How to write a business case
Key takeaways
A business case helps decision-makers judge whether an investment is worth the time, money and risk.
- State the reason for the activity and ensure it aligns with organisational strategy.
- Compare realistic options, including doing nothing, and clearly justify the preferred choice.
- Separate project costs and timescales from ongoing operational costs and benefit realisation timescales.
- Define benefits in measurable terms and distinguish outcomes from benefits so performance can be tracked.
- Include known dis-benefits and major risks, plus mitigations, to avoid one-sided decisions.
- Use an investment appraisal, such as net benefits and break-even timing, to test viability.
Introduction
This article explains how to write a business case. It includes 2 business case examples and a free business case template for you to download .
You’re probably reading this article because you want to know how to write a business case. Perhaps your organisation is embarking on a major project to develop a new product. Or, perhaps you’re thinking of moving house so your family can enjoy a better life. In either case, you write a business case to ensure the investment is worthwhile.
In this article we’ll give you 2 business case examples, provide you with a simple business case template for you to use, and explain how to write a business case.
What is a business case?
A business case is the justification for some activity (e.g. a project) undertaken by your organisation. It weighs up the timescales, costs and risks of doing the activity against the benefits to be gained. Think of it as weighing up the pros and cons and then taking a sensible decision.
A business case forms an essential component of the curriculum of the best project management courses .
Personal business case
You may also use a business case to justify an investment you make in your personal life. For example, when you’re thinking of moving home to another area. You and your spouse will need to understand the costs of moving, the timescales and risks involved, and weigh these up against the benefits to be gained e.g. saving time traveling to your office, or your children able to go to a better school.
Why have a business case?
Projects should not just start on a whim or because of vanity – although a lot of money has been wasted over the years on such projects .
For business organisations, justification for a project usually takes a commercial form i.e. evaluating how much money could be made from the investment. For example, investing money in developing a new software app to bring first to market, might be deemed to bring certain monetary benefits (in terms of sales) which exceeds the costs of investment.
For government organisations, justification is probably not a commercial one, but could be based upon giving value for money to achieve certain benefits. For example, a public health campaign extolling the benefits of flu-vaccinations for elderly people, might be judged as giving greater value for money than having no campaign, and instead relying on treating patients in hospital once they have contracted the virus.
With so many competing claims being made on scarce funds, organisations need the assurance that the decision they are taking is the right one. After all, there will not be enough funds to pay for all the ideas for projects which are floating around the organisation.
Who uses a business case?
Business cases can be used by many different levels of management within an organisation. Not only are they used to justify the investment in an individual project, but also they are typically used by a portfolio management office to help it decide which projects will contribute to the organisation’s strategic goals. That way, they can filter out the bad ideas for projects, and only fund projects which will contribute to strategic goals.
A business case is also often used by a project sponsor or