Project management sometimes necessitates periodic reporting on progress to upper management, stockholders, and potential funders. Making a business case analysis is an excellent method to assess the current state of your project in a precise and comprehensive manner. Read on to know more about a business case study in project management. We also added some tips on how to write a business case. So, why not dive in now?
What Is a Business Case?
A business case is a proposal that explains a business issue and argues for a particular course of action. This document is created in the beginning phases of a project and lays out all the information needed to determine whether or not to proceed with the endeavor.
Making a business case requires you to weigh the pros, cons, expenses, and risks of your venture to see if it will help you achieve your goals. The business case summarizes these facts so that upper-level management can decide whether or not to proceed with the project.
Who Needs One?
The business case is an invaluable tool for anyone in the corporate or government world with an idea they want to propose. When it comes to implementing anything novel that requires the expenditure of money or resources, businesses, and government organizations often have some “red tape” to wade through. The business case may involve the work of an analyst, manager, head of department, controller, or similar administrative figure.
How to Write a Business Case
Have you been thinking about how to write a business case? Worry not! Here are some steps you need to follow to write a business case:
#1. Executive Summary
The first part of the business case is the executive summary, a condensed version of the complete document. It conveys the project’s “story” its origin, motivation, role, etc. while also providing crucial facts. You shouldn’t go above a paragraph here. In the next paragraphs, you’ll have the chance to provide more information.
#2. Financial Section
The purpose of this section is to update the budget approvers on the current financial situation. There are two sections to this:
- Financial Appraisal: This is a neutral assessment of the project’s potential earnings and stability in terms of finances. You can compare the expenditures of the project to the anticipated benefits by using the information gleaned from your evaluation. The purpose of a financial analysis is to make sure the project is feasible monetarily and that no stone is left unturned in terms of expense.
- Sensitivity analysis: This reduces the danger of the project. It takes into account potential outcomes by gauging their effect on a project’s outcomes, and it takes into account shifting value assumptions in cases of ambiguity.
#3. Project Definition
The project’s sponsor, stakeholders, and team will gain the most from this section of your business case. This section is broken down into the following sections:
- Background Information: This provides a concise summary of your business justification and project scope. Include a synopsis of the motivations for the creation of your project. This may be the result of a new difficulty, an unexpected opportunity, or a shift in your current situation.
- Business Objective: Explain in this section the significance of your project. The business purpose should explain why your project is important, how it will help the company, and what obstacles must be overcome in order to succeed.
- Benefits and Limitations: This is meant to demonstrate the necessity of the project by outlining the benefits, both monetary and otherwise, that will result from its completion. Describe why you’re working on this, and how these advantages will help you succeed. In addition to the positives, you should highlight any drawbacks that could threaten the success of your project.
- Options Identification and Selection: In this part, you should list all the possible answers to the issues you’ve encountered. There are usually several ways to approach a problem, so it’s important to weigh your options. The goal is to examine all of the possibilities and suggest the best course of action. Several choices will be eliminated as the project continues, leaving you with a shorter selection. You can want to provide a selection of three to five benchmark solutions in your final business case.
- Scope, Impact, and Interdependencies: Specify the steps that must be taken to accomplish the business goal here. It also reveals which departments inside the company would be impacted. Included and excluded items, as well as important dependencies on other projects, can be listed here.
- Outline Plan: This is a synopsis of the project’s plan, timing, and activities. It comprises a brief overview of the project and who is responsible for what in addition to a list of the project’s primary deliverables. Your project, like a schedule, is most effective when broken down into phases, with major choices preceding each phase.
- Market Assessment: A market analysis is an in-depth examination of the market conditions in which a company operates. In this part, you can lay out the driving motivations behind your company. Consider discussing the political, economic, social, technological, legal, and environmental conditions in your market.
- Risk Assessment: This is a synopsis of the major threats and benefits to your project, as well as your strategies for dealing with them. Include any concerns that may occur as a result of your project. Make a detailed list log to record the threats to your project and the steps you’re taking to mitigate them.
- Project Approach: Here is where you’ll detail the project’s execution and the actions taken to ensure its success. Describe in detail the steps you take to complete a task, the outcome you expect, and the resources you invest in order to get there.
- Purchasing Strategy: This third component of the definition of a project is meant to elaborate on the means by which the project will be funded. The procurement plan should include detail of the organization’s procurement procedure for the project.
#4. Project Organization
This final component of your business case covers the structure of your project and is divided into two sections. These should be formatted as follows:
- Project Governance: In this section, you’ll lay down the framework of your project for the reader. This is also where you can describe the hierarchy of decision-makers involved in moving your project forward. Include the project’s roles and responsibilities, as well as any standards or tolerances that will be applied. Explain how these considerations are factored into final conclusions.
