Short Form Business Case guidance
for a FCERM change project for Local
Authorities, Internal Drainage Boards
and other risk management authorities
This business case template and the headings contained within are drawn from HM Treasury Green book and
Five Case Model. It should be used for justifying projects where the total project cost is less than £2 million.
The Five Case Model envisages a three staged approach in developing a business case in a logical and
structured manner to the point of final investment approval. Under the Five Case methodology the Strategic
Outline Case (SOC) is prepared at the commencement of detailed work on a project and provides the strategic
case for change, identifies a short list of options from the initial long list and provides indicative costs and
benefits sufficient to demonstrate that a viable project is possible. The Outline Business Case (OBC) details the
appraisal work on the short listed options and the selection of the preferred option to be taken through a
procurement stage. It also provides an update on costs and benefits and a delivery plan. The Full Business
Case (FBC) contains the finalised prices from the procurement exercise, final terms of any legal agreements
(e.g. contributions, compensation etc ) and a completed delivery plan. The FBC immediately precedes the
signing of contracts.
In most cases you only need to submit your business case at Outline Business Case (OBC) stage accompanied
by the relevant forms as noted below. If your project value is in excess of £50m you will need to complete and
submit business cases at all three stages. In these cases please discuss your project and planned submissions
with the Large Projects Review Group (LPRG).
For a flood risk scheme, send your OBC with a completed FCERM 2.
For a coastal scheme, send your OBC with a completed CPA1 and include a copy with a completed CPA2.
For a study or strategy, please use form FCERM 7. We will not need an OBC.
The Grant memorandum sets out the procedures to be followed when applying for grant and you should follow
this to make sure that the total costs for approval are only those eligible for a grant. Once the scheme is
approved you are eligible for a grant for the costs you have incurred in preparing your business case so these
should be included in your application, but you should exclude the costs of studies if you have previously claimed
grant under a separate FCERM7. All development and study costs should be shown in the whole life costs.
The Outline Business Case (OBC) describes the appraisal that has been carried out on a flood and coastal
erosion risk management (FCERM) project, and provides the supporting business case to your application for
Flood Defence Grant in Aid (FDGiA). It should contain all relevant information and facts to satisfy a reader with no
knowledge of the project that the correct investment decision, in technical, environmental and economic terms, is
being recommended. If a separate SOC has not been presented then it is important to include details of the work
carried out at the SOC stage, i.e. in establishing the strategic basis for the project and in selecting the short listed
options. This needs to be in sufficient detail for the earlier steps to be understood as part of the review of the
Outline Business Case submission.
Your business case should explain why you think your project deserves investment and give evidence to support
the decisions that led to the final conclusions and recommendation. You should cover the background to the
facts in appropriate appendices, but the reader should not have to refer to the appendices (other than to see
drawings or detailed figures) to be satisfied that your business case is sound and reliable.
We have provided this template to help you compile your business case and to provide some consistency in the
layout and style of business cases sent to us for grant approval. This template is a good foundation for most
projects to follow, but within the headings you can vary the content and amount you write so as to present your
case efficiently and effectively.
The length of the business case will depend on how complex your project is and the scale of the investment you
need. A concise summary business case is more efficient to prepare and easier to review and approve. It should
usually be possible to describe a project in around 15 pages excluding the header sheets and the appendices,
unless the project is particularly complex.
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Content
To help you, most sections of this template contain guidance notes that offer suggestions and prompts for
possible content and the use of tables. Please delete all of this text when completing the business case.
The business case, and any supporting documents, should not include the consultant’s logo or extra pages from
the consultant’s procedures, such as the quality assurance (QA) sign-off sheet (the business case approval sheet
included here is the QA record). Avoid using page headers and footers that contain the consultant’s name.
Tables
You should include tables wherever you feel they are appropriate and help to summarise and present information
concisely or effectively. We have provided some tables in the template that relate to specific details you must
provide. There is guidance in the template on how to use these tables and in some cases when it possible to
make modest changes to them, for example to adjust them for the number of options being considered.
Appendices
Some standard appendices are shown at the end of the template, but you should use whatever additional
appendices you think are necessary to support the business case. You will need to update the contents list to
reflect the actual appendices contained in your business case.
Auto-updating the contents page
The contents page will update to reflect information that has been changed in the main text and tables. To update
it, right click on the relevant area of the contents page to highlight it and select ‘Update Field’ to access the
update option.
To allow these updating features to be created, the template contains specific text types and ‘fields’. These are
headings 1, 2, 3 and 4 − fields in the table labels and in the appendix labels. When editing the document, take
care to keep these.
Numbering paragraphs
You should retain the existing numbering of all paragraphs in sequence as subsets of the section number.
