Every project needs a business case. This may be informal – especially for small and/or internal projects. It may also be very formal, as is likely the case for very large and very visible projects run for customers outside of your organization. In most cases, the customer has put together a business case in order to gain their own funding for the project. In some cases, they’ll need your help – as the project manager – in putting together the project business case and thus justifying the project and associated expenses to others within their organization.
Below is Carl Pritchard’s take on the Business Case documentation as outlined in his book “The Project Management Communications Toolkit.” I found it to be an interesting read and hope that some PMs find this of value on the projects they are working or getting ramped to work on.
The Business Case Documentation
Purpose
The business case establishes the fundamental rationale for a course of action. It is the documented history of why a project, effort, or approach was selected. It details the objectives, the projected outcomes, and the projected investments associated with the effort. As such, it allows decision makers to examine the breadth of information currently known about the effort to determine whether or not the project is a good idea in terms of cost, benefit, and organizational objectives. It may include statements about the impacts on existing business practices, resource constraints, and environmental considerations so as to provide a comprehensive understanding of the project. In some instances, risk analysis is a key component. It is the primary document defending the rationale for the project.
Application
The business case is normally applied early in the project and may be developed by senior management, marketing groups, the project office, or by any group or organization responsible for initiating large-scale activity within the organization. Business cases in mature organizations follow consistent formats to allow managers to review multiple projects in similar contexts.
The business case will list the key proponents of the project, the sponsor, the users or beneficiaries of the project, and any deliverables. At a high level, it will describe the approach to be used and the business justification or rationale for that approach. Normally, that rationale will incorporate some form of cost/benefit analysis, although the types of cost/benefit analyses and their applications vary widely.
A general outline for a business case might look like this:
- Executive Overview
- Project Description
- Proponent(s)
- Sponsor(s)
- Users/Beneficiaries
- Deliverables and Quality Criteria
- Rationale
- Cost/Benefit
- Schedule/Time Frames
- Communications and Reporting Requirements
- Environmental Considerations
- Project Development Environment
- Project Implementation Environment
- Organizational Processes
- Risk Factors/Risks
- Risk Management Approach
- Preliminary Risks Identified
- Assumptions
Content
The information supporting each of those outline components should be developed as objectively as possible. To achieve that, each element should be reviewed by at least one other person. The content may be expanded (or compressed) based on the business needs of the organization conducting the analysis. At a high level each section should contain the specific information discussed in the following subsections.
1.0 Executive Overview
The executive overview is a general scope statement identifying the time, cost, and requirements for the project, as well as the business need driving the effort. It should include the names of the project sponsors and project manager, as well as a description of the beneficiaries of the effort. The executive overview should provide a synopsis of the cost/benefit analysis, regardless of whether those costs and/or benefits are tangible or not.
2.0 Project Description
The project description should provide more depth on most of the issues raised in the executive overview, including the background, sources, and history for any data provided as rationale for the project or the cost/benefit analysis. This section may include cross-references to other project documentation, including draft plans, product descriptions, and stakeholder analyses or surveys.
3.0 Environmental Considerations
The cultural, technical, or physical environment may described here in depth, providing information on the practices and protocols typical within the environment.
4.0 Risk Factors/Risks
The risk approach described here may include the means and practices to be employed for risk identification, qualification, quantification, response development, contingency allocation, and risk reassessment. Any initial or significant risks identified in developing the preliminary information (like the cost/benefit analysis) should be identified here as well.
5.0 Assumptions
Assumptions are beliefs that are held as true to allow for ongoing planning. In an effort to ensure that they have value, assumptions identified here regarding all aspects of the project (resources, environment, client culture, organizational behavior, and so on) should be validated as practicable.
Approaches
Business cases in some organizations may be voluminous and detailed. Others span only a page or two. Regardless of the level of depth, they should provide insight into the considerations that were used to determine if there is a valid business reason for moving forward with a project. They should be directed at an internal audience, because they may include information about the internal response to and structure for the customer relationship. The internal audience should, at a minimum, include the project sponsors, the project manager and executive management.
Considerations
Because the business case may contain sensitive competitive information, it should be disseminated only to those who have achieved a level of trust within the organization. The author of the document should be clearly identified, and contact information for that individual should be included as well. Although the business case is an initiating document, it should be reviewed and revisited on a regular basis to ensure that the cost/benefit analysis and proposal are still being pursued.