Posts Tagged ‘Business case’

Business Case

Posted: February 27, 2012 in Projects
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Business Case

A business case is similar to a business plan prepared for private business. Its purpose is to outline the business rationale for undertaking the project and to define the parameters and management factors involved in the project itself. It provides the project manager with a tool to guide the design, management and evaluation of the project

Importance of Business case

The preparation of a business case serves the dual purpose of creating a budget. A business case is a structured proposal that is justified in terms of costs and benefits. It is a typical prerequisite for the initiation of a medium to large project and is explicitly required by many project management methodologies, no matter the size of the project.

The business case serves four purposes:

  • It helps the applicant think through the project in a systematic, step-by-step manner.
  • It explains to program administrators, funding partners and other interested parties why the project should be undertaken.
  • It helps potential funding partners understand the economic value of the project.
  • It provides a framework for completion of the project on time and on budget

The business case should address the business need that the project seeks to resolve.

It clearly sets scope and expectations, which, if carefully managed, will minimize time delays and cost over-run.

Benefits of Business case on Project and Project Manager

Business case includes the reasons for the project, the expected business benefits, the options considered (with reasons for rejecting or carrying forward each option), and the expected costs of the project, a gap analysis, and the expected risks. In this case, the gap analysis looks at both the personnel resources and materials available and what must be developed.

The business case will be reviewed periodically. Typically, the first review decides to continue the project or not. After that, reviews happen periodically during the execution of the project. A review is conducted to ensure that:

  • The business case is still valid, i.e. the business need still exists.
  • The project is still on track to deliver the solution to the business need.

As a result of this review, the project may be terminated or future parts amended. The business case may also be subject to amendment if the review concludes that the business need has abated or changed.

Performance measures included in Business case evaluate the success of the project. They indicate how the project will meet the objectives listed at the beginning of the business case. The business case will:

  • List the plan objectives.
  • State the evaluation criteria for each objective.
  • Outline how or by whom each will be evaluated.

The technical analysis in business case outlines the technical information used to make the decision, and tells why the proposal represents the best or most cost-effective solution. It describes:

  • Technical problems encountered in existing situation
  • What alternative solutions were considered
  • Why this is the best course of action to choose
  • Why this is the most cost-effective solution, or if not, why it was chosen
  • What innovative technologies are being used