The commercial case answers the questions:
• Is the proposed procurement commercially viable?
• Can the market deliver?
The commercial case should demonstrate that the preferred option is able to be procured in a viable way both for the public sector and for the service providers. This requires:
Put simply, the commercial case should test whether the proposed procurement is commercially attractive and deliverable, and that the delivery mechanism allocates risk fairly.
Because the commercial case primarily focuses on setting out procurement arrangements for the preferred option (and its key activities), it generally cannot be completed until the strategic and economic cases have been finalised for the phase you are in. However, some work may need to be done to develop the commercial case to inform optioneering, such as establishing any key procurement or contracting risks associated with options, to assist in evaluating them.
For some activities, particularly digital or regulatory type alternatives, it is common to test the market in order to develop the long or short list options. This may also be the case for highly complex infrastructure or methodologies or new innovative alternatives.
As with the other four cases, the commercial case is progressively developed throughout the business case phases and is typically developed in parallel with, and informed by, the management and financial cases.
Each successive phase of business case development will build on the commercial case from the previous phase(s). For example, for a business case developing a programme through to activity level then implementation, this could look like:
Follow the links to find out more about how the commercial case is developed in each phase.
Programme business case phase
Single-stage business case phase
Indicative business case phase
Detailed business case phase
Pre-implementation and implementation
The commercial case is also reviewed during the pre-implementation phase to explore more details around agreed scope and services, contractual arrangements, implementation timescale and risk allocations.
At a level appropriate to the phase of development you are in, your commercial case should provide evidence on the commercial viability of the preferred option, including:
Although approved organisations generally have a high-level procurement strategy or plan endorsed by NZ Transport Agency Waka Kotahi (NZTA) (for example the Infrastructure Procurement Strategy for NZTA projects) the commercial case should still demonstrate suitability of the endorsed strategy or plan for delivering the preferred option, as well as project specific details such as the appropriate procurement method and delivery model.
Infrastructure procurement strategy
For guidance on procurement plan and strategy development for National Land Transport Fund (NLTF) projects refer to the NZTA Procurement manual.
A key focus throughout the five-case model is to identify and manage risks and uncertainties.
Although they are closely related, risks and uncertainties are typically managed in different ways within the BCA. For a detailed overview of how risks and uncertainties are treated throughout the five-case model, including definitions and templates for risk and uncertainty registers, see our detailed guidance.
Risk and uncertainty in the five-case model
Risks and uncertainties can arise within each of the five cases. As work on the business case progresses, risks and uncertainties must be identified, recorded and tracked. You should also capture the proposed approach to managing each risk or uncertainty, which will ultimately form a key focus for the management case.
It is good practice to set up registers to track risks and uncertainties from an early stage in the business case. The registers continue to be used throughout development of the business case to capture risks and uncertainties from all of the cases.
The commercial case should focus on identifying risks and uncertainties that relate to procurement and the contract delivery model. In particular, the risk allocation and/or risk transfer implications of the chosen delivery model must be clear.
You may need to develop an understanding of the commercial case risks or uncertainties for each alternative or option to inform the optioneering process, and also to determine any residual risks or uncertainties associated with the recommended option.
This will depend on which phase you are working on, how complex the investment is and how much risk or uncertainty is involved.
However, there are a few things that can help you, including:
How to self-assess your business case
To some extent this will depend on which phase of development is being assessed. For example, the expectations for the commercial case will be different for a PBC than for a DBC (where the next phase might be implementation). In general, however, we are looking to understand how the best public value can continue to be achieved through the contract phase. Some of the key things assessors will be looking for are:
Contact your NZTA investment advisor or email the Business Case Process team at businesscaseprocess@nzta.govt.nz
