PRINCE2® wiki

Business case

The business case practice ensures that the project is desirable, viable, achievable, and worth the ongoing investment throughout its lifecycle, which is in line with the ensure continued business justification principle. Essentially, it provides a framework for assessing whether the project remains worthwhile and feasible as it progresses.

Purpose

The purpose of the business case practice is to establish mechanisms to judge whether the project is (and remains) desirable, viable, and achievable as a means to support decision- making in its continued investment.

Let us look at that statement again and break it up.

Business justification

Business justification is a key concept in PRINCE2. It refers to having a valid business reason for undertaking a project and ensuring that this justification remains valid throughout the project’s lifecycle. If, at any point, the business case becomes invalid, the project should be halted. Continued business justification is also one of the 7 principles of PRINCE2, ensuring that the project stays aligned with its original purpose and goals.

Why a business case?

The business case document provides the necessary information for management to assess if a project is desirable, viable, and achievable, helping to determine if it is worth investing in. It is typically developed during the starting up a project process, unless provided by the business layer. Once created, the business case is maintained throughout the project’s lifecycle. A key question to ask is, “Why is the business case maintained, and what does this mean?”. Let’s consider an example to explain this further.

Your company plans to invest €100,000 in a sales application, expecting a return on investment (ROI) in 20 months by reducing the need for two administrative positions. The system will allow clients to place orders and view their account information online, reducing the need for phone calls. This seems like a good investment.

However, three months into the project, you discover that two major clients refuse to use web-based applications in their purchasing departments. As a result, you must retain one admin person, meaning the ROI will now take 32 months instead of 20. The business case needs to be updated with this new information.

As the project manager, you will continue to evaluate whether the project is still worth pursuing. If you believe it is no longer justified, you will recommend stopping the project to the project board. Thus, the project manager constantly asks, “Is the continued investment in this project still worthwhile?”

PRINCE2 assumes there will be a customer requesting the product, paying for it, and potentially using it, while a supplier (internal or external) will produce the product.

Project’s output

In PRINCE2, understanding the terms output, outcome, and benefits is crucial for assessing what a project delivers and how its success is measured. These terms help define what the project produces, how it impacts users, and the measurable improvements it brings to the organization. Below, we will explore these concepts in detail and how they relate to the overall business justification for a project.

Example of output, outcome and benefits or a new CRM software:

Dis-benefit

A dis-benefit is a measurable negative impact resulting from an outcome, perceived as detrimental by the investing organization, which undermines one or more business objectives.

For example, after implementing a new CRM system, if the system is difficult to use and leads to longer customer response times, it could result in customer dissatisfaction, which negatively impacts the business objective of improving customer service.

Capability

A capability is the complete set of project outputs necessary to achieve a desired outcome.

For example, in a software development project, the capability might include the completed application, user training materials, and system integration tools, all of which are required to enable users to use the new system efficiently.

Business objective

A business objective is a specific, measurable outcomes that reflect progress towards the organization’s strategy, which the project aims to contribute to.

For example, a business objective for a marketing campaign project could be to increase brand awareness by 20% within six months, which aligns with the organization’s goal to expand its market share.

Business case lifecycle

The business case begins as an outline at the start of the project, based on the project mandate. It provides enough information for the project board to confirm the business justification and authorize the project manager to initiate the project. In PRINCE2, this is called the ‘outline business case,’ which is documented in the project brief. Think of the ‘outline business case’ as a ‘draft business case.’

At this stage, project costs, timescales, products, risks, and targets may not be fully understood, making the outline business case often incomplete. As the project is planned during the initiating stage, more details emerge, and the outline business case evolves into a more detailed version known as the ‘full business case’ in PRINCE2.

The business case is refined by the project manager as the project progresses, incorporating actual costs, realized benefits, and new information. It is then reviewed by the project board at the end of each stage.

PRINCE2’s business case technique

PRINCE2 uses a four-step technique for business case management: develop, check, maintain, and confirm. If the organization has its own procedure, it can be used instead, but this should be documented in the project initiation documentation. The business case is first developed in outline, then in detail at the start of the project. It is reviewed and updated throughout the project, with the project board checking it at key decision points, like stage boundaries, and confirming benefits over time.

