Business case guidance and templates for TEIs

He aratohu tono pakihi me ngā tauira mahi mā ngā TEI

Last updated 3 November 2016
Last updated 11/03/2016

This page provides information about the Government’s approach to business cases and links to guidance and templates to help tertiary education institutions (TEIs) prepare a business case.

Why business cases are required

The Government is committed to improving the quality and consistency of business cases prepared by capital-intensive Crown agencies when these institutions seek funding or a decision from the Crown. 

As a result, the Treasury has published guidance and templates addressing the business case requirements for departments and Crown entities. Using the Treasury's guidance as a basis, the Tertiary Education Commission (the TEC) has developed its own guidance and templates for TEIs.

Further detailed information is available on The Treasury website.

What TEIs need to do

If you have any investment or borrowing proposal that requires approval from the TEC, Secretary for Education and/or ministers (including Cabinet) it must be accompanied by a business case developed using the process and templates outlined in these three pages:

Step 1: Business case scoping document
Step 2: Business case development
Step 3: Business case assessment.

Using this approach provides business case writers with clear processes and criteria to follow when engaging with the Crown on investment or borrowing proposals.

We strongly encourage all TEIs to adopt and integrate the following guidelines and templates into their internal management and council processes. However, their use is not mandatory for most internally funded projects.

The five case model

The Government has a standardised business case model known as Better Business Cases for Capital Proposals. This proven five-case model is designed to provide explicit assurance to ministers, stakeholders and business case assessors that the proposed investment:

  • is supported by a robust case for change, the ‘strategic case’
  • maximises value for money, the ‘economic case’
  • is commercially viable, the ‘commercial case’
  • is financially affordable, the ‘financial case’
  • is achievable, the ‘management case’.

The approach helps ensure each of the key aspects of a robust investment proposal is explicitly and systematically addressed as part of the business case development process.

Single-stage and two-stage business cases

All business cases follow the five-case model but are broadly differentiated as follows: 

  • Programme business cases are used as a basis for seeking early approval to start a preferred programme of work, to develop subsequent business cases and to review the ongoing viability of the programme.
  • Project business cases are divided into three categories:
    • Single-stage business case – typically used for proposals that have a relatively low level of investment and risk profile
    • Single-stage (light) business case – applies to investment proposals with lower levels of delegated authority, that are very small scale and/or very low risk
    • Two-stage business case – made up of an indicative business case and a detailed business case. These are applicable to high risk proposals with a whole-of-life cost (WOLC) over $25 million, that could expose the Government to significant fiscal or ownership risk. 

The number of stages mainly relates to the number of points at which decision-makers can decide whether the writers of the business case should continue to develop the proposal further. Whether a business case is a single-stage or two-stage also depends on whether the proposal is likely to involve a programme of work or is high/low value or high/low risk as summarised in the table below.

Project and Programme Business Case Stages
Projects Programmes
(see below)
Small scale
and low-risk projects
Large scale
and high-risk projects
Single-stage Two-stage Varies

Deciding whether a proposal requires a programme, single-stage or two-stage business case is normally determined following submission of a scoping document. The TEC and the business case owner then use this scoping document to reach agreement on key decisions such as:

  • whether the solution to the problem being addressed by the business case is likely to be a discrete project, or would be better addressed through a larger programme of work
  • whether further work is required to clarify the problem/opportunity and the possible options, benefits, strategic responses and solutions. Most business cases require an Investment Logic Mapping (PDF, 37 Kb) exercise
  • the level and depth of analysis required in various stages of the development of the business case
  • the level and depth of independent quality assurance required in various stages of the development of the business case
  • the timing and nature of engagement and decisions required including how these fit with other processes required by the TEI (ie, council approval) or by the TEC (ie, internal review, agreeing borrowing conditions, recommendations to Ministry of Education (MoE)).

We also encourage and support TEIs, as a matter of good practice, applying the best available tools to assess the scale and risk of the proposal, such as the Risk Profile Assessment tool

Quality assurance

During the scoping phase we, and the TEI, will agree on whether any and what type of concurrent third-party (independent) quality assurance is required to support the development of a business case.

The purpose of quality assurance is twofold:

  • business case assessors obtain assurance that an appropriate level of rigour has been applied to the analysis of key aspects of the business case. It also provides assessors with a degree of assurance the business case is of an acceptable quality prior to review
  • business case owners and writers obtain independent evidence to support the level and depth of analysis they have applied to the development of a business case.

The main purpose of independent quality assurance is to save business case assessors, business case owners and business case writers time and effort in their respective roles.

We and the TEI will agree the level and scope of any independent quality assurance during the early scoping phases of the development of an investment proposal. This can range from a Gateway review for all high risk projects to an independent review by a third party for programmes of lower risk and lower value proposals.

Business case review and assessment

When considering a preferred solution or investment proposal, we need to be satisfied the evidence provided demonstrates to a greater or lesser degree that the investment proposal demonstrates, contributes, supports or identifies these factors:

  • Strategic alignment – identifies and contributes to the Government’s stated outcomes for tertiary education as set out in the Tertiary Education Strategy, and other strategies relevant to the TEI(s) and/or the business case
  • Value for money – demonstrates value-for-money for the Crown, measured against a range of possible options, and aligns to the investment objectives agreed between the TEC and the TEI(s)
  • Tertiary network – contributes to a balanced network of provision (i.e. geographically and/or academically), with more focus on national and regional solutions and less on individual local institution specific approaches
  • Stakeholders – supported by key stakeholders (including, as appropriate, staff, students, other providers, industry and advisory organisations, business groups, and central and local government) 
  • Affordability – contributes to the current and future financial viability and sustainability of the TEI(s) (and other TEI's, if applicable) and is affordable and justified as part of long-term capital asset management plan(s)
  • Risk – identifies and appropriately manages or mitigates key areas of risk and uncertainty that could threaten the success of the proposal, its implementation including any regional/national risks and/or risks to the Crown.

The specific assessment criteria that we will use in each of the five cases of a business case alongside the assessment criteria listed above is available in Step 3: Business case assessment.

Overview of business case review and assessment - projects

The flowchart below illustrates indicative, high-level business case development, review and decision-making processes for two-stage and single-stage business cases. This flowchart does not illustrate concurrent third party quality assurance activities which are likely to be required alongside most business cases (particularly projects that require a two-stage business case). Actual processes and timelines are normally agreed on a case-by-case basis.

Single-stage and two-stage business cases: Assessment process and timelines

Single-stage and two-stage business cases thumbnail image
Click on image for larger view

Overview of business case review and assessment - programmes

The flowchart below illustrates indicative, high-level business case development, review and decision-making processes for programme business cases. This flowchart does not illustrate concurrent third party quality assurance activities which are required alongside all programme business cases. Actual processes and timelines are normally agreed on a case-by-case basis.

Programme business cases: Assessment process and timelines

Programme business cases thumbnail image
Click on image for larger view