Andrew Gordon and Lucy Malone

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


• 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


• 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


• 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


• 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


Primary indirect benefits for Wisbech – £39.7m

BCRs in the range of 2.3 to 3.04 for various options assessed


• 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

Andrew Gordon

Group according to 5 cases and split between 2 slides


• 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


• Overall: – Scheme addresses identified problem

– Strong case for investment

– Bidding to appropriate fund

– Meets requirements of guidance

– Scheme promoter input

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