South West Employers
Business Case & Specification Writing
Trainer:
Date:
Activity 1 - Icebreaker
How many points do you have? _______
Is a middle child
Likes to eat
Japanese food
Is wearing pink
Plays a team sport
Speaks another
language
(1 point)
(1 point)
(1 point)
(1 point)
(1 point)
Wears glasses
Is over 6’ tall
Has less than four
letters in his/her
first name
Has a last name
that starts with a W
Has green eyes
(1 point)
(1 point)
(1 point)
(1 point)
(1 point)
Owns a Vauxhall
car
Likes classical
music
Preferred Maths to
English in school
Knows someone
famous
Has red hair
(2 points)
(2 points)
(2 points)
(2 points)
(2 points)
Has more than 2
children
Has made a
parachute jump
Has visited more
than 10 countries
Has more than 7
letters in his/her first
name.
Has a birthday in the
same month as me
(3 points)
(3 points)
(3 points)
(3 points)
(3 points)
One unusual fact I have found out about someone here is? ____________________________ (5 points)
Activity 2 - Groundrules

Groundrules help to create a positive and
safe learning environment. Discuss and
agree a list of between 3 and 5 rules that
all participants are comfortable with
Objectives

At the end of the session, participants will have knowledge
and an understanding of:

The fundamental principles of preparing for and developing a
business case and specification:
 What
is a business case and when is it needed?
 Typical
 What
business case contents
is a specification and why is it important?
 Types
of specification
 Special
considerations when buying services
 Potential
issues and challenges and how to manage them
Sections
1.
Introduction to Business Cases
2.
Business Case Content
3.
What is a Specification?
4.
Writing a Specification
What is a Business Case and when is one
needed?
Some functions

A recommendation to decision-makers of a course of action

An evaluation of a number of identified courses

Analysis of costs, benefits and risks in pursuing certain
courses of action

An explanation of how a course of action should be
implemented

A communication tool to provide relevant information to
people involved in the decision-making process

A method for innovation, wider-thinking and new practice

An opportunity to assess what others are doing to compare
best practice
Innovation Savings - Think and Do Different
Supplier Prices
Traditional Procurement
Profit
10%
Risk
Premium
5%
Overheads
Direct
Costs
45 – 50%
40 – 50%
Squeeze the profit margin
may yield 3 – 5%
Target the 90%
Might achieve 40%

Soft market testing

Demand Challenge

Innovate

Benchmark

Change of Use
Why have a Business Case?
Assess the situation, what (if anything) is needed?
Requirements
Evaluate
Benefits
Investment
Appraisal
Provide
Baseline
Mobilise
Support
Project
Structure
Compliance
Risk
Management
Secure
Resources
Secure
Budget
Stakeholder
Buy-In
Approval
When is a Business Case required?


Where approval is required for expenditure
 Often
for procurement over the EU threshold
 Refer
to your local CPRs for further detail
For complex requirements where a project structure is
required (eg under Prince 2 or similar project methodology)
Writing a Business Case will help to . . .

Obtain the support of decision-makers

Obtain management commitment

Gain approval to proceed

Ensure fit with policies and strategy

Provide a planning and implementation framework

Enable monitoring against a stated baseline

Ensure benefits are clearly stated and logged/achieved

Facilitate risk management

Provide resources

Initiate a broader project
Be prepared

Identify stakeholders

Determine/analyse options

Consider/evaluate risks

Identify risk management

Assess benefits

Determine benefits tracking

Undertake financial analysis
Sections
1.
Introduction to Business Cases
2.
Business Case Content
3.
What is a Specification?
4.
Writing a Specification
Executive Summary

Arguably the most important part

A snapshot of the whole business case

Highlights the key aspects

Enables senior staff to grasp the key aspects

One page is ideal – maximum
This is what we want
you to approve............
And this is why it is a
good idea............
Introduction

Sets the scene

Provides background and relevant history

Summarises the business need

Explains the current situation

Identifies the drivers for change

Relates to strategic goals
This is where we
are now............
And why we need
to change............
Project management

Applicable for major and project related items

Project structure

Roles

Governance

Decision levels

Project plan

Outline of resources
Here’s the
process that will
take us through
to successful
implementation....
.
Definition, scope and implications

Outlines the requirement

Examines the broader impact

Identifies stakeholders

States constraints

Analyses dependencies

Identifies critical success factors
This is what we
need to buy and
the broader
impact.....
Stakeholder analysis and management
Stakeholder Power
High
Low
Internal
Keep Satisfied
Key Players
Minimal Effort
Keep Informed
Stakeholder Interest
High
Source: adapted from Mendelow (1991)
Activity 3 – Stakeholder Analysis

Work in pairs or small groups
 Using
the given contract and identify the relevant key
stakeholders. Consider their level of interest and power
relative to the contract and plot their position using the
matrix approach that we have discussed
Technical considerations

