Preparing a Business Case

How often can the cause of a troubled project which has fundamental deficiencies or is experiencing severe implementation difficulties be directly linked with a poorly drafted or, in some cases, no underlying business case. In contrast, a successful project will almost in all circumstances be underwritten by a clearly articulated business case which defines what the project is trying to achieve.

What is a business case

In short a business case is a commercial justification for effort to be expended on achieving a specified objective. In practice it is a document that focuses on realising a business opportunity such as the introduction of a new product, service, or technology; improving internal productivity; dealing with significant internal organisational problems or responding to external requirements including the introduction of new regulation.  

The business case will include the core business benefits of the project, the justification for the work, the various options for achieving the objective, the costs to be incurred and the risks. This information will be expressed in a formal document which will provide sufficient detail for the target audience to facilitate informed decision making.

The project will invariably require change in the organisation and will be prepared with input from management, staff and other parties impacted by this change.

Format of a business case document

The format of a business case document will be determined by the nature of the project and the end objective, but will generally comprise of the following components.

  1. Executive summary – This will be a concise summary of the business case detailing the business goal, the major considerations and the overall benefits, costs and risks to the organisation and the consequences if the project was not implemented. The executive summary will clearly identify the key stakeholders and the areas of the organisation that will be impacted.
  1. Background – The background will include a brief history of the current situation and the circumstances that warrant change such as an opportunity to increase revenue, reduce costs, improve productivity or regulatory requirements. This is commonly described as the “as is” i.e. where the organisation is, which should then be contrasted against a description of the “to be” i.e. the future state for the organisation, using supporting evidence to highlight the differences between the two.
  1. Strategic goals – The business case should position the project in relation to the organisation’s strategic goals and include a synopsis explaining how the project will align with the corporate strategy and a description of the project’s contribution to the organisation’s strategic direction.
  1. Business description – This will depend on the nature of the project, but for example if the work involves streamlining a significant process as a cost reduction measure, or reorganising a supply chain due to the introduction of government sanctions, then it would include a summary of the process, detailing the areas of concern i.e. costs or risks of non-supply with a possible reference to an attached appendix showing a more detailed process map.
  1. Market analysis – Again this will depend on the project, but if the organisation were considering introducing a new product or entering a new market, an analysis of the market conditions would be required. Much of the detail can be assigned to appendices with only the most pertinent points summarised in this section. This would involve both a qualitative and quantitative market assessment including the economic environment in respect of barriers to entry, the regulatory environment, competitor analysis, customer segmentation, pricing etc., all of which could be supported with a SWOT analysis. The aim is to provide an overall assessment of the market dynamics and the attractiveness of the market.
  1. Product or service – Detail what the organisation is going to do. For example if the project is to introduce new technology such as the blockchain, a summary of the technology and its impact on the organisation is required. The detail can be delegated to an appendix, but the key point is that management has a clear idea what is being introduced. Similarly for a new customer service, the business case will include a summary of how the service will benefit customers together with a high level overview of its launch and roll-out.
  1. Review of options – Management should be appraised of the alternative options that are available and these should be evaluated. With certain projects this is not necessary such as the introduction of mandatory regulation, where there are no options it is a must, but in others such as the introduction of productivity enhancing measures, an overview of the alternatives should be discussed including the do nothing option. The evaluation process for each option should highlight whether it is both feasible and acceptable to the organisation and provide an assessment of its impact.

Having reviewed the strengths and weaknesses of all the options, with supporting cost benefits analysis, the reasons for selecting the chosen option should be stated.

  1. Risk analysis – All risks of the selected solution should be identified and classified i.e. operational, financial etc., in order for management to be informed of the potential problems and the level of risk mitigation and management that may be required. A risk analysis model should be prepared with each defined risk having its own assessment of significance e.g. probability and impact. The sophistication of the risk analysis model will vary depending on project complexity and can range from a simple table defining the key risks and their probability to a full analysis with outcome simulation. The risk analysis can be included in the appendix, with a summary of the key findings in the main body of the report together with a recommendation stating how they will be managed.
  1. Key assumptions and dependencies – Prepare a summary of the significant assumptions and dependencies to provide an overview of how the project may be affected by other activities/actions, either within the organisation or happening externally.
  1. Success criteria – Always include the project’s critical success factors and ensure that they are aligned with the organisation’s strategic goals.
  1. High level plan – This is not a comprehensive plan just an outline summary giving an indication of the main activities, the duration of the project, the major milestones and key deliverables.
  1. Resource requirements – This a business case and not a detailed planning document, however management will want some idea of what resources will be required, whether internal or external staff and the appropriate combination of complementary professional, technical and specialist skills. As project sponsors and stakeholders they will also need an overview of their own commitments particularly in participating in the various governance committees etc.
  1. Implementation costs – At this stage a full breakdown of the costs is not required, but management will want an overview of the total project cost, split between operating and capital over the project life, whether the project is included in the organisation’s budget, the financing options and the cost implications for sustainability once the project is live.
  1. Project governance – The project governance will be formulated after the business case and project have been approved. However at this stage an indication of the project structure and project management framework is required providing an overview of the roles and responsibilities, the governance committees, the various reports and logs that will be maintained, the change management process and project reporting.
  1. Conclusion – Conclude the business case with a concise summary of the findings and the recommendations for management to consider and approve.
  1. Appendices – Supporting documentation should be included in the appendices as reference material to underpin and validate the main points in the business case and can include more detailed cost/benefit analysis, tables, charts etc. Always ensure that the appendices are clearly labelled with a heading and an appendix letter/number relating to the subject’s order of appearance in the business case. Each appendix must be referenced in the main body of the business case.

Dos and don’ts of preparing the business case

In developing the business case, identify the main sections to be included in the report and gradually develop the points within each section with any detailed supporting analysis included as an appendix. The structure of the document is important as it will guide management through the logic to reach the proposed course of action.

Show and discuss drafts with personnel who will be responsible for implementing the project and those who will benefit from the project to obtain their thoughts and ideas and importantly their buy-in.

The project sponsor and stakeholders should also be briefed on a regular basis explaining how the document is progressing, the various options and any significant issues. As the case is being developed it may be worthwhile to prepare a PowerPoint presentation to indicate progress and the salient points.

The business case should be easy to read and understood by non-technical experts, thus keep it simple and omit jargon, but ensure it is adequately validated by the supporting evidence and analysis. If information is not relevant leave it out. Always proof read the various drafts for good grammar and punctuation.

The costs and benefits should be measurable in both qualitative as well as quantitative terms.  Ensure, however, that the business case shows an overall real benefit.

When formally presenting the business case for approval it is usually best to present it in a PowerPoint format based on the executive summary, using the actual business case for support and back up, if required. A well-presented business case will give credibility and reliability.

Know your audience as well as the organisation’s protocol. A CFO has a different perspective in comparison to a head of a business division. Circulate the PowerPoint, before the formal presentation to get early feedback as well as buy-in. The PowerPoint should not be more than a few slides. 

A successful project will invariably be underwritten by a well articulated business case. Prior preparation and planning is essential. The greater the effort that is spent on preparing the document, the better the chance of a successful project. Approach the drafting in a disciplined manner, gather, evaluate and analyse the relevant information and structure the material in a logical and coherent order. And finally ask the question is the business case compelling and does it flow logically?

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