Finform 206 business_case_template
STAFFORDSHIRE UNIVERSITY
BUSINESS CASE
TEMPLATE 2015/16
Policy Ref:
Finform 206
Author
Commercial Accounts via Head of
Finance
Version
1.0
Date
21 October 2015
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
Table of Contents
1. Introduction to a Business Case ....................................................................... 4
2. Capital Budget Process ................................................................................... 5
Template no.1 – Short, Outline Business Case ....................................................... 6
Template No. 2: Full Version Business Case .......................................................... 8
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
Version Control
Version
1.0
Date of effect
21 Oct 15
Summary of amendment
Pg 12 table added within the Resource Required section
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
1. Introduction to a Business Case
The HE sector is a dynamic competitive ever changing environment. Projects and continuous
improvement is crucial to the success of the University. A business case is designed to help
aid success by ensuring alignment with the University vision, the strategic objectives,
operational plans and the value for money strategy. The University has a finite resource and
all employees have a duty to ensure we use this money in the most economic, efficient and
effective way. The template is designed to promote these values, to guide and to encourage
consistency and transparency in the approach to decision making. A business case should be
developed in the following circumstances;
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Overspend on your Income and Expenditure budget (due to projects not known at
budget time)
Revenue investment requests (during year to spend more money)
Staffing changes due to restructures
Any expenditure which would usually be classed as capital investment (including ipads) which are part of an externally funded project with no requirement for the
project to be at cost.
Capital investment - for each capital project by sub set (For example each Estates
Strategy building stream)
Capital definition includes the following;
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Capitalizing costs is an attempt to follow the Matching Principle of accounting. The
Matching Principle seeks to match expenses with revenues. In other words, match
the cost of an item to the period in which it is used, as opposed to when the cost
was incurred. As some assets have long lives and will be generating revenue during
that useful life, their costs may be depreciated over a long period.
Our depreciation rate is as follows and items capitalised should ideally last for this
time frame.
o computers over 3 Yrs
o small equipment / servers over 5 yrs
o large equipment / refurbishments over 10 yrs
o buildings over 50 yrs
Any project should be over £1k
Costs to acquire an asset can be included in the price of the asset.
Subsequent expenditure to ensure the asset maintains its performance (maintenance
and repairs) should be recognised in the income and expenditure account. However
these can be capitalised in the following circumstances;
o it enhances the economic benefits of the asset in excess of its original
standard
o relates to a major inspection or overhaul that restores the economic benefits
of the asset that have already been reflected in depreciation.
The business case should be;
 well structured
 use clear language
 have sufficient background information
 authentic
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
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realistic
succinct
enable informed decision making
Whilst devising the business case please consider the following;
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Ensure sufficient planning time
Value for money (economy, efficiency and effective)
Consider all options adequately with enough detail
Support from key stakeholders where applicable such as Faculties, IS, Estates,
Marketing, HR and Finance
Project will be properly governed and managed throughout project
Who will be accountable and how will the project be measured?
Reviewed by someone else with a critical eye
Please include VAT
Two templates have been designed, a short outline business case and a full, more
comprehensive template. It would also generally be expected to include where possible an
NPV and payback calculation and dependant on the project it would be expected to have
income generating projects to be at least breakeven and the payback to be between 1 to 5
years. Outline business cases should be prepared to agree to the capital budgets, although if
you are ready at this stage a full business case could be completed. Outline business cases
are required for approval to progress to final business case stage.
Please find below the recommended structure of a business case in summary;
1. Cover and contents page.
2. Executive summary (this should be a high level concise summarisation of the key
points to make an informed decision and grab people’s attention). This should be
used only for the shorter business cases and as part of the larger business cases.
3. Project Description (the problem, the opportunity, what and why, market research,
benchmarking).
4. Options and proposed solutions (feasible approaches, including do nothing, length of
project).
5. Resources required (cost benefit analysis, ROI, NPV, payback – the evaluation of
each option).
6. Accountability and measurability (lead and how to measure success).
7. Risks (to include the assumptions used, sensitivity analysis and dependencies).
8. Desired outcome of project and recommendations.
2. Capital Budget Process
For 14/15 please continue with the current process. For 15/16 it will be a requirement for an
outline business case to be completed during the budget process. This will enable an informed
decision to be made on capital budget allocations before the start of 15/16. It is perfectly
acceptable to pool together smaller capital cost items of equipment into a business case.
Once the allocations have been made, as and when the project is required, a detailed business
case will need to be completed for projects over £10k.
