south west employers business case & specification writing trainer: date:

South West Employers

Business Case & Specification Writing

Trainer: Date:

Activity 1 - Icebreaker

Is a middle child

(1 point)

Likes to eat Japanese food

(1 point)

Is wearing pink

(1 point)

Plays a team sport

(1 point)

Speaks another language

(1 point)

Wears glasses

(1 point)

Is over 6’ tall

(1 point)

Has less than four letters in his/her

first name

(1 point)

Has a last name that starts with a W

(1 point)

Has green eyes

(1 point)

Owns a Vauxhall car

(2 points)

Likes classical music

(2 points)

Preferred Maths to English in school

(2 points)

Knows someone famous

(2 points)

Has red hair

(2 points)

Has more than 2 children

(3 points)

Has made a parachute jump

(3 points)

Has visited more than 10 countries

(3 points)

Has more than 7 letters in his/her

first name.

(3 points)

Has a birthday in the same month as me

(3 points)

One unusual fact I have found out about someone here is? ____________________________ (5 points)

How many points do you have? _______

Activity 2 - Groundrules

Groundrules help to create a positive and safe learning environment. Discuss and agree a list of between 3 and 5 rules that all participants are comfortable with

Objectives

At the end of the session, participants will have knowledge and an understanding of:

The fundamental principles of preparing for and developing a business case and specification:

What is a business case and when is it needed?

Typical business case contents

What is a specification and why is it important?

Types of specification

Special considerations when buying services

Potential issues and challenges and how to manage them

Sections

1. Introduction to Business Cases

2. Business Case Content

3. What is a Specification?

4. Writing a Specification

What is a Business Case and when is one needed?

Some functions A recommendation to decision-makers of a course of action

An evaluation of a number of identified courses

Analysis of costs, benefits and risks in pursuing certain courses of action

An explanation of how a course of action should be implemented

A communication tool to provide relevant information to people involved in the decision-making process

A method for innovation, wider-thinking and new practice

An opportunity to assess what others are doing to compare best practice

Innovation Savings - Think and Do Different

Su

pp

lier

Pri

ces

Profit

Risk Premium

Overheads

Direct Costs

10%

5%

45 – 50%

40 – 50%

Traditional Procurement

Squeeze the profit marginmay yield 3 – 5%

Target the 90%Might achieve 40%

Soft market testing

Demand Challenge

Innovate

Benchmark

Change of Use

Why have a Business Case?

ComplianceRisk

ManagementSecure

ResourcesSecureBudget

StakeholderBuy-In

EvaluateBenefits

InvestmentAppraisal

ProvideBaseline

MobiliseSupport

ProjectStructure

Approval

Requirements

Assess the situation, what (if anything) is needed?

When is a Business Case required?

Where approval is required for expenditure

Often for procurement over the EU threshold

Refer to your local CPRs for further detail

For complex requirements where a project structure is required (eg under Prince 2 or similar project methodology)

Writing a Business Case will help to . . .

Obtain the support of decision-makers

Obtain management commitment

Gain approval to proceed

Ensure fit with policies and strategy

Provide a planning and implementation framework

Enable monitoring against a stated baseline

Ensure benefits are clearly stated and logged/achieved

Facilitate risk management

Provide resources

Initiate a broader project

Be prepared

Identify stakeholders

Determine/analyse options

Consider/evaluate risks

Identify risk management

Assess benefits

Determine benefits tracking

Undertake financial analysis

Sections





Executive Summary Arguably the most important part

A snapshot of the whole business case

Highlights the key aspects

Enables senior staff to grasp the key aspects

One page is ideal – maximum

This is what we want you to approve............

And this is why it is a good idea............

Introduction Sets the scene

Provides background and relevant history

Summarises the business need

Explains the current situation

Identifies the drivers for change

Relates to strategic goals

This is where we are now............

And why we need to change............

Project management Applicable for major and project related items

Project structure

Roles

Governance

Decision levels

Project plan

Outline of resources

Here’s the process that will take us through to successful implementation.....

Definition, scope and implications Outlines the requirement

Examines the broader impact

Identifies stakeholders

States constraints

Analyses dependencies

Identifies critical success factors

This is what we need to buy and the broader impact.....

Stakeholder analysis and management

Keep Satisfied Key Players

Minimal Effort Keep Informed

Internal

High

High

Low

Sta

keh

old

er P

ow

er

Stakeholder Interest

Source: adapted from Mendelow (1991)

Activity 3 – Stakeholder Analysis

Work in pairs or small groups

Using the given contract and identify the relevant key stakeholders. Consider their level of interest and power relative to the contract and plot their position using the matrix approach that we have discussed

Technical considerations Will vary depending on the item being purchased

May include:

Quality

Sustainability

Storage

Distribution

Operational issues

Training

Systems

Compatibility issues

We have considered how the purchase will impact on us operationally.....

