South East Training - The Project Management Toolkit

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The Business Case

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Should we be doing this? This is a key question. For successful enterprises, the range of business opportunities usually far exceeds the resource capability to exploit those opportunities. This means that decisions need to be made as to which to pursue. To gain approval, it is usual to prepare a business case.

This document, should as a minimum, include the following:


The Business Case

  • Business requirement
  • Options
  • Benefits
  • Risks
  • Costs
  • Timescales
  • Investment appraisal

The Business Case

The business case sets out the rationale for investment. Each option is explored from the perspective of the likely cost, benefits, timescales and risks, and a recommendation made as to which option should be selected. An investment appraisal for the preferred option seeks to establish that the returns (usually expressed in financial terms) justify the cost.

It is important to recognise that the business case is ‘dynamic’ in the sense that it evolves and is updated during the early phases of a project as more information about costs and timescales becomes available.

For large projects, a full business case may not be available until the end of the planning phase. Throughout the implementation phase, the business case is used as a benchmark against which the progress and continued viability of the project can be assessed.

The business case also has a life after the project has been completed, being used as a baseline against which to measure the accrued benefits.  

The key elements of the business case are:

Business requirement - why do we need this project and how does it help in meeting the overall business objectives, i.e. how does it fit with the ‘big picture’?

Options - what options have we for meeting the business requirement? For example, to meet a learning and development need we might want to compare the options of delivering the learning through e-learning, providing a face-to-face programme of workshops and coaching or providing a blended learning solution, e.g. a mix of e-learning and face-to-face. In addition, and for every potential project, we would consider the ‘do nothing option’.

Benefits - these are the real reason for embarking on the project. In the example above, the benefits would relate to the likely impact the new knowledge, skills and attitudes would have on business performance, e.g. more sales, greater productivity, reduced absenteeism. The benefits are likely to be different for each option.

Risks - these are possible events that might hinder the achievement of objectives and consequently impact on the likely benefits. As an example, problems with internet access might frustrate the e-learning option causing delays to the programme and impacting negatively on the learning outcomes. Once again, the risks will be different for each option.

Costs - these will be different for each option and need to be weighed against the likely benefits.

Timescales - again, these will be different for each option and need to be weighed against the urgency of providing the business solution.

Investment appraisal - this involves conducting a present-worth calculation to determine the extent to which our investment will produce the estimated business benefits. To calculate the ROI it is necessary to represent the business benefits in financial terms. For some projects, learning and development as an example, it is often difficult to measure the financial benefits. In these cases, we use ROE, or return on expectation. ROE might be expressed in terms such as improved customer or employee satisfaction or enhanced reputation, measurable through conducting surveys before and after the project.