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Contents

Introduction to Business Case ..................................................................................................... 1

What is the Five Case Model? ......................................................................................................1

Multiple Choice Questions 1: ...................................................................................................... 5

The Business Case Development Process .................................................................................... 7

The Business Case Development Framework .............................................................................. 7

Determining the Strategic Context and Undertaking the Strategic Assessment .......................... 8

Programme and Project Management Methodologies (PPM) .................................................. 11

The Use of Workshops for the Development of the Business Case ............................................. 12

Critical Success Factors (CSFs) ................................................................................................... 15

Multiple Choice Questions 2: .................................................................................................... 17

Mitigating Common Causes of Failure ........................................................................................ 19

Estimating Benefits for the Economic Appraisals ...................................................................... 23

Introduction to Business Case

Evaluations should be initiated and performed in a broader business case. Business cases should give appraisals of strategic fit, options appraisal, achievability, value for cost, and affordability. A business case should include an economic appraisal and other data involving the intended arrangements for finance, management, marketing, procurement, monitoring, and evaluation of the appropriate policy, programme, or project. The effort to be put into business cases should be in proportion to the scale and value of the proposal. The documentation of the business case is required at different stages to inform the key decisions. The business case document should be used as a living document, to be returned and updated regularly as information and assumptions are developed and refined prior to each key decision point, it is not just provided for ideas of getting approval and then organised. The terms business case and business plan are not interchangeable. DoF uses the latter term in the context of financially‐assisted or commercially oriented projects, for which a business plan is required in addition to an economic appraisal to build project viability. The development of the business case for any project should be a constant process from beginning to implementation. Proportionate and relevant effort should be implemented in all cases.

What is the Five Case Model? Let us understand these cases one by one.

1. Strategic Case

The aspect of this case is to answer if the project is applicable. The running projects should be aligned to their strategic objectives. As there is no point in making an investment in a project that is not going to bring about benefits that will help you to deliver its strategic objectives. The Strategic Case is to ensure that the investment made will allow you to deliver the required benefits. This case also necessitates the spending authority to demonstrate that the spending proposal has clear and concise spending objectives, which are Specific, Measurable, Achievable, Relevant, and Time constrained (SMART).

2. Economic Case

This case looks to respond if the project is appropriate. The selected option needs to make sense. If your business is planning to make an investment you should know that it will be money well spent and that by spending this money it will add value. The Economic Case will ensure that the project will provide that Value for Money (VfM).

3. Commercial Case

It looks to respond if the project is attractive. If you are going to deliver the project you will need someone to deliver the outputs that can be used to positively deliver the benefits. Your business desires to ensure that the potential deal will be attractive to suppliers but also that it will be a good deal for your own business.

© The Knowledge Academy 2020 1

The Commercial Case looks to assure this by making you emphasise on a procurement strategy that works for both customer and supplier.

4. Financial Case

It's purpose is to demonstrate the project's affordability. An investment might look to deliver VfM but you must be able to afford the investment. It is ok to say that if we spend a million pounds, we will get back two million pounds in benefits so the project provides value for money but what you also need to know is that you have the million pounds to spend in the first place! The Financial Case looks to assure that you have the essential funding to pay for the project.

5. Management Case

This case looks to answer is the project achievable. There is no point initiating a project that has a good solid strategic, economic, commercial, and financial case if we then don’t manage it properly. Your project needs to have the suitable strategies and plans in place to express that it can be managed efficiently. The management case looks to ensure all the suitable strategies and plans are in place to manage the project efficiently.


Multiple Choice Questions 1:

1. In a Five case model, which of the following case looks to answer is the project achievable?

a. Financialb. Strategicc. Commerciald. Management

2. Commercial Case looks to answer__.

a. Is the project affordable?b. Is the project appropriate?c. Is the project attractive?d. Is the project achievable?

