CMU Business Case Template - leicscc.axlr8.uk Response 3 … · Web view8 Business Case Final...

Leicestershire County Council Business CaseStatus: Final Template

Leicestershire County CouncilBusiness Case[project name]

Status: Final Template

Prepared by: Change Management Unit

Version v5.0

Date April 2014

document.docLast Updated: April 2014

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Contents

1. DOCUMENT CONTROL 31.1 Control Details 31.2 Document Amendment Record 31.3 Document Review Record 31.4 Document Sign-off3

2. MANAGEMENT SUMMARY 42.1 Introduction 42.2 Outcomes and Benefits 42.3 Scope42.4 Preferred Option 42.5 Implementation Strategy Overview 42.6 Costs, Savings and Funding 52.7 Key risks 52.8 Conclusion and Recommendations5

3. INTRODUCTION 63.1 Background 63.2 Project Mandate 73.3 Aims and Objectives 73.4 Outcomes and Benefits 73.5 Related work to date 8

4. OPTIONS APPRAISAL 94.1 Baseline (Do Nothing)94.2 Option 1 104.3 Option 2 114.4 Option.. 114.5 Options Summary 11

5. IMPLEMENTATION STRATEGY FOR THE PREFERRED OPTION 125.1 Implementation Approach 125.2 Procurement Approach 125.3 Assumptions, Dependencies and Risk Appraisal 125.4 Implementation Impact Analysis 155.5 Implementation Plan 165.6 Resource Plan 165.7 Key Stakeholders 175.8 Governance 175.9 Costs, Savings and Funding Summary 18

6. CONCLUSIONS AND RECOMMENDATIONS 217. APPENDIX 1 – FINANCIAL ASSUMPTIONS AND ANALYSIS 22

7.1 Financial Assumptions 227.2 Investment Analysis 227.3 Full Sensitivity Analysis 23

8. APPENDIX 2 – Project Prioritisation Assessment Criteria 24


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1. Document Control1.1 Control Details

Document Location:

/tt/file_convert/5abefbe37f8b9ad8278dd5ff/document.doc

Production Software:

Microsoft Word 2007

Author: [Name], [Directorate], [Service Area]Owner: [Name], [Directorate], [Service Area]

1.2 Document Amendment Record

Issue Amendment Detail Author Date Approved

1.3 Document Review Record

Service Name DateDepartment DirectorFinanceHRS&ITCommercial & Procurement ServicesCommunication(Add in other key stakeholders)

1.4 Document Sign-off

Project Manager:

Signature: …………………………………………………………….

Printed Name: …………………………………………………………….

Position: …………………………………………………………….

Date: …………………………………………………………….

Project Sponsor:

Signature: …………………………………………………………….

Printed Name: …………………………………………………………….

Position: …………………………………………………………….

Date: …………………………………………………………….


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2. Management SummaryPlease note, all sections in blue are intended to provide guidance and should be removed from the final report

This document constitutes the Business Case for the [xxx project]. This management summary is overview of the benefits, costs and risks from implementing this project.

2.1 Introduction

2.2 Outcomes and Benefits

2.3 Scope

2.4 Preferred Option

2.5 Implementation Strategy Overview


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Content guidanceThe Business Case should be developed in consultation with appropriate Business Partners, SMEs and representatives from relevant corporate groups and services to ensure that these stakeholders are engaged at an early stage and are able to provide professional advice and support to the development of the document and review the document ahead of submission for approval.

The management summary should provide the reader with a brief but comprehensive overview of the key messages and figures contained within the body of the report. Based solely upon the document content but it should allow the reader to understand why the project is proposed, benefits, what it will cost and how it will be delivered and key risks. The reader should be directed to specific sections for any detail.

Prioritisation AssessmentThe information contained in the Business Case could also be used by senior management DMT, CMT or a Programme Board to prioritise this project against others in terms of investment and allocation of resources. Therefore once the project brief is finalised the Prioritisation Matrix at Appendix 2 needs to be completed

Content guidanceInclude the background and rationale for the project, the aims and objectives.

