• If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • You already know Dokkio is an AI-powered assistant to organize & manage your digital files & messages. Very soon, Dokkio will support Outlook as well as One Drive. Check it out today!


Phase 5

Phase 5 Guide: Business Case


This short guide provides some advice on implementing the Innovation Process. It specifically focuses on the ‘Business Case’ phase. It is part of a broader toolkit, which provides advice, with tools and worked examples, on a full process that has been developed, tested and refined in partnership with a number of local authorities and is firmly rooted in innovation practice as well as theory.


Aims and Objectives


The key aims and objectives of this phase are to select a small number of projects, from the 5–10 project definitions emerging from the previous phase, to take forward and develop business cases. Activities in this phase will typically involve determining what level of business case is necessary and sufficient to support the decision to take a project forward, and then developing a case for each project. Business case development is best undertaken through collaboration with the key stakeholders who will help to deliver a project or be impacted by it in any way.


At the start of this phase you will have:

At the end of this phase you will have:

- 5-10 favoured solutions to key problems, with an audit trail of how these solutions were filtered - 2-3 business cases for projects:
- Feedback on these solutions from; users, event participants and other key stakeholders
  • to provide a strong foundation and justification for implementation
- 5-10 well defined projects based on these solutions; explaining how they could be practically implemented
  • of ‘necessary and sufficient’ detail to support funding and implementation decision process

- Potential implementation partners identified and engaged 

  • in correct local format
  • validated by key stakeholders to be involved in project delivery


Phase 1 Activity Map


Key activities are outlined in below, with additional detail later in this guide:


Project Selection

Collaborative Business Case Development

Draft and Validate Business Cases


Timescales and resources


The amount of time and effort in this phase will depend what level of detail is required by the senior stakeholder to approve a project, and also what is required by the funder and finance team to support due diligence.


Supporting Documents and Tools


A number of supporting tools and guides are available to help with this phase:






Innovation Briefing

Short Process Guide

Phase 4: Project Definition

Phase 6: Action Decision

IDeA Guidance

HMT Guidance on eGovernment

Social & Economic BC Tool

Inclusion Through Innovation BC Tool

Mietool BC tool

Stakeholder Benefits Tool

HMT Business Case Checklist

Prince 2 Business Case Template

Business Cases


Description of Activities


The process has been following a typical innovation funnel as illustrated in Figure 1. During the innovation event many ideas emerged to key problems identified against the main issue or challenge. These were consolidated and reduced to a smaller number of better-defined solutions. During the next phase solutions were shortlisted against robust and transparent criteria and then further researched to begin to answer questions about how they might be practically delivered. At this stage solutions were turned into better-defined projects.  At each stage of the innovation funnel the quantity of ideas, solutions and projects has been reduced, but their maturity has increased. The business case stage is no different. A short-listing meeting is held, preferably with the senior stakeholder to make recommendations on the few projects for which to go ahead and develop business cases. The bulk of this stage is spent developing these business cases in preparation for a final milestone meeting at which a decision on which project(s) to take forward will be made.



Figure 1 Innovation Funnel Mapped Against Process



Project Selection


At the end of the last phase the final project definitions were assessed against the idea filtering criteria, which enabled a clear recommendation to be made on the few projects to take forward to the business case stage. This is a good point at which to meet again with the senior stakeholder to feedback the results of the innovation process to date, to present the breadth of projects that have emerged, and then to offer recommendations on which projects to take forward. The results of the user/ stakeholder testing will also be important to convey at this project selection meeting. Once again a small list of recommendations on how to handle the projects that are not selected would be helpful. The outcome of this meeting should be clear agreement on which projects to proceed with and some direction on what level of detail in the business case is required for a final action decision.


Back to activity map

Collaborative Business Case Development


It is important to strike the right balance between the level of effort to produce a business case and the level of investment required to implement the project being assessed. There may be local rules, standards and guidance to support developing a proportionate assessment and these should be well understood before proceeding with this stage of the innovation process. If it is the intention of the project team to submit a bid for a grant to take forward the best solutions from the innovation process, then this is also a good time to look at the business case and template requirements made by the grant body.


There is plenty of national guidance on business case development:

  • For major investments HM Treasury offers a wealth of information, tools and guidance on their standard 5-stage business case model, which is mainly targeted at major investment projects. However some of these tools are useful even for smaller business cases – such as the Business Case checklist, which provides the type of questions that assessors should be asking when reading a business case. Many of these questions are as relevant to small projects as to larger ones; the answers are likely to be shorter and less complex.
  • The Office of Government Commerce and HM Treasury issued some guidance and toolkits in 2003 specifically on the use of technology to improve public services. This includes guidance on benefits identification and quantification.
  • The Local Government Group has issued guidance on business case production and this is more targeted to local authorities.


Even for small projects emerging from the innovation process it is worth developing a short, succinct business case. This is because business cases answer some key questions at the start of the project, which if left unanswered, could derail a project much later on when resources have been expended. They are also important for benefits realisation, and keeping the project team focused on delivering the impact envisaged when the idea was originally conceived.


Some particular issues with business cases for projects with social outcomes, and potential ways of dealing with them, follow.


