A Business Case describes the reasoning behind starting a project or activity.
It is often presented in the form of a well-structured written document, but sometimes it can take the form of a presentation or a simple verbal agreement. The logic of the business case is that whenever economic, tangible or intangible resources are consumed, this should be in support of a specific business need.
What is a Business Case?
A Business Case represents the justification of a project and includes timescales, costs, benefits and risks.
The continuing viability of a project is tested against the Business Case. It offers useful information that helps to determine whether a project is (and continues to be) desirable, feasible and achievable.
What is a Business Case in Project Management?
Often during the course of a project, the focus is on what is being done and how losing sight of the ‘why’. The Business Case is an essential element because it defines why it is worthwhile to continue the project.
The Business Case is used to document the justification for the execution of a project based on the estimated costs and benefits, taking in consideration the possible related risks.
Within the PRINCE2 approach the Business Case is seen as a test for the viability of the project; answering the question “is the investment still valid?”
The Business Case is not static: it is maintained for the complete course of the project and constantly adjusted for new information on costs, risks and benefits.
Within the PRINCE2 approach, the Business Case is usually developed at the beginning of a project and maintained for the complete lifecycle of the project. The Business Case is subjected to formal verification by the Project Committee at each key decision-making moment and confirmed during the period in which the benefits are confirmed.
Composition of the Business Case
The Business Case has to describe the motive to undertake the project. It has to contain the following elements:
Executive summary: highlights the key-points of the Business case and must include the benefits and the ROI (return of investment).
Reasons: elaborates the reasons why it is necessary to undertake the project and how the business strategies and objectives are included.
Business Options: analysis of the possible options: no initiative (“do nothing”), minimum action (“do the minimum”) or take action (“do something”).
Expected benefits: the benefits that will be delivered by the project, expressed in measurable terms. Both qualitative and quantitative benefits are mentioned, in line with the defined business benefits. It is important to establish the current state of the benefit in measurable terms in order to be able to evaluate progress after completion of the project. Measurable benefits are also used to establish the methods and moments for measuring improvements.
Expected disbenefits: the measurable decline resulting from an outcome perceived as negative by one or more stakeholders. Dis-benefits are consequential effects that reduce one or more organisational objective. Dis-benefits have to be assessed and incorporated in the investment assessment. The difference between dis-benefit and risk is that the latter has a level of uncertainty, the dis-benefit has not.
Sustainability targets: specific targets relating to sustainability that the project must meet. The targets include sustainability tolerances.
Timescale: execution times of the project in which the benefits should be realised.
Costs: summary of the costs, including the current operating costs and the maintenance costs of the project in respect to the financial plan.
Investment Appraisal: compares benefits and dis-benefits with the costs of the project and the ongoing costs of operation and maintenance.
Major risks: assessment and summary of all main risks related to the project, their probable impact and action to undertake when the risks materialise.
Where can I find more data/sources to elaborate on the Business Case?
The project executive is the one accountable for the Business Case. This does not mean that they are the one that actually write it; however, they are responsible for the creation and the approval.
Within PRINCE2, the Business Case primarily derives from the project mandate and is developed in the pre-planning phase to obtain the approval of the Project Committee.
The final Business Case takes its shape by the information from the project plan and risk assessment.
The Business Case contains elements of:
Project Mandate and Project Brief – the project’s reasons.
Project plan – costs and timescale.
Expected benefits according to senior user/s – in line with business benefits.
Value for money analysis of the expected benefits according to the project executive – elaborated information of the economic environment.
Risk register – information related to identified risk, including their status and history.
Issue register – all information related to possible issues.
Format
The Business Case can be delivered in several formats, including:
The document, spreadsheet or presentation slide.
File within a project management tool.
The Business Case< is the base of all decision making processes and ensures that the project maintains its justifications, that business goals are met and that expected benefits are realised.
QRP International is an official ATO for PRINCE2, accredited by Peoplecert on behalf of Axelos. We’re authorised to deliver PRINCE2 training courses online, on-site or in an e-learning format.
Would you like support in order to figure out the best solution for you and your team? We would be happy to provide more info on the different PM methods available – contact us!
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