Content guidanceSummarise the expected outcomes and benefits (cashable and non-cashable), what does the project seek to achieve? Explain the contribution to the MTFS (e.g. identified saving or problem resolution)

Content guidanceInclude in this section a summary of the scope of the project. What current services/contracts are in scope and the value of these (e.g. budgets/contract value)

Content guidanceInclude an overview of the options considered and a summary of the preferred option including the rationale for the decision.

Content guidanceInclude an outline of how the project is to be delivered, the stages and the key milestones


2.6 Costs, Savings and Funding

2.7 Key risks

2.8 Conclusion and Recommendations


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Content guidanceProvide an overview of the costs of the preferred option, how the savings will be achieved and how it will be funded.

Content guidanceSummarise the significant risks, preventative or mitigating action and any financial consequences.


3. Introduction

3.1 Background


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Document content guidance

The purpose of a Business Case is:

To document the justification for undertaking the initiative, the need for change and the situation that you are aiming to address, based on the estimated cost to complete it, against the risks and anticipated business benefits to be gained.

To provide enough information to allow Senior Management or a Programme/Project Board to make a decision. Ideally, the information should be of sufficient detail so that sections of the PID (when produced) can refer back to the Business Case rather than re-state information.

To describe what the options are and not the detail of how to implement them

To consider the total business change as this may be much wider than just the project development costs. The structure and information within the document must allow the Programme/Project Board to monitor the on-going viability of the project against the Business Case.

Above all, it should provide the reader with a complete understanding of the need for change and the situation that you are aiming to address and outcomes to be achieved.

It is sometimes useful to ask these questions:1. Why do we want to do this?2. Is it possible to do it?3. Will it add value?4. What impact will it have and on whom?5. Who needs it?6. Who is responsible for making it happen?7. How will it be paid for?8. Who can give the authority for it to proceed?9. Is the environment supportive enough?

Service-related jargon and acronyms should be avoided or explained. Except for ICT infrastructure proposals, technical jargon and in-depth descriptions should also be avoided.

The Business Case should concentrate on the service improvements or the direct financial benefits that will accrue as the proposed investment is made.

The production of the document should not become an industry in itself so succinctness is key and the detail should, clearly articulate the case for change and mirror the relative

complexity of the initiative.

Content guidanceFocus on the specific detail and be brief.

Outline the current context; how did this project come about? What was the policy, political, financial, legislative or other drivers for change that began

this project?


3.2 Project Mandate

3.3 Aims and Objectives

3.4 Outcomes and Benefits

3.5 Related work to date


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Content guidanceThis section should be factual but indicate the decision that approved the commencement of the business case. Links to other documents are often helpful.

This could take the form of: An email or memo from a Director Minutes from an executive meeting (CMT, DMT etc.) A Cabinet report Cabinet meeting minutes A new piece of legislation/circular

Content guidanceInclude in here the rationale for the project e.g.

- What does the project seek to achieve? - Which strategic priorities, objectives or policy is it aligned to?

Objectives are statements that describe what the project will achieve and the value it will add to the business. (Objectives of the Project should be stated as SMARTly as possible i.e. Specific, Measurable, Achievable, Realistic & Time Bounded)

For example:- To increase income levels by 2% over the next two years.- Implementation of revised streamlined business processes reducing staffing costs by 10%

by 31st March 2014

Content guidanceThis section should include the expected project outcomes, benefits (cashable and non-cashable) that it is expected will be achieved by the preferred option. Where possible, each one should be described in measurable terms and the current baseline status should be stated so that measurable improvements can be, planned, tracked and assessed, in the event the project is approved and completed. The business case must be re-assessed regularly through the life of the project and this will include the statement of the benefits. Further information on benefits management can be found on the CIS Benefits Management

For Example:This project is seeking to deliver an improvement in recycling rate, which currently stands at 42%This project is seeking to streamline the invoice payment process, reducing the current cost of processing by 10%

Include the impact upon the MTFS, at a high level (e.g. identified saving, future cost avoidance or resolution of an existing problem)

Content guidanceDescribe any work/activity that has been undertaken prior to this Business Case being developed.(e.g. engagement with internal/external stakeholders, needs analysis, market analysis or any other form of research.)

http://intranet/change_performance/change_management_unit/project_support.htm


4. Options Appraisal

4.1 Baseline (Do Nothing)


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Content guidanceThis section should provide a description of each option considered for the project. It should take into account possible variations in project scope, different delivery models (e.g. delivered by internal or external resource), degrees of risks (e.g. deliverability, assumptions, dependencies and financial). It should contain enough detail to allow Senior Management or the Project Board to make a decision as to which option is the most appropriate and offers best value for money.

