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Business Case

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Aligned with the Continued Business Justification principle, the purpose of the Business Case Theme is “to provide a structure to judge whether the Business Case is desirable, viable, achievable and worth the continued investment that is made during the project”. You could also say the Business Case theme provides a mechanism to judge whether the project is and remains desirable and achievable.

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

Business Justification

“Business Justification” is a popular term in a number of methods and is now used by PRINCE2. Business Justification means that there is a valid business reason for doing the project and it remains valid throughout the project. If the Business Case becomes invalid during the project, then the project should be shut down. Continued business justification is also one of the 7 principles of PRINCE2.

What does a Business Case do for the project?

The Business Case gathers the information to allow the management to judge if a project is desirable, viable and achievable, and therefore worthwhile to invest in. The Business Case is normally developed at the Starting up a Project process, unless it is provided by Corporate or Programme Management. Once created, it is then maintained throughout the life of the project. A good question to ask here is “Why is the Business Case maintained and what does this mean?”

Let me give you an example to explain this. Your company will invest €100,000 in a Sales application and it expects to have a return on its investment in 20 months due to reduction of two administrative persons, as less administrative work is required. The clients will be able to order and view all account information online and don’t need to call as often. So as you can see, this sounds like a good project.

However, 3 months into the project, you find out the following: Two of your bigger clients don’t wish to use Web-based applications in their purchasing department, so you will need to keep one admin person. The return on your investment (ROI) will change, therefore, as it will take 32 months instead of 20 to recoup the cost of the project. The Business Case needs to be updated with this information.

As the Project Manager, you want to show that the project is still worth doing (if you think it is), but you will recommend to the Project Board to stop the project if not.

As you can see then, the Project Manager is constantly asking “Is the continued investment in this project still worthwhile?”

PRINCE2 assumes that there will be a customer who is requesting a product, who will pay for the product and will perhaps use the product. PRINCE2 also assumes a Supplier who will produce the product. Both the customer and supplier can exist within the same company (two different departments), or the supplier can be external.

How to best describe 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:

Outputs, Outcomes, Benefits

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 to create the Business Case. They are:

Step 1: Develop (Create) the Business Case

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.

Develop Business Case

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 in the project by the Project Board.

Where do you think would be good points in the project for the Project Board to Verify the Business Case (to see if the Business Case is worthwhile)?

Tip: Project Board decision points. Project Board verification points:

The Executive is responsible for ensuring that the project is value for money and is aligned with the corporate objectives, and also for assuring other stakeholders that the project remains viable. So, the Executive is the accountable person for the project, not the Project Manager.

Business Case Lifecycle

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 (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 of the 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.

Maintain Business Case

Step 4: Confirm the Benefits

Benefits are identified and written down at the start of the project in the document The Benefits Management Approach and the Business Case. For each benefit, you must include how the benefit will be measured and when this benefit will be realized. This information is placed in the Benefits Management Approach .

Example of measurable: X% reduction in costs, X% increase in profits

Benefits are usually realized after the project is closed, but some can be realized during the project. The step Confirm the Benefits checks to see if expected benefits have been realized.

Confirming Benefits

The Benefits Management Approach

The purpose of the Benefits Management Approach is to identify the benefits and most importantly, to select how the benefits can be measured. In other words, the Benefits Management Approach is used to plan the assessment of benefits. You can then compare the new results to the current situation, so the current situation becomes the baseline.

The purpose of the Benefits Managvement Approach is to:

The Benefits Management Approach must include information on the expected timeline for these benefits. The Project Manager creates it in the Initiating a Project process. The Senior User is responsible for specifying the benefits and realizing the benefits.

Why should the Senior User be responsible for specifying and realizing the benefits? The Senior User represents the users who are asking for a new product so they should be able to describe the expected benefits. These benefit descriptions should show that the project is value for money (worth the investment).

The Senior User is then responsible for using the product to achieve the benefits, and they become more accountable to the Corporate or Program Environment. This will also ensure their continued commitment during and after the project.

Benefits Management Approach

  1. Created by Project Manager in the Initiation stage
  2. Information is provided by the Senior User
  3. Project Board approves the Benefits Management Approach
  4. Check the realised benefits at the end of each stage
  5. Plan the Benefits Review after the project (post project)
  6. Check for realised benefits (post project)

The Contents of a Business Case

The Business Case should describe the reasons for the project and include information on the estimated costs, risks and expected benefits. The Business Case contains the following parts:

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discussion icon Written by: Frank Turley