3. The terms business case and business plan are interchangeable.

a. Trueb. False

4. The economic case will ensure that the project will provide the _______.

a. Cost for moneyb. Value for moneyc. Value for investmentd. None of these

5. What does R stands for in SMART goals?

a. Relevantb. Resourcec. Rightd. Revision


The Business Case Development Process

It includes the overview of business case development process for large, medium, and small spending proposals using the Five Case Model methodology and how it aligns with the Gateway Process for the review and assurance of policies, programmes, and projects The business case for significant spending proposals is developed in three key stages as follows: Determining the strategic context for the project Stage 1 – Scoping the scheme and preparing the Strategic Outline Case (SOC) Stage 2 – Planning the scheme and preparing the Outline Business Case (OBC) Stage 3 – Procuring the solution and preparing the Full Business Case (FBC)

The Business Case Development Framework

For large and medium scale public sector spending proposals that are needs to be procured competitively as per the appropriate procurement legislation, the above stages involve 10 key steps, as described below:

Determining the Strategic Context and Undertaking the Strategic Assessment Step 1: Determining the strategic context Gateway 0: Strategic assessment

Stage 1 – Scoping the scheme and preparing the Strategic Outline Case (SOC)

Step 2: Making the case for change Step 3: Exploring the preferred way forward Gateway 1: Business justification

Stage 2 – Planning the scheme and preparing the Outline Business Case (OBC) Step 4: Determining potential Value for Money (VfM) Step 5: Preparing for the potential Deal Step 6: Ascertaining affordability and funding requirement Step 7: Planning for successful delivery Gateway 2: Delivery strategy

Stage 3 – Procuring the solution and preparing the Full Business Case (FBC) Step 8: Procuring the VfM solution Step 9: Dontracting for the Deal Step 10: Ensuring successful delivery Gateway 3: Investment decision

Implementation and Monitoring Gateway 4: Readiness for service

Evaluation and Feedback Gateway 5: Operations review and benefits realisation

Determining the Strategic Context and Undertaking the Strategic Assessment This is the strategic planning phase of the spending proposal that authorises the strategic alignment of the project.


The aim of this stage is to assess the strategic context for the project and to demonstrate how it provides holistic fit and synergy with other programmes and projects within the strategic portfolio to support the organisation’s business strategy. This stage aligns with Cabinet Office Gate Review point 0 (strategic assessment) and comprises of the following business case development activity:

Step 1: Determining the Strategic Context Early indications that the project is still needed and approved in principle are: o The successful completion of a Cabinet Office Project Validation Review for the schemeo The existence of an up‐to‐date and approved organisational strategy and supporting

portfolio of which the project is a parto The completion of feasibility and full studieso The existence of an approved Programme Business Case, where the project is not

standalone and forms part of the programme.

Stage 1 – Scoping the Scheme and Preparing the Strategic Outline Case (SOC) This is the scoping phase for the project, which results in the production of the Strategic Outline Case (SOC). The aim of this stage is to reaffirm the strategic context for the project, as this may have changed if some time has elapsed since the strategic assessment was undertaken; to make the case for change and to determine ‘the preferred way forward’.

Recognising the ideal way forward is achieved in two stages: first, by appraising a wide range of possible options (‘the long‐list’”) against the spending objectives and critical success factors for the project; and second, by calculating the indicative Net Present Values of a reduced number of possible options (‘the short‐list’) on the basis of a preliminary analysis of their costs and benefits, including optimism bias for uncertainty.

This stage aligns with the Cabinet Office Gateway Review point 1 (business justification) and comprises of the following business case development activities: Step 2: Making the case for change Step 3: Exploring the preferred way forward.

Stage 2 – Planning the Scheme and Preparing the Outline Business Case (OBC) This is the planning phase for the project, which results in the production of the Outline Business Case (OBC). The aim of this stage is to revisit the options identified in the SOC, to recognise the option which optimises public value (‘the preferred option’) following more detailed appraisal; and to set out the possible deal while confirming affordability and putting in place the management arrangements for the successful delivery of the project.

This stage aligns with the Cabinet Office Gateway Review point 2 (delivery strategy) and comprises of the following business case development activities: Step 4: Determining potential VfM Step 5: Preparing for the potential Deal Step 6: Ascertaining affordability and funding requirement Step 7: Planning for successful delivery


Stage 3 – Procuring the Solution and Preparing the Full Business Case (FBC) This is the procurement phase for the project, which results in the Full Business Case (FBC), follows negotiations with potential service providers prior to the formal signing of the contract(s). The purpose of the FBC is to record the findings of the procurement phase and to identify the option that offers the ‘Most Economically Advantageous Tender’ (MEAT) and best public value. Additionally, the FBC records the contractual arrangements, confirms affordability and puts in place the agreed management arrangements for the delivery, monitoring, and post‐evaluation of the project. This stage aligns with the Cabinet Office Gateway Review point 3 (investment decision) and comprises of the following business case development activities: Step 8: Procuring the VfM solution. Step 9: Contracting for the Deal. Step 10: Planning for successful delivery.

