Finance and Business Case Tasks

Estimate costs and prepare outline business case.

Start to create high-level costs and benefits for inclusion in the strategic business case going forward. At this initial stage, it is probably just guess work so use ranges and factor in optimism bias. If this is something that has been done before, try and find information to help with cost estimating.

Factor in costs and benefits for other organisations.

Assess affordability – is the money available to invest in the idea?

Estimate costs and prepare outline business case.

Start to create high-level costs and benefits for inclusion in the strategic business  case going forward. At this initial stage, it is probably just guess work so use ranges and factor in optimism bias. If this is something that has been done before, try and find information to help with cost estimating.

Assess affordability – is the money available to invest in the idea?

Identify likely costs of the project.

It is necessary to have some idea of the costs so they understand what they are committing to.

Outline details on costs that may be available.

It will be recognised that these are only rough estimates but it is always good to have some figures on which to assess the value of the investment.

Carry out early work on identifying where the costs are likely to come from.

The selection of the governance model may provide an indication of the route that is being taken and therefore provide an insight into the funding source.

The case for change should be evident in the vision and the brief.

Headline estimates of major costs should be included in the brief.

The Vision Statement will be a key consideration when evaluating options, as the Business Case completes.

Ensure the cost estimates have been captured and are captured in the brief.

The cost estimates are sufficiently extensive and there is a risk rating associated with them. There should be justification for a ‘Go’ decision into programme or project definition.

Create a portfolio level financial plan showing profiled capital and operating expenditure budgets and forecasts.

Decide how much financial contingency to retain at portfolio level.

Financial contingency is a reserve to address cost escalation on current programmes and projects and to fund new initiatives.

The corporate financial accounting systems should be aligned with the portfolio accounting to ensure that overarching controls are in place.

Ensure that investment is balancing the short, medium and long term returns on investment.

Business cases should include a cost/benefit analysis to support investment appraisal and decision making. Cost/benefit analysis should be used to ensure the projects with the best rate of return are selected for investment.

Financial diligence and transparency of investment decision should be reported as part of compliance.

Compliance projects can be implemented in different ways that have different costs. Implementation can often incorporate other benefits (e.g. streamlining existing processes, IT solutions etc).

Review the progress against the financial plan on a regular basis.

Review the performance against business cases.

Check that the financial projections adequately cover the investment in change management.

Review should include spend against budget, cost overruns and cost escalation as well as underspend.

Regular review of performance against business cases will help identify trends and improvements in financial forecasting and business case development.

Organise audit reviews of financial compliance.

Ideally the Business Case will have been satisfied now. If it has not, then the programme may be closing early, possibly due to the lack of funding or that the benefits were not achievable. Formal auditing of the programmes budgets should be scheduled.

Audit financial expenditure and close budgets.

This should be done at the end of the closure activities, as the work on reviewing benefits and capturing the full costs of the projects needs to be undertaken first. It is advisable that there is a formal review to check that financial controls have effectively been applied and lessons learned, particularly in the area of scheduling of funds and the challenges and opportunities that have come from this. The Business Case should be formally reviewed, accounting systems and budgets closed down.

Formalise the evaluation of the business case

Close down programme relating budgets

Ensure residual budgets are dispersed or returned

Operational budgets should have been adjusted to reflect economic benefits (savings) and operational budget changes.

Check financial benefit forecasts for reliability.

Check that there is no double counting of financial benefits in the accounting processes.

Ensure that operating budgets are reflecting  changes to the cost base.

Ensure forecast benefits beyond the life of the programme or project are in line with the business case, and that the budget holders are clear on what is happening.

For cashable savings (eg reduced staffing levels) or increased revenue forecasts, adjust current and future budgets to reflect forecast benefits profile.

Where is identified that there are deficiencies in the accounting or calculation processes and guidance, then the business case procedures and documents will need to be amended.

In extreme cases, all business cases may need to be reviewed.

