A business case capture is a collection of thought processes and data that informs the decision-maker as to why, when and how a project should be initiated. A business case captures the rationale for starting a project or activity. It may be presented in an organized written document, or may be a condensed version of an oral presentation or discussion. It is a summary of what the project involves, what its key risks are and what the benefits would be if it is successfully initiated and managed. In addition, it identifies the people involved in beginning, planning and completing the project, and who will be responsible for maintenance and oversight of the project.
It is very useful in project analysis and decision support. It is made up of five basic elements: market assessment, risk assessment, identification of risks, the impact of risks and the actions required to mitigate those risks. Each element in a business case is specified in a risk profile. The process of selecting a risk profile depends on the current state of the market, the project’s objectives, the number of people involved in starting, maintaining, implementing and finishing the project, the resources available and the appropriate risk management protocols. Following are some questions to ask when creating a business case.
Why is it needed? An effective business case can identify benefits and risks associated with starting and completing a project. Based on this information, the project manager can determine whether to invest in a technology, a facility, a product, an outsourcing company or a combination of these activities. Projects that will not result in tangible benefit to the organisation in the short or long term have little or no value to shareholders. Therefore, investors are reluctant to participate in projects that are deemed to have limited or no potential benefits.
Who is involved? What are the various drivers of investment? The project manager should analyse the project’s likely impact on the organisation, its internal and external environments, its key drivers and key milestones. The personal life of the project manager plays an important role as well. Project managers have many personal influences, such as family, friends, executives and peers.
How are the facts to be measured? The business case should identify the details of what is to be measured, how to measure them, who to measure them against, and the measurement procedure or process. For example, how would the personal impact be measured if a major project change resulted in reduced production levels and increased operational costs? A good business case should consider these types of details and use them to make sound decisions.
What do the benefits and costs look like? Once all the details have been assessed, an effective business case will identify both the expected short-term benefits and the long-term costs. To ensure that all projected short-term costs are realized, the business case should identify the time-scale for each benefit as well as the level of efficiency needed for each benefit.