  1. develop: Explore options and gather the necessary information for investment decisions.
  2. check: Assess whether the project is still worthwhile.
  3. maintain: Keep the business case updated with actual progress and current forecasts, including forecast benefits.
  4. confirm: Assess if the intended benefits have been or will be realized. Confirmation mostly happens after the project ends, though some benefits may be realized during the project when products are delivered.

Step 1: Develop

The project mandate initiates the project. It is used to develop the initial business justification, which is documented in the outline business case as part of the project brief. The project board approves the project brief when authorizing project initiation. The outline business case is refined into a full business case during project initiation and approved by the project board.

There are three basic options for any investment:

The “do nothing differently” option should always be the baseline for comparing the other options. Analyzing these options helps the project board and stakeholders decide which option offers the best value. It answers the question: Are the expected benefits more desirable, viable, and achievable than the other options?

At the start of the project, many options may be considered, but the number will be reduced for detailed evaluation. Even for “must-do” projects, exploring different options is necessary to select the most suitable one, based on viability, desirability, and achievability.

Example - upgrading a customer support system:

Step 2: Check

The business case should be regularly assessed for desirability, viability, and achievability. New risks or changes might justify switching options. It is refined and updated as project details become clearer. Continued business justification ensures business objectives and benefits can still be achieved.

The project board should check the business case:

The project manager checks the business case:

Step 3: Maintain the business case

“Maintain the business case” refers to keeping the business case up to date (living document) 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 typical changes can be an increase or reduction in cost, new information on a risk, etc.

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 even the updated cost of the next stage, along with any information on issues and risks.

Step 4: Confirm the benefits

The business layer reviews the business case in a post-project benefits review to check if the intended benefits were realized. During the project, benefits reviews occur at stage boundaries to ensure benefits are on track.

Note: Projects deliver outputs that lead to outcomes and benefits.

The senior user, who specifies the benefits, also confirms if the forecast benefits are achieved. Since many benefits appear after the project, the senior user should come from the impacted area. The benefits management approach ensures outcomes and benefits are realized. It is created at the initiation stage and approved by the project board, which may involve the business in benefits reviews beyond the project.

Measurable benefits should be confirmed by the senior user and reported by the project manager in end-stage and final project reports. If benefits are not realized, forecasts should be updated at stage boundaries.

Post-project benefits reviews hold the senior user accountable for realizing benefits and taking corrective actions. These reviews also assess the project product’s performance and provide lessons for future projects.

The project executive ensures benefits reviews are planned. After project closure, the responsibility shifts to the business (senior user), who will manage the reviews.

Business case management documents

The following are the management documents related to the business case practice:

Their relationship with this practice is explained below, and you can find more information about them on their own pages.

Note: There’s a practice called “business case” (explained on this page) and also a management document called “business case”. These two are tightly related but are not the same. There’s also the ensure continued business justification principle with a similar subject.

Benefits management approach

The benefits management approach defines the benefits of the project and, more importantly, how they will be measured. It provides a plan for assessing the benefits, allowing you to compare the expected results with the current situation, which serves as the baseline.

The purpose of the benefits management approach is to:

The benefits management approach should also include the timeline for realizing these benefits. The project manager creates it during the initiating a project process. The senior user is responsible for specifying and realizing the benefits.

In your opinion, why is the senior user responsible for specifying and realizing benefits?

The senior user represents the stakeholders who requested the product. They should be able to define the expected benefits and demonstrate that the project delivers value for money (justifying the investment).

The senior user is also accountable for using the product to achieve the benefits and for maintaining their commitment to the project, both during and after its completion.

  1. The project manager creates the benefits management approach during the initiation stage. The senior user provides the necessary information for the benefits management approach.
  2. The project board approves the benefits management approach.
  3. Review the realized benefits at the end of each stage.
  4. Plan the benefits review to occur after the project (post-project).
  5. Conduct a post-project review to assess (confirm) the realized benefits.

Business case

The business case outlines the reasons for the project, along with estimated costs, risks, and expected benefits. It includes the following sections:

Role & responsibilities

PRINCE2 defines seven key roles to manage a project. Below are their specific responsibilities related to the business case practice:

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Written by Frank Turley.

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