Always include an Option to “Do Nothing”, this will highlight the impact of not undertaking the project and act as a baseline for comparison of benefits. The “Do Nothing” option will not always be the same as the “as-is” position e.g. consequences of failure to meet a regulatory/statutory duty, financial impact of increasing demand.

Establishing the Investment RequiredThe corporate financial guidance and models should be used when establishing the investment required for each option. These tools and guidance can be found on the CIS under Change Management, Project Support Contact your Finance Business Partner if your require support with the development of the financial summary and the application of financial analysis tools.

There are a number of pre business case activities which inform the strategy and the case for change such as data and needs analysis, business and market Intelligence and market testing. This intelligence and insight will ultimately be used in determining which options are taken forward into the options appraisal. Therefore it is important that commissioning support services, (e.g. Commercial and Procurement Services, Research and Insight, SI&T, Strategic HR, Strategic Finance etc.) are involved as early as possible in this pre-business case activity to ensure the right options are put forward.

The key consideration is how each option will address problem/situation that you are aiming to manage.

Content guidanceInclude a

Summary/description Operating costs Risks - including any significant negative consequences of the proposed project not

proceeding. (e.g. penalties for non-compliance with new legislation, large maintenance overhead or lost opportunity costs associated with use of outdated technology, impact on service user, impact on service performance). For guidance see section 5.3

http://intranet/change_performance/change_management_unit/project_support.htm


4.2 Option 1

Option 1 Financial SummaryOption 1 '000s

Project Cost Savings Estimate (Operation) SavingsCategory Y1 Y2 Y3 Ops Y1 Ops Y2 Ops Y3 Ops Y4 Ops Y5 Project Estimate Total

Capital ised resource costs £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Capital Expenditure £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Resource costs £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Other Revenue Expenditure £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Income £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Contingency £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Cash Flow - Option 1 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Cash Flow - Baseline £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

Cash Flow - Change £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0

NPV £0.0 IRR No ReturnPayback (years) no payback years

Option 1 Top 5 Risks

Risk MitigationCurrent

Risk Score

Financial Impact

e.g. Insufficient resources to complete the project initiation document

Secure resources and monitor regularly, review project plan and schedule, reprioritise work

9

e.g. May not meet legislative deadline

Develop and monitor plan and key deliverables 15

e.g. Benefits are not realised due to resistance to cultural changes and new ways of working

Ensure that there are mechanisms in place to embed the change including identification of responsibilities, clear approach to compliance and consequence and continuous improvement approach

15

Project not financially viable if X% of financial benefits not realised

e.g. Capital costs based upon industry average 16

Project not financially viable if capital costs (£1m) increase by 10%


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Content guidanceFor each option include a

Summary/description (summary should include the extent to which the option addresses the problem/situation you are aiming to manage)

Summary of operating and delivery costs (The standard table is included in the financial model “BC options Appraisal” tab)

Financial benefits Non-financial Benefits (e.g. Improved customer service, reduced cost to businesses and

individuals of complying with statutory requirements, improved operational efficiency; more efficient and effective business processes; more flexible working, social inclusion of disadvantaged groups)

Top 5 risks (deliverability, assumptions, dependencies and financial). For guidance see section 5.3


4.3 Option 2

4.4 Option..

4.5 Options Summary

Project Investment

£

Operational Costs (on-going pa)

NPV Benefits OverallRisk

Rating

Baseline

Option 1

Option 2

Option 3

Option 4

4.5.1 Preferred Option


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Content guidanceIn this section summarise all of the options (suggested layout in the table below, note the financial information is included in the financial model on the “BC options Appraisal” tab) and define which option is recommended to the programme/project board as the most appropriate, providing detailed rationale for the recommendation.

