PwC Middle East Location Intelligence Services
PwC Middle East Location Intelligence Services
Introduction
Infrastructure investments are the foundation of economic growth. They shape places and communities for generations to come. In recent years, the GCC region has seen multibillion-dollar infrastructure investments ranging from new transit systems and new power sources and grids, to entire new cities.
As this infrastructure investment surge continues, it is becoming increasingly important to emphasise the sustainability and robustness of the underlying business cases.
Decisions to invest in infrastructure must stand the test of time, not least because once investment decisions are made they are difficult to undo. The financial implications are very significant, the time-to-build can be lengthy, and large-scale infrastructure does not realise its full potential until long after the initial decision to build. In addition, there are risks in delivering any given project in a continuously changing and increasingly volatile economic climate, which through unforeseen events such as the COVID-19 pandemic, supply chain disruption or inflation, can alter dramatically between the planning and delivery stages.
Well-developed business cases are, therefore, critical to the success of infrastructure investments. They identify the intended benefits and outcomes of a project and provide a rationale behind the work and a roadmap for progressing the project and keeping it on track - however the business or economic climate changes.
A better business case goes beyond a simple statement of intent. It also provides a decision-making framework. It should function as a well-structured discovery process that supports planners with an evidence-based rationale to help them make decisions between alternative options and outcomes.
The Five Case Model
Among structured approaches to business case generation, the Five Case Model (or 5CM) has been adopted by multiple countries: it has been the standard business case approach in the UK for two decades, and, in 2018, it was adopted by the G20 to help develop spending proposals and inform investment decisions. Most recently, the Kingdom of Saudi Arabia has adopted the 5CM approach through Royal Decree, mandating that every project seeking public funding should submit a 5CM-compliant business case rationale.
The model provides clients with a framework for structured thinking and project assurance through asking and answering five key questions about any infrastructure investment.
- The Strategic Case: Is it needed? What is the case for change and how does it provide a strategic fit?
- The Economic Case: Is it value for money? What are the options? What is the best choice for optimizsing social value?
- The Financial Case: Is it affordable? Are costs realistic and is funding available?
- The Commercial Case: Is it viable? What is the deal, and can the supply side deliver it?
- The Management Case – Is it achievable? Are the necessary arrangements in place for a successful delivery?
How PwC can help
Risk, complexity and high costs are inevitable features of major capital projects. All too often, projects are affected by cost and time overruns, or failure to meet business case objectives. These threaten the implementation of business strategy, divert management focus and may lead to re-financing or, in the worst case, insolvency.
As better business cases become mandatory, and as public investments attract an increased level of scrutiny, it is key that both public and private sector organisations build capacity to develop projects in line with the accepted business case framework.
At PwC, we support our clients in making the right infrastructure investment decisions through:
- Developing good business cases - Our experienced industry experts have been working closely with public sector clients to help them evaluate all levels of complexity to develop robust business cases.
- Training and upskilling - In PwC’s latest Middle East Capital Projects and Infrastructure survey, access to skilled resources is cited as the main issue that will constrain growth. This challenge is particularly important as Saudi Arabia works to realise its ambitious Vision 2030 national transformation programme. We deliver internationally accredited training on the 5CM process, allowing participants to win certification from the gold standard 5CM provider APMG.
- Digital solutions - We have developed a 5CM-compliant digital solution that focuses on streamlining business case planning within government systems, creating a systematic approach to developing business cases and evaluating their merits through an advanced analytics assessment tool at both project and portfolio levels.
Conclusion
A robust business case has many benefits including opportunities for governments to make better infrastructure decisions. Good business cases lead to better quality projects that deliver improved outcomes.
Business cases should not be seen as a box-ticking exercise to justify a predetermined outcome, but rather a thinking process for decision-making. When done well, they provide an objective assessment of investment, and a basis for risk mitigation strategies to deal with unintended consequences.
Good business cases are good business. Please reach out to us now to move to the next level, and secure the future.
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