Business case

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A business case is a structured proposal for business change that is justified in terms of costs and benefits. It is a typical prerequisite for the initiation of a large project and is explicitly required by many Project Management Methodologies.

The Business Case addresses, at a high level, the business need that the project seeks to resolve. It includes the reasons for 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.

In almost all cases the option of doing nothing should be included with the costs and risks of inactivity along with the differences (costs, risks, outcomes etc) between doing nothing and the proposed project.

It is from this that the justification for the project is derived.

The case will be reviewed at the initiation of the project (before the go/no-go decision is made) and periodically during the running of the project (e.g. at stage or sub-project boundaries) to ensure that:

The business case is still valid, i.e. the business need still exists.
The project is still on track to deliver the solution to the business need.

As a result of this review the project may be terminated or future parts amended. 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.

[edit] References

Practical Prince2 by Colin Bentley (The Stationery Office), ISBN 0-11-702853-3.
Description of BusinessCase on ProjectPerformance
OGC Guidance and templates on [1]

Business cases must be justified, evaluated and prioritised to ensure:

the investment has value

the project will be properly managed
the firm has the capability to deliver the benefits
the firm’s dedicated resources are working on the highest value opportunities
projects with inter-dependencies are undertaken in the optimum sequence.

The Business Case Process should ensure:

the required issues have been thoroughly considered - this is essential in order to facilitate completion of the documentation
all proposals are presented in a standard and consistent format
all relevant information is available and considered
sufficient information to facilitate fair comparative evaluations of a number of different proposals is available
both the value and risks inherent in the proposed project are clear
the project is sponsored by, and has the commitment of, an executive member who has the capability and authority to deliver most—if not all—of the benefits
the IT department agrees that the project is technically viable.
the delivery of the outcomes and benefits can be traced and measured.

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.

The principal purposes of the Business Case Process are to:

introduce a way of thinking that causes people with the authority to recommend projects to firstly consider their value, risk and relative priority as a fundamental element of submitting the project proposal
require those proposing a project to justify its value to the firm and to self-cull any proposals that are not of demonstrable value
enable management to determine if the project proposed is of value to the business and achievable compared to the relative merits of alternative proposals.
enable management to objectively measure the subsequent achievement of the business case’s benefits.

Generating a business case

Generation of the Business Case should not be mechanical. Indeed, the case must demonstrate that: the issues have been thought through, the full benefits will be realised on time, any technical aspects have been thoroughly evaluated and costed, and track and measure their achievement.

(For any IT project it is unlikely that any significant proposal would be submitted to the Executive Management Team for approval without both the business sponsor head of IT agreeing on the merit of the proposal.)

A business case should contain some or all of the following information types (depending on the size, timing, scale and availability of information):

Reference - Project name/reference, Origins/background/current state
Context - Business objectives/opportunities, Business strategic alignment (priority)
Value Proposition - Desired business outcomes, Outcomes roadmap, Business benefits (by outcome), Quantified benefits value, Costs/ROI Financial scenarios, Risks/costs of not proceeding, Project risks (to project, benefits and business)
Focus - Problem/solution scope, Assumptions/constraints, Options identified/evaluated, Size, scale and complexity assessment
Deliverables - Outcomes, deliverables and benefits planned, Organizational areas impacted (internally and externally), Key stakeholders, Dependencies
Workload - Approach, Phase/stage definitions (Project (change) activities, Technical delivery activities, Workload estimate/breakdown, Project plan and schedule, Critical path)
Required resources - Project leadership team, Project governance team, Team resources, Funding
Commitments (required) - Project controls, Reporting processes, Deliverables schedule, Financial budget/schedule