There are several options available when an organisation identifies a strategic objective that needs to be addressed.
To refine these options down and present management with that one recommended project several business cases are required.
In order for a business case to be effective, clearly defined project benefits are essential.
Project Benefits are the expected value that the project will bring once delivered. They should include:
- The level of benefits expected
- The timeline in which the benefits are expected to be realised
- The range of acceptability of a particular benefit (e.g., we are expecting a 15%-20% Return On Investment for this project.
- It is important that benefits are tied to the organisational strategy.
Four Important Business Case Strategies
1) Align the benefits with the strategic objectives of the organisation
If the project does not satisfy the strategic objectives of the organisation, then why is it being considered? This is a question that stakeholders will want answered. There will be significant resources applied to projects and it is best that they are being spent in the most effective manner.
2) Ensure the benefits are measurable
The importance of measuring benefits cannot be overstated. Even if it is an intangible, it will still require some type of measurement. For example, customer satisfaction can be measured by surveys or feedback forms.
3) Ensure that stakeholders are consulted with
The engagement with stakeholders at the project initiation phase is incredibly important. The stakeholder will raise awareness of opportunities that may have not been considered. They will also be able to bring awareness of potential risks possibly not considered by the project manager.
4) Benchmark projects against one another to determine the optimal project
Bringing a set of benchmarks to a business case will provide stakeholders with a high-level look at the competing project proposals. Employing Earned Value Management (EVM) techniques can be used ensuring dissimilar projects can be compared. EVM brings key benchmarks into percentages. This provides a level playing field and simplifies the comparison between different projects.
Key Elements of a Business Case
- Explanation of why this business case is important
- Define the expected values and benefits
- How to get there
- The risks
- Why this is the best option
- The costs
- Timeframe
- The project plan summary
- Return on investment summary
The business case is the last document that sets out the benefit of whether this is the right project for the organisation. The rest of the documentation of the project is about doing the project right.
Something else that differentiates the business case from other documents is the comparison with the do-nothing option. In effect we compare the business case with the option of doing nothing to determine whether this provides a better alignment with the strategic options. In fact, a business case without a null option is in effect a project charter.
Of course, as project manager you may not be writing the business case. This may be completed by a project client or business analyst. You should however be a significant stakeholder in the process and have a lot of input into the document.
After the project has finished the business case will form an important part of the lessons learned when it comes time to reflect on the project.
Significant questions to consider will be:
- How well did we estimate the expected benefits?
- Were we able to provide all the deliverables that were set out in the scope?
- What change occurred throughout the project and could it have been predicted?
- What items in the business case can be drawn on to provide further lessons learned for future projects?
The business case will also consider the risk to the organisation of the project going forward. This is the only time this is considered as the project planning stage only considers the risk of the project itself.
Also, the business case should continue the ongoing costs after the project has been delivered. A project manager will only look to consider the project and its three constraints of time, scope and cost. The organisation must consider the ongoing costs after the project has been delivered. These costs may include repairs and maintenance, training, upgrades, IT interfaces, compliance and insurances or decommissioning.
