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 come in the form of a short verbal agreement 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 non-quantifiable 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, 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.
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 initiatives 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 realization of the business and behavioral 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 – accountability and commitments for the delivery of benefits and management of costs are clear.
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:
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.
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 Cost–benefit 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.
