What Are Business Cases?

What Are Business Cases?

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A business case captures the rationale behind initiating a proposed project or activity. It’s most often presented in the form of an organized written document, usually presented as a white paper, but can also come in the form of an oral presentation or conference call. A business case is generally divided into several different sections; these include the product or service that is being considered, an analysis or assessment of the market, and marketing or business strategies. Marketing strategies, for example, might include financial statements, financial forecasts, and other forecasting methods. The final section of the business case often involves recommendations for actions and decisions to be taken by the company.

Just what are the benefits of presenting a business case? In essence, it provides the information needed to make a decision or to justify that decision. This is very different from the more direct forms of financial statements, sales proposals, and operating guidance. While the information provided in such documents is more specific and detailed, it doesn’t have the same analytical value and therefore is not as useful when planning future phases of investment or operating budgets.

Planning and analysis must occur before any investment is made in order to understand the risks and rewards involved. The business case allows the organisation to build up and track historical data, as well as provide projections based on the assumptions used, and thus provide the necessary analysis and justification for any decisions to be made. Investment decisions depend upon the values and assumptions underlying those values and assumptions. Without a clear and systematic review of the assumptions, the likelihood of the investment being successful is lower than it could be.

A variety of benefits are provided through the use of business cases, and they do vary according to different scenarios. For example, some provide the information needed to determine whether investment would be justified within the specified budget. Others identify risk factors and forecast the likely benefit and price elasticity for any particular project. In addition, some contain a full description of the technical and managerial process that would be required to successfully implement the project, as well as providing the benefit to employees, clients and other stakeholders if that were to happen. The final category includes those that address the distribution of benefits among various stakeholders.

When an independent project Sponsor begins working on a new project, they must first consider all the relevant information to determine the optimal timescales and deliverables. However, there are many different ways in which this can be done, and some of the most common fall into three broad categories. Firstly, the timing of the project should be carefully considered; most projects are best started after about 3 years of development, though the timescales may vary depending on the actual complexity of the task. Secondly, it should be considered whether the budget has sufficient funding to accommodate the demands of the project, in terms of both scope and complexity.

Once all the necessary information is gathered, the business case should then be written, and it is important to address all the key stakeholders involved in the project. A strong focus is required in this stage, and it is usually recommended that an executive summary is completed, detailing all the key stakeholders, including more detailed information for each of the stakeholders. Then the full version of the business case should be written, using the same outline format as the executive summary. Finally, this section must be thoroughly reviewed and refined, before it is released to the rest of the project team. By following this format and strategy, project sponsors will help ensure that their services are used most effectively by their clients, in order to create projects that achieve the best results in line with their business needs and strategies.

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