Benefits Summit 2015 - Benefits and Better Business Cases
Posted by APM on 7th Aug 2015
Stephen Sanchez and Alan Brown, Value People
Stefan Sanchez and Alan Brown from Value People described the alignment of benefits throughout each and every stage of the Better Business Case process.
Better Business Cases (BBC) is the accredited, best practice approach to developing spending proposals, widely used in the public sector.
Five key questions for consideration
It examines five key questions with respect to a specific spending proposal:
- The Strategic Case Question: Is there a ‘case for change’ and are we clear about the outcomes we want to achieve from our investment?
- The Economic Case Question: Has a sufficiently wide range of options been considered and can we demonstrate that the preferred option optimises value for money?
- The Commercial Case Question: Is the proposal commercially achievable - can a deal be done to provide the required service?
- The Financial Case Question: Is the proposed solution affordable? If so, where is the finance coming from?
- The Management Case Question: Have we got the resources to manage the successful delivery of the scheme?
Benefits run like a thread through the business case, delivery of the scheme and post-delivery (when the service is up and running). At the early stages (the strategic and economic cases), benefits are identified and where practical and possible, quantified. The commercial and management cases set out the arrangements for managing the delivery of benefits and ‘pass the baton’ to programme and project managers to oversee and direct their delivery.
Benefits fall into one of the following categories:
- Cash releasing – results in ‘cash in the bank’ through avoided spend/savings etc.
- Financial but non-cash releasing – benefits that can be monetise (i.e. have a monetary value associated with them and their delivery) but don’t result in ‘cash in the bank
- Quantitative – benefits that can be counted but are very difficult to monetise
- Qualitative – benefits that cannot be monetised, but are often very significant
Qualitative benefits are often the main reason for investing public money and often represent the largest benefits – investment is usually to improve social outcomes such as health, wellbeing and education.
Taking wellbeing as an example, Stefan and Alan examined a fictional smoking cessation campaign, identifying the potential benefits of the investment and the steps between the investment and achieving the benefits and posed the following question:
‘Are we being too scientific about benefits management’?
Whilst it is easy to measure the number of visits to GPs or the cost of treating smoking related diseases, attributing such ‘benefits’ to a smoking cessation campaign with any confidence is virtually impossible. Stefan and Alan suggested that linking the investment with the benefits would require some heroic assumptions such as:
- That the public have understood the campaign message(s)
- The public have changed their behaviour in response to these message(s) leading to a reduced number of smokers
- Other factors that influence smoking rates can be isolated, such as increased taxation on cigarettes; performance of the economy; increased physical activity rates
- Reduced smoking rates result in improved health, but this could be due to better treatments, better overall health…and potentially a number of other positive or negative factors
Much effort is expended trying to quantify and manage the delivery of these benefits, but is the effort worth it? Stefan and Alan suggested that this effort may be better spent focusing on developing the options to make sure that the proposed solution is fit for purpose, acceptable to stakeholders and successfully delivers the scheme’s outcomes.
Stefan and Alan suggested that we should be honest about this when developing large schemes with significant societal benefits and:
- Focus on paying for the scheme with direct benefits wherever possible (anything over and above this should be considered a bonus)
- Work with stakeholders to develop a convincing narrative to align the investment to the large indirect benefits
- Encourage investment decisions to be taken with the full understanding that indirect benefits cannot be controlled
- Measure programme/project success on delivery of clearly articulated outcomes
- (spending objectives)
Content from the Benefits and Better Business Cases presentation was captured in a Mindmap.
The maps has been linked to the associated PowerPoint presentation held on APM Slideshare Channel and an audio file [MP3 Podcast] on APM SoundCloud Channel.
The map has been indexed to be viewed with other material from #apmbmsummit. Individual maps can be downloaded in PDF and native Mindmap formats [Mindjet] for further learning, reflection and sharing.
All materials have been created by Andrew Wilcox of Conference Reaction and are available for re-use. Content is available to be used. We would be grateful to receive your attribution and feedback. ’
Prepared by Nick Wensley