Implementation and Monitoring The business case should be used as a reference point for logging any material changes that are required by the procuring authority or the service supplier in respect of services and products. The management tools developed in support of the project business case should be used to deliver and monitor progress and provide the basis for regular reports to the Project Board. This includes use of the project implementation plan, and benefit and risk registers. This stage of the project aligns with Cabinet Office Gateway Review point 4 (readiness for service).

Evaluation and Feedback The business case and its supporting products should be used for post evaluation. This includes the Project Implementation Review (PIR) for assessing how well the project was delivered and lessons learnt, and the Post‐Evaluation Review (PER) for evaluating the extent to which the anticipated benefits were delivered. This stage of the project aligns with Cabinet Office Gateway Review point 5 (operations review and benefits realisation).


Programme and Project Management Methodologies (PPM)

The policies, programmes, strategies, and projects within an organisation should be in association and the ‘critical path’ for deliverables and delivery timescales understood and documented by qualified practitioners using a standard PPM methodology and best practice tools and techniques as follows:

Component Deliverables Best practicedocumentation

Policy Clear goals Policy Statement

Strategy Long term aims Implementation strategy Portfolio of Programmes

Programme Medium term outcomes

Programme Business Case/SOP Blue Print

Project Short term outputs

Business Case – SOC, OBC, FBC or BJC

This requires the use of:

1. Clear, brief, and detailed policy statements.2. Thorough implementation strategies for the internal management and control of

published business plans and business strategies.3. A professionally documented methodology for the delivery of portfolio of programmes

within the published business strategy.4. A standard (professionally) methodology for the delivery of the individual programmes

within the portfolio. The suggested standard to use in the UK public sector is Managing Success Programmes (MSP). This provides the blue print crucial in support of the Programme Business Case, which is similar to the Strategic Outline Programme (SOP).

5. A business case prepared in agreement with the five case model6. Using a professionally documented methodology for the delivery of the project/scheme.

The suggested standard for use in the UK public sector is PRoject IN a Controlled Environment (PRINCE2). Note that the PRINCE2 business case is for the initiation and approval for the creation of the project rather than scoping, planning and cost justifying the way forward. These two products should not be confused

The Use of Workshops for the Development of the Business Case

Experience validates that the business case is best developed by a number of workshops involving key stakeholders, customers, and users, at the critical phases of its development.

This adds immeasurably to the robustness of the case and, consequently, to the approval

and successful delivery of the scheme.

The total number of workshops needed will depend on the complexity of the project.


In most examples they are required to ‘close‐off’ the below aspects:

1. Developing the case for change2. Assessing the options3. Developing the reference project/ outline Public Sector Comparator (PSC)4. Developing the deal5. Determining the delivery arrangements6. Assessing the potential service providers and solutions

The detail is as follows:

Workshop Objectives Key Participants Outputs

Workshop 1: Determining the case for change and options for service delivery (SOC Stage).

To define and agree business needs, potential scope andspending objectives; To define and agree desired outcomes and service outputs; To define and agree the CSFs and benefit criteria for assessing the options; To identify the potential options for service delivery.

Senior Responsible Owner; Board members;Programme director; Project manager; External stakeholders or commissioners; Customer and/or user representatives; Technical adviser; Financial adviser; Facilitator.

SMART spending objectives; Business needs and potential scope; CSFs and benefits criteria; Long list of options; Fundamentals of the SOC.


Workshop 2: Assessing the options (SOC/OBC stage).

To sift the long list and generate the short list; To identify and assess the potential costs, benefits and risks associated with the short‐listed options.

External stakeholders or commissioners; Director of finance; Economic adviser; Customer and/or user representatives; Project manager; Facilitator.

Short‐listed options with preliminary assessment; Outline benefits realisation plan; Inputs for economic appraisal.


Workshop Objectives Key Participants Outputs

Workshop 3: Developing the reference project/ outline PSC (OBC stage).

To develop the PSC; To address all relevant issues, including risks, affordability and implementation.


Preliminary PSC with indicative costs; Fundamentals of the economic and financial cases.

Workshop 4: Developing the deal (OBC stage).

To develop the service specification; To develop the apportionment of risk and underpinning payment mechanisms; To develop the proposed contract.


Preliminary Risk Allocation Matrix (RAM); Potential deal; Fundamentals of the commercial case.

Workshop 5: Successful delivery arrangements (OBC stage).

To develop the procurement strategy; To develop the project plan; To develop supporting strategies (for change management and contract management etc).