The financial data in the summary table is derived from the financial model options table; this is included in Appendix 1. Refer to this detailed table in your recommendations.

The overall risk rating is derived from the highest rating in the top 5 risks for each option. E.g. For the example under Option 1 above the overall risk would be 16 and Red.

Content guidanceIn this section define which of the above options is recommended to the programme/project board as the most appropriate. Provide rationale for the decision and include a summary of the investment required, anticipated benefits and financial and delivery risk.

Example wording is below

The recommended option XX requires an initial investment of £XX primarily relating to… to deliver the investment a programme/project team costing £XX over a XX year period is required.

The option is expected to deliver the highest/lowest level of income/cost of all of the options.

The anticipated benefits are … e.g. enables the following outcomes to be delivered…enables a reduction in FTE of XX through the elimination of XX. The benefits have been based upon …

Financially the recommended option provides an investment rate of return of X% which compares favourably to the target rate of XX%, giving a positive NPV of £X. For support with finance elements contact your Finance Business Partner


5. Implementation Strategy for the Preferred Option5.1 Implementation Approach

5.2 Procurement Approach

5.3 Assumptions, Dependencies and Risk Appraisal

5.3.1 Assumptions

5.3.2 Constraints

5.3.3 Dependencies and Interfaces


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Content guidanceFor the recommended option provide a high level description of the approach to the project.Define what the stages/phases are and what they will deliver to the project e.g. initiation, analyses, design, build, test, implement.

For example: The project planning stage will deliver a PID and a review of the existing service structure (as

is analysis). An external consultancy will be appointed to provide advice on service re-design.

Content guidanceInclude in this section, if applicable, the anticipated approach to any commissioning and Procurement activity, e.g. use an existing Leicestershire County Council contract, use of ESPO or National Framework arrangements, or formal tender process.

Social Value Act 2013 Consider the implications of this project in terms of Social Benefits for Leicestershire (both

positive and negative) Include reference to impact on SME’s where there is a Commissioning & Procurement activity as appropriate

Guidance on the corporate procurement policy and purchasing guide can be found on the CIS Procurement

Content guidanceExamples of possible project dependencies are as follows:

Result of a policy decision that has yet to be taken Funding decisions e.g. partnership or other external funding, departmental budget. Commencement or completion of another project or project deliverable Also include any projects or activities which are dependent upon this one being funded or

completed

An interface is something that may affect the project or be affected by the project. Often these are situations that need managing throughout the project to ensure that there is no adverse effect on delivery.

For example: The corporate review of office accommodation may result in the closure of project staff

office accommodation.

Content guidanceDetail the assumptions that have been made when scoping, planning, costing the project. Also consider any areas that are explicitly excluded from the project.

Content guidanceWhat are the main constraints (e.g. timescales, budget availability within a department or by central government, skills or capacity limitations?).

http://intranet/internal_services/procurement.htm


5.3.4 Risk Analysis

ID Risk Mitigation Current Risk Score

(Impact x

Financial Impact


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Content guidance

State any significant risks to the successful completion of the proposed project that can be identified at this stage. Explain delivery, financial and benefits risks e.g. consequences of delay, identify known variables such as fluctuating prices or demand, if grant funded, outline the risk of breaching funding conditions or risks associated with any procurement. The risk appraisal should also reflect any risk associated with the potential impact (e.g. equality/human rights, the cumulative impact on services users or employees, cultural and skills changes), assumptions, constraints and dependencies identified to date.

Briefly indicate the likely preventive or mitigating action and the risk score, based on the Corporate Risk Management Guidance, which can be found on the CIS Corporate Risk Management

Once the project is approved risks with a current rating of 10 or above must be recorded on the departmental risk register. Risks with a current rating of 15 or above must be escalated to the corporate risk register.In the financial impact column, indicate the financial consequence of the risk should it materialise (e.g. delay of this nature would add £x), this should be based on a realistic level of change (i.e. not worst or best imaginable). Where appropriate sensitivity analysis should be performed and included. The financial model will support this process and guidance is available in section 14 of the financial guidance.

http://intranet/internal_services/finance/risk_management_new.htm

http://intranet/internal_services/finance/risk_management_new.htm


Likelihood)

001 e.g. Insufficient resources to complete the project

Secure resources and monitor regularly, review project plan and schedule, reprioritise work

9

Project delay leading to loss of savings of

£x

002 e.g. May not meet legislative deadline.