Will vary depending on the item being purchased

May include:
 Quality
We have
considered how
the purchase will
impact on us
operationally.....
 Sustainability
 Storage
 Distribution
 Operational
issues
 Training
 Systems
 Compatibility
issues
Commercial considerations

Determine outcomes

Market considerations

Existing frameworks and collaboration

Soft market testing, opportunities for innovation

Outline specification

Sourcing options

Contract term

Contract type

M.I. requirements

Implementation timescales
And here are the
key business
considerations
which are
relevant to the
purchase.....
Additional considerations

Market testing
 Is
the supplier willing to invest?
 What
 Is
opportunities are there for shared responsibility?
collaboration possible?
 What
And here is the
options are available for innovative
way inpractice
which we and
original solutions
will gain
additional
rewards, shared
responsibility and
innovation.....
Risk analysis


Probability
 How
likely is it that the risk will happen?
 High
: Medium : Low
Impact
 What
will be the impact if it does happen?
 High
: Medium : Low

Risk management and mitigation

Contingency
And we have
considered
the risks and
how they can
be
managed.....
Activity 4 – Identifying and managing risks

Work in pairs or small groups
 Consider
the risk examples provided
 Determine
the probability of these risks arising and their
potential impact if they do arise
 Suggest
ways that each of the risks can be managed
Financial & resource considerations

Impact on staff (workload, TUPE)

Costs



Phasing

Operational

Ongoing

Whole life
Budget

CapEx

RevEx

Shared investment and risk
These are the
relevant financial
aspects......
And the impact
on
headcount........
Return and payback

Procurement activity is not simply a process – it should
add value and produce savings
Investment appraisal techniques

Payback Period

Net Present Value

Internal Rate of Return

Accounting Rate of Return
Breakeven point
£
Accumulation of
Benefits
Total costs
Break even point
TIME
(or production)
Benefits management & realisation

Hard benefits

Soft benefits

Measurement

Manage and track
And these are the
benefits that the
purchase will
deliver........
Options appraisal

Long list

Short list

Explain reasons for rejection

Financial analysis of options

Use SWOT analysis

Evaluation criteria
A number of
options have
been considered
and
evaluated........
SWOT analysis
Strengths
Opportunities
Weaknesses
Threats
Internal
External
Activity 5 – Evaluating options

You have been involved in writing a business case and six
options have been identified as offering potential solutions

As a group, consider the criteria that you could use as a basis
for evaluating each option
Recommendation

Clear

Concise

Supported

Logical
This is the option
we recommend....
And why.......
Ensure you follow local procedures for sign-off
Other content

Title page

Table of contents

Definitions/glossary of terms

Bibliography

Appendices
Summary of typical content
1.
Title page
9.
Commercial considerations
2.
Executive summary
10.
Risk analysis
3.
Table of contents
11.
4.
Definitions/glossary of
terms
Finance and resource
considerations
12.
Benefits management and
realisation
13.
Options appraisal
14.
Recommendation
15.
Appendices
16.
Bibliography
5.
6.
7.
8.
Introduction
Project management
Definitions, scope and
implications
Technical considerations
Business case checklist

Is the need/requirement clearly stated?

Does it fit with strategy, policies and goals?

Are the benefits identified?

How/when will benefits be realised and measured?

Has success been clearly defined?

Have all options been identified and evaluated?

Is the preferred option clearly supported?

Is the funding requirement clear?

Have risks been identified and evaluated?

Have plans been put in place to manage the risks?

Is there a clear recommendation?

Does the financial analysis support the recommendation?
Sections
1.
Introduction to Business Cases
2.
Business Case Content
3.
What is a Specification?
4.
Writing a Specification
Activity 6 – What is a specification?

Consider and discuss the meaning of ‘specification’
Some definitions

A statement describing the characteristics of the supplies or
services to be purchased, which the supplier is expected to
provide

A means of communicating in writing the requirements or
intentions of one party to another about a product or service,
a material, procedure or a test

A standard against which the supplier can be measured

A statement of the attributes of a product or service

A statement of requirements

Most importantly: it is part of your contract with the
supplier!
Why is a specification needed?
It must not be assumed that
the supplier will always
precisely understand what
is being requested by the
purchaser........
......purchasers get what they
ask for, but not necessarily
what they need
Caveat emptor
A computer?
Or, a computer?
The main functions of a specification

To communicate to a supplier what you expect them to supply

To provide a record against which the goods or services
supplied will be measured

A tool to obtain buy-in and commitment from internal
stakeholders

A contractual tool to ensure you get what you want
Activity 7 – Services v Goods

Work in pairs or small groups

Discuss the issues when specifying services (compared
to goods, for example, tangibility versus intangibility)
Specifying services

Be as objective as possible

Define standards and expectations

Set measurement criteria

Be specific about expectations

Some specific considerations about services:
 Breakdown
 Apply
 Set
the service into measurable milestones
rigorous standards to all aspects of the service
performance targets of a ‘good’ service
 Check
methods of delivery
 Ensure
you put into place the right monitoring methods
Should suppliers be involved in developing
specifications?
If so, how?
Supplier involvement
Advantages:
Considerations:

Access their expertise

Conflict of interest?

