Business Case

Business case key Philosophies:

The business case represents the optimum mix of information used to judge whether the project is (and remains) desirable,viable and achievable, and therefore worthwhile investing in. A business case must drive the project,it should justify the reason for embarking on the project and why it is worth investing in. If the business case is not satisfactory then you should not embark on the project, and should justification disappear during the project,then stop the project.

The business case is owned by the executive,and it should be developed at he beginning and maintained throughout the project. The focus of the business case should be on totality of business change.

Types of Business cases or projects

• Compulsory project: A compulsory project is a project that must be done and is essential for the survival of the company.

• Not for profit project: This might be a project to fulfill a corporate social responsibility or for goodwill whereby the company is not looking to earn profits from it.

• Customer/Supplier project: This is a project that is initiated by a customer and fashioned to the customer's specifications. The organization seeks to earn profits from such projects.

• Multi-organization project: As the name implies,it is a project between two or mor organizations for a specific purpose. For example a joint venture.

Business case Contents

1) Expected benefits: This would be a list of each business case benefits the company stands to gain by the project's outcome. Benefits may be measured by financial or non financial metrics. Each benefit should be aligned to strategy and objectives mapped from outputs and outcomes quantified with tolerances measurable assigned.

The PRINCE2 senior user is responsible for identifying the business case benefits in the first place and will be held to account by corporate or programme management that these benefits are eventually realised.

2) Expected dis-benefits: A dis benefit is a negative outcome of carrying out a project. It can be called a side effect or consequence. For example a project that involves the manufacturing a product might come with a dis benefit of air pollution and also noise pollution.

3) Timescale: This is the timeframe on which cost benefit analysis would be based upon.,the time when benefits will be accrued and the earliest time or latest feasible start and completion dates.

4)  Costs: The cost should be linked to the corporate strategies and objectives, it should include details of on-going operational and maintenance costs. This section of the business case should also include the funding arrangements.

5)  Investment Appraisal: A business case should contain a comparison of the development, operations and maintenance costs against the value of the benefits over a period of time. Some of the techniques that can be used for an investment appraisal include:

1) Return on investment

2) Discounted cash flow

3) Payback period

4) Net present value

5) Internal rate of return.

Major risks: in order for the business case to make a balanced business justification,it must consider and include the risks, and these should be balanced against those benefits and costs.