Develop and monitor plan and key deliverables

15 Financial penalty of £X for every month of

delay

003 e.g. Predicted income levels over estimated

Undertake regular market testing, revise business case and model

15

Budget deficit of £x Year 1 and Year 2

5 Very High 5 10 15 20 25

4 High 4 8 12 16 20

3 Medium 3 6 9 12 15

2 Low 2 4 6 8 10

1 Negligible 1 2 3 4 5

1 Rare

2 Unlikely

3 Possible

4 Probable

5 Almost certain

5.3.5. Potential Opportunities

ID Opportunity ActionCurrent

Opportunity Score

Financial Impact

001 e.g. energy prices are estimated at Xp per unit, there is a reasonable possibility that energy prices may increase by XXp per unit over X period of time leading to an increase in financial benefits

Monitor energy prices

9

5.3.6 Contingency and Sensitivity


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Content guidanceContingency both within the project and on-going operational costs is required so that decisions are made on the likely cost/income rather than those just identified to date. Further guidance on how to set is available in section 13 of the financial guidance.

In this section explain the level of contingency e.g. 10% of project value (£ & %) and how this was set, particularly if this is different from the recommended guidance. The contingency should take into account the financial impact particularly of high risk areas identified.

Sensitivity analysis should be undertaken for projects with significant uncertainties and factors outside of management control as recommend in the Financial Guidance section 14. This will provide a possible range of costs and income rather than an absolute figure, and may be more appropriate in managing expectations and developing contingency around the preferred option.

The outcome of the analysis should be explained in the summary table below (The standard table is included in the financial model “BC Contingency and Sensitivity” tab). Include a reference to Appendix 1 where the detailed financial analysis and assumptions are displayed.

If there are significant risks in the baseline position i.e. Option 1 Do Nothing, sensitivity analysis may also be required to avoid flawed conclusions as to the benefits or otherwise of different options.

For support with finance elements contact your Finance Business Partner

Content guidanceIf there are potential opportunities that are being sought, but not committed to these can also be covered in the same way as the risks, using the likelihood and impact ratings to determine the score for each opportunity. (e.g. opportunities for cost avoidance, possible social value benefits) For support with recording potential opportunities contact Technical Accounting Team (Risk Management & Governance)

Likelihood

Impact


Sensitivity Analysis

Option presented

Expected Value

Variance Comments

Most Likely 100 120 20 Key drivers of the potential changeWorse 80 -20Better 140 40

5.4 Implementation Impact Analysis


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Content guidanceOutline the significant impacts this project may have on other projects and business as usual. Areas for consideration are:

People What will it mean for staff e.g. changes to structure, culture, ways of working Will staff from other departments be affected by the project What will be the impact on service users

Equalities and Human Rights (See CIS for further guidance on Equality & Diversity) Consider any major equality or human rights impacts the project may cause and the scope

for mitigating negative effects Which service user groups, employees, partners or other stakeholders e.g. voluntary group

will be affected and how.

Process What process will be impacted (at a high level) Will any change in process impact on other parts of the department or the organisation?

Information and Data Will the way information is managed change Is there a requirement to share information or data with partners Are there any new information or data requirements

IT Systems Will system(s) need replacing or updating Will existing links and interfaces be impacted

Policies Are there any policies that will need to be reviewed and amended

Organisation Will the project impact on other parts of the organisation How will the project impact on the organisation and/or partnerships

Environmental Highlight the environmental implications of the project, both positive and negative.