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
Template no.1 – Short, Outline Business Case
1. Business Case Executive Outline Summary (1/2 pages)
2. Project Description
3. Options and Proposed and Solutions
4. Resources and Cost Benefit Analysis with key assumptions (financial
/mon financial)
5. Accountability and Measurability
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken
Finform 206 business_case_template
6. Risks
7. Desired Outcome and Benefits
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
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Finform 206 business_case_template
Template No.2 - Full Version Business Case
Project Title
Proposed by
Reference
Is this project within your budget Yes / No
Will this be a New Asset / Replacement (if applicable) - Delete as necessary. If this is a replacement then please
complete disposal form from Julie Evans (x 3365) before project completion date.
Capital Costs
One-off Revenue Costs
Estimated ongoing Revenue (annual costs
NPV and Payback Year (see
Project Start Date (after approval date)
Project Completion Date
– see section 4)
section 4)
Commercial Acct and Procurement Signature on
Finance Check
HR Signature on Staffing Chge Check
Please indicate which departments have been consulted with and their comments;
ACT
BEL
CES
HS
Academic Development Unit
Marketing and PR
Estates & Commercial Services
Procurement Team
Corporate Information Team
Partnerships Team
Financial Services
Research, Business, Employability Services
Human Resours and Organisational Development
Student Academic Services
International Office
Vice Chancellor’s Office
Information Services
Students’ Union
Contents Page
1. Executive Summary
2. Project Description
3. Options and proposed solutions
4. Resources required
5. Accountability and measurability
6. Risks
7. Desired Benefits and Outcome of project
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
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Finform 206 business_case_template
8. Recommendations
1.
Executive Summary
This should be a high level, concise summarisation of the key points to make an informed decision
and grab people’s attention.
2. Project Description
This may include marketing, benchmarking and other evidence collated.
3. Options and Proposed Solutions
This can include different ways of achieving the project, including ‘do nothing’ and partial investment
options.
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
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Finform 206 business_case_template
4. Resources Required
This should include a cost benefit analysis with your key assumptions, aiming for accuracy as far
as possible. Please include VAT in your costings and seek advice from your commercial
accountant.
Please consider financial and non-financial costs and benefits over the relevant period of time –
perhaps 1 year or annual costs for 5 years for example.
Financial costs should include Income types, Revenue Cost types and Capital costs.
The revenue costs may be broken down in terms of implementation, licenses, maintenance, pay,
material, training, travel, etc
Non monetary items could include time, uncertainties, risks, competitors, market changes,
technology, student experience etc
Benefits also include other than profit, benefits to all stakeholders, improvement on processes,
reliability, durability, sustainability, improving the customer portfolio, reputation, recruitment.
The costs v benefits should be compared and evaluated in summary. Your commercial accountant
can help with this and a template to calculate NPV and payback will be developed with guidance.
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Capital/
Revenue
Yr 1 £k
Yr 2 £k
Yr 3 £k
Yr 4 £k
Yr 5 £k
Income
Total Income
Costs
Total Costs
Total Surplus (Deficit)
Cumulative Surplus
(Deficit)
Total Revenue Income
Total Revenue Costs
Total Revenue Surplus
(Deficit)
Total Capital Costs
NPV at 5.4%
Payback YR
Notes and Assumptions
Please state in here any assumptions when calculating income and costs. Particularly income and
costs which are difficult to quantify. If income is difficult to quantify then payback will not be relevant.
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
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Yr 6 £k
Finform 206 business_case_template
First Year £k
Capital/
Revenue
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
April
May
June
Income
Total Income
Costs
Total Costs
Total Surplus
(Deficit)
Cumulative
Surplus (Deficit)
Total Revenue
Income
Total Revenue
Costs
Total Revenue
Surplus (Deficit)
Total Capital
Costs
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July
Yr 1
Total
Finform 206 business_case_template
5. Accountability and Measurability
Who will lead and how will it be measured?
6. Risks
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To include the assumptions used, sensitivity analysis and dependencies.
What If analysis / Sensitivity analysis is often used to compare different scenarios and their
potential outcomes based on changing conditions. Conducting a sensitivity analysis framework is
beneficial in several ways. Not only can you make better and more informed decisions by
changing assumptions and observing or estimating the results, you are also better able to predict
the outcome of your decisions. It is key to understand the sensitivity of the surplus and payback
based on changing key assumptions.
Please use sensitivity analysis to demonstrate the error margin incorporated in your key
assumptions. To highlight changing profitability and payback periods.
7. Desired Benefits/Outcome of project and Recommendations
8. Recommendations
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Equality issues have been taken into account during the development of this policy and all protected characteristics have been considered as part of the equality analysis
undertaken