Customise page footer
To customise the page footer to the individual project go to Insert>Header and Footer and select Footer from the
toolbar. Enter the specific scheme title, reference number, version number and date.
Help and support
Before preparing your business case we advise you to contact your local Environment Agency Area Flood and
Coastal Risk Manager and/or Partnership & Strategic Overview teams who can provide valuable support and
advice. Once you have completed your business case they will review and check the document as part of the
submission process as shown on the approval sheet.
The template starts below. This and the preceding guidance page should
be deleted from the final Outline Business Case.
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XXX Project
RMA Short Form
XXX
Business Case
Version No:
Date:
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BUSINESS CASE APPROVAL SHEET
1
Review & Technical Approval
Project title
Authority project reference
EA reference
Lead authority
Date of submission
Consultant
‘I confirm that this project meets our quality assurance requirements, environmental obligations and Defra
investment appraisal conditions, that all internal approvals, including member approval, have been completed and
recommend we apply to the Environment Agency for capital grant and local levy in the sum of £
Job title
Name
Signature
Date
Authority Project Executive
‘I have reviewed this document and confirm that it meets the current business case guidelines for local authority
and Internal Drainage Board applications.’
OBC reviewer
‘I confirm that the project is ready for assurance and that I have consulted with the Director of Business Finance’
Area Flood & Coastal Risk
Manager
Assurance sign off - (Tick the appropriate box)
AFCRM Assurance
Projects < £100k
Or Projects < £1m (if GiA & Levy <£100k)
NPAS Assurance
Projects £100k - £2m
Recommendation for approval
Date
AFCRM or NPAS Chair
Version Number
Project total as approved (£k)
Project total made up of :
Capital Grant (£k)
Levy (£k)
Other Contributions (£k)
2
Project Financial approval
Financial scheme of approval
Project total
Area Flood & Coastal Risk
Manager
<£100k or
<£1m (if GiA &
Levy <£100k)
Director of Business Finance
All projects
>£100k
Name
Signature
Plus:
Area Manager
£100k- £1m
Director of Operations
£1m -£10m
3
Further approvals (if applicable)
Date sent (or N/A)
Version number
(if different)
Date approved (or N/A)
Final Comments
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Date
For FSoD Coordinator use only:
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Table of Contents
BUSINESS CASE............................................................................................................................................................. 7
1.
INTRODUCTION ..................................................................................................................................................... 7
2.
STRATEGIC CASE.................................................................................................................................................. 7
3.
ECONOMIC CASE .................................................................................................................................................. 7
4.
COMMERCIAL CASE .............................................................................................................................................. 8
5.
FINANCIAL CASE ................................................................................................................................................... 8
6.
MANAGEMENT CASE ............................................................................................................................................. 9
7.
RECOMMENDATION ............................................................................................................................................ 10
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Business Case
(The business case should consist of a concise summary of the key matters. Guidance is provided below to help you
complete the document – please delete the text in brackets as you complete each section.)
1. Introduction
(State briefly what the project is and the approval amount being sought through the business case.)
2. Strategic case
Strategic context
(Summarise the strategic drivers for investment, with reference to supporting strategies, River Basin and Catchment
Flood Management plans and any local initiatives.)
The case for change
(Briefly explain the current situation and the problem to be solved. Identify the benefits to be delivered and the
opportunities for improvement over current arrangements.)
Objectives
(Set out the objectives of the project - which should be SMART (Specific, measurable, achievable, realistic and time
bound) and comment on any constraints or dependencies that may affect delivery.)
3. Economic case
Options considered
(Describe the options considered, explain those rejected, and comment on the technical, social and environmental
issues for the different options.)
Options
Description
1
Do nothing
2
Do minimum
3
Do something 1
4
Do something 2
5
Do something 3
6 etc
Do something 4
Technical, Environmental &
Social matters
Key findings
(Summarise the findings from the economic appraisal of the short listed options. State the source of figures and key
assumptions and comment on any issues arising. )
Present
Value
costs
(£’000)
Option
Present
Value
damages
(£’000)
Present
Value
benefits
(£’000)
Average
benefit: cost
ratio (BCR)
1 Do nothing
2 Do minimum
3 Do something 1
4 Do something 2
Preferred way forward
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Incremental
benefit: cost
ratio (IBCR)
Option for
incremental
calculation
(Describe why you have selected the preferred option with reference to key criteria e.g. economic, environmental
benefits, risks, sustainability, carbon footprint or other. Comment on the sensitivity of the option choice to variations in
the key assumptions.)
4. Commercial case
Procurement strategy
(Explain the planned approach to procurement, and the benefits over the alternatives considered, e.g. use of
Environment Agency frameworks.)
