Project Management – Make Sure You Have a Sensitivity Analysis

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A business case capture outlines the rationale for starting a project or activity. It may be presented as a written document, but can also be presented in the form of an oral presentation or verbal agreement. In business cases, the process of organizing and formulating business case studies has become a routine part of the process of project management. Business case studies are an essential tool for managers who want to understand the existing customer base, and determine how to increase it. This article provides information about what a business case actually is and what it is not.

A business case is one in which an executive or project sponsor explains a concept in simple, concrete language. The idea is that a business case will convince decision makers that the proposed action will meet the anticipated benefit. Often this “if it ain’t broke, don’t fix it” approach is adopted by senior executives, because it tends to eliminate unnecessary arguments during discussions. Below is an outline of the elements of such an outline.

An Executive summary is an important part of an enterprise wide business case. An Executive Summary is a written account of the organisation’s current status and future prospects, and describes what the organisation is doing and plans to do over the next few years or months. The focus of the summary is to provide a comprehensive overview of the organisation’s business model, e.g., the product range it provides, the price and services it provides, what it is currently doing in terms of business development and innovation, etc. The Executive Summary should answer the questions that any decision maker might ask. For example, the report should answer whether the organisation’s product or service meets the needs or desires of the audience it will be targeted with, what risks might be involved in pursuing the project, the impact on the organisation’s competitors and other important business issues.

A description of the costs and benefits of the business case is necessary for any decision maker to understand the analysis. An Executive Summary can provide the information necessary for assessing the benefits of the project. However, a description of the costs associated with undertaking the project is equally important. It should provide the key business case benefits and describe the expected operational costs over the long term. The description should also detail the benefits of short-term actions taken by the organisation.

A detailed description of the assumptions used in the project is needed to determine if the business case presents a realistic picture of the costs, benefits and risks involved in pursuing the project. The description should also identify the assumptions used by the executive summary and describe how these assumptions were reached, how they are tested and how the results of these tests support the conclusions drawn in the report. It should also clarify how the forecasted benefits and costs are compared to the pre-defined operational costs. A summary of the assumptions used should also include a discussion of why these assumptions were chosen, and what benefit the project offers society, the stakeholders or users.

The Sensitivity Analysis report deals with the level of sensitivity that must be applied to the project details. It goes into why the business case is classified as sensitive and what level of sensitivity must be applied to the project details. It also discusses what kind of comments need to be included in the executive summary and how these comments will affect the organisation’s ability to pursue the project. The sensitivity analysis will include a discussion of the recommendations that might need to be made and the implications that these recommendations could have on the project. It will also discuss what actions might need to be taken if the recommendations are not followed and what consequences might occur.

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