The Winning Ingredients for Success
Case Studies of Successful and Unsuccessful Business Cases
Andrew Gordon and Lucy Malone
Business cases integral to gaining funding in the current climate
Contents
• What can go into the economic appraisal?
• Where have we been successful?
• And unsuccessful?
• Conclusion – what are the winning ingredients?
What goes into the economic appraisal?
Mode shift
Reduced car traffic
Decongestion Noise
Air quality
Carbon
Accidents
Maintenance
Increased walk/cycle
Mortality Absenteeism
Improvements to sustainable modes
Time benefits Journey quality
Jobs & GVA
Accessibility
What are the challenges?
• Gaps in WebTAG guidance, e.g.:
– Health
• Includes mortality and absenteeism
• What about other morbidity-related impacts?
– ‘Liveability’/quality of life
• What makes cities attractive places to live and work?
– How to measure the ‘catalyst effect’
• Not all about BCR
• Green Book appraisal suggests that we should assess all benefits (qualitative if too difficult to quantify)
• Local growth fund – competing against non-transport schemes
CASE STUDIES
Birmingham Cycle City Ambition Grant
• Birmingham’s Cycle Revolution – Long-term investment in cycling infrastructure and facilities to build a comprehensive on and off road network across Birmingham
• Benefits v Costs (millions)
• BCR = 3.08 = High Value for Money
Birmingham Cycle City Ambition Grant
• Key data sources and evidence bases used:– Household Interviews, Mott MacDonald 2009-2012
– Cycling Demonstrations Towns DfT Report, Cycle England 2009
– Cycling Trends in Birmingham Technical Report, Sustrans 2011
• Followed WebTAG, particularly:– A4.1 Social Impact Appraisal
– A5.1 Active Mode Appraisal
– A5.4 marginal external costs
Birmingham Cycle City Ambition Grant
• Strategic Case – Visionary & aspirational
– Clear message
– Well defined scheme
– In-depth discussion of key issues and how they will be addressed
– Strong qualitative assessment of non-monetised impacts
– Clear links to other policies and initiatives
Birmingham Cycle City Ambition Grant
• Economic Case – Well evidenced appraisal
– Significant monetised benefits
• Management Case– Evidence of robust procurement, management and delivery
processes
Merseyside LSTF
• Supporting Sustainable Access to Opportunity in Merseyside: – Sustainable transport
infrastructure
– Support for bus services
– Working with employers to raise use of sustainable modes
– Travel solutions for people accessing employment & training
Merseyside LSTF
• BCR = 13.04 = Very High Value for Money
• DfT adjusted BCR = 4.2 = Very High Value for Money
• Aligns with DfT assessment of overall LSTF BCR at 5.1
• Benefits v Costs (millions)
Merseyside LSTF
• Strategic Case – Visionary & aspirational
– In-depth discussion of key issues and opportunities and how they will be addressed, overall and for each package – socio-demographics / mode of travel / travel distance / congestion / employment opportunities
– Strong evidence of working in partnership with the private sector in development and delivery (e.g. Liverpool Chamber of Commerce)
• Finance Case – High level of match funding from private, public and community
sector partners – £16.75m
Merseyside LSTF
• Economic Case – TUBA Assessment in accordance with WebTAG
– Utilised Liverpool City Region Transport Model (LCRTM)
– Less robust evidence base
– No appraisal of health benefits
– Significant monetised benefits (submitted & adjusted)
March – Wisbech Rail Service
• Line closed to passenger services in 1968 and freight in 2000
• Local support for reopening to help relieve traffic congestion
• Previous studies concluded a low BCR ranging 0.99 to 1.98
March – Wisbech Rail Service
• Mott MacDonald undertook an assessment of wider economic benefits
• Utilising the Mott MacDonald Transparent Economic Assessment Model (TEAM)
• WebTAG compliant Wider Impacts in Transport Appraisal (WITA) analysis
• Assessment of secondary indirect benefits and labour market effects
Direct Impacts
Induced Impacts
Indirect Impacts
Jobs / SalariesGVA
Gross Benefits
Gross minus deadweight,
displacement, leakage etc
Net Economic
Gain
Project Intervention
Multiplier
Multiplier
- 161 additional FTE jobs
- £9.0m of additional GVA benefits per annum
Increasing to £56.7m based upon a direct service to Cambridge
Secondary indirect benefits- 392 houses- £39.2m of
house building expenditure
March – Wisbech Rail Service
Primary indirect benefits for Wisbech – £39.7m
BCRs in the range of 2.3 to 3.04 for various options assessed
March – Wisbech Rail Service
• Significantly strengthened the case for investment
• Increased the BCR of the scheme by >1
• Enabled recommendation of the option offering the greatest potential for delivering wider economic benefit – a direct rail link between Wisbech and Cambridge
• Prompted progression of scheme to GRIP 2 Feasibility Study now being undertaken by Mott MacDonald
0.99 – 1.98 2.3 – 3.04
Common Failings of Documents Seeking to Make a Case for Funding
Through evaluating unsuccessful business cases, we have identified common failings:
• Strategic Case – Weak narrative and vision
– Did not meet requirements of the funding / aspirations of promoter did not align with objectives of funder
– Political reasons for application rather than based on evidence
– Lack of evidence of problem and in-depth discussion of issues
– Retrospective / unrealistic & non-transparent option assessment
Common Failings of Documents Seeking to Make a Case for Funding
• Economic Case – Based upon qualitative assessment
– Lack of quantitative evidence and monetised benefits
– Lack of robust evidence and analysis to support claims of VfM
– No assessment of wider benefits
• Finance Case – Uncertainty over third party / private sector funding contributions
• Management & Commercial Cases – Lack of detail on management and delivery processes including
governance structures, consultation & procurement procedures.
The Key to a Successful Business Case
• Strategic Case– Clear vision and objectives
– Aspirational and innovative
– Strong narrative with in-depth discussion of issues & opportunities
– Well defined schemes
– Sells the scheme using the evidence and information available
• Finance Case – High level of match funding
– Private sector contribution
The Key to a Successful Business Case
• Economic Case – Well defined schemes
– Evidenced and robust analysis to support VfM
– Doesn’t matter if BCR is low if you can evidence additional benefits
– Supports economic growth / comment or quantification of wider benefits
• Management & Commercial Case – Evidence of deliverability
– Robust and considered procedures and processes
The Key to a Successful Business Case
• Overall: – Scheme addresses identified problem
– Strong case for investment
– Bidding to appropriate fund
– Meets requirements of guidance
– Scheme promoter input
www.mottmac.com