Procurement strategy; Management and delivery arrangements; Post project evaluation arrangements.

Critical Success Factors (CSFs)

By definition, the Critical Success Factors (CSFs) are the attributes essential to the successful delivery of the scheme, against which the available options are assessed. Alongside the assessment against CSFs is the assessment of how well the options meet the scheme’s spending objectives and benefits criteria.

CSFs will invariably differ from project to project, both in content and relative importance; but the key point is that they must be crucial (not desirable) and set at a level which does not exclude important options.

As a starting point, projects could consider the following, which are predicated upon the ‘Five Case Model’:

Key CSFs Broad Description

Strategic fit and business needs

How well the option: Meets agreed spending objectives, related business needs and service requirements provides holistic fit and synergy with other strategies, programmes and projects.

Potential VfM How well the option: Maximises the return on the required spend (benefits optimisation) in terms of economy, efficiency and effectiveness from both the perspective of the organisation and wider society minimises associated risks.

Potential achievability

How well the option: Is likely to be delivered in view of the organisation’s ability to assimilate, adapt and respond to the required level of change matches the level of available skills which are required for successful delivery.

Supply‐side capacity and Capability

How well the option:


Matches the ability of the service providers to deliver the required level of services and business functionality appeals to the supply‐side.

Potential affordability

How well the option: Meets the sourcing policy of the organisation and likely availability of funding matches other funding constraints.


Multiple Choice Questions 2:

1. Which of the following is Stage 3 among the key stages of business casedevelopment process?

a. Planning the scheme and preparing the Outline Business Case (OBC)b. Procuring the solution and preparing the Full Business Case (FBC)c. Scoping the scheme and preparing the Strategic Outline Case (SOC)d. Determining the strategic context and preparing the Strategic Outline Programme (SOP)

2. Which of the following are the outputs of Workshop 4 Developing the deal (OBCstage)?

I. Preliminary riskII. Procurement strategies

III. Preliminary Risk Allocation matrix (RAM);IV. Potential deal

a. i and ivb. ii and ivc. i, ii and iiid. i, iii and iv

3. The _____________ are the attributes essential to the successful delivery of thescheme, against which the available options are assessed.

a. Procurement Factorsb. Critical Success Factorsc. Key Performance Indicatorsd. Allocation Matrix

4. As per PPM, which of the following is best practice documentation of a project?

a. Implementation strategyb. Portfolio of Programmesc. Business Case – SOC, OBC, FBC or BJCd. Policy Statement

5. Determining the case for change and options for service delivery (SOC Stage)relates to which workshop?

a. Workshop 1b. Workshop 2c. Workshop 3d. Workshop 5


Mitigating Common Causes of Failure

The following are common causes of project failure along with questions to be answered in terms of their mitigation have been recognised by the National Audit Office and the Office of Government Commerce.

Common causes of project failure

Stage Questions to be answered

1. Lack of clear links between theproject and the organisation’skey strategic priorities, includingagreed measures of success

SOC Do we know how the priority of this project compares and aligns with our other delivery and operational activities? Have we defined the Critical Success Factors (CSFs) for the project? Have the CSFs been agreed with the key stakeholders? Is the project founded on realistic timescales taking into account any statutory lead times, and showing critical dependencies such that any delays can be handled?

OBC Are the lessons learnt from relevant projects being applied? Has an analysis been undertaken of the effects of any slippage in time, cost, scope or quality? In the event of a problem/conflict at least one must be sacrificed.

FBC Have the CSFs been agreed with the service provider(s)? Do we have a clear project plan that covers the full period of the planned delivery and all business change required, and indicates the means of benefits realisation?


2. Lack of clear seniormanagement andministerial ownership andleadership

SOC Does the project management team have a clear view of the inter‐ dependencies between projects, the benefits, and the criteria against which success will be judged? If the project traverses organisational boundaries are there clear governance arrangements to ensure sustainable alignment with the business objectives of all organisations involved? Are all proposed commitments and announcements first checked for delivery implications? Does the Senior Responsible Owner (SRO) have a suitable track record of delivery? Where necessary, is it being optimised through development and training?

OBC Are decisions taken early on, decisively and adhered to, in order to facilitate successful delivery? Does the project have the necessary approval to proceed from its nominated Minister either directly or through delegated authority to a designated SRO?

FBC Does the SRO have the ability, responsibility and authority to ensure that the business change and business benefits are delivered?

3. Lack of effectiveengagement withstakeholders

SOC Have we identified the right stakeholders?


