A business case is an evidence-based methodology that demonstrates to Government decision makers' three key elements:
■ the case for change - demonstration, justification and priority of the service need (section 3)
■ analysis of the proposal offers value for money relative to alternatives (section 4)
■ the agency responsible for delivering the proposal has the capacity to procure, implement and realise the benefits (section 5).
Examining these elements is the minimum level of analysis and evaluation to be undertaken for the development of a business case. This approach is not intended to supersede or duplicate existing agency processes. This reinforces the critical areas to be addressed, and enable the flexibility to include unique analysis established in agency specific business case guidelines or policies.
The extent of evidence required for a preliminary or a final business case will be proportionate to the value and/or the risk of the project or program. A high-value project will generally always require extensive evidence. A low value project may also require extensive evidence if it presents risks which require agencies to demonstrate their consequence and treatment measures. Agencies should carefully consider these issues and consult with Treasury before drafting business cases to ensure the level, extent and accuracy of evidence fits the purpose.
The standard of evidence for describing, analysing and evaluating the service need, options and implementation of the proposal is through the use of referenced quantitative (preferred standard) and qualitative data and established methodologies that assess costs and benefits and link resources to services to results via an evidence-based results logic.
The basis for and accuracy of the cost estimates in business cases should be stated. A lower level of accuracy is reasonable for cost estimates in preliminary business cases e.g. 25 per cent. Cost estimates are expected to be more accurate in final business cases - ideally within 10 percent of actual costs.
Agencies should undertake a structured internal review of business cases and with complex analysis, an independent review of the expected returns of the project or program is encouraged.
If after submitting a business case, a resource allocation has not been provided, agencies must consider the validity and accuracy of the business case before submission in following years. Business cases are likely to be out of date after one year and agencies must consider either preparing a new business case or updating a business case consistent with these guidelines.