Revision as of 23:31, 18 February 2021

By Andrea Pin Morales (s205567)

Abstract

There are 7 principles that must be followed when managing a project in order for it to be considered a PRINCE2 project ^[1] (p.20). One of these is the principle of Continued Business Justification. According to this principle, no project can be initiated without a justifiable reason. This reason will be the one steering all of the decisions to be made throughout the project. The justifiable reason must not only be recorded and approved, but must also remain valid and be revalidated during the entire project life cycle. ^[1](p.21.)

The business justification can be documented in the form of a Business Case. The business case is crucial to ensuring that the projects pursued are systematically aligned with the organization’s strategy and objectives. Its main purpose is to provide a recommendation for a precise set of actions. Despite the extensive literature available on this subject, problems still arise during the development and application of business cases which offset many of their benefits. ^[2] (p.2.)

To prevent this from happening, the main purpose of this article is to provide a set of practical guidelines to develop a strong business case in the context of project management. The article will achieve this by describing some of the key characteristics of a project’s business case as well as the most important reasons for developing it. The recommended structure and formats will be explained and a thorough description will be provided on the steps that are vital to the writing of a robust business case. Furthermore, the consequences of not following these steps and not creating a business case will be reported. At last, some recommendations will be provided regarding tools and techniques that can be used to uplift the analysis and the limitations of the business case will be presented.

Introduction to the Business Case

Why? This is the central question of the project that the business case addresses. The business case is a document, aligned with the principle of the Continued Business Justification ^[1](p.48.), that provides justifiable reasons for a project to be initiated given the required investments.

The business case outlines the benefits that can be achieved through the undertaking of a project and the costs of the investments that will be needed throughout its life cycle, as well as any risks that it might set ahead. The benefits can be tangible and intangible but they must always be measurable in some way. The business case is written prior to the project’s initiation but must be reviewed after each management phase and must be modified with the latest information throughout its implementation and development. ^[1](p.294.)

According to the PRINCE2 standards, the business case can be substituted by a business plan for part of the project lifecycle ^[1](p.48.). However, the business case and business plan are not the same. While the business case is used for specific projects or initiatives, the business plan encompasses the overall vision and processes that the organization should follow to achieve financial success with respect to the set strategic goals and business model ^[3] (p.190-191.).

The Need for a Business Case

The business case enables decision makers to judge a project’s desirability, viability and achievability upon qualitative and quantitative criteria.

• Desirability - indicates that the benefits of a project outweigh any of the costs and risks that it might create and that the project follows the organization’s strategic objectives. ^{[4] [1]}
• Viability - indicates that the project will be able to deliver the products or services despite the technical, time and resource constraints. ^{[4] [1]}
• Achievability - ensures that at the end of the project the stakeholders will be able to enjoy the anticipated benefits. ^{[4] [1]}

Recommended Structure and Formats

Formats

Structure

Practical Guidelines

Building a Strong Business Case

Business Case Methodology

Consequences of not Developing a Business Case

The Five Case Model

Roles and Responsibilities

Useful Tools and Techniques

12 Common Mistakes to Avoid

Limitations

Annotated Bibliography

In the following section, references have been provided for further reading on the topic of the Business Case in the context of project management.

• Messner, W. (2013). Making the Compelling Business Case. Palgrave Macmillan.

- This book is useful to those looking for in-depth descriptions of individual techniques that can be used to perform the costs and benefits appraisals, comprised in the Business Case. For example, chapter 5 is dedicated to describing how to make investment decisions utilizing the Net Present Value (NPV). The book provides a variety of example case studies and exercises illustrating the different aspects involved in the development of the project Business Case. Moreover, it also provides guidance on how to best present the Business Case and recommendations on how to structure it. This book will therefore also be useful to those interested in learning about how to verbally deliver the Business Case as well as the concept of Business Case selling.

• Gambles, I. (2009). Making the Business Case: Proposals that Succeed for Projects that Work (1st ed.). Routledge. https://doi.org/10.4324/9781315249988

- This book discusses the influence of other factors, such as task definition and stakeholder mapping, in the development of the Business Case. Similarly to the above book, it provides examples and exercises to build an understanding of the benefits and costs analyses required by the Business Case.

• Sheen, R. (2015). HBR Guide to Building Your Business Case. Harvard Business Review Press. https://store.hbr.org/product/hbr-guide-to-building-your-business-case/15038

- This guide describes common mistakes that are made when developing and pitching a Business Case. It explains through different examples how to generate integral parts to the costs and benefits analysis of the Business Case, such as the Return On Investment (ROI) and the break-even analysis. It also provides tips to delivering a great business case presentation and a general structure for the business case presentation.

• HM Treasury. (2018). Guide to developing the Project Business Case. HM Treasury and The Welsh government. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/749086/Project_Business_Case_2018.pdf

- This is a best practice guide published by the HM Treasury and the Welsh government in 2018. It provides detailed and specific advice on how the Five Case Model dimensions can be integrated into the Business Case. It addresses organizations that are part of the public sector but is applicable to all projects. It contains different types of checklists to go through when developing project Business Case as well as links to Business Case templates. Another version is also available specific to programme Business Cases.

References

1. ↑ ^{1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7} AXELOS. (2017). Managing Successful Projects with PRINCE2 2017 Edition. The Stationery Office Ltd. https://www.axelos.com/store/book/managing-successful-projects-with-prince2-2017
2. ↑ Messner, W. (2013). Making the Compelling Business Case. Palgrave Macmillan. https://link.springer.com/book/10.1057/9781137340573
3. ↑ Cox, J. B., & Radwan, S. S. (Eds.). (2015). ASAE Handbook of Professional Practices in Association Management (3rd ed.). Wiley. https://www.wiley.com/en-us/ASAE+Handbook+of+Professional+Practices+in+Association+Management%2C+3rd+Edition-p-9781118775394
4. ↑ ^{4.0 4.1 4.2} Business Case Theme. (2018). In Prince2® (pp. 131–157). John Wiley & Sons, Ltd. https://doi.org/10.1002/9781119549185.ch4