Have we, as intelligent customers, identified the rationale for doing so (for example, the why, the what, the who, the where, the when and the how)? Have we secured a common understanding and agreement of stakeholders’ requirements? Does the business case take account of the views of stakeholders, including customers/users?

OBC Do we understand how we will manage stakeholders (for example, ensure buy‐in, overcome resistance to change, allocate risk to the party best able to manage it)? Has sufficient account been taken of the subsisting organisational culture?

FBC Whilst ensuring that there is clear accountability, how can we resolve any conflicting priorities?

4. Lack of skills and provenapproach to project managementand risk management

SOC Is there a skilled and experienced project team with clearly defined roles and responsibilities? If not, is there access to expertise, which can benefit those fulfilling the requisite roles?

OBC Are the major risks identified, weighted and treated by the SRO, the director, and project manager and/or the project team? Has sufficient resource, financial and otherwise, been allocated to the project, including an allowance for risk?


Do we have adequate approaches for estimating, monitoring and controlling the total amount of expenditure on projects? Are the governance arrangements robust enough to ensure that ‘bad news’ is not filtered out of progress reports to senior managers? If external consultants are used, are they accountable and committed to help ensure the successful and timely delivery?

FBC Do we have effective systems for measuring and tracking the realisation of benefits in the business case?

5. Too little attention to breakingdevelopment andimplementation into manageablesteps

OBC Has the approach been tested to ensure that it is not ‘big bang’ (for example, IT enabled projects)? Has sufficient time been built in to allow for planning applications in property and construction projects etc.? Have we done our best to keep delivery timescales short so that change during development is avoided? Have enough review points been built in so that the project can be stopped if changing circumstances mean that the business benefits are no longer achievable or no longer represent Value for Money (VfM)?

FBC Is there a business continuity plan in the event of the project delivering late or failing to deliver at all?


6. Lack of effective projectteam integration betweenclients, the supplier team andthe supply chain

OBC Has a market evaluation been undertaken to test market responsiveness to the requirements being sought? Are the procurement routes that allow integration of the project team being used? Is there early supplier involvement to help determine and validate what outputs and outcomes are being sought for the project?

Has a shared risk register been established? Have arrangements for sharing efficiency gains throughout the supply team been established?

Estimating Benefits for the Economic Appraisals

The aim of valuing benefits is to discover whether benefits of an option are worth its costs, and to permit alternate options to be compared systematically in terms of their net benefits or costs. All benefits must be quantified carefully, wherever possible; and that the economic appraisals should take these into account from the perspective of society as a whole ‐ the public, private, and third sectors is the ‘golden rule’. The benefits for spending usually fall into four main categories:

Cash Releasing Benefits (CRB). These benefits decrease the costs of organisations in a way that the resources can be re‐allocated elsewhere. This usually means that an entire resource is no longer needed for the task for which it was previously used. This can be staff or materials/assets.

Financial but non‐Cash‐Releasing Benefits (non‐CRB). This usually involves reducing the time that a specific resource takes to do a specific task; but not adequately to re‐allocate that resource to a completely different area of work.

Quantifiable Benefits (QB). These are the benefits that can be quantified, but not always easily. The degree to which QBs are measured will depend on their importance. Though, as a general rule all the efforts should be made to quantify benefits financially wherever possible and proportionate to do so.

Non‐Quantifiable Benefits (non‐QB). The Qualitative Benefits, which are of value to the public sector that cannot be quantified.


Sample Exam

Project Scenario

Seatown Transformation

Seaboro County is a largely rural area of 250 square kilometres, with 30 kilometres of coastline around the Seaboro Bay. It has a catchment population of circa 350,000. Bartlett City (population 140,000) is the major urban area. The Wider West Development Agency (WWDA) has recently agreed that the complete redevelopment of the Seatown area of Bartlett City is one of its primary aims. Within 15 years the WWDA plans to deliver a programme of change to support the local authorities in transforming the Seatown area. The focus will be on the area’s potential for leisure and tourism. The next step is to develop, with strategic partners (i.e. Bartlett City Council and the Seaboro County Council), a Seatown Transformation Programme. This will include planning the first major works project in the area. When the Seatown Transformation Programme is complete, the area will comprise of the following:

The major leisure area for Bartlett City, and a significant tourist and leisure attraction forthe wider region

Housing for 9,000 residents in 5,000 homes

An attractive area for businesses to settle and develop

An attractive, modern environment that has retained links with its rich history as a port.