An Environmental Implications Tool (EIT) is available for evaluating the potential impacts of the project on the Council’s Environmental Strategy objectives and the Sustainable Community Strategy objectives. The use of the EIT is a mandatory component of the Business Case Guidance for all projects classified as Major Projects, as agreed by CMT on 7th May 2009. This is defined as:

Having an investment or contract value (if procurement project) of £250k or more; and/or Is ‘high’ risk; and/or Is highly complex Is of strategic importance; and/or Is leading delivery of significant improvement

http://intranet/us_and_partners/equality_and_diversity.htm


5.5 Implementation Plan

5.6 Resource Plan

Resource Type Resource Requirement

(Effort)

Resource Requirement

(Duration)

Budget Requirement

£

Comments

Operations/Service

Information/Data Management

Human Resources

Training/workforce development

Change Management Inc. Cultural Change & Business Readiness


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Content guidanceThis section should be used to give an indication of timescales and of likely involvement of any significant resource groups. Indicate any points (milestones/activities on the critical path) in the plan that should be drawn to the attention of the Project Board

Content guidanceThe Business Case is about the justification to do the project. Understanding the necessary resources is fundamental to this and while some initiatives may only need those under control of the Project Board, other projects have wider demands.

Whichever is the case, list all the anticipated resources required to deliver the project, outlining the timescales. Below is a suggested list for you to amend accordingly. The financial guidance includes a section outlining which resources should have a financial impact included in the financial appraisal. A suggested table format is included below.


Communications, Consultation and Engagement

Project Management & Support

ICT Design, Development, Test

Business Analysis, Systems & Processes

Commissioning &Procurement

Data/research & Insight

Community Development/Capacity Building

Legal

Other (specify)

5.7 Key Stakeholders

Who are they? Why do they have an interest in the project?

What level of influence will they have on the success of the project?(H,M,L)

5.8 Governance

Role Responsibility Recommendation

Rationale

Reporting Board/Programme

A decision making body and will take overall responsibility for the effective running of the project:

Project Sponsor/Executive

Chair of the project board and is ultimately accountable for the success of the project, including benefits realisation and project


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Content guidanceThis section should be used to provide a recommended project governance model. Guidance on Project and Programme roles is available on the CIS Project Board Terms Of Reference

Content guidance

Identify key stakeholders, who need to be involved, engaged, and/or consulted and why. A suggested table format is included below.

http://lccedrms4:8087/Intranet%20File%20Plan/Document%20Store/Document%20Repository/Awaiting%20Publication/CMU%20Project%20Board%20Terms%20Of%20Reference%20Template%20v1.1.doc


decisions that are made.

Senior User (client) Accountable for ensuring that requirements are fully and accurately specified making sure that what is delivered is fit for purpose and that the solution meets users’ needs.

Senior Supplier Accountable for the quality of the products delivered by the project team. They must have authority to commit or acquire supplier resources as required.

Project Manager Responsibility is to ensure the project delivers the agreed deliverables to the required quality standard and within the specified constraints of time and cost.

Project Assurance Provides the check that the project continues to meet its specification, the required standards and the business case

5.9 Costs, Savings and Funding Summary

5.7.1 Savings Analysis

Current Expenditure Saving

Description £ ‘000s £ ‘000s % Enabler

e.g. Team X 200 Resource savings across the team from automation of manual tasks

e.g. System Y 50 Decommission system Y saves annual license costs

5.7.2 Cost Analysis


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Content guidanceInclude in this section the costs and savings summary for the preferred option, which can be derived from the financial model. The savings analysis should explain what change is directly enabling the saving e.g. reduction in FTE of X., reduction in IT licences of Y…

Contact your Finance Business Partner if your require support with the development of the financial summary and the application of financial analysis tools.

Content guidanceInclude the table (example below) from the financial model (the standard table is included on the “BC Cost savings and funding” tab) and explain any large expenditure items that have not been covered in the implementation and procurement approach sections above.Contact your Finance Business Partner if your require support with the development of the financial

summary and the application of financial analysis tools.


Prefered Option versus BaselineY1 Y2 Y3 Ops Y1 Ops Y2 Ops Y3 Ops Y4 Ops Y5 Project Estimate Total

Category Project - Number of FTE Operations - Number of FTE Savings

InternalContractorsNo Financial ImpactTotal FTE

Project Cost '000s Savings Estimate (Operation) '000s Project Operation TotalInternalContractorsPropertyTrainingICT SoftwareICT InfrastructureCapital CostsInternalContractorsPropertyTrainingRedundancyConsultancyTransportSupplies & ServicesRevenue CostsStaffi ngRunning CostsIncomeContingency

External Income

Total Cash Flow - (LCC)Cumulative Cash Flow - (LCC)

NPVIRR No ReturnIndexPayback no payback years

5.7.3 Project Funding

Prefered Option versus BaselineSavings

'000s Y1 Y2 Y3 Ops Y1 Ops Y2 Ops Y3 Ops Y4 Ops Y5 Project Estimate TotalRevenue budgetReserves / Capital Disposals (ops)Borrowings / Repayments (ops)Funding Available

Funding RequiredTo Find / saving estimate

Project Cost Savings Estimate (Operation)


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Content guidanceInclude the table (example below) from the financial model (the standard table is included on the “BC Cost savings and funding” tab). Explain the known investment funding; focus on any borrowing requirements, income generated (e.g. capital receipts) and partnership agreements.

Key grant conditions should be included; particularly any contingent liabilities e.g. claw back. For partnerships outline the agreement, particularly how over and under spends will be dealt with.

Explain the on-going MTFS position and if cash savings will be different to MTFS savings, e.g. resolution of an overspend.Contact your Finance Business Partner if your require support with the development of the financial



6. Conclusions and Recommendations


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7. APPENDIX 1 – Financial Assumptions and Analysis

7.1 Financial Assumptions

Description £ Basis & source of estimate

e.g. Project Manager for 3 months

£20,000 Assumed internal resource, similar duration to project X

ESPO Procurement Costs £17,000 ESPO Business Proposal for undertaking this project

7.2 Investment Analysis

Y1 Y2 Y3On Going

P/A NPV IRR Index Payback

Baseline £0.0 £0.0 £0.0 £0.0

Option 1 £0.0 £0.0 £0.0 £0.0 £0.0 £0.0 No Return 0.00 no payback years




Ratio vs Base'000s

Operational Net Cost/IncomeProject

Investment


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Content guidanceInclude detail of any financial assumptions made and provide and explanation of the source of the assumption.Contact your Finance Business Partner if your require support with the development of the financial


Content guidanceInsert the investment analysis table (example below) from the financial model (the standard table is included on the “BC appendix 1” tab).Contact your Finance Business Partner if your require support with the development of the financial



7.3 Full Sensitivity Analysis

Option 1 Assumption Change % Change '000s Probability Variance '000s Expected

Sensitivity Description of Group Description of Sensitivity Worse Better Worse Better Worse Better Most Likely

Worse Better Total Value

A 100%B 100%C 100%D 100%E 100%F 100%

Balance 100%Sub Total Sub Total Sub TotalManual 1 100%Manual 2 100%

Total £0.0 £0.0 Total £0.0 £0.0 £0.0 £0.0

Original Worse Better Most Likely

EV NPV '000s £0.0 £0.0 £0.0 £0.0Variance to Original '000s £0.0 £0.0 £0.0

Variance to Baseline '000s £0.0 £0.0 £0.0 £0.0

OR

Option 1 Total '000s

Sensitivity Description of Group Description of Sensitivity Cashflow NPV Break Even %

Comments

ABCDEF

Balance£0.0 £0.0


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Content guidanceInsert the full sensitivity or break even analysis table (examples below) from the financial model (the standard tables are included on the “BC appendix 1” tab). Contact your Finance Business Partner if your require support with the development of the financial summary and the application of financial analysis tools.


8. APPENDIX 2 – Project Prioritisation Assessment CriteriaContribution Criteria Low Contribution - 0 Medium Contribution - 5 High Contribution -10 Principle Validation Source(s)Benefits Financial

Size of savings delivered, with a financial return on the investment made.Strength of evidence for cost/income projections.Change in financial risk following the change.

Savings or cost avoidance does not justify the investment made (never paid back)

Project & proposed outcome could significantly increase the level of financial risk, i.e. greater potential for uncontrollable financial variability.

Serious concern over the quality of costs/income projections used to justify the investment

Reasonable level of savings expected (>£50k) and the investment justified (NPV better than zero).

Project & proposed outcome has minimal effect on the level of financial risk/opportunity.

Good supporting evidence for cost/income projections. Uncertainties could worsen but not completely undermine the projections.

High levels of savings or cost avoidance expected (>£250k) and the return on investment is better than average.

Potential financial opportunities at least offset risks. Hence the financial risk is expected to reduce as a result of the change or possible additional benefits could be secured.

Strong supporting evidence for cost/income projections, with minimal change expected.

Project Brief(PB) Current Expenditure Expected Investment Expected Benefit Risk appraisalBusiness Case (BC) Financial Model Recommended Option Investment required Financial benefits Risk analysis

Benefits Strategic Alignment – to corporate vision, six strategic imperatives, target operation model or other corporate strategies e.g. ICT, Property, People

There is little evidence to support that is aligned with strategic priorities

There is evidence to support that is aligned with strategic priorities

There is strong it evidence to support that is aligned with strategic priorities

Project Brief(PB) Aims & Objectives BenefitsBusiness Case (BC) Project Mandate Benefits Aims & Objectives Recommended Option


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Contribution Criteria Low Contribution - 0 Medium Contribution - 5 High Contribution -10 Principle Validation Source(s)Legal Statutory –

required to meet change in legal duty

There is no statutory requirement

This is responding to a statutory requirement but this is not imminent or could be delivered another way

This is responding to a statutory requirement and cannot be achieved another way and is imminent

Project Brief(PB) Aims & Objectives BenefitsBusiness Case (BC) Project Mandate Background Recommended Option

Service Disruption, Performance and Delivery

Tactical – will provide flexibility in future or there is a limited window of opportunity

There is no tactical imperative

Some evidence that without the project there will be an impact on current and/or future service performance

Strong evidence that without the project there will be significant impact on current and/or future service performance. Or there is a limited window of opportunity.

Project Brief(PB) Benefits Aims & ObjectivesBusiness Case (BC) Recommended Option Benefits Aims & Objectives

Urgency Enabler/Critical Dependency - required/key dependency to enable savings, cost avoidance and/or strategic alignment

There is little evidence to support that this is a key enabler or is critical dependency

There is evidence that this is an enabler and/or dependency but not for high priority projects or statutory requirement

There is strong evidence that this is an enabler and is a critical dependency for high priority project(s) or statutory requirement

Project Brief(PB) Aims & Objectives BenefitsBusiness Case (BC) Benefits Recommended Option

Confidence Delivery Risk – extent to which there is a clear delivery plan and confidence of achievability

No clear project plan in place and/or delivery mechanism is unclear

Project plans are mostly in place and any delivery issues are believed to be manageable

The project has robust plans in place and there are sound reasons to believe delivery performance will be good

Project Brief(PB) Plan Risk Appraisal Assumptions DeliverablesBusiness Case (BC) Recommended Option Implementation Approach Resource Plan Risk & Impact Analysis


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Project Prioritisation - Evaluation

Project Name:

Department: Service / Section:

Key Contact Name: Contact Details:

Evaluation Date: Evaluated By:

Contribution Criteria Score Rationale

Benefits

Strategic Alignment – to corporate vision, six strategic imperatives, target operation model or other corporate strategies e.g. ICT, Property, People

Financial Benefits

Size of savings delivered, with a financial return on the investment made.Strength of evidence for cost/income projections.Change in financial risk following the change.

Legal Statutory – required to meet change in legal duty

Service Disruption, Performance and Delivery

Tactical – will provide flexibility in future or there is a limited window of opportunity

UrgencyEnabler/Critical Dependency - required/key dependency to enable savings, cost avoidance and/or strategic alignment

Confidence Delivery Risk – extent to which there is a clear delivery plan and confidence of achievability

Total Score 0


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CMU Business Case Template - leicscc.axlr8.uk Response 3 … · Web view8 Business Case Final...

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