Key contractual terms and risk allocation
(Indicate the key areas to be agreed in the planned contractual arrangements, any likely complications and comment on
how risks are allocated between parties whether related to design, construction or residual risks.)
Efficiencies and commercial arrangements
(Provide a summary of efficiencies that will be achieved with any necessary detail (e.g. project efficiency register)
included in the appendices. Comment on any other commercial issues or opportunities.)
5. Financial case
Summary of financial appraisal
(Provide detail of the projected costs for the project on economic (present value) and cash bases and showing the
amount for approval. Explain how the costs have been derived and how the optimism bias has been calculated.)
Cost for
economic
appraisal (PV)
Costs up to OBC
Whole-life
cash cost
N/a – sunk costs
Total Project
cost
(approval)
Exc previous app
Costs after OBC
Existing staff costs
Further staff costs
Consultants’ fees
Contractors’ fees
Cost consultants’ fees
Site investigation and survey
Construction
Site supervision
Environmental mitigation
Environmental enhancement
Land purchase & compensation
Other
Risk Contingency
Optimism Bias
Risk - Monte Carlo 95%ile or similar
N/a
N/a
N/a
Risk - Monte Carlo 50%ile or similar
Inflation
N/a
N/a
Future costs
(construction + maintenance)
(PV)
(Cash)
N/a
Optimism Bias on future costs
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Cost for
economic
appraisal (PV)
Whole-life
cash cost
Total Project
cost
(approval)
Project total cost
Funding sources
(Summarise the partnership funding score and how the total project cost is to be funded. Please specify the source of all
contributions and comment on any conditions placed on funding or potential risks. The partnership funding calculator
and letters of agreement or support should be included in the appendices.)
Description
%
Total £k
Raw Partnership Funding score
Funding:
Contributions (list)
Other: (list)
Local Levy
Non GiA contributions
Adjusted Partnership Funding score
Grant in Aid
Project total cost (approval)
Overall affordability
(Summarise the overall affordability of the project showing the costs and contributions needed over the lifespan of the
investment. Comment on any likely issues and on the planned arrangements for sharing any cost overruns.)
Annualised spend profile (£k)
Yr 0
20xx
Yr 1
20xx
Yr 2
20xx
Yr 3
20xx
Yr 4+
Total
Staff costs
Construction & other costs
Optimism bias & risk contingency
Inflation
Project total cost
Less: Costs not eligible
Less: Contributions
Less: Local Levy being claimed
Capital grant claim
Grant rate
6. Management case
Project management
(Comment on the project management arrangements for the scheme, including project governance, roles and
responsibilities and the project plan. Outline the planned communications and stakeholder engagement. Show the key
steps in the project and it may be helpful to include an activity plan (such as a Gantt chart) in the appendices to show
the critical path.)
Date
Activity
Comment
(DD/MM/YYY)
Planning permission received
Other (detail as necessary)
Work to be started on site
Work substantially completed by
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Benefits realisation
(Summarise the targeted benefits and explain how they will be monitored and reported and when they will be realised.
Also comment on the arrangements for tracking efficiency savings compared with target.)
Contributions to outcome measures
Outcome 1 − Ratio of whole-life benefits to costs
Present value benefits (£k)
Present value costs (£k)
Benefit: cost ratio
Outcome 2 − Households at reduced risk
2a – Households moved to a lower risk category (number – nr)
2b – Households moved from very significant or significant risk to
moderate or low risk (nr)
2c – Proportion of households in 2b that are in the 20% most deprived
areas (nr)
Outcome 3 – Households with reduced risk of erosion
3a – Households with reduced risk of erosion (nr)
3b – Proportion of those in 3 protected from loss within 20 years (nr)
3c – Proportion of households in 3b that are in the 20% most deprived
areas (nr)
Outcome 4 – Water framework directive
4a – Hectares of water-dependent habitat created or improved (ha)
4b – Hectares of intertidal habitat created (ha)
4c – Kilometres of river protected (km)
Risk management
(Summarise key risks of the project, indicate the risk owner and how these are being managed and mitigated and
explain how the risk contingency has been derived. A copy of your risk register may be included in the appendices.)
Key Risks
H/M/L
Owner
Mitigation
1
2
3
Assurance, approval & post project evaluation
(Summarise the assurance and approval arrangements for the project e.g. project board meetings, peer reviews,
independent assurance (NPAS etc). Ensure project milestones accommodate the timing of these steps as well as
approval. Include details of any post project reviews or post project benefits management and reporting arrangements.)
7. Recommendation
(Formal recommendation of the proposed outcome and the approval sought for the scheme.)
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Appendix A: Partnership funding calculator
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Appendix B:
List of reports produced
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