13IN E S S C A S E BUS

Change Control Business Case Directing a Project Configuration Management Starting up Initiating a a Project Project Controlling a Stage Managing Closing a Stage Project Boundaries Organisation

Quality in a Project Environment

Managing Product Delivery Planning Management of Risk Controls

Plans

Figure 13.1 The Business Case

This chapter outlines an approach to the development of a projects Business Case. PRINCE2s key philosophy is that its Business Case must drive the project. If a satisfactory Business Case does not exist, a project should not be started. If a Business Case is valid at the start of a project, but this justification disappears once the project is under way, the project should be stopped. The focus of the Business Case should be on the totality of business change, not just one element of it, e.g. the cost of buying new equipment should take into account the impact on personnel, training, changed procedures, accommodation changes, relationships with the public, etc. In PRINCE2, the Business Case is developed at the beginning of the project and maintained throughout the life of the project, being reviewed by the Project Board at each key decision point, such as end stage assessments.

13.1 What is a Business Case?

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The Business Case is a description of the reasons for the project and the justification for undertaking the project, based on the estimated costs of the project, the risks and the expected business benefits and savings. The Business Case covers the entire scope of change to the business that is affected by the project.

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The Business Case is the most important set of information for the project. It drives the decision-making processes and is used continually to align the projects progress to the business objectives that are defined within the Business Case. Business Cases need to be developed according to any organisational standards that might exist and the nature of the project. Some Business Cases will require significant effort in their development and approval because the project will have a major impact on the organisation. Others will require less effort and involvement as the project is self-contained and has minimal impact on other parts of the organisation. Also the level of investment required will influence the rigour with which the Business Case is developed.

13.2 What should a Business Case contain?

There are many different Business Case formats. Each Business Case should contain sufficient management information such that it can be used effectively throughout the project. The Business Case in PRINCE2 is supported by other documentation such as the Risk Log, which will contain the detailed information underpinning the Business Case. As a minimum in PRINCE2, the Business Case should contain information under the following headings. These are the ones that appear under composition in the Business Case Product Description outline in Appendix A.

13.2.1 Reasons
This section provides an explanation of the reasons why the project outcome is needed. This information should be in the Project Mandate. If not, the area needs further investigation during Starting up a Project and the rationale for the project established.

13.2.2 Options
This section should describe in outline the various options that have been considered to deliver the required outcome. The chosen option should be indicated, together with a summary of the reasons why. This information provides assurance that alternatives were considered.

13.2.3 Benefits
This section should identify each benefit that is claimed would be achieved by the projects outcome. Each one should be described clearly in measurable terms. It is important to define the current status of each benefit in quantifiable terms so that measurable improvements can be assessed after the project has completed. Consideration should be given to defining how and when the measurement of improvement can be made. The Executive has the responsibility for defining benefits. A negative way of assessing benefits may be useful as part of the overall justification for the project. This describes what will happen if the project is not done, e.g. the loss of market share, large maintenance costs, heavy legal penalties for non-compliance with new laws.

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13.2.4 Risks
This section contains a summary of the key risks facing the project that, if they happen, would seriously affect delivery of the outcome. Details of how these risks will be managed are contained in the Risk Log.

13.2.5 Cost and timescale

This information comes from the Project Plan. If the Project Plan is not yet completed, it may be necessary to outline the projects costs and timescales in the Business Case and refine them when the Project Plan is completed.

13.2.6 Investment appraisal

This illustrates the balance between the development, operational, maintenance and support costs against the financial value of the benefits over a period of time. This period may be a fixed number of years or the useful life of the product. The baseline for investment appraisal is the do nothing option, i.e. what will the picture of costs and benefits be if the project is not undertaken? This is compared to the picture expected from completing the project. Wherever possible, benefits should be expressed in tangible ways. To start with, the customer, user or Executive may define many benefits as intangible, e.g. happier staff. It is worth making the effort to think carefully about intangible benefits to see if they can be expressed in more tangible ways. For example, happier staff may translate into less staff turnover and/or less time off for stress-related problems. Both of these can be converted into a likely monetary saving.

