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Business case

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Business case
A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured
written document, but may also sometimes come in the form of a short verbal argument or presentation. The logic of
the business case is that, whenever resources such as money or effort are consumed, they should be in support of a
specific business need. An example could be that a software upgrade might improve system performance, but the
"business case" is that better performance would improve customer satisfaction, require less task processing time, or
reduce system maintenance costs. A compelling business case adequately captures both the quantifiable and
unquantifiable characteristics of a proposed project.
Business cases can range from comprehensive and highly structured, as required by formal project management
methodologies, to informal and brief. Information included in a formal business case could be the background of the
project, the expected business benefits, the options considered (with reasons for rejecting or carrying forward each
option), the expected costs of the project, a gap analysis and the expected risks. Consideration should also be given
to the option of doing nothing including the costs and risks of inactivity. From this information, the justification for
the project is derived. Note that it is not the job of the project manager to build the business case, this task is usually
the responsibility of stakeholders and sponsors.
[1]
Reasons for creating a business case
Business cases are created to help decision-makers ensure that:
the proposed initiative will have value and relative priority compared to alternative initiatively based on the
objectives and expected benefits laid out in the business case
the performance indicators found in the business case are identified to be used for proactive realisation of the
business and behavioural change
Development and approval process
The business case process should be designed to be:
adaptable - tailored to the size and risk of the proposal
consistent - the same basic business issues are addressed by every project
business oriented - concerned with the business capabilities and impact, rather than having a technical focus
comprehensive - includes all factors relevant to a complete evaluation
understandable - the contents are clearly relevant, logical and, although demanding, are simple to complete and
evaluate
measurable - all key aspects can be quantified so their achievement can be tracked and measured
transparent - key elements can be justified directly
accountable - accountabilities and commitments for the delivery of benefits and management of costs are clear.
Business case
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Key Elements of the Business Case Report
A good business case report, which brings confidence and accountability into the field of making investment
decisions, is a compilation of all information collected during enterprise analysis and the business case process. The
key purpose is to provide evidence and justification for continuing with the investment proposition. Here is a
recommended structure:
[2]
Preface
Table of Contents
Executive Briefing
Recommendation
Summary of Results
Decision to be Taken
Introduction
Business Drivers
Scope
Financial Metrics
Analysis
Assumptions
Cash Flow Statement (NPV)
Costs
Benefits
Risk
Strategic Options
Opportunity Costs
Conclusion, Recommendation, and Next Steps
Appendix
Review and approval
At various stages in the project, the business case should be reviewed to ensure that:
The justification is still valid,
The project will deliver the solution to the business need.
The result of a review may be the termination or amendment of the project. The business case may also be subject to
amendment if the review concludes that the business need has abated or changed, this will have a knock on effect on
the project.
Business case
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Public sector projects
Many public sector projects are now required to justify their need through a business case. In the public sector, the
business case is argued in terms of Costbenefit analysis, which may include both financial and non-financial cost
and benefits. This allows the business to take into account societal and environmental benefits, allowing a more
comprehensive understanding of economic impacts.
Notes
[1] Building a Projects Business Case (http:/ / www.pmhut. com/ building-a-projects-business-case) PM Hut, 8 January 2009
[2] Source: Messner, W.: More on Making the Compelling Business Case (http:/ / www. globusresearch. com/ business-case. aspx#info) GloBus
Research, accessed: 5 May 2013 and Messner, W. (2013): Making the Compelling Business Case (http:/ / www. thebusinesscase. info).
Houndmills: Palgrave Macmillan.
References
Bentley, C.: Practical Prince2 (The Stationery Office), ISBN 0-11-702853-3.
Five elements to include in a compelling business case (http:/ / www. industryweek. com/ articles/
five_elements_to_include_in_a_compelling_business_case_15594. aspx)
Messner, W.: Making the Compelling Business Case. Decision-Making Techniques for Successful Business
Growth. Houndmills: Palgrave Macmillan, 2013 ( book companion website (http:/ / www. thebusinesscase. info))
OGC Guidance and templates on 'Business Case' (http:/ / webarchive. nationalarchives. gov. uk/ search/
?query=http:/ / www. ogc. gov. uk/ documentation_and_templates_business_case. asp)
Schaltegger, S. & Wagner, M. (Eds.): Managing the Business Case for Sustainability. The Integration of Social,
and Economic Performance. Sheffield: Greenleaf, 2006
Article Sources and Contributors
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Article Sources and Contributors
Business case Source: http://en.wikipedia.org/w/index.php?oldid=597000308 Contributors: 98ui80i, Acdcjunior, Agrior, Alek1955, Avalon, Beast from the Bush, Biscuittin, Bluemask,
Bluemoose, Bonadea, Charivari, CharlotteWebb, Cheapskate08, ChrisG, ChrisGualtieri, Colapeninsula, Dassiebtekreuz, Davidp, Dj krysus, EdPonce, Emeraude, Gmelli, GreenReaper, H005,
Hubbardaie, Ibogorad, J. Finkelstein, JamesBWatson, JoanneB, Jwestland, Kuru, M4gnum0n, Mac, Mkoval, Mohamed-Ahmed-FG, Mrfebruary, Mschmidt224, Myproject, Nickcarr, NixonJames,
Optimist on the run, Owain.wilson, Paceconsult, Perrier citron, Pluma, Pm master, Proj.sponsor, Ramaksoud2000, Rhobite, Rinconsoleao, Robtrob, Ronz, RoyBoy, SJMorgenstern,
SchreiberBike, Skridgley, Snacks, Stephenboothuk, Stifle, Tagishsimon, Tdh1980, Titusmars, Tor Stein, Trevhowes, Tskogstrom, Wmessner, Zondor, 90 anonymous edits
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