Inform corporate finance, so that future BAU budgets and strategic financial planning reflect portfolio benefits and avoid double counting or overlook benefits.

The case for change should be evident in the vision.

The Vision Statement will be a key consideration when evaluating options, as the Business Case completes.

High level cost estimates should be available.

The costs of achieving the various options should be estimated and considered as part of options appraisal.

Review project budgets to aggregate Business Case costs

Expenditure on projects avoided should be built into the Business Case and identified as an early benefit. Funds from closed projects can be used to resource priority initiatives.

Review project budgets to aggregate Business Case costs and correlate funding plans to ensure tranches are achievable. 

Provide expenditure estimates against each of the tranches. 

Expenditure on projects avoided should be built into the Business Case and identified as an early benefit. Funds from closed projects can be used to resource priority initiatives. 

Existing financial commitment can be better controlled by scheduling funds based on the step changes. It may be that funding constraints will be a key element or constraint to what can be achieved and by when, which will affect the Tranches.

Cost estimates can now be finalised for the preferred approach.

There should be a cost analysis of each of the options.

The analysis should form the Options Appraisal section of the Business Case. Do nothing should also be included as one of the options.

Review the funding strategy and anticipated costs.

Ensure there is commitment to the anticipated Business Case and funding for the Design phase. Significant effort should have gone into the options appraisal, which should be visible to the Sponsoring Group. The budget for the next stage should also be established.

Financial estimates should be firmer and updated.

Initial costings for individual projects should be undertaken.

The cost of the project is a critical cost element of the programme and will represent a large proportion of the costs in the Business Case. At this point, there should be enough information to set a budget for each project.

Complete the Monitoring and Control Strategy

Financial controls and approvals within which the programme will work and function should be included within the Monitoring and Control Strategy. These should define how budgets will be allocated and managed and the levels of authority for individuals within the programme and Project Managers.

Financial management plan should now be finalised.

There should be a financial plan that outlines how and when funds will be made available to the programme. Availability of funds could be a key constraint around which you have to work.

Define the budget.

Undertake Independent assurance of cost estimates.

The project should be compliant to the finance management standards in the framework and how the resource management cycle will be used by the project.

The source of funds should be explained and where and when the expenditure is likely to occur, the Stages should be used as the basis for this.

Large elements of the costs will not be known yet however information on the current costs of services or operational delivery should be included for later comparison.

Check availability of funding to support first tranche.

Funds to mobilise the programme and put the infrastructure in place need to be ring fenced to ensure availability. The budget should be clearly defined and allocated.

Revise individual project budgets in line with revised projects.

Allocate funds to appropriate groups.

Establish expenditure tracking and monitor effectiveness.

Ensure compliance of projects to finance process.

Establish financial authorities.

The budgets for the projects will exist in the Business Case. The early development work for the projects will be to establish the viability of their objectives within that budget.

Track and optimise the use of finances across the projects and programme.

Review effectiveness of financial forecasting and address causes of weakness.

Monitor and manage project financial performance.

Programme business progress should be reported to each programme board.

Monitor for opportunities to optimise financial performance.

Update budget information to reflect actual costs at this stage.

The tolerances for achieving the Projects will be set within the Business Case and these will need to be regularly managed and reviewed. In addition, there should be regular liaison with the financial functions to ensure that anticipated funds are going to be available in accordance with the plan, or to make adjustments if this is the case.

The budget for the programme will be defined within the Business Case. Tight controls of expenditure at the programme and project levels should be maintained and approvals for expenditure should be in line with organisational approval levels. The monitoring should be of the aggregated performance against expenditure as well as the individual projects. It is critical that expenditure is measured in line with achievements, under spends can be as serious as overspends.

Final transition costs should now be available and reflect the total cost of the projects.

Refine finance plans to accommodate any changes.

Review effectiveness of financial forecasting and address causes of weakness.

Review the funding strategy and anticipated costs.