The area will offer permanent employment for 10,000 people, served by an accessible and integrated transport system.

The Seatown Area

Historically, Seatown was a significant port with several cargo ships docking each week. Seatown imported raw materials for the local paper mills and other factories within the region, and it exported finished products. The port built up along the side of the small harbour which has for centuries been the home of many small fishing vessels.

In recent times, the traditional industries in the area have largely disappeared and the port no longer operates commercially. A number of buildings in the oldest Paper Mill, Grand Mill (circa 1890), now house small‐scale light industry (including a laundry, a print company and a vehicle body shop). Although some of the buildings are architecturally interesting they are generally in poor condition. The site of the other major Paper Mill, Parchment Place, is now unoccupied and in a state of disrepair.

The port area is run down, and the wharf buildings have been abandoned for many years. Vandalism is an ongoing problem. The harbour continues to provide moorings for smaller boats. The harbour’s attractive landmark lighthouse (not used for eighty years) continues to provide a focal point for local residents and the occasional visitor.


In Seatown’s peak period in the first half of the 20th century, many houses were built to accommodate the local working population. As the availability of jobs has diminished, many people have moved away and the population is now less than two thousand. Many of the older, less substantial, properties have been demolished and some areas are in a poor state of repair Portway Road, a straight kilometre‐long road, connects the port area to the city’s road infrastructure. The road provides good access to the proposed development area and the land either side would be suitable for development. There is an unused railway line that has the potential to link the port to the Central Station.

Seatown Transformation

The WWDA and strategic partners have a broad outline plan designating potential areas for residential, leisure and commercial development. They have also determined a list of the potential developments they would like to see in the area.

These include:

A pedestrian only area with restaurants and bars overlooking the bay

A leisure complex with multi‐screen cinema and other leisure facilities,

including restaurants and bars

A landmark regional theatre

A leisure facility with an educational focus, ideally relating to the history of the area

A retail area with 20–30 units

Two or three hotels

An arts and crafts centre

Five or six office developments, one of which would provide for the relocation of

the Seaboro County Council main offices

Five or six major residential developments

Conversion of the harbour to a marina

Re‐opening of the railway line, new bus routes, road and parking infrastructure.

In light of the plans for the area, a developer has purchased a fifteen‐acre plot adjacent to

Portway Road. The developer is planning a residential development of 300 homes, with a

potential expansion to 750 apartments and houses. The Seaboro County Council (SCC) has

scheduled work on widening Portway Road, and adding high quality street lighting and

other attractive features.

The SCC is developing a business case for the relocation of their main offices. They are looking

at several plots as potential options.

At the heart of the transformation, programme is the redevelopment of the quayside to the

east of the harbour. This will become a pedestrian area with restaurants, bars, and possibly

some retail outlets. This will be coupled with the conversion of the harbour to a marina. Given

the complexity of the scheme, it is estimated that it will take five or six years to make this a

reality. The WWDA and strategic partners believe that it is important for an early project with

a focus on leisure to be started as soon as possible. This is so that within three years a

substantial development will be in place. It has been agreed that the focal point for this

development will be a Regional Theatre. © The Knowledge Academy 2020 20

The Regional Theatre Project

The proposed theatre will be a landmark facility for Seaboro County and the Wider West Region. There are no major theatres in the Wider West Region. It will need to be a development appropriate to a catchment area of 800,000 people if it is to attract national touring shows and acts.

The theatre complex will be a permanent base for four regional and local operatic, drama and dance groups. These groups are employed and have small offices in various buildings in Bartlett. The groups currently perform at the 250 seat Old Theatre in the city centre and in community halls in the wider Seaboro County area.

Given the civic nature of the proposal, a development offering a wider educational role beyond its entertainment remit would be favourable if it could be achieved. There is also a suggestion that the proposed art & craft centre would be a complimentary addition to the theatre development. This suggestion needs considering, as well as the need for catering and retail facilities.

The creation of permanent jobs will be an important feature of the Regional Theatre project. It is assumed that at least 3% of the fifteen‐year employment target can be achieved within a year of the project’s completion.

The real measure of success will be attracting satisfied visitors to Seatown. In five years’ time, it is hoped that 900,000 visits a year will be made to the theatre precinct. It is believed that this will be achievable due to the added attraction of the marina and quayside restaurants and bars. The expectation for the stand‐alone theatre is 600,000 visits within two years of opening.

