ACT CANADA 2014:
Using Business Cases To Get Great
Projects Financed and Delivered
December 1, 2014
|
Michael Sutherland
Where we started from
“Alignments and technologies will be developed during the project-level Benefits Case Analysis that Metrolinx will carry out in
partnership with municipalities and transit agencies for individual projects. When it comes to make decisions on new transit
projects, the costs and benefits of all reasonable alternatives need to be evaluated so that the best possible transit
projects are built.”
– The Big Move (RTP), 2008
The challenge
Metrolinx has not published a detailed financial plan, showing what it plans to build, how it will be paid for, and what this will deliver. “Benefit Case
Analyses” have not been issued for some schemes. The BCAs that have been issued omit key information. [Important] BCAs...were not made public
until we obtained them for this report through a Freedom of Information request. In any case, Metrolinx seems to be ignoring their conclusions…in
contravention of its own principle of accountability.
– Neptis Foundation Review of Metrolinx’s Big Move, 2013
Recommendations
Recommendation 5: Enhance reporting systems for project rationale, schedule, budget, & change
Recommendation 14: Enhanced evidence-based project evaluation and selection processes
Rec 2: Apply open, evidence-based decision-making to Next Wave projects through the review of the RTP (Big Move)
- Metrolinx Investment Strategy Recommendations, 2013
The public’s low trust in transit decision-making can be addressed in part by ensuring that the process for project evaluation and
selection is evidence-based and transparent. The Metrolinx Investment Strategy notes that using a comprehensive business case
analysis and prioritization framework ‘builds confidence that the right projects are being selected for delivery at the right time and in the
right sequence.
–Transit Investment Strategy Advisory Panel, 2013
CONFIDENTIAL ADVICE
2
Business
Cases and
Prioritization
Introduction
• Business Cases inform decisions about the
value of individual projects (including
considering project options).
• Prioritization builds on Business Cases to
inform considerations of how projects
compare to each other and how projects
may be implemented in phases over time.
CONFIDENTIAL ADVICE
3
Annual
Board
Approval
Capital Planning and Phasing: Annual Review Cycle
Prioritization = multiple projects
Business Cases = individual projects
Board
Approval
Regional
Transportation
Plan and
Corporate
Strategic Plan:
Major Studies:
Board
Board
Approval
Significant
Approval
Planning and
Policy or Individual
Project Studies
Alternative Finance
and Procurement/
Pre-Contract
Approval:
Vision,
Policies,
& Projects
10-30%
Significant Design
Community and Stakeholder Consultation
CONFIDENTIAL ADVICE
4
Business
Case
Methodology
A collaborative platform for project evaluation across the organization
A problem statement initiates a study; options are developed to respond to the problem statement.
Value is measured qualitatively and quantitatively, with evidence gathered in three areas:
Strategic & Planning
How does the proposed project deliver larger policy objectives?
How does the project contribute strategically to the overall network?
(look at Regional Transportation Plan policies like shifting mode, reducing congestion)
3 part
Business
Case
Economic & Financial
What is the value for money of the project? How efficient is it?
How much will it cost? What benefits will it contribute?
(benefit:cost ratio, Net Present Value)
Deliverability & Operations
How is the project best delivered for on-time, on budget results? What is
a feasible timeline? How will it be built, operated and maintained?
Optimize partnerships, identify risks and opportunities for effective delivery.
in London, UK – an audit of the business and investment cases for this rail improvement project
CASECONFIDENTIAL
STUDY - Thameslink
ADVICE
5
http://www.nao.org.uk/wp-content/uploads/2013/06/10164-001-Thameslink-Full-Report.pdf
Integrating
the Evidence
Conceptual
•
Is the investment supported by a robust case for change that fits with wider public
policy objectives? – ‘policy and planning analysis’;
•
Does the investment show value for money and is financially affordable? – ‘economic
and financial analysis’;
•
Is the investment viable and achievable from an operations and deliverability
perspective? – ‘deliverability and operations analysis’
CONFIDENTIAL ADVICE
6
$ Transportation
Investment
Direct economic
impacts
Economic
Benefits
Jobs and associated
economic activity from
construction and
operation
Worth measuring, but
shouldn’t be used to
evaluate projects
because these benefits
accrue to any
construction project.
CONFIDENTIAL ADVICE
Traditional mobility
benefits
Includes ridership, trips,
travel time savings,
reliability, accident
avoidance, health
benefits, and other
benefits
Benefit Cost Ratio
should be > 1
relevance
7
reliability
Agglomeration
Benefits
Other uncaptured
benefits
Increasing accessibility in
a region to enable more
travel interactions and
greater productivity
Quality of life
Greener cities
Access to opportunity
Reduced inequality
Precise land use shaping
~5 - ~100% additional
benefits
Methods are improving
for estimating these
benefits
Relevant to decisions
Difficult to measure in
dollars
Highlight
Business
Case
Work
CONFIDENTIAL ADVICE
8
Supporting
Good
Investment
– Both
Large and
Small
CONFIDENTIAL ADVICE
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Thank you and Questions?
CONFIDENTIAL ADVICE
10
www.metrolinx.com