Preparing an Effective Business Case - A Guide to Planning and Funding Municipal and Community Projects
Table of Contents
Preparing a business case is an integral part of the planning and fundraising process for any municipal or community project. It becomes more important as the cost and complexity of the project increases.
This Factsheet will help municipalities and not-for-profit organizations prepare an effective business case for raising funds — both within the community and through government programs.
A business case is similar to a business plan prepared for private business. Its purpose is to outline the business rationale for undertaking the project and to define the parameters and management factors involved in the project itself. It provides the project manager with a tool to guide the design, management and evaluation of the project.
Information on preparing business plans is available from OMAFRA, local Business Enterprise Centres and private consultants. Business planning software is available wherever business books and computer programs are sold. The OMAFRA Factsheet Preparing Business Plans Order No. 08-051 is available from ServiceOntario at 1 800 267-8097.
The business case provides evidence that the project is a good investment for both the funding partner and the community. Funding partners and government funding programs usually require a business case before committing to the project.
The grant application is separate from the business case. It merely conveys the basic information required by the granting body. The business case accompanies the grant application. Its purpose is to sell the idea or concept to the funding administration. Therefore write in clear, plain language, avoiding technical jargon. This helps the program administrator and the potential partner to understand the need to help fund the project.
If specific forms are requested as part of a program application, complete the information in full, using the format provided. Make sure you thoroughly understand both the terms of reference of the program, and the nature of the project, both the wording and the intent, before beginning to prepare the application form. The business case is attached to the application form, along with letters of commitment and support from potential partners.
The business case serves four purposes:
An effective business case is one that matches the purpose and parameters of the funding program that it seeks to attract. In short, an effective business case justifies:
While the business case may be presented in various formats, there are certain elements to include in any written document. The description that follows is a logical sequence for the final business case. This format can be adapted to almost any project, but be sure to present the business case in a manner that will create a favourable impression on the funding partner or program administrator.
The title page is the first impression a reader gets of a business case. Make sure it is neat and orderly, simple, balanced and easy to read. It contains the:
Table of Contents
The table of contents lists the major headings in the business case, and the page on which each is found. Remember to number the pages in the document. While it is the last section completed, it is placed immediately following the title page.
Executive or Project Summary
This is your first and most important selling tool. It is where you create the critical first impression of the project, so it is important to summarize the most important elements of the project in a concise and compelling manner.
Guidelines for writing the executive summary are listed below.
Keep the executive summary to two pages or less. Do not include technical descriptions. Concentrate on explaining your reasons for undertaking the project, and what the benefits will be.
It may help to do a point form first draft before writing your business case; this could clarify the important elements of the plan. Write the final draft after completing the plan details.
This is a concise, general statement of what the municipality intends to achieve by completing the project. It explains what is to be done, for whom, and why. If possible, do not exceed one sentence.
The Town of Greendale will construct a four-lane bridge over the Lazy Hollow River, in order to attract industry to its industrial park and to facilitate traffic flow between the downtown and the highway575 by-pass.
Objectives of the Project
What, precisely, will be achieved by completing the project? State the objectives clearly; one short statement for each, without accompanying arguments or documentation. These appear in the body of the report and in the project summary. It should be clear to the reviewer, however, how these objectives relate to the objectives of the funding program.
Objectives are Specific, Measurable, Achievable, Realistic and Timely (S.M.A.R.T.). These define the results expected as a direct consequence of the project’s completion. Such hard data verifies the value of the project, and makes it saleable to the community as well as the funding program. They include such items as:
Some projects have long- and short-term objectives. Identify these as such if it adds to the understanding of the program. For example, the short-term objective of building a new bridge may be to replace an aging structure soon to be condemned. In the long term, a multi-lane bridge near the industrial park may help to attract industry to the municipality, if this is a significant rationale.
The discussion following each objective clarifies the analysis or rationale for arriving at the objective. For example: A 2001 traffic study indicated that 60,000 cars and 6,000 heavy trucks would use the new route annually, each saving 2.4 miles per trip. This would create an annual savings of $300,000 in maintenance on other roads.
Performance measures evaluate the success of the project. They indicate how the project will meet the objectives listed at the beginning of the business case. The business case will:
The needs assessment analyses the problem and explains why the problem needs to be corrected. It provides the information as to whether the project should be undertaken at all. The report, in abbreviated form, becomes part of the business case.
Environmental Assessment (if applicable)
Benefits from Correcting the Problem?
The technical analysis outlines the technical information used to make the decision, and tells why the proposal represents the best or most cost-effective solution. It describes:
Project Work Plan
The work plan spells out the terms that will form the basis of any contracts, including the jobs to be done, the time frames and milestones. It could help the project manager if you include the evaluation criteria for each step or milestone here. Name those responsible for managing the project and contracts as soon as they are known.
While you will use a detailed work plan listing subcontractors, detailed processes and reporting mechanisms to manage the project, it is not necessary to include this in the business case.
The financial plan shows how the project will be financed and how returns, if any, will be credited. Give an explanation of why program funding is necessary and how funds will be used in the introductory paragraph. This will show up again in the project budget. Elements of a financial plan include:
Capital Asset Management Plan
Partners may be any parties with a vested interest in the project who are contributing significantly to its success. The most effective partners are those that contribute financially to the project.
The partner profile includes:
Letters of support from interested parties may help in supporting a grant application, but they are not considered part of the business case. Organizations or writers of such letters may not considered to be "partners" by the funding program administration.
Appendices are pertinent documents that show support for or give validity to the project. They include:
By creating a complete business case such as the one described here, the sponsoring organization will know that it’s management has thought through the entire project thoroughly. The managers will be confident the right decision has been made, and that designated people are in charge of each step of the process. Funding organizations will be confident the project has been well planned, will provide the expected return and is in the best interests of the community.
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