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:

    • 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.

      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.