Suppose you and your spouse are considering moving to a new home. You will need to weigh up the pros and cons of moving. This is done using a business case. You might not call it that, but that’s what it is. Let’s look at an example.

Reason

As you can see from the example, the first thing to be clear about in a business case is the reason for doing the project or activity. In this example, the couple has answered the question

Why? In fact, there are two problems here – the local school and John’s long commute.Options consideredA business case should weigh up the competing options which have been considered. After all, there is usually more than one option. Perhaps an alternative option would have been for John to change his job to one nearer their current house. However, this wouldn’t solve the issue with the school.BenefitsThe benefits of a project or activity are the positive things you’re going to get back in return for your investment of time and money. In this case, the kids will get a better education, and John will save time each day.TimescalesIt’s also important to understand how long the investment of resources will take. This is so that the organisation (or family in this case) knows when the resources will be freed up to work on other projects

or activities.There are usually 2 timescales to consider. First, the timescale of the project or activity – in this case 3 months to find a new house and move there. Second, the time over which the benefits shall be realized. In this case it’s 5 years until the kids leave school.Costs

The costs of doing the project or activity is the next important bit of information. On this project, the costs of moving to a new house will be £5,000. These are the project costs.However, the couple will spend an additional £2,000/year for every year over which the business case is calculated. For a project in an organisation, this is usually referred to as the operational costs of maintaining and operating the projects outputs e.g. an IT system. At this point, the couple knows the total costs over the timescales when the benefits shall be realized.RisksFor any activity or project, it’s also important to understand the major risks involved. Risks are the uncertain things which may or may not happen during the period of the investment. There is only one risk identified here, which is the risk that the couple might lose touch with friends who live close to them right now.Investment appraisal

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Let’s now look at this example business case.

Executive summary

This sample business case contains an executive summary. This section briefly describes the selected option and the key benefits it will bring.ReasonsThe reasons for the project are clearly spelled out when describing the 3 current problems which the company faces.OptionsIn this example, there are 2 options (other than do nothing) which have been examined. Each option is summarized and the reason why option 3 is the preferred option has been stated.

Benefits

The expected benefits of reduced overheads are clearly stated. Benefits should be measurable and quantifiable. That means that the benefits can be measured later. But what about the reduced errors, rescheduled appointments and customer contract cancellations? Aren’t they benefits?

Well, these are in fact something else – they’re called outcomes. Outcomes are the results of the changes which come about by using the new handheld devices. The ways you measure the improvements resulting from these outcomes are known as benefits.

Dis-benefits

This example also contains a dis-benefit which is that the back-office staff morale will be lower due to reduced overtime payments. A dis-benefit, if you’re wondering, is a negative consequence of a project. It’s not the same as a risk which implies something uncertain. A dis-benefit is something which you know will happen because of the project and it has negative consequences for the organisation. It’s the opposite of a benefit!

Timescales

Just as we saw in the previous example, the business case contains 2 timescales – the project timescales (i.e. the time it will take to complete the project) and the benefits realization timescales (i.e. the time over which benefits are expected to be realized).

Costs

Again, there are 2 costs – project costs and the ongoing operational costs over the benefits realization timescale. When the decision is taken whether to invest in this project, the total costs (i.e. project costs and ongoing operational costs) are weighed against the expected benefits over the same time period.

Risks

• One major risk has been identified in this example, but on your project, there could be many risks.
• Investment appraisal
• The final section is the investment appraisal. The investment technique used in this example is called net benefits. As you can see from the table, the project and operational costs are recorded for each year of the investment.
• The project lasts 1 year which is why the project costs are zero after year 1. Of course, the benefits won’t be realized until the solution is in place and the company starts to use the handheld devices.
• The net benefits are simply the total benefits minus the total costs. This shows that the company will start to get a return on its investment sometime towards the end of year 2. This knowledge is vital if the decision-makers are to take a sensible decision about whether to invest in the project.
• Business case template
• This simple
• business case template