Commercial considerations Determine outcomes

Market considerations

Existing frameworks and collaboration

Soft market testing, opportunities for innovation

Outline specification

Sourcing options

Contract term

Contract type

M.I. requirements

Implementation timescales

And here are the key business considerations which are relevant to the purchase.....

Additional considerations Market testing

Is the supplier willing to invest?

What opportunities are there for shared responsibility?

Is collaboration possible?

What options are available for innovative practice and original solutions

And here is the way in which we will gain additional rewards, shared responsibility and innovation.....

Risk analysis Probability

How likely is it that the risk will happen?

High : Medium : Low

Impact

What will be the impact if it does happen?

High : Medium : Low

Risk management and mitigation

Contingency

And we have considered the risks and how they can be managed.....

Activity 4 – Identifying and managing risks


Consider the risk examples provided

Determine the probability of these risks arising and their potential impact if they do arise

Suggest ways that each of the risks can be managed

Financial & resource considerations Impact on staff (workload, TUPE)

Costs Phasing

Operational

Ongoing

Whole life

Budget CapEx

RevEx

Shared investment and risk

Return and payback Procurement activity is not simply a process – it should

add value and produce savings

These are the relevant financial aspects......

And the impact on headcount........

Investment appraisal techniques

Payback Period

Net Present Value

Internal Rate of Return

Accounting Rate of Return

Breakeven point

TIME(or production)

£

Total costs

Accumulation ofBenefits

Break even point

Benefits management & realisation Hard benefits

Soft benefits

Measurement

Manage and trackAnd these are the benefits that the purchase will deliver........

Options appraisal Long list

Short list

Explain reasons for rejection

Financial analysis of options

Use SWOT analysis

Evaluation criteria

A number of options have been considered and evaluated........

SWOT analysis

Strengths Weaknesses

Opportunities Threats

Internal

External

Activity 5 – Evaluating options

You have been involved in writing a business case and six options have been identified as offering potential solutions

As a group, consider the criteria that you could use as a basis for evaluating each option

Recommendation Clear

Concise

Supported

LogicalThis is the option we recommend....

And why.......

Ensure you follow local procedures for sign-off

Other content Title page

Table of contents

Definitions/glossary of terms

Bibliography

Appendices

Summary of typical content

1. Title page

2. Executive summary

3. Table of contents

4. Definitions/glossary of terms

5. Introduction

6. Project management

7. Definitions, scope and implications

8. Technical considerations

9. Commercial considerations

10. Risk analysis

11. Finance and resource considerations

12. Benefits management and realisation

13. Options appraisal

14. Recommendation

15. Appendices

16. Bibliography

Business case checklist Is the need/requirement clearly stated?

Does it fit with strategy, policies and goals?

Are the benefits identified?

How/when will benefits be realised and measured?

Has success been clearly defined?

Have all options been identified and evaluated?

Is the preferred option clearly supported?

Is the funding requirement clear?

Have risks been identified and evaluated?

Have plans been put in place to manage the risks?

Is there a clear recommendation?

Does the financial analysis support the recommendation?

Sections





Activity 6 – What is a specification?

Consider and discuss the meaning of ‘specification’

Some definitions

A statement describing the characteristics of the supplies or services to be purchased, which the supplier is expected to provide

A means of communicating in writing the requirements or intentions of one party to another about a product or service, a material, procedure or a test

A standard against which the supplier can be measured

A statement of the attributes of a product or service

A statement of requirements

Most importantly: it is part of your contract with thesupplier!

Why is a specification needed?

It must not be assumed that

the supplier will always

precisely understand what

is being requested by the

purchaser........

......purchasers get what they

ask for, but not necessarily

what they need

Caveat emptor

A computer?

Or, a computer?

The main functions of a specification

To communicate to a supplier what you expect them to supply

To provide a record against which the goods or services supplied will be measured

A tool to obtain buy-in and commitment from internal stakeholders

A contractual tool to ensure you get what you want

Activity 7 – Services v Goods


Discuss the issues when specifying services (compared to goods, for example, tangibility versus intangibility)

Specifying services Be as objective as possible

Define standards and expectations

Set measurement criteria

Be specific about expectations

Some specific considerations about services:

Breakdown the service into measurable milestones

Apply rigorous standards to all aspects of the service

Set performance targets of a ‘good’ service

Check methods of delivery

Ensure you put into place the right monitoring methods

Should suppliers be involved in developing specifications?

If so, how?

Supplier involvement

Advantages:

Access their expertise

Objective check & balance

Opportunity for refinement

Early notice of requirements

Considerations:

Conflict of interest?