A target budget of $90 million has been set for the stand‐alone theatre, with the WWDA agreeing, in principle, to purchase a suitable site if it is necessary to get the project moving. The local authorities recognise the great potential of the development in transforming Seatown, and they will be prepared to contribute substantially to the construction costs. Donations from the Arts Council, private donors and a public appeal are also likely.

Some early market testing has already established that there are no private sector developers who will take the risk on such a venture. In particular, this is because of the likely demand for the building to be architecturally unique. The construction of the theatre is expected to take up to two years to complete. Given the potential difficulty of the build, a break clause is to be put into the contract allowing either party to terminate the arrangement after six months, giving two months’ notice.

Staged payments will be agreed in line with key stages in the construction. Additionally, the

contractor will need to provide a warranty for a period of 10‐years on completion of the

construction. It is recognised that financial support may be necessary in the first year of

operation. However, the theatre must be self‐financing within two years, with the aim of

making a small surplus on an ongoing basis.

Additional Information


Five potential sites have been identified for the Theatre complex.

The newly formed Seatown Transformation Programme Board has commissioned the development of a Business Case for the proposed theatre precinct.


Part A

Using the Scenario answer the following question.

The following questions include only true statements about the Seatown Transformation Programme. Only one statement is an appropriately defined SMART spending objective for the stated aims of the Regional Theatre project.

1. Which is an appropriately defined spending objective for attracting visitors?

a. At least 5,000 new homes for 9,000 residents within 15 years.b. Increase visitor’s satisfaction ratings to 90% satisfied or better.c. At least 600,000 visitors per year to the Seatown theatre precinct within two

years of opening.d. 800,000 visitors per year to the Seatown theatre precinct within six years of opening.

2. Which is an appropriately defined spending objective for customer satisfaction?

a. Achieve a minimum rating of 90% satisfied or better from visitors to the theatre precinctwithin two years of opening.

b. Attract 600,000 visitors per year to the Seatown theatre precinct within two years ofopening.

c. Attract at least 60% of the national touring shows and acts within one year of opening.d. Reduce travel costs to theatres in other areas for customers in the Seatown catchment

area by $30 per visit.

3. Which is an appropriately defined spending objective for the new facilities?

a. Provide a Regional Theatre, appropriate for a catchment population of 800,000, within 2years.

b. Provide an educational role beyond its entertainment remit.c. Provide an attractive, modern environment that retains links with its rich history as a

port.d. Provide at least 3% of the programme’s 15‐year employment target within a year.

4. Which is an appropriately defined spending objective for employment?

a. Provide a permanent base for the four regional and local operatic, drama and dancegroups within a year of the scheme’s completion.

b. Create at least 300 permanent new jobs within a year of the scheme’s completion.c. Attract at least 60% of the national touring shows and acts within one year of opening.d. Provide permanent employment for 10,000 people within 15 years.


Part B

Column 1 is a list of benefits identified in the strategic case. For each benefit in Column 1, select from Column 2 the main beneficiary. Each selection from Column 2 can be used once, more than once or not at all.

# Column 1

1. A survey in the new Regional Theatre catchment area suggests that over 40% of residents per annum visit a theatre in another area. They quote a potential saving in travel costs of $30 per visit if there was a closer theatre in Seatown

2. It is anticipated that the development will lead to greater local pride

3. The Regional Theatre, with its striking location and unique architecture, will provide an excellent landmark for marketing Seatown.

4. The bringing together of the four regional and local operatic, drama and dance groups will lead to efficiencies in theatre operation.

Column 2

A. Organisation‐Theatre Management

B. Sponsor – Strategic Partners

C. Users/Customers

D. Staff

E. Other Organisations

F. The Public



Answer the following questions about the categorisation of benefits.

Remember to select 2 answers to each question

Part‐C

1.Which 2 benefits should be categorized as cash releasing?

a. The bringing together of the four regional and local operatic, drama and dance groups will lead to efficiencies in operation.

b. Improved working environment.c. The development will lead to improved local pride.d. The Regional Theatre, with its striking location and unique architecture, will provide an

excellent landmark for marketing Seatown.e. When complete, the Regional Theatres facilities will be available for hire at commercial

rates.

2.Which 2 benefits should be categorised as quantifiable but non‐cash releasing?a. Improved working environment.b. When complete, the Regional Theatres facilities will be available for hire at commercial

rates.c. The new Regional Theatre will provide customers with a greater number and variety of

theatrical events each year. It will also encourage new and emerging acts.d. Enhanced reputation with the Council.e. The new Regional Theatre will reduce travel costs for those customers in the catchment

area who would otherwise visit a theatre in another area.