Business Cases are often dominated by one organisation’s perspective (possibly because the wide economic case gets muddled up with the financial case that solely looks at the affordability to the funder); this means that costs and benefits that fall elsewhere other than the lead organisation are not typically as well understood and this can cause problems later with implementation. This issue particularly impacts social and digital inclusion projects where partnership working is often a route to more effective and efficient delivery for the hardest to reach. Ways of the dealing with this issue include:


  • Identify key stakeholders in the project at an early stage and involve them in the development of the business case. (see stakeholder identification stage within the social & economic business case tool)
  • Build the business case collaboratively (as recommended in the HM Treasury Green Book); discuss the business case with each stakeholder to explore the benefits and burdens that relate to them. Potentially even hold a small business case meeting or workshop.
  • Develop a table of benefits and burdens (costs) against each stakeholder (this function is available within the social & economic business case tool)
  • Get stakeholders to validate and agreed the draft and final business cases.

[1] A burden might be a direct cost borne by a stakeholder, indirect cost related to time and effort, or a potential negative outcome which might make the stakeholder less supportive of the project during delivery.

Social projects often deliver softer, less monetary benefits, which are difficult to compare against seemingly more tangible costs in a business case, but HM Treasury is clear that they are a necessary part of the economic case. Ways of the dealing with this issue include:

  • Identify all benefits whether monetary or not and find a way of presenting these in the business case. (see the Stakeholder Benefits Tool for assistance in identifying benefits).
  • Consider techniques to quantify and if possible monetise some of these benefits. For example a softer benefit such as ‘increased self-esteem’ could lead to job searching and the more tangible and monetary benefit of entering work or further education.
  • There are formal techniques and methods and guidance for translating social benefits into hard currency. The Social Return on Investment (SROI) model is one such approach.


Project costs are often underestimated, incomplete or inaccurate, which can cause significant problems during implementation if additional funding is required. Ways of the dealing with this issue include:

  • Work closely with delivery partners to develop actual costs for components of the project. These are much better than rough estimates that haven’t been subject to consultation with the organisations and people responsible for delivering the relevant components of the project.
  • Similarly, working closely with stakeholders in a collaborative way can expose hidden costs that would not ordinarily have been thought of and included in the business case.
  • There is some available guidance on costing around projects with IT components (see annex in HMT egovernment business case guidance)


In addition to the guidance and prompts that have already been provided there are a number of more holistic toolkits that are available for developing business cases:


  • Social & Economic Business Case Tool; this tool is designed to be used in a meeting of stakeholders, by a facilitator, to develop a ‘strategic’ high-level business case. It incorporates:
    • a clear project definition,
    • stakeholder identification and analysis (with stakeholder prompt lists),
    • benefits and burdens analysis for each stakeholder (with benefit prompts),
    • simple options comparison against: benefits, burdens, effectiveness and project achievability,
    • an automated high level business case output report,
    • and it goes on to provide the means to produce a complete, quantified outline business case.
    • Inclusion Through Innovation Business Case Tool; this is a tool that was developed in 2005 to assist with business casing digital inclusion projects.
    • mietool (measurement of improvement and efficiency tool); is a business casing tool that specifically helps to draw out the efficiency and effectiveness benefits of projects.
    • Prince 2 Business Case Template; PRINCE2 is a process-based method for effective project management. Within the PRINCE2 toolkit is a simple template for writing business cases.


Back to activity map

Draft and Validate Business Cases


As has been highlighted already, it’s important that the key stakeholders who are impacted by the business case, and/or are vital to project delivery, are sighted on drafts, are able to comment, can agree the final business case and are able to validate the costs and benefits associated with them. Ideally all the delivery partners in particular have their names and logos on the business case, then at the milestone decision meeting in Phase 6 the senior stakeholder can have confidence that the business case provides an accurate assessment and is deliverable.


Finally, it should be recognised that the business case process is often iterative. It is a live document to be revisited during project delivery. So the output of this phase should be considered a starting point.


Dos and Don’ts


Do develop a proportionate business case which balances time and effort against the scale of investment envisaged. 

Do involve stakeholders in cost and benefit identification and analysis – particularly those who are vital to delivering the project. 

Do make use of the guides and toolkits that are available to help produce business cases.

Don’t be tempted to skip the business case phase because the project is too small. The business case stages answers some key questions at the start of the project, which if left unanswered, could derail a project later on. 

Don’t just focus on the benefits and costs to the lead delivery organisations – identify costs and benefits to all stakeholders. 


Key Questions to Think About


  • How many projects and which ones to prioritise for business case development?
  • How much detail in the business case is necessary and sufficient to support a decision on whether to proceed with the project, and to provide a foundation for successful implementation of the project? 
  • Is there a set format required, or any local guidelines and rules for business case development that must be adhered to?
  • Who are the key stakeholders who are a) impacted by the project and b) vital for delivering it?
  • In what way does the project benefit or burden each stakeholder?
  • What are the alternative options (including doing nothing) to the project and why is this project the best approach? 
  • Are all key stakeholders able to agree the final business case and validate the costs and benefits associated with them? 


© City of London 2010