The Commercial Case

Which case demonstrates that a proposed deal is commercially viable and attractive to the market?

• A The Commercial Case ✓
• B The Strategic Case
• C The Financial Case
• D The Economic Case

Answer: The Commercial Case shows that the procurement is commercially viable, will attract suppliers and results in a well-structured, achievable deal.

In the Commercial Case, what is the principle underlying effective risk allocation?

• A Retain all risk within the public sector
• B Allocate risk based on the lowest bid price
• C Transfer every risk to the supplier regardless of cost
• D Allocate each risk to the party best able to manage it ✓

Answer: Best practice is to allocate each risk to the party best placed to manage and control it, which usually delivers the most cost-effective outcome.

What is a 'payment mechanism' in the context of the Commercial Case?

• A The list of critical success factors
• B The discount rate used in appraisal
• C The budget approval process within the organisation
• D The arrangement linking supplier payments to performance and outputs delivered ✓

Answer: A payment mechanism defines how and when a supplier is paid, often linking payment to performance, availability or delivery of outputs.

Why is the procurement strategy set out in the Commercial Case?

• A To calculate the optimism bias adjustment
• B To define the organisation's strategic objectives
• C To produce the benefits realisation plan
• D To describe how the required goods or services will be procured from the market ✓

Answer: The procurement strategy explains the approach to engaging the market and acquiring the required goods, works or services to deliver the preferred option.

In the Commercial Case, what is 'output-based specification' intended to encourage?

• A Removing all performance measures from the contract
• B Fixing payment regardless of delivery
• C Defining required outcomes so suppliers can propose innovative solutions ✓
• D Prescribing the exact technical solution to suppliers

Answer: Output- or outcome-based specifications describe what is required rather than how to deliver it, giving suppliers scope to innovate and add value.

Which of the following is typically addressed in the Commercial Case?

• A The SMART spending objectives
• B Contractual arrangements, including key contract clauses and personnel implications ✓
• C The economic appraisal of the long list
• D The whole-life affordability against the available budget

Answer: The Commercial Case covers the proposed contractual arrangements, including key terms, charging, risk transfer and any personnel or transition implications.