– See All Project Management Key Concepts –
The Business Case
Welcome! Let’s look at the key concepts from the PMBOK guide. In project integration management, when we start off with the project charter, the business case is one of the biggest things that feeds into that project charter. It’s the very first step that we’re looking at.
What is a business case?
The approved business case is a business document most commonly used to create our Project Charter which is that very first step in the PMBOK guide process groups. The business case describes the necessary information from a business standpoint to determine whether the expected outcomes justify the required investment. It’s our basic cost vs. benefits – we’re asking and analysing “Do they weigh up?”
That’s why our business case is commonly used for decision-making by managers or executives above the project level, for example the project sponsor who ultimately will potentially fund this project or at least provide the resources in their part of the organization to proceed with the project.
How do we create a business case?
There are a few things that we can do and the first is to research or analyze any of the following below just to see if that investment is going to be worthwhile. It may sound simple but you do have to do the legwork, you have to actually do a little bit of mathematics, and probably a bit of research to figure out if it’s going to be worthwhile.
You could research any of these things, for example the market demand. Out there in the world are our customers saying that this is exactly what they’re wanting? Then maybe that’s what we’re going to create.
Is there an organizational need? Maybe we’re wanting to combine a few departments, maybe the company is downsizing or maybe it’s growing and you need to create a new department and all of a sudden that requires resources, processes and things to be set up, and that could be a project that needs to be kicked off.
Customer requests, for example let’s say you work at YouTube and you’re seeing customer feedback who really want this feature, and everyone is requesting it all the time. Then maybe we want to check whether that’s worthwhile, how much is it going to cost? And we put a business case forward to get it approved.
Legal requirements, if you’re working in financial services or maybe you’re working in health there’s always legal requirements. There might be royal commissions, for example the government making changes to the legalities around your profession and that requires you to make a change. That also requires you to see whether it’s worthwhile and create a business case.
Ecological impacts, where we want to reduce the paper or we want to reduce our carbon footprint. Do we want to look better towards the market because we’re a better ecological company? What do we need to do, is it worthwhile? Can we spend the dollars and can that give us an outcome that’s worthwhile?
Social need, where recently the COVID response and the social need and the vaccines that need to be created, those are projects. How much do they cost? Do they need government funding? Is that cost going to be worth the effort for that particular vaccine, or maybe there are a hundred different vaccines on the cards and so which one is the most worthwhile? Which one is going to be worth vetting for that investment? That’s where the research comes in, and that’s your business case.
Lastly once we’ve done all that research, we simply write the case, which is a short document outlining what we have found.
There are things that will impact the business case, such as enterprise environmental factors which are the way an organization actually works. Is the work done by conversations in the hallway? Or is it done by this approving manager? Or is it done by a project management office? Does it have to go through the proper governance, through this particular area, what are the actual enterprise environmental factors of the company that you’re working in and how does work get done? Make sure you know.
Organizational process assets are things like templates that are accepted practice, and a business case has to be done in that particular template. Many companies work this way.
Lastly we make a recommendation based on our research. If it’s only going to cost a hundred thousand dollars to do it but we’re going to make five million then I think this is something that we would hopefully approve based on that investment and that potential return. We look to put that into our project charter and initiate our project.
And that is the business case.
– David McLachlan