Agencies are expected to:
- prepare a business case to support the procurement of higher value and higher risk items, and
- require the business case to be part of the project approval process.
If the procurement is part of a larger project, there may already be an approved business case in place.
The business case
A business case provides justification for undertaking a project. It evaluates the benefits, costs and risks of alternative options and presents the rationale for the preferred solution. Its purpose is to obtain management commitment and approval for the investment or funding.
The business case is owned by the project sponsor.
A business case should explain:
The case for change
- Identifies and describes the need.
- Demonstrates sufficient consultation with stakeholders.
- Identifies what success looks like.
How to achieve best public value
- Determines how critical goods/services are to agency and how goods/services will deliver against business/public policy objectives.
- Reviews contract outcomes and supplier performance where there has been a previous contract for supply of the goods or delivery of the services.
- Identifies the options for an approach to market and the preferred option with justification for its selection.
- Identifies level of quality and performance required, and options to measure.
- Demonstrates an understanding of the market, current prices and price drivers.
- Assesses the costs, benefits and risks (include whole-of-life costs) and examine whether the initiative is feasible.
Recommendations and other options
- Provides rationale for preferred solution and the reasons for rejecting others through a thorough options analysis.
- Seeks management approval for project to proceed and obtain financial approval for the estimated costs.
Treasury – better business cases
Treasury – guidance and templates for writing business cases
Relationship to the procurement plan
The procurement plan should build on the business case (not repeat it), and provide a link from the business case to implementation and delivery. A procurement plan provides the methodology and approach, process and project management structure for implementation.
Writing a procurement plan