A Business Case should be self-sufficient and should contain all information necessary to take the decision to “go/no go” at each phase in a project or program’s life. The first decision involves looking at the initiative, and judging whether or not to initiate the project or program. At each gate there should be an updated Business Case and there should be a new decision about whether to continue with the next phase. During the project or program life there will be change requests. These should be decided on an individual basis, but also with consideration of the total concept. All major change requests should be accompanied by an updated version of the Business Case.
At the end of the project or program a final Business Case should be developed. This is important for lessons learned and to ensure that the benefits will actually be realized. A project is not worth anything, unless the benefits are realized in the organization, whatever the benefits may be. Ideally an updated version should also be done after the benefits have been realized, or a certain period of time thereafter.
The Business Case is an integral part of the portfolio process; for comparing initiatives, for selection, and for prioritization. The key word is comparison. To accomplish this, the Business Case must be standardized, both in terms of content and quality.
The Parts of a Business Case
A Business Case contains three main parts, each of which can be further divided depending on the organization and type of initiative. The three parts are:
- Management summary
- Benefit analysis; all the detailed data for strategic value, financial value, and risk value
- Narratives; explaining the set-up and environment
This is a one-page summary covering the salient points and figures from the initiative. This document is used for decision making. The other parts of the Business Case are supporting material. All figures in the management summary must be derived from the other two parts.
Typically there are separate templates for the first Business Case (version 0), for the updated Business Cases at the other gates, and for when major project change requests (PCRs) are presented.
The information in the Benefit Analysis section of the Business Case will depend on what is relevant to the organization. OPGport has defined the information in three categories: strategic value, economical value and risk.
The selection and prioritization of initiatives depends on a standardization of the information needed to take the decisions. Important points when defining the standard for an organization are:
- Definition of the types of categories of initiatives
- A decision about the kind of information that is relevant for the organization
- Standardized metrics for the information
- A unified process for identifying and analyzing the information
- Quality assurance and how to verify and validate the information. The information must be reliable, valid and relevant.
A Business Case should contain information about background, needs and objectives. A summary of key performance indicators and functional requirements should also be included.
The initiative does not exist in a vacuum, which means that the environment must be explored and described. The salient information will depend on the initiative and the circumstances. For strategic projects that will have an impact on products and/or markets, the market place, competitors, substitutes and so on are of interest. For internal development projects (IT and organizational development) the environment of interest will include other projects, key stakeholders and their interests, and also the direction the organization is moving in, business wise.