Don’t undervalue a Good Business Case

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The importance of business cases is often undervalued and not given sufficient focus within the suite of project management tools and techniques. Very often, the business case is referred to ‘that’ document that is put together by the business and handed to the project and there is actually no ownership for. This lack of ownership can often mean a detachment of the business from the project and lead to various stand-offs at various points along the project cycle. In the worst of cases, it leads to project failure, as requirements are not met, and business value is not delivered. This is not a good story so the simple message is that lets not under-value a good business case.

The business case provides significant value as it helps to ensure that the organisation does not implement the wrong solution and the business understands what it is trying to do. There are three steps in developing a good business case:

Step 1: – Recommend Action to Address Business Needs

  • A complete recommendation includes a high-level proposal stating how the needed capabilities will be acquired.
  • This approach is not a detailed project management plan and does not include the level of detail in a project charter.
  • Instead, it is a suggested path for adding the capabilities.

Step 2: – Recommend the Most Viable Option

  • A complete recommendation includes a high-level proposal stating how the needed capabilities will be acquired.
  • This approach is not a detailed project management plan and does not include the level of detail in a project charter.
  • Instead, it is a suggested path for adding the capabilities.

Step 3: – Conduct Cost-Benefit Analysis for Recommended Option

  • Payback Period (PBP): – The payback period is the length of time required to recover the cost of an investment.
  • Return on Investment (ROI): – A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost.
  • Internal Rate of Return (IRR): – The internal rate of return (IRR) represents the interest rate in which the net present value (NPV) of a project’s expected total cash flows, both positive and negative, sum to zero.

So what should the business case contain. Here are a common set of components in any business case should minimally include the following:

  • Problem/Opportunity: – Specify what is prompting the need for action. Use a situation statement or similar way to document the business problem or opportunity to be accrued through a program or project. Include relevant data to assess the situation and identify which stakeholders or stakeholder groups are affected.
  • Analysis of the Situation: – Organisational goals and objectives are listed to assess how a potential solution supports and contributes to them. Include root cause(s) of the problem or main contributors of an opportunity. Support the analysis through relevant data to confirm the rationale. Include needed capabilities versus existing capabilities. The gaps between them will form the program or project objectives.
  • Recommendation: – Present results of the feasibility analysis for each potential option. Specify any constraints, assumptions, risks, and dependencies for each option. Rank-order the alternatives and list the recommended one; include why it is recommended and why the others are not. Summarise the cost-benefit analysis for the recommended option. Include the implementation approach, including milestones, dependencies, roles, and responsibilities.
  • Evaluation: – Include a plan for measuring benefits realisation. This plan typically includes the metrics to evaluate how the solution contributes to goals and objectives. It may necessitate additional work to capture and report those metrics.

So what makes a successful business case? The business case should include a wide range of benefit types and recognise all possible benefits. This includes the intangible or subjective benefits, which are more appealing to business stakeholders and which often return greater commitment from those delivering the projects

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