A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured written document, but may also come in the form of a short verbal agreement or

presentation A presentation conveys information from a speaker to an audience. Presentations are typically demonstrations, introduction, lecture, or speech meant to inform, persuade, inspire, motivate, build goodwill, or present a new idea/product. Presenta ...

. The

logic Logic is the study of correct reasoning. It includes both formal and informal logic. Formal logic is the science of deductively valid inferences or of logical truths. It is a formal science investigating how conclusions follow from premise ...

of the business case is that, whenever

resources Resource refers to all the materials available in our environment which are technologically accessible, economically feasible and culturally sustainable and help us to satisfy our needs and wants. Resources can broadly be classified upon their av ...

such as money or effort are consumed, they should be in support of a specific business need. An example could be that a software upgrade might improve system performance, but the "business case" is that better performance would improve

customer satisfaction Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of ...

, require less task processing time, or reduce system maintenance costs. A compelling business case adequately captures both the quantifiable and non-quantifiable characteristics of a proposed project. Business cases can range from comprehensive and highly structured, as required by formal

project management Project management is the process of leading the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. T ...

methodologies, to informal and brief. Information included in a formal business case could be the background of the project, the expected business benefits, the options considered (with reasons for rejecting or carrying forward each option), the expected costs of the project, a gap analysis and the expected risks. Consideration should also be given to the option of doing nothing including the costs and risks of inactivity. From this information, the justification for the project is derived.

Reasons for creating a business case

Business cases are created to help decision-makers ensure that: * the proposed initiative will have value and relative priority compared to alternative initiatives based on the objectives and expected benefits laid out in the business case. * the performance indicators found in the business case are identified to be used for proactive realization of the business and behavioral change.

Development and approval process

The business case process should be designed to be: * adaptable – tailored to the size and risk of the proposal * consistent – the same basic business issues are addressed by every project * business oriented – concerned with the business capabilities and impact, rather than having a technical focus * comprehensive – includes all factors relevant to a complete evaluation * understandable – the contents are clearly relevant, logical and, although demanding, are simple to complete and evaluate * measurable – all key aspects can be quantified so their achievement can be tracked and measured * transparent – key elements can be justified directly * accountable – accountability and commitments for the delivery of benefits and management of costs are clear.

Key elements of the business case report

A good business case report, which brings confidence and accountability into the field of making investment decisions, is a compilation of all information collected during enterprise analysis and the business case process. The key purpose is to provide evidence and justification for continuing with the investment proposition. Here is a recommended structure:Source: Messner, W.: More on Making the Compelling Business Case
GloBus Research, accessed: 5 May 2013 and Messner, W. (2013)
Making the Compelling Business Case
Houndmills: Palgrave Macmillan. * Preface * Table of contents * Executive briefing ** Recommendation ** Summary of results ** Decision to be taken * Introduction ** Business drivers ** Scope ** Financial metrics * Analysis ** Assumptions ** Cash flow statement (

net present value The net present value (NPV) or net present worth (NPW) applies to a series of cash flows occurring at different times. The present value of a cash flow depends on the interval of time between now and the cash flow. It also depends on the discount ...

, etc.) ** Costs ** Benefits ** Risk ** Strategic options **

Opportunity costs In microeconomic theory, the opportunity cost of a particular activity is the value or benefit given up by engaging in that activity, relative to engaging in an alternative activity. More effective it means if you chose one activity (for example ...

* Conclusion, recommendation, and next steps * Appendix

Review and approval

At various stages in the project, the business case should be reviewed to ensure that: * The justification is still valid, * The project will deliver the solution to the business need. The result of a review may be the termination or amendment of the project. The business case may also be subject to amendment if the review concludes that the business need has abated or changed, this will have a knock on effect on the project.

Public sector projects

Many

public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, inf ...

projects are now required to justify their need through a business case. In the public sector, the business case is argued in terms of

Cost–benefit analysis Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives. It is used to determine options which provide the best approach to achieving benefits ...

, which may include both financial and non-financial cost and benefits. This allows the business to take into account societal and environmental benefits, allowing a more comprehensive understanding of economic impacts.

Notes

References

*Bentley, C.: ''Practical Prince2'' (The Stationery Office), .
Five elements to include in a compelling business case
*Messner, W.: ''Making the Compelling Business Case. Decision-Making Techniques for Successful Business Growth.'' Houndmills: Palgrave Macmillan, 2013
book companion website
*OGC Guidance and templates o
'Business Case'
*Schaltegger, S. & Wagner, M. (Eds.): ''Managing the Business Case for Sustainability. The Integration of Social things, and Economic Performance''. Sheffield: Greenleaf, 2006

External links

Business Case article in PRINCE2 wiki
{{DEFAULTSORT:Business Case Project management Evaluation methods ru:Технико-экономическое обоснование