Management contract: business justification

Business justification is the first stage. It takes place once a business need has been identified which might result in a building project. This stage involves assessing whether there is justification for the project, preparing a preliminary business case and creating an organisational structure for the project. The business justification stage takes place before the appointment of the consultant team, so the client may wish to appoint independent client advisers to help them.

Within this plan the management contractor is appointed on completion of concept design. Earlier or later appointment will result in some activities being re-allocated between the consultant team and the management contractor (for example the role of cost consultant).

[edit] Defining the business need

The client identifies a business need which might result in a building project and appoints a preliminary internal team to assess whether there is justification for the project.

The client prepares a statement of need, which is a first attempt to describe the possible requirements of the project. This may or may not result in the need for a project, and even if a project is necessary, it may not require a new building.

[edit] Preparing a preliminary business case

Very experienced clients may have in-house expertise allowing them to make appointments, and to prepare a preliminary business case and strategic brief. However, many clients will not have the full range of skills required and may wish to appoint independent client advisers to assist them. These advisers are separate from the consultant team which will undertake the actual design of the project. See: Management contract: appointment.

The client explores high level options for meeting the requirements set out in the statement of need. This may include an assessment of comparable projects. They then prepare a preliminary business case, which is a first attempt to justify the investment required by the potential project and should include a management structure, draft legal agreements and funding options.

The client assesses the preliminary business case and decides whether it merits investigating in more detail and whether procedures should be established for appointing a consultant team.

[edit] Establishing an internal organisation

The organisational structure for the project should have been defined and approved in the client's preliminary business case, and may include:

• A project director
• A project board to advise the project director on technical and user matters
• A project sponsor responsible for day-to-day liaisons with the consultant team and independent client advisers
• Champions (perhaps heads of departments) to take responsibility for the quality of the project
• User panels to bring experience to briefing and design workshops
• Project stakeholders to be consulted during the early stages of the project

[edit] Preparing an initial strategic brief

The client develops the statement of need into an initial strategic brief which provides sufficient information about the project to allow the appointment of a consultant team who will carry out feasibility studies and options appraisals, prepare a project brief and design the development.

The initial strategic brief may include the identification of potential sites for the development. It should be noted that for particularly large projects, an environmental impact assessment may be required by the local planning authority and that this may include an assessment of alternative sites for the development. It is important to consider this when assessing potential sites. Identifying potential sites, and considering their impacts (such as the possibility of moving staff) can be a complicated process and may require the appointment of independent client advisers (such as surveyors).

The client undertakes risk assessment and value management exercises, sets an initial budget and considers funding options for the project. They may then revise the preliminary business case and strategic brief.

[edit] Assessing whether there is sufficient justification to progress to the next stage

The client considers the preliminary business case and strategic brief and decides whether to proceed to the next stage where the consultant team will be appointed, feasibility studies undertaken, and options assessments carried out.