3
Stage B: Initiation

3.1 Purpose of stage

The purpose of Stage B is to develop detailed proposals for the programme business case to determine what the programme will be able to deliver and make an informed judgement regarding its financial viability.

3.2 Stage outline

The required outcomes established during inception are developed by a more detailed analysis, the programme brief, to identify what would be required from a programme and how it would need to be delivered to secure the outcomes. A programme business case is then compiled to determine the financial viability of the proposed programme. See Figure 3.1.

Schematic diagram depicting stage B (Initiation), from vision statement to identification to feasibility to sponsoring organization approval.

Figure 3.1 Stage B: Initiation.

Identification process

The identification process includes the development of the programme mandate to provide further details of what the programme needs to achieve.

Called the ‘programme brief’ (see Appendix T3 for a template), this document covers aspects such as the following:

  • Statement of intended outcome(s)
  • Statement of the benefits required from the programme
  • Awareness of how these benefits will be measured
  • Consideration of the strategy for delivering the programme
  • Indication of the organisational structure necessary to deliver the programme
  • Statement of all costs of delivering the programme
  • Statement regarding the funding mechanism
  • Outline of time schedule for the achievement of the programme, including any critical dates, interdependencies between projects and any external dependencies or dates
  • Identification of any external processes, procedures or approvals that will be relevant to the programme
  • Statement of any key risks, issues, assumptions and constraints that have the potential to impact the delivery or outcome of the programme and its projects

Who will assist with the preparation of the programme brief, other than the programme sponsor, will vary from programme to programme and will depend on factors such as the sensitivity (commercial, corporate or political) of the programme, the complexity of the programme and the degree of knowledge and expertise available within the sponsoring organisation. In some circumstances it may be possible for it to be produced by the programme sponsor, while in others it may require the assistance of external advisers or the early involvement of some of the key members of the programme management team, such as the programme manager, programme financial manager or head of the programme management office (PMO).

At some point during the initiation stage, it will be necessary for the programme sponsor to have the specialist knowledge provided by somebody who has a thorough appreciation of what the final outcome of the programme needs to be. A business change manager (BCM) views the development of the programme from the perspective of the final end state. The BCM will be appointed from within the sponsoring organisation or by the organisation that will be managing the enterprise being facilitated by the programme.

Programme sponsor’s board (PrgSB) approval is required for the description of what the programme is to achieve and what is required to deliver it as set out in the programme brief. This approval allows work to be undertaken after consideration of the feasibility of achieving the programme outcomes.

Feasibility process

The feasibility process involves making an informed study of the effort and costs of delivering the programme’s objectives against the returns to be obtained and establishes the financial viability of undertaking the programme. Based on the information contained in the programme brief, an investment appraisal is carried out balancing the expected benefits with the potential risks and threats of delivering the programme. This information represents the programme business case (see Appendix T4 for a template). This is a document that will be used throughout the programme as a control to verify that deliverables being achieved are aligned with the programme objectives.

Preparation of the business case is the responsibility of the programme sponsor, but it is expected that the sponsor will require assistance from financial and investment specialists who have an appreciation of the undertaking.

When the PrgS considers that the business case presents a viable programme, it is submitted to the PrgSB for their review and approval. By signing off on the business case, the PrgSB is confirming they are satisfied the programme can proceed to the definition stage (Stage C). As this approval commits a significant level of resources and expenditure in some instances, it may therefore be necessary to refer the business case to the sponsoring organisation’s executive board in order to obtain the instruction to proceed to the next stage.

The PrgSB should also be asked to ratify the terms of reference and time schedule indicating how the next stage will proceed.

3.3 Stage organisation structure

3.3.1 Stage structure and relationships

The key participants in this stage are the PrgS and BCM, who work together to develop the details of the proposed programme such that its viability, in the form of a valid business case, can be demonstrated to the PrgSB and the programme business partners. It is likely that during this process the programme sponsor will require the assistance of the programme manager to ensure that the assumptions made regarding programme implementation are appropriate and achievable. See Figure 3.2.

Schematic diagram depicting stage B (Initiation – organization structure), from programme sponsor’s board and programme business partners to project teams.

Figure 3.2 Stage B: Initiation – organisation structure.

3.3.2 Stage roles of key participants

Programme sponsor

This stage commences with developing the programme mandate into a more comprehensive programme brief. This process involves the PrgS in the following ways:

  • Selecting and appointing the BCM
  • Selecting and appointing the PrgM
  • Ensuring, with the BCM, that the benefits identified as being delivered by the programme are compatible with the business requirements of the client
  • Providing initial consideration of the governance policies for the programme
  • Developing the outline strategy for implementing the programme
  • Providing initial consideration of likely timescale
  • Providing initial consideration of likely cost
  • Providing initial consideration of major constraints and risks
  • Reviewing with the client funding options
  • Producing the programme brief
  • Presenting the programme brief to the PrgSB
  • Securing PrgSB approval of the programme brief

Approval of the programme brief allows the PrgS to proceed with a series of activities related to developing the programme business case:

  • Review in conjunction with BCM the identification of the benefits to be delivered by the programme
  • Review in conjunction with the PrgM the methodology for delivering the programme
  • Review with specialist adviser the available funding options
  • Develop a funding strategy
  • Review any relevant lessons learned from previous projects or programmes
  • Oversee the production of the programme business case
  • Present the programme business case to the PrgSB
  • Secure approval of the PrgSB to the programme business case

Prior to completion of this stage, and in anticipation of obtaining PrgSB approval, the programme sponsor needs to develop proposals for executing Stage C:

  • Develop the terms of reference ToR for Stage C
  • Develop in conjunction with the PrgM a time schedule for Stage C
  • Develop in conjunction with the PrgM a resources plan for Stage C
  • Secure PrgSB approval to proceed to Stage C

Programme sponsor’s board

Throughout this stage the PrgSB continue their function of advising, reviewing and approving, which includes:

  • providing advice and input into the programme brief
  • resolving issues raised by the programme brief
  • ensuring the proposals contained in the programme brief are consistent with the requirements of the functions/organisation(s) that they are representing
  • reviewing and approving the programme brief
  • providing advice and input into the programme business case
  • resolving issues raised by the programme business case
  • ensuring the proposals contained in the programme business case are consistent with the requirements of the functions/organisation(s) that they are representing
  • reviewing and approving the programme business case
  • giving approval to proceed to Stage C

Business change manager

During Stage B, the BCM has responsibility for the following:

  • Supporting the programme sponsor (PrgS) in the production of the programme brief
  • Verifying that the information contained in the programme brief reflects the business objectives of the sponsoring client body
  • Defining, based on the objectives set out in the programme mandate, the characteristics and nature of the benefits to be delivered
  • Supporting the PrgS in the production of the programme business case
  • Ensuring the benefits to be delivered by the programme are clearly stated in the programme business case

Programme manager

The PrgM is introduced into the programme for the first time during this stage to ensure that the information regarding the implementation of the programme is realistic and appropriate. This is a senior appointment and will require a person with high levels of leadership and a proven ability in the successful delivery of programmes and projects. The PrgM’s tasks include the following:

  • Supporting the PrgS in the production of the programme brief
  • Supporting the PrgS in the production of the programme business case
  • Developing a strategy for the implementation of the programme
  • Establishing the deliverables required to achieve the programme’s benefits
  • Considering an initial listing of likely projects required to achieve the identified deliverables
  • Developing a time schedule for programme delivery
  • Developing a cost plan for programme delivery
  • Developing a risk register for programme delivery
  • Developing a resource plan for programme delivery
  • Developing in conjunction with the PrgS a ToR, time schedule and resource plan for Stage C

3.4 Programme management practices

3.4.1 Benefits management

A generic approach to programme benefit management consists of three phases (see Figure 3.3):

  1. Capabilities phase: building and delivering the programme
  2. Transition phase: transferring and operating the asset
  3. Benefits phase: realising the benefits
Schematic diagram of benefit delivery in three stages, displaying 1 – Benefits identification, 2 – Benefits management, 3 – Benefits realization.

Figure 3.3 Benefit delivery in three stages.

Benefits delivery means achieving the desired outcomes identified in the business case on time and on budget. Its key stages are benefits identification, benefits management and benefits realisation. To deliver benefits successfully, benefits need to be measurable outcomes and fall into one of the five categories as identified in Figure 3.4.

  • Stage 1 – Benefit identification methods: ‘Horses for courses’. The theme for improvement is a top-down method of articulating the focus areas in which the organisation wants to make a change. They give a clear sense of the areas of change and a broad understanding of where benefits will be seen

    A more detailed approach to identify benefits and their measures is through a tree structure. A tree starts from the driver for change, and through a deductive, analytical and structured approach, processes through to a series of options of potential benefits by category

  • Stage 2 and 3 – Benefits management and realisation. Once all benefits captured and defined, they can be held in a central database and summarised to include definition by category and delivery measure and timescale for delivery and owner. For benefit tracking, a graphical bar chart can be used to represent and track benefit realisation over time (see Figure 3.5)
No Alt text required.

Figure 3.4 Benefits categories.

Graphical bar chart of benefits realization over time, displaying 2015 as the lowest (below 0%) and 2020 and 2021 as the highest (100%).

Figure 3.5 Example of graphical representation of benefits realisation over time.

3.4.2 Feasibility study

A feasibility study is an analysis of the viability of an idea. The programme brief will contain the strategic objectives and an overview of constraints and risks, along with high-level financial forecasts; however, to translate the information contained within the brief to a business case, a feasibility exercise will should be undertaken.

The feasibility study should thoroughly examine all the issues and include the following:

  • Appraisal of business alternatives with respect to meeting the identified need
  • Appraisal of opportunities generated
  • Assessment of high-level risks and potential mitigating factors
  • Probability of success of delivery, at both programme and project level
  • Funding options and scenarios
  • Benefits appraisal
  • Resources appraisal
  • Any fundamental assumptions made and appraisal of the assumptions
  • Demonstration of due diligence

It is important to note that once the programme brief is set, in particular for large and complex programmes, a scoping or options appraisal or even a pre-feasibility study may be necessary to narrow down the possible options and scenarios prior to commissioning a detailed feasibility study.

The feasibility study report should consider the programme brief thoroughly and may specifically comment on the following:

  • Technical viability
  • Financial viability
  • Benefits viability
  • Contingency options
  • Fitness for purpose

The feasibility study report, along with its recommendations, will constitute the backbone of the business case.

3.4.3 Funding arrangements

The initial investigations regarding the nature of funding will essentially determine the potential sources, availability and governance. An initial scoping study must be undertaken to determine whether the availability of funding is in keeping with the forecasted cash flow for the programme.

For private sector projects, commitments must be sought from the fund holders (and the shareholders or directors of businesses) to ensure that there is sufficient funding for the life of the programme. It is often the case that an initial funding is released to kick start the programme, and any further subsequent funding is conditional to key trigger events or achievement of early benefits (typically linked with revenue generation).

In certain instances, it is also advisable to ascertain the provenance of the funding to ensure that it is complying with regulatory and legal requirements.

Large public sector programmes often rely on PPP or PFI (public–private partnership or private finance initiatives) as sources of programme funding. In this scenario, the key steps are the following:

  • Implementation of the PPP/PFI/commercial policy
  • Managing PPP and PFI projects within programmes
  • Controlling the quality of PPP and PFI projects though procurement
  • Supporting the transition through operational PPP and PFI projects to ensure that they achieve their benefits
  • Managing the market of the operators and investors
  • Embedding continuous improvement in PPP and PFI projects and programmes

In order to deliver the above functions, organisations are encouraged to ensure that the following enablers are considered at the initiation stage:

  • A clear mandate of roles and responsibilities: There should be clarity regarding who is doing what, what are the delegated limits and who is authorised to make decisions
  • Adequacy of resources – capacity and competency: The delivery team has the resources collectively experienced in PFI/PPP, commercial, financial, technical and sector-specific programmes and projects
  • Strong relationship – intra- and inter-organisational: Strong relationships are needed within the delivery team and within the key organisations involved

A further option available to public sector organisations is self-financing, where funding could be available through borrowing (provided such borrowing is affordable, prudent and sustainable over the medium term), capital receipts (by selling fixed assets), capital grant (from various central and local government funding, lottery funding, European grants), revenue contributions (albeit under the current regulations the scope is limited) or capital reserves (with funding earmarked for specific capital programmes).