The review should principally focus on the ongoing financial viability of the programme and, in particular, the availability of funds to support it. The balance of benefits and costs should have been under review all the way along, this is the opportunity to stand back and re-think against the bigger picture of organisational context.

The review should assess the accuracy of the estimates being provided for costs and benefits. These should be re-forecast and a revised Business Case produced to justify the programme continuing.

Funds to mobilise the programme and put the infrastructure in place need to be ring fenced to ensure availability.

Costs of disposal and decommissioning should now be reflected in the budget.

Ensure that support costs associated with legacy systems are removed from the budget and payment to suppliers is stopped.

Confirm availability of funding to support next tranche or closure.

Commitment to the anticipated Business Case and funding for the next Tranche should be put into place.

Costs of developing the design and procurement should be recorded in the budget.

The costs for this work, and in particular external expertise should have been identified in the budget for this phase of work. Cutting costs during these activities could end up with a much larger bill later.

Financial analysis of the implementation costs should be developed.

A key consideration is going to be cost. A budget will need to be set and if the achievement of the original idea is now looking more expensive, then it is better to stop the project at this stage.

Produce budget estimates for the delivery of the recommended options and cost of the Design stage work.

The option selected must be within the budgetary expectations that will have been set for the strategic Business Case or have a good justification for variation.

Ensure recommended actions relating to budget are dealt with.

Resolving actions on costs may affect the validity of the Business Case, if it goes beyond authorised tolerance that will require managing.

Refine the estimated costs of achieving the new model.

Ensure that the costs of all aspects of the change are being captured, not just the costs of the assets. There are financial implications to many aspects of the ways of working that will need to be estimated.

Budget expectations should be updated to reflect the detail of the new design.

Make preparations to complete the Full Business Case.

There may well be a cost to undertaking this detailed design prior to the procurement being undertaken - these costs should have been included in the Outline Business Case.  

The final pricing from the tender should be included in the Business Case.

Budgets should be set to cover the costs of the procurement and the resources required to undertake it. In particular, include the costs of additional specialist knowledge resources or tools that will be used to undertake the procurement.

Assure that the budgets are sufficiently accurate and available.

This will be the main area for consideration - a robust financial plan will be expected, not only showing total costs, but also the expenditure profile which will be built into the financial plans.

Update financial forecasts and establish a change budget.

Payments to the supplier should be based on the achievements rather than simple time or input resource effort.  

The total costs resulting from the contract must be cross referenced back to the Business Case to ensure that they are within limits that have been set.

Financial forecasts for the project and operating costs can now be updated.

The financial implications of the new model should include the cost of any contracts, the implementation costs and of course and the ownership costs.  Any of these may have changed during the contract placement activities.

Costs for in-house and independent testing should be made available.

A budget to cover the testing programme should have been included within the full Business Case, any extension on time and resources should be cross referenced back to the Business Case budget.

Review budgets and adjust to meet any additional work that will be required.

Budgets should now be finalised and submitted as part of the gate review. This should include contingency for any risks that have been identified or issues that have not been resolved. 

Ensure financial skills and budgets are available to fund the stage.

A budget to cover the costs of transition should be in place with responsibilities for expenditure allocated.

Adjust transition budget to reflect new starting point.

If the level of operational support requirements change then the budget will be affected and should be updated.

Track costs against forecast and manage deviations.

There may be financial incentives and penalties built into the contract to help with quality management.

Monitoring of costs to ensure that they stay within tolerance is important.  

During this phase, costs could be running at maximum as the project and the operational transition support will be in place.

Update budget information to reflect actual costs at this stage.

Final transition costs should now be available and reflect the total cost of the projects.

Report final costs with commentary on any expectations.

Project financials are closed.

Any additional costs associated with issues will require a budget.

Project finances should now be in the process of being closed off. The final obligations to support resources should be diminishing and final payments to suppliers should now be made.