Unfair advantages?

Reduces competition?

Encourages dependency?

Co-operation & collaboration

Writing a specification may need to be a team effort

Activity 8 – Consulting with others

Identifying individuals in terms of their (stakeholder) interest and influence is sometimes important

Discuss who it may be necessary to engage with for large value items. Who could provide valuable information and advice on requirements and considerations for an item of significant expenditure?

General considerations

Successful procurement relies on the specification being a true and accurate statement of requirements

Specifications must take account of internal criteria, eg budgets

Consider that every requirement is likely to add cost

The end user should be aware of the content of the specification

Judgement and common sense are required when deciding on the content

Preparing a specification should be seen as a key partof the procurement cycle

The procurement cycle

Planning

Enquiry

Implement

Define & review need

Define & review need

Develop business case and write specification

Develop business case and write specification

Determine procurement strategy

Determine procurement strategy

InviteInvite

Pre-qualify suppliers

Pre-qualify suppliers

Issue RFQ or ITTIssue RFQ or ITTEvaluate tendersEvaluate tenders

Negotiate?Negotiate?

Contract awardContract award

Manage implementation and transition

Manage implementation and transition

Manage contract performance

Manage contract performance

Exit & terminationExit & termination

Output v Input specifications

Functional / Output: Defines the task or desired result by focusing on what is to be achieved

rather than the method for achieving the result

Functional / Output: Defines the task or desired result by focusing on what is to be achieved

rather than the method for achieving the result

Technical / Input: Defines the technical and physical characteristics of a requirement eg

physical dimension, power input

Technical / Input: Defines the technical and physical characteristics of a requirement eg

physical dimension, power input

Balance of risk

Execution risk iswith the purchaser

(You tell the supplierhow to do it)

Execution risk iswith supplier

(The supplier proposeswhat will do the job)

Output v Input specifications

Functional/Output:

Focuses on outputs

Details ‘delivery’

Reliant on supplier

Emphasises performance

Assigns risk

Delegates control

Technical/Input:

Focuses on inputs

Details ‘method’

Prescriptive

Emphasises compliance

Retains risk

Keeps control

Outcome specifications

Some golden rules

Do not get carried away with technical content. Always keep focused on the requirements (the must haves not the would be nice to haves)

Keep specifications as simple as possible

Ensure technical drawings etc are correct and up to date

Clarify the meaning of acronyms and ‘jargon’

When in doubt – explain

Avoid specifying brands (unless required)

Prepare, prepare, prepare

When to develop a specification

Is there an existing specification which meets your requirements exactly? Writing new specifications which are not needed can lead to duplication and lack of standardisation, adding unnecessary costs. Consider re-using or adapting a previous specification

However, writing a new specification may help you to improve on previous practice and to encourage innovation. There may also be cost savings to be made if you appraise options rather than simply run with what has been done before

Re-use of existing specifications

Exercise caution – changes may have occurred which could impact on the specification

Internal

Macro

Micro

Activity 9 – PQQ Selection

In three groups, prepare your response to the PQQ evaluation activity

First, decide on your evaluation criteria

Secondly, decide on your assessment method (scoring, pass/fail or traffic lights, or some other method)

Thirdly, use the matrix provided to evaluate

Sections





Writing a specification

Preparation and planning are key

Arrange the content into a logical form

Consider the likely main headings and then add in sub-headings

Consider ‘need to have’ versus ‘nice to have’ requirements

Everything included in the specification will become part of your legally binding contract with the supplier

Does the specification make it absolutely clearwhat is required? – test it out with colleagues

Structure and layout

There are no fixed rules

Put yourself in the position of the supplier

Is it logical?

Does it make sense?

Is it unambiguous?

Level of detail

Will vary with:

The value of the contract

The complexity of the requirement

The potential risks involved

Contents – summary

Structure:

Identification

Table of contents

Introduction

Background/history

Glossary

Other documents

Bibliography

Considerations:

Standards

Legislation

Regulations

Requirements:

Scope

Detailed requirements

On completion

Meet internal sign-off authorisation limits

Where appropriate, obtain sign-off before proceeding

Keep key stakeholders informed

Retain the specification in the contract file post-award

Use as a reference document for ongoing supplier performance management

Activity 10 – Specification Development

Prepare a specification for an item that adequately details your requirements. This should have sufficient information to allow another group to propose a price to deliver this to you

Objectives

At the end of the session, participants will have knowledge and an understanding of:

The fundamental principles of preparing for and developing a business case and specification:

What is a business case and when is it needed?

Typical business case contents

What is a specification and why is it important?

Types of specification

Special considerations when buying services

Potential issues and challenges and how tomanage them

south west employers business case & specification writing trainer: date:

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