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Business Case

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The Business Case gathers the information to allow the organisation management judge if a project is worthwhile to invest in and they can also compare with other requirements and ideas.

Business Case Sample

The PRINCE2 Manual actually says “The Business Case gathers the information to allow the management judge if a project is desirable, viable and achievable”. Lets take a look at: desirable, viable and achievable:

“Business Justification” is a popular term in a number of methods and is also used by PRINCE2. Business Justification means that there is a valid business reason for doing the project and it remains valid throughout the project so this should be one of the question the Project Board should be asking at the end of each stage: “Is the Business Case still valid?”

The Executive is responsible for creating the Business Case and usually gets assistance from the Project Manager. It is created at the start of the project and maintained during the project by the Project Manager (A good question to ask here is “Why is the Business Case maintained and what does this mean?”). The Business Case contains the following information:

A few notes about the business case product:

Derivation

The Business Case is derived from the: * Project mandate and Project Brief – reasons for the project * Project Plan: This provides the costs and timescales of the project * The Senior User(s) - provides the expected benefits of the project * The Executive - value for money (ROI, Strategy) * Risk Register - overview of major risks * Issue Register - is the project viable.

Format

Quality Criteria

The following quality criteria should be considered

Describing what you get from a project

PRINCE2 uses the terms “Output, Outcome and Benefits.” These terms help to describe what we get from a project. The objective here is to explain what these terms mean and, also, how they differ from one another.

As an alternative to definitions that may hang in the air, here are three focused question to help explain Output, Outcome and Benefits.

Outputs: The Outputs of a project are the products that the users will use. These are also known as specialist products and the project is set up to create these products.

Outcome: You may have heard the expression “outcome is a result of change”. From a PRINCE2 project point of view, we say that an Outcome is the result of the change derived from using the project’s outputs.

Benefits: PRINCE2 says that Benefits are the measurable improvement, resulting from an outcome that is perceived as an advantage by one of the stakeholders. Try to see Benefits as the measurable advantages of using the product. Benefits can be realized during the project, but most benefits are usually realized after the project has closed and sometimes a long time after.

Example: A company installs a new Sales (CRM) system. Output Question: What is the product that will be delivered by the project?

Outcome Question: What can the users do better (different) with this product? Some answers could be:

Notice how all the answers are very vague, and there is no mention of percentage (%) faster. Benefits Question: What are the measurable benefits of using this product? Some answers could be:

The path to creating the Business Case

The Business Case is developed in the Initiation Stage and maintained during the project. The Business Case is first verified by the Project Board so that the project can start. It is then verified at key decision points during the project, such as at the end of each stage. There are 4 steps in creating the Business Case. They are:

Step 1: Develop the Business Case

This is the same as Create the Business Case. The Business Case is created and first completed in the Initiation Stage, and it becomes part of the Project Initiation Documentation. The Executive is responsible for creating the Business Case, but it can be written by others or with help from others. For example, the Executive might involve a person from the financial department to assist with the financial information.

Step 2: Verify the Business Case

What does verify the Business Case mean? It means to determine whether the Business Case is worthwhile. This verification is done at a number of points throughout the project. Where do you think would be good points in the project for the Project Board to Verify the Business Case or, in other words, to see if the Business Case is worthwhile? You will find it much easier to understand these if you have listened to the Process Model podcast.

Tip: Think about the Project Board decisions points.

The 7 verification points listed are the most important ones and the easiest to remember. Nevertheless, it should be kept in mind that other points of verification exist beside those mentioned above.

Step 3: Maintain the Business Case

What is meant by Maintain the Business Case? Maintain the Business Case refers to keeping the Business Case up to date to reflect what is happening in the project. It may be done when assessing Risks or Issues, or at the end of a stage. For example some of the typical changes can be: increase or reduction of costs, new information on a risk and so on.

The Business Case is also referred to as a living document, meaning it is continually updated during the project to reflect reality. So when is a good time to update the Business Case during the project? A good time to update the Business Case is at the end of every stage, as you will have the true cost of the last stage, and perhaps the updated cost of the next stage, along with any information on issues and risk. In evolving projects, some deliverables may already be put into products and therefore the project will be receiving some of the expected benefits. This information also needs to be added to the Business Case. One final point to remember here is that the Executive has the responsibility to all project stakeholders for the project to remain desirable, viable and achievable at all times.

Step 4: Confirm the Benefits

The approach to confirm the benefits is in 4 steps:

  1. Identification of the benefits by the Senior User. These are documented.
    • These benefits are stored in the Business Case and the Benefits Management Approach.
  2. Select objective measurements that reliably prove the benefits.
    • Examples: x% reduction in costs, x% increase in process time, x% reduction of products failing quality tests, x% increase in sales.
    • These measurements will enable you to determine if the benefits are realized or not.
  3. Collect the baselined measures so that they can be used to compare the improvements. Baselined measures refer to recording the current status of the current day.
    • For example, with the CRM application, it is possible to record the average amount of time for a client to order today, the cost of handling each order, customer satisfaction survey, and so on.
  4. Decide how, when and by whom the benefit measures will be collected. I will explain this using the CRM application as example.
    • Example 1: The Account Manager might be responsible for the client survey.
    • Example 2: The Office Manager might provide the information to show the average time for each order.

As you can clearly see, these steps are all about ensuring that benefits are correctly measured.

When do you think most benefits are realized, during or after the project? Most project benefits are realized after the project has been shut down. Consequently, there has to be a process to continue to check the project benefits. The Benefits Management Approach is also used to determine this. It is created by the Project Manager during the Initiation Stage and it is one of the documents that the Project Board should look for before authorizing the project to start. The Benefits Management Approach may be updated at the end of each stage in the project, as some benefits can be realized during the project and/or new benefits can be identified Now you may ask who takes ownership of the Benefits Management Approach once the project has stopped, as the Project Manager is no longer available. Usually, it is someone in Corporate or Programme Management. They will ask the Senior User to provide information and evidence to confirm the benefits.

The Contents of a Business Case

The Business Case should describe the reasons for the project and includes information on the estimated costs, risks and expected benefits. Appendix A of the manual contains a product description for the Business Case. It should contain the following parts:

Appraisal Techniques

Below are discussed two appraisal techniques. This type of information can be included in the Business Case document.

Roles regarding the Business Case: Who is responsible for what?

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discussion icon Written by: Frank Turley