The purpose of a business case

The purpose of a business case is to justify the expenditure on the project by identifying the business benefits the project's outcomes are going to deliver. To create a business case you should:

  • Identify the business problem or opportunity. The business case should describe what it is, how it's come about and the time frames in which it needs to be addressed. The first question you need to answer when it comes to creating a business case for your project is who is behind this project and what are their motives for wanting the work done - these may include all sorts of intangible factors such as prestige, knowledge acquisition and/or risk mitigation. You need to have a clear understanding of why this project is being undertaken and who will be receiving value (both tangible and intangible) from the completion and implementation of the project. This knowledge is critical to understand the purpose of the project and the time frames for delivery.

  • Define how the project supports the organisation's strategic objectives. Every organisation should have a strategic plan that defines the current set of strategic objectives. Examples of these may be that the company wants to move into a new market, release a new product, or introduce new and ground-breaking technology. It's much easier to justify the existence of a project if you can show how this project helps achieve one or more of those strategic objectives (in fact, if the project does not support the organisation's strategy what is the point of doing the work?).

  • Identify the Alternative Solutions. This can be done by:
    • Identifying how similar projects were done in the past
    • Documenting the alternative solutions.
    • Quantifying the benefits of implementing each solution
    • Forecasting the costs of implementing each solution
    • Assessing the feasibility of implementing each solution
    • Identifying the risks and issues associated with each solution

  • Recommend a preferred solution. First ensure the solutions are feasible, reject any that are not. Then rank the remaining solutions by the application of an appropriate scoring model - lowest cost is rarely the only factor to consider. Document the process in the business case

  • Calculate the return on investment (ROI) for the preferred option. The ROI this project will generate is a critically important part of establishing a business case. With the exception of regulatory /mandated projects, there should be a positive return on the investment. Defining ROI can take on a number of different forms. It may be dollars that are invested, manpower, or even opportunity costs that are incurred because of not working on some other project. Where possible, include references to previous similar projects and their overall performance, this validates the business case and provides confidence the proposal is viable.

  • Describe the implementation approach. Document the steps needed to implement the solution for the client.

  • Obtain agreement from the project sponsors, PMO or other authority. Obtain consensus on the decision to move forward, as well as on the methods used and the conclusions specified in the analysis.