by all parties ?
- What are the impacts on income/expenditure a/c and on balance sheet if applicable ?
- Are potential cost over runs provided for are the any contingent liabilities?
- Any guarantees ?
- Management Case (programme or project management)
- Is the proposal practically deliverable and what are the delivery plans ?
- Are there clear delivery dates and detailed milestones ?
- Does the proposal require programme or project management techniques ?
- Is there a contract management plan ?
- Change management requires a change management plan !
- If in a controlled environment such as ICT use of PRINCE 2 is mandatory !
- Does the plan include clear arrangements for OGC Gateway peer reviews ?
- Is there a contingency plan with arrangements & provision for risk management ?
- There should be a benefit realisation table and plan.
- Does the plan include monitoring arrangements (who when how and costs) ?
- Does the plan include post implementation evaluation arrangements (including who when how and costs)?