What is a PRINCE2 Business Case and why do you need one?

A Project Brief describes what needs to be done. The Project Plan explains how you are going to do it. The Business Case gives the reasons why.

In the PRINCE2 project management methodology, the Business Case is the 'driver' of the project. Senior Project Management review the Business Case before authorising the initiation and each subsequent stage of the project. The Business Case is used to decide if the project is a worthwhile investment. Before allowing any change to the Project Plan, the Executive must consider the impact that this change will have on the Business Case.

In other words, every project must have a Business Case in order to get off the ground.

The Business Case justifies the investment of time, money and resources into a project by outlining the benefits that the project will bring. It is made up of eight key sections:

Reasons

Why is the project necessary?

The reasons you give must conform to corporate/programme strategy. You would have a hard job convincing a clothing manufacturer that an advertising campaign persuading people to recycle last year clothes would be a profitable project to undertake.

Another way of thinking about the reasons for a project is to consider what need the project will address. Is customer satisfaction low? Do your profit margins need a boost? Are you still using the same, snail-paced computers you acquired in 1983? And, most importantly, how will the project resolve this need?

Options

What different options are available for addressing the identified need? Why is the option you have chosen (the project) the best of the bunch?

Showing that you have seriously considered all the possibilities will strengthen your Business Case. Providing senior management staff with all the available information will also maximise the chances that somebody will suggest an improvement. It is much better to change your Project Plan now than to watch everything collapse halfway through.

Benefits

This is where you persuade your audience that your project is worthwhile. Every possible benefit should be considered, tangible and intangible. Just make sure that you justify the benefits that you expect your project to deliver.

If your project will increase profit, then present detailed figures as evidence. If the primary benefit is improved customer care or staff efficiency, then explain how this will happen and what the effects will be.

Try to quantify the benefits, financially if possible, in order to make it easier for senior management to decide if the project is worthwhile.

Risks

What are the main risks to project success? Be frank. Transparency will gain the confidence of senior managers, and effective risk response will demonstrate your foresight, realism and capability.

Not all risks are negative. The project management definition of a risk is any potential event that would affect the outcome of a project. It is possible, for example, that a rival organisation will collapse during the course of the project. As the project manager, you need to be ready to exploit this ‘risk’ (or opportunity) in the best way possible.

Cost

The senior project managers need to know the total anticipated cost before they can authorise the project. Justify each area of expenditure, so that nobody is in any doubt that the budget you have forecast is as accurate as possible.

Timescale

How long will the project take? When will the chief benefits be realised? Will the anticipated duration of the project match any external deadline? Time costs money, and missing deadlines can lose you business. Accurate projections of the timescale will save you grief in the long run.

Investment Appraisal

This is where you pit the cost and benefits against one another in order to demonstrate once and for all that your project is a worthwhile investment. Before senior management can authorise your project, they need to know what they are getting for their money.

This investment appraisal, by detailing the costs and benefits over a fixed period of time, is the most direct way of quantifying ‘value for money’.

Don’t forget to include any ongoing costs of operating the final product of your project and add these to the project costs. These overall costs will be weighed up against the financial benefits over the same period ot time to decide on the viability of the project.

Evaluation

Consider your own Business Case in an objective light. What are the strongest and surest benefits that you have promised? Why are they necessary? Why is your project the best way of achieving them?

The primary benefit of using a PRINCE2 template for your Business Case is that you can be sure that you will cover all the essential aspects of the document, while being forced to think about your project from all possible angles. The Business Case is so important to project management that it is in fact the first core component (or “Best Practice”) of the PRINCE2 method. Follow the links below to find out more about the PRINCE2 methodology and the PRINCE2 project management training.

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