Objective check & balance

Unfair advantages?

Opportunity for refinement

Reduces competition?

Early notice of requirements

Encourages dependency?
Co-operation & collaboration
Writing a specification may need to be a team effort
Activity 8 – Consulting with others

Identifying individuals in terms of their (stakeholder) interest
and influence is sometimes important

Discuss who it may be necessary to engage with for large
value items. Who could provide valuable information and
advice on requirements and considerations for an item of
significant expenditure?
General considerations

Successful procurement relies on the specification being a
true and accurate statement of requirements

Specifications must take account of internal criteria, eg
budgets

Consider that every requirement is likely to add cost

The end user should be aware of the content of the
specification

Judgement and common sense are required when deciding
on the content

Preparing a specification should be seen as a key part
of the procurement cycle
The procurement cycle
Define & review
need
Exit & termination
Manage contract
performance
Manage
implementation and
transition
Develop business case
and write specification
Implement
Planning
Determine
procurement
strategy
Contract award
Invite
Pre-qualify
suppliers
Enquiry
Negotiate?
Evaluate tenders
Issue RFQ or ITT
Output v Input specifications
Functional / Output:
Defines the task or desired result by
focusing on what is to be achieved
rather than the method for achieving the
result
Technical / Input:
Defines the technical and physical
characteristics of a requirement eg
physical dimension, power input
Execution risk is
with supplier
Execution risk is
with the purchaser
(The supplier proposes
what will do the job)
(You tell the supplier
how to do it)
Balance of risk
Output v Input specifications
Functional/Output:
Technical/Input:

Focuses on outputs

Focuses on inputs

Details ‘delivery’

Details ‘method’

Reliant on supplier

Prescriptive

Emphasises performance

Emphasises compliance

Assigns risk

Retains risk

Delegates control

Keeps control
Outcome specifications
Some golden rules

Do not get carried away with technical content. Always keep
focused on the requirements (the must haves not the would
be nice to haves)

Keep specifications as simple as possible

Ensure technical drawings etc are correct and up to date

Clarify the meaning of acronyms and ‘jargon’

When in doubt – explain

Avoid specifying brands (unless required)

Prepare, prepare, prepare
When to develop a specification

Is there an existing specification which meets your
requirements exactly? Writing new specifications which are
not needed can lead to duplication and lack of
standardisation, adding unnecessary costs. Consider reusing or adapting a previous specification

However, writing a new specification may help you to improve
on previous practice and to encourage innovation. There
may also be cost savings to be made if you appraise options
rather than simply run with what has been done before
Re-use of existing specifications
Exercise caution – changes may have occurred
which could impact on the specification
Macro
Micro
Internal
Activity 9 – PQQ Selection

In three groups, prepare your response to the PQQ
evaluation activity

First, decide on your evaluation criteria

Secondly, decide on your assessment method (scoring,
pass/fail or traffic lights, or some other method)

Thirdly, use the matrix provided to evaluate
Sections
1.
Introduction to Business Cases
2.
Business Case Content
3.
What is a Specification?
4.
Writing a Specification
Writing a specification

Preparation and planning are key

Arrange the content into a logical form

Consider the likely main headings and then add in
sub-headings

Consider ‘need to have’ versus ‘nice to have’
requirements

Everything included in the specification will become
part of your legally binding contract with the supplier

Does the specification make it absolutely clear
what is required? – test it out with colleagues
Structure and layout
There are no fixed rules
Put yourself in the position of the supplier
Is it logical?
Does it make sense?
Is it unambiguous?
Level of detail
Will vary with:

The value of the contract

The complexity of the requirement

The potential risks involved
Contents – summary
Structure:
Considerations:

Identification

Standards

Table of contents

Legislation

Introduction

Regulations

Background/history

Glossary
Requirements:

Other documents

Scope

Bibliography

Detailed requirements
On completion

Meet internal sign-off authorisation limits

Where appropriate, obtain sign-off before proceeding

Keep key stakeholders informed

Retain the specification in the contract file post-award

Use as a reference document for ongoing supplier
performance management
Activity 10 – Specification Development

Prepare a specification for an item that adequately
details your requirements. This should have
sufficient information to allow another group to
propose a price to deliver this to you
Objectives

At the end of the session, participants will have knowledge
and an understanding of:

The fundamental principles of preparing for and developing a
business case and specification:
 What
is a business case and when is it needed?
 Typical
 What
business case contents
is a specification and why is it important?
 Types
of specification
 Special
considerations when buying services
 Potential
issues and challenges and how to
manage them