3.Which 2 benefits should be categorised as indirect?

a. Local schools and colleges believe that the Regional Theatre, with the promise of practical workshops, will improve educational standards amongst students.

b. The Regional Theatre, with its striking location and unique architecture, will provide an excellent landmark for marketing Seatown.

c. The bringing together of the four regional and local operatic, drama and dance groups will lead to efficiencies in operation.

d. It is anticipated that the development will lead to greater local pride.e. When complete, the Regional Theatres facilities will be available for hire at commercial

rates.

4.Which 2 benefits should be categorized as qualitative?

a. The higher number of visitors will increase income from fares and reduce the local authority bus subsidy on routes to Seatown.

b. Local schools and colleges will benefit from the Regional Theatre, with the promise of practical workshops, improving educational standards amongst students.

c. It is planned that this development will lead to greater local pride.d. When complete, the Regional Theatres facilities will be available for hire at commercial

rates.e. The new Regional Theatre will provide customers with more variety of theatrical events

each year and also encourage new and emerging acts.

Part‐D

Lines 1 to 4 in the table below consist of an assertion statement and a reason statement. For each line identify the appropriate option, from options A to E, that applies. Each option can be used once, more than once or not at all.

Option Assertion Reason

A True True AND the reason explains the assertion

B True True BUT the reason does not explain the assertion

C True False

D False True E False False


# Assertion Reason

1 It is appropriate to describe the proposed redevelopment of the quayside under the ‘Existing Arrangements’.

BECAUSE Within a Strategic Case, the ‘Existing Arrangements’ describe what is wrong with the current situation.

2 The opportunities for residential developments by local developers should be identified as an indirect benefit.

BECAUSE Both direct and indirect benefits should be captured for each spending objective.

3 It is appropriate to describe the diminished local working population as a business need.

BECAUSE The business needs, identified in a Strategic Case, describe what we are seeking to achieve.

4 The Regional Theatre should be identified as an integral part of the WWDA’s business strategy and Transformation Programme.

BECAUSE A case for change should be manipulated to support a chosen solution.

Part E

The project manager has drafted the Strategic Case for the Regional Theatre project. Decide whether the entry is appropriate for this project and select the response that supports your decision.


1. A change in Council could affect the Wider West Development Agency’s (WWDA)remit’ is recorded and categorized as a business risk.Is this an appropriate entry for this project?

a. No, because a change in Council is an external event that is outside the controlof the project.

b. No, because the remit of the WWDA is not relevant to the project.c. Yes, because this is a strategic risk that remains with the public sector organisation,

regardless of the sourcing method for the proposed spending.d. Yes, because business risks affect all organisations regardless of whether they are public

or private sector.2. ‘A poor choice of developer may result in an unrealistic design’ is recorded and categorised as a service risk.

a. Is this an appropriate entry for this project?b. No, because the choice of developer is an external dependency and therefore is not a

risk.c. No, because a service risk is associated with the build and operational phases of the

proposed spending.d. Yes, because the design is a project constraint.e. Yes, because this is a risk to the success of the project.

3. ‘An unexpected change in service requirements may affect the scope of the spending proposal’ is recorded and categorised as an external non‐systemic risk.Is this an appropriate entry for this project?

a. No, because this is a service risk associated with the design phase of the spending proposal.

b. No, because an external risk only impacts a private sector organisation.c. Yes, because an unexpected change may be triggered by an external event.d. Yes, because the source of the change is not known.

Part‐F

Using the Scenario, answer the following question about the costs identified when preparing Economic Appraisals for the short listed options for the Regional Theatre.

Column 1 contains a list of the costs identified. For each cost in Column 1, select from Column 2 the type of cost it represents. Each selection from Column 2 can be used once, more than once or not at all.


# Column 1

1. Electricity to run the Regional Theatre.

2. Money spent to date on the site feasibility study and legal

advice.

3. Rental of temporary office accommodation while the

development takes place

4. Contractor to demolish the Old Wharf Warehouse and clear the

site if that site is used for the new Regional Theatre.

5. If the Regional Theatre project goes ahead, the old theatre

could be sold (market value $600,000).

6. Two new staff will be needed in the local authority finance

department to manage the contract with the private sector

partner.

Column 2

A. Capital costs

B. Revenue costs

C. Opportunity costs

D. Sunk costs

E. Attributable costs


Instructions to Follow

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