Why should anyone sponsor and fund a project? It is your Business Case – or Project Proposal – that sets out the answer. Project proposals set out the case for investing in a project. So, we start work on them early on. And, when complete, they drive essential decision: to invest I the project or not.
A Project Business Case is a part of Project Governance. It sets out why you should start your project. It gives an
‘analysis of the benefits and costs of making a change to the way things are done’.
Your Project Business Case is therefore a tool for senior people to make an informed decision. It is a vital part of your project governance.
In this guide to the Project Business Case, we will cover:
So, let’s get started with the most fundamental question…
Here’s a short video that answers the question, What is a Business Case?
All of the major bodies of Project Management knowledge define it…
Business Case:APM Body of Knowledge, 7th Edition
Provides justification for undertaking a project, programme or portfolio. It evaluates the benefit, cost and risk of alternative options and provides a rationale for the preferred solution.
Association for Project Management, 2019
As is often the case, it’s the APMs definition that I like the best. The underlining for emphasis is mine. But the PRINCE2 definition is similar and introduces continuous testing of viability (again, my underline)…
Business Case:Managing Successful Projects with PRINCE2
The justification for an organizational activity (project), which typically contains timescales, costs, benefits and risks, and against which continuing viability is tested.
As usual, the PMI’s definition is effective, but worded with dreadful inelegance! It does emphasise the importance of authorisation, which I like (and have underlined).
Business Case:A Guide to the Project Management Body of Knowledge, 6th edition (PMBOK Guide)
A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities.
The Project Management Institute, 2017
And, lest you think I am just being snarky about the language, let me stay that I grew up speaking English as my first language. Indeed, I had to read this through several times before understanding this awful prose. Many, many users of the English-language edition of the PMBOK Guide do not have English as their first language. There is no excuse for this.
None of the three organizations we just considered define the term ‘Project Proposal’. But, there is no doubt that it is in common use. So, I shall have to define it myself…
Sets out the value a project will deliver, as a way to win the stakeholder support and sponsor funding needed to allow the project to proceed.
The resulting distinction that this definition provides is that:
|The Project Business Case||The Project Proposal|
|– An objective evaluation of the project||– A piece of advocacy|
|– Sets out multiple options to compare||– Promotes a single proposal|
|– Purpose is a sound decision||– Purpose is to ‘sell’ the project|
|– A governance tool||– A marketing tool|
|– Covers things like: objectives, costs, benefits, risks||– Covers things like: objectives, costs, benefits, risks|
Clearly, within an organization, the Project Business Case is the more appropriate tool. It leads to better, less biased, decision-making. However, there are plenty of organizations in which people use a Business Case to make a case – as project proposal, rather than as a decision-tool.
The Project Proposal is most obviously appropriate where an external agency, consultancy, or service provider is proposing a solution to a potential client. Here, the client expects advocacy and will (should) use competing project proposals to create an evaluation that meets its governance requirements.
First and foremost, the content will overlap a lot. The difference will be that:
We have another article that looks at the science and craft of Influence. So, in this article, we shall focus on the Business Case. But we’ll also recognize that most of what we say about one will be equally valid for the other.
A project business case is a part of the overall set of project definition documents; sometimes known as:
This document (for a small project), or suite of documents (for a large project), needs to answer three questions:
So you need a Project Business Case to set out the purpose of and justification for the project. It acts as the basis for the Go/No-go decision to invest or not in your project.
Quite simply: it puts the case.
Therefore, you need to compile your business case rigorously. First, gather information and data, and compile the costs, benefits, and risks. Next, you must use an acceptable methodology for conducting the analysis. And finally, present your conclusions clearly and objectively.
Making a decision, and then justifying it, are clearly the primary purposes of your Project Business Case. But there are many other reasons why your organization should consider them to be a necessary part of Project Management and Governance.
Good governance is an essential part of rigorous Project Management. Principally, your business case must answer the questions the decision-makers will (should) ask. These include:
This will happen at the end of the project, and during it. External assessors, like a Gateway Review team, or Project Auditors, will use your Business Case. They will need to consider whether you are delivering the benefits you projected. And also, how well you are keeping to your budget, so the net benefit meets your plans.
When was there ever a ‘typical project’? But on a typical project:
The Project Manager is responsible for maintaining the Project Business Case as a live, controlled document. You will do this in consultation with yor Project Sponsor. This means that, if there are any significant changes, the team will need to update the business case. And if those changes are substantial, it would need to go back to the decision-making group.
Do you have a Gateway Review (or Stage Gate) process? If so, then the Gateway Review Team will use the Project Business Case as part of the basis for their assessment.Project Business Case: How to Create the Perfect #Project Proposal https://wp.me/p79Sag-EI #PMOT Click To Tweet
The first place to start is this video…
The questions we saw in the section above need to dictate the contents of your Project Business Case. So too should its target audience:
So, here is the content list from our Project Business Case Template.
Your Executive Summary must cover the key issues and conclusions from your Project Business Case. This is valuable to decision-makers, because they will want a quick overview, to help them understand what they will be reading. Sections are likely to include:
At the heart of your business case is the answer to the question:
Why do this project?’
So, the information you need will include:
Here is your Evaluation of the Pros and Cons of each option. This section gets to the nub of the case for your project. It sets out the value for money that each option represents. Therefore, you will document:
This section is where you set out the governance process around the approval and maintenance of your Project Business Case. So, you will need:
Lastly, there are other things that you may want to include:
Next, you’ll need a simple process for building and using a robust Project Business Case. Ours consists of six steps.
The purpose of this step is to develop a prioritized list of project requirements:
Now you will take what you have learned and use the Project Business case structure to document it:
Use the options to create a formal evaluation of each one. This means your decision-makers will be able to compare them on a like-for-like basis.
Now that you have done the hard work, pull together your Project Business Case document. To help you, our Project Management Template Kit contains a useful template.
If you do not have a procedure for placing a Project Business Case before decision-makers in your organization, you’ll need to create one. When you get a decision, be sure to document it.
For this, I favor a process that not only has decision-makers signing off your business case. Also, I like to have them, and other senior executives who need to contribute to your project, signing a printed copy of the business case they approved. This is a great way to focus minds on accountability and the role each has in delivering the project benefits.
Once the decision-makers have approved your Project Business Case, it will become a live document. Therefore, you need to:
If you do, we’d love to see your experience or thoughts about this article. Put them in the comments below. And do ask questions, if you have any.
You may be interested in our Project Manager’s Project Definition Kit – an innovative course and resource kit, so you can take a jumble of ideas, needs, and requests and turn it into a well-defined project.
Dr Mike Clayton is one of the most successful and in-demand project management trainers in the UK. He is author of 14 best-selling books, including four about project management. He is also a prolific blogger and contributor to ProjectManager.com and Project, the journal of the Association for Project Management. Between 1990 and 2002, Mike was a successful project manager, leading large project teams and delivering complex projects. In 2016, Mike launched OnlinePMCourses.
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