- Progress Reporting: Finally, your business plan should detail how you intend to monitor the project’s development. Include in this plan how you will keep the project board informed of progress.
What Is a Business Case Analysis
A business case analysis is performed to evaluate a potential course of action. Costs, risks, and benefits are the three most crucial elements for this goal in a corporate context. That is to say, there are three primary concerns that need to be addressed in any business case analysis report:
- Costs: Is there a price tag attached to not making this choice?
- Risks: If I go ahead with this, what risk do I put myself in?
- Benefits: When making this choice, what advantages do you anticipate?
The purpose of this inquiry is to determine whether or not to proceed with this choice. The decision should be made if the anticipated advantages are much larger than the associated costs and dangers. However, another course of action should be considered if the risks and expenses outweigh the potential gains.
The costs, risks, and rewards are typically weighed against one another in monetary terms during a business case study. However, alternative quantitative or qualitative perspectives might be used in business case analysis as well. It’s possible, for instance, that a decision’s costs should be expressed in terms of time rather than money. Similarly, a decision’s risks and rewards could be evaluated by considering how it affects the company’s brand value, customer happiness, or legal standing. To help stakeholders make a well-informed decision when a business case study doesn’t center on monetary consequences, it’s useful to look for objective ways to weigh the pros and cons.
Why Use Business Case Analysis?
Business case analysis is useful for two major reasons. The first advantage is that it compels the author to weigh the pros and drawbacks of every possible course of action. It’s common to lose sight of the whole range of potential consequences when making a choice. There is a better possibility of making the right choice while considering extreme or unfavorable outcomes.
The second benefit of using business case analysis is that it facilitates the transfer and contextualization of important knowledge to stakeholders from a subject-matter expert (often the product manager). The importance of some costs, risks, and advantages may be missed by stakeholders without a thorough report from the expert.
When to Use Business Case Analysis
When a project manager at a major company needs buy-in from stakeholders, they will often do a business case analysis. As the project manager is often the company’s most invested party in smaller and medium-sized enterprises, buying in from higher-ups is unnecessary.
However, even for smaller businesses, conducting such analysis might pay off in the long run. As was indicated above, this is because it compels the decision-maker to weigh all relevant factors.
Managing the Business Case
Throughout the project lifecycle, the business case provides structure and aids in organizing the project. Because of this, it shouldn’t be put on the shelf but rather used frequently as a resource. As a result, the project sponsor and project board should revisit it at strategic points to ensure the project’s continued viability and the soundness of the rationale behind it. To avoid wasting time and resources, it’s best to conduct the evaluation before moving on to the next phase.
Why Do You Need a Business Case?
You need a business case for the following three reasons:
- It is meant to persuade decision-makers to move forward with the project concept, but it also aids in the prioritization of initiatives that are in accordance with the company’s overall strategy.
- In order to make fair comparisons across potentially competing projects, business cases standardize the evaluation process.
- If the project is selected, the business case can be used to better manage the project’s scope in the early stages of planning. Even after the project is over, it can still be used to evaluate the success of the project’s planning and execution.
Business Case Analysis vs Business Case
Perhaps you’re confused about the distinction between a business case and a business case analysis. Both of these names describe the same type of software used for business analysis. The report is called a “business case,” while the method used to analyze it is called “business case analysis.”
What Is Business Case Document?
The document is an argument presented in writing to persuade a decision-maker to accept a certain course of action. A well-developed one investigates potential solutions to a problem and allows decision-makers to pick the one that will be most beneficial to the company.
What Is the Purpose of a Business Use Case?
The purpose of a business use case is to outline the steps an organization must take to deliver a useful, measurable outcome to a customer.
Who Writes the Business Case?
In many organizations, the Project Manager or a business analyst is tasked with developing a thorough Business Case, even though it is the responsibility of program management. The Business Case is another area where Project Assurance can lend a hand.
Final Thoughts
Here, we laid out the steps for creating a convincing business case. Due to the breadth of our discussion, the resulting business case may appear daunting. A business case needs to get right down to business. A few pages are possible if the project is relatively small. The document will be longer for more involved projects and sophisticated business change initiatives. As a result, you should write each part with your target audience in mind, and store supplementary materials in an appendix.
Related Articles
- PROJECT MANAGEMENT: Definition, Software, Skills, Steps & Salary
- Project Planning: A Guide To Project Planning Techniques
- HOW TO GET INTO PROJECT MANAGEMENT: Definition, Guide, and Requirement
- PROJECT RISK MANAGEMENT: Step-By-Step Guide On How To Manage Risks
- 12 Components of Business Plan (Detailed Guide)
References
