A business case provides justification for undertaking a project, programme or portfolio.

It evaluates the
benefit, cost and risk of alternative options and provides a rationale for the preferred solution.

Definition from APM Body of Knowledge 7th edition 📖

Five elements of a business case

A common way of thinking about a business case is using these five elements:

Strategic context: The compelling case for change.

Economic analysis: Return on investment based on investment appraisal of options.

Commercial approach: Derived from the sourcing strategy and procurement strategy.

Financial case: Affordability to the organisation in the time frame.

Management approach: Roles, governance structure, life cycle choice, etc.

The business case is reviewed and revised at decision gates as more mature estimates and information
become available. The approved business case provides a record of the decisions made by governance
about how to achieve the required return on investment from the work. It documents the options
considered and it is normal practice to include the ‘do-nothing’ option as a reference. Through this
approach, the business case becomes a record of the recommended option with rationale and evidence
to support the decision.

The presentation of the business case, if approved, results in the formal startup of the project,
programme or portfolio. The sponsor owns the business case.

It brings together the investment appraisal with evidence of how the investment is intended to lead to
realisation of the intended benefits. All projects must have a business case that demonstrates the value
of the work and it is outlined during the concept phase of the life cycle.
Starting Out in Project Management

The business case captures the reasoning for initiating a project or task. It is the information needed for
authorisation of the project.

What is the purpose of the business case?

The purpose of the business case is to document the justification for the undertaking of a project usually
based on the estimated cost of development and implementation against the risks and the anticipated
business benefits and savings to be gained. The total business change must be considered, which may be
much wider than just the project development costs. The concept of the business case may exist under
other names, e.g. project brief, project charter, high level project plan. Irrespective of the name the
purpose is to present justification for project start up and initiation.

Why use business case analysis?

Business case development is a step that companies often use for project selection. It analyses how
fulfilling the business case for the project will implement the corporate strategy and sustain the
competitive advantage of the company.

The business case can further be developed with the addition of more details. You can convert the
business case to action steps and major milestones in order to develop a plan that will guide your
venture through the entire project life cycle, including that of the project outcome.

The business case is a key input to the project management plan and is usually owned and created by
the project sponsor. Following project close or completion a post-project evaluation (PPE) will usually be
held- usually some months after project completion – to measure the project’s benefits against those
set out in the business case.

Business Case Composition

Most organisations will have a standard approach to a composing a business case. However, key
elements usually include:

reasons

options (a brief description of the different options considered and option recommended)

benefits expected (expressed in measurable terms against today’s situation

risks (summary of the key risks of the project)

cost (extracted from the project plan)

timescales (summary of the project plan)

investment appraisal

Ownership of the business case

The business case is the key document for a project manager – it is both the justification for their
activities and a benchmark by which the project benefits will be measured. The business case is also the
key document of the project portfolio management process and, as such, is the document used by the
organisations project investment committee. However, the primary owner of the business case is the
project sponsor. The sponsor is responsible for ensuring the continued viability of the project and that
the benefits defined in the business case are realised after project completion.