Business Case
In the Oxford lexicon, a Business case means “A justification for a proposed project or undertaking on the basis of its expected commercial benefit.” To sum up, a business case is the “why” of the project. In other words, the business case helps decision-makers understand the project viability. There are many justifications, for example, the benefits obtained with the project compensate the effort of developing it. Or, the costs that the organization will incur are less them the expected benefits. Or even more, customer satisfaction will increase greatly. In other words, the benefits of a project can be financial but not exclusively.
However, the business case should always translate benefits into figures, deciding on making or not the project, more simple. For the decision makers would be much easier to decide if the project should go foward if the expected cost reduction is a number or percentage, then just that the project will bring a cost reduction. The decision-makers will not know if is 10% or 20% reduction. And without that information, a decision is harder to take. Let’s not forget that organizations have many projects that can developed, and many with the same objective. Decision-makers have to choose between projects and the better the information the better.
A normal business case will normally answer these questions:
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- Why should we carry out the project?
- What happens if we don’t do it?
- What benefits can we achieve for the company?
- What are the risks of justifying the project?
- How high are the potential costs?
- What is the deadline for realizing benefits, investment, and operating costs?
The main persons responsible for the business case or the sponsor or executive. The project manager should keep updating the business case throughout the project to guarantee that the project keeps making sense.
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Characteristics of a Good Business Case
A business case should show a clear vision of the initiative. Communicating clearly the why, what, how, and who of the initiative. To sum up the business case should include a clear vision of the project. In other words, what the initiatives looks to solve or aims for. The BC should also describe the project delivering and how will impact the organization.
The BC should be short, and concise. The business case should only include the necessary information to make an informed decision. Moreover, the information should be factual. It should only include information collected from team members and experts. Moreover, the BC developer should explicitly exclude assumptions.
A BC should show a clear vision of the initiative. Communicating clearly the why, what, how, and who of the initiative. To sum up the business case should include a clear vision of the project. In other words, what the initiatives looks to solve or aims for. The BC should also describe the project delivering and how will impact the organization.
The business case should be short, and concise. The BC should only include the necessary information to make an informed decision. Moreover, the information should be factual. In other words, it should only include information collected from team members and experts. Moreover, the BC developer should explicated exclude assumptions.
The business case developer should do his work carefully. The BC must be involving and interesting. If its boring people will stop reading it, and if it tells a beautiful story but will not tell explicitly the advantages and the benefits of doing the initiative people will get confuse and will not be able to make the decision. The most important is that the BC must create a proposal that people would like to get involved and see it in progress.
What Should a Business Case Include?
The business case in the main source of information for the decision-makers make a decision. We may thing that everything that is possible to know about the initiative should be on the BC but that is not true. A very detailed and not concise BC will be less efficient them a concise and precise BC. To sum up, a business case should have:
Governance
It must include the executive responsible for the project justification. It should also include the project assurance procedures explained and documented.
Statement of the problem or opportunity
On the business case a section should be dedicated to describe in more detail the problem or the opportunity. It also must include the research and the opinion of the team members and other experts regarding the opportunity or problem. It should also mention the impact on the organization or business.
Expected outcome
The business case should have a section explaining the benefits for the organization if the project is successful.
Options
The approach to solve a problem or opportunity may be different depending on many factors. The business case should have a section dedicated to most important alternatives to approach the problem or opportunity. The project requirements should also be included, like, for example, team, equipment’s, software.
One of the options that the BC should approach is the “do noting”. This options refers to the option of not doing anything, not beginning with the initiative.
Benefits
This section presents the measurable benefits that the initiative will bring. The objective is, therefore, to show those who make the decision why the project is necessary. The Business Case must also list positive results, such as reducing costs, generating revenue, increasing market share, and improving customer loyalty.
Budget
The BC should include the costs and investments necessary to move on with the project. The financing alternatives should also be included.
Timeline
No business case would be complete without a preliminary project schedule. An high-level schedule with deadline and the expected period for the realization of costs and benefits.
Risks
The BC must include the risks of the project and the benefits. Things like lack of expertise from the internal team, delivery delays, should be documented as well as increase in sells, increase in customer satisfaction from the positive perspective.
Dependencies
If the project may depend of other initiatives, this should be record on the business case. For example, if we need a specific team member and he will only be available on the x day, this should be documented.
Cost/benefit analysis
A cost-benefit analysis or a sensitivity analysis is a nice to have on the BC. It should be included but its not always possible. Even with preliminary figures, this is something that should be made and the more realistic the better.
Recommendation
The final thing that the business case should have is a recommendation. The recommendation should give an idea of what to do next and the plan of action.
In short, the main objective of the business case is to help decision-makers do what they suppose to do, decide. The business case should be concise and precise to be easy to ready and easy to take the decision.