Evaluation
There are many ways to evaluate the claimed benefits and investment appraisal. For example, sensitivity analysis can be used to determine whether the Business Case is heavily dependent on a particular benefit. If it is, this may affect project planning, monitoring and control activities and risk management, as steps would need to be taken to protect that benefit. Another example is to define three views of the achievement of the benefits, i.e. what are we really expecting, what might we achieve if things went well, what might be the worst-case scenario? The latter might be affected by building into the costs an allowance for estimating inaccuracies, tolerances and risks. This usually reveals if benefit expectations are reasonable or are really over-optimistic. The result of this analysis can lead to revision of the decision to go ahead with the project which would form a basis for setting any benefit tolerance. This technique is sometimes referred to as GAP analysis (good, average, poor).

13.3 Developing a Business Case

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The Executive is the owner of the projects Business Case. It is the Executives responsibility to ensure the projects objectives, costs, benefits, etc. are correctly aligned with the business strategy or programme objectives

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The Executive may delegate the development of the Business Case to the Project Manager. However, the data upon which the case will be developed will be largely provided by the business and responsibility for an accurate and effective Business Case remains with the Executive. On large projects, the Business Case may require a small team of experts to develop the contents. On small projects, the Business Case may only require one person to develop the information During start-up, the information from the Project Mandate is used to develop the information required for the Business Case. Where the project is part of a programme, much of the required information should be available within programme-level documentation. Projects operating within a programme environment may not in themselves deliver business benefits. They may be required to deliver products that are prerequisites for other projects. The Business Case should reflect this During initiation, the Business Case is updated to provide more detailed information on the benefits, risks, options and costs. The Project Plan, once completed, gives a much clearer view of risks and costs. This information is used to refine the investment appraisal or GAP analysis. The detailed information on risks is kept in the Risk Log for formal monitoring during the project Formal approval of the Business Case is required from the Executive to ensure there is senior management commitment to the project. This approval is part of the formal review done at the end of Initiating a Project (IP) During each stage of the project, the Business Case is reviewed to confirm that the project remains on track and to check that the Business Case remains valid within the business context. The Business Case requires formal change control and configuration management to ensure any changes to the projects environment are accurately reflected and approved before revising the Business Case. The Business Case remains a live document during the project and all decisions regarding project progress are made using the Business Case as the driver The projects Business Case provides all stakeholders with basic information about the project. The Communication Plan for the project should cover how and when the Business Case information is to be communicated to stakeholders and how they can provide feedback and raise issues concerning the Business Case At project closure, the Business Case is used to confirm that the project has delivered the required products and that the benefits expected can be realised in an appropriate timeframe by the business. The Business Case provides the basis for the Post-Project Review Plan, to ensure that the later assessment of whether the outcome was successful or not is firmly linked to the Business Case.

13.4 Development path of the Business Case

Figure 13.2 shows the PRINCE2 management products that affect the Business Case or use its contents.

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The Project Mandate should contain some basic elements at least of the Business Case. At this point there may be only some reasons why a solution is being sought. If the project is part of a programme, the Project Mandate may be just a pointer to the programmes Business Case. If the project were preceded by a feasibility study or something similar, the Project Mandate would contain a copy of the Business Case for the preferred option.
Project Mandate Reasons for the Project Project Brief Outline Business Case

PID

Enhanced and approved Business Case

Business Case Expected benefits Reviewed Business Case Updated Business Case

Post-Project Review Plan

Project Issues

End Stage Report

Figure 13.2 Business Case development path Depending on how much information there was in the Project Mandates Business Case, Starting up a Project (SU) might be required to bring it up to a basic level, containing sufficient justification for the Project Boards Authorising Initiation (DP1). Initiating a Project (IP) is the process that fully develops the Business Case as part of the Project Initiation Document. It now contains the latest information on the costs and time to develop the product, taken from the Project Plan. If not done before, this is also where all benefits will be defined (or revised) and, wherever possible, put into measurable terms. This is needed for the Project Boards Authorising a Project (DP2) and also in readiness for the post-project review. As part of Managing Stage Boundaries (SB) the Business Case is revised for each End Stage Report with information from the stage that is closing and the next stages plan. This revision is a major input to the Project Board in its decision in Authorising a Stage or Exception Plan (DP3). As part of Examining Project Issues (CS4) each Project Issue is reviewed for any impact that it might have on the Business Case. At the end of a project the Business Case provides the agenda for much of the creation of the Post-Project Review Plan, submitted by the Project Manager as part of Closing a Project (CP).

Hints and Tips

It can be useful to hold a stakeholder workshop to help clarify the business objectives and impact of the project. Capturing input from stakeholders to inform the Business Case will help achieve greater commitment to the project.

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