When done correctly, a business case evaluation can take time to complete. Therefore, it may be a good idea to use this process only for projects above a certain dollar amount. Different utilities will set different limits depending on the size of the facility. A smaller utility will probably set a lower dollar amount than a larger utility. Each utility should select a dollar amount that allows most major expenditures to go through the process, while not overly burdening the personnel.

A business case evaluation can have several possible outcomes. These outcomes include:
  • Project should go forward in current year's CIP
  • Project should be delayed until a future year's CIP
  • Insufficient information was presented in the business case; project should be re-submitted with additional information
  • Alternatives should be investigated and the project should be re-submitted with the additional information
  • A different alternative than the one selected should be chosen
  • Additional O&M is recommended; the project should be delayed for some number of years
  • Project should not go forward
Projects should proceed only if the most appropriate alternative has been selected and both the need and benefit are clearly shown. If these conditions are not met, one of the other options as outlined above should be selected. If more information is needed, the project can be re-evaluated and re-submitted.

Because capital expenditures account for such a large portion of the overall budget of most utilities, a good capital project validation process can provide significant cost savings for even small utilities. As an example, Arenas Valley, a small utility included in this manual, was contemplating a capital project that included replacement of much of their water distribution system. This project would have cost approximately $5 million dollars. A validation process showed that the project was not needed. Instead, the utility would benefit from looped lines, isolation valves, and a limited pipe replacement project. This project was completed at a fraction of the cost of the original project and increased the level of service for the customers.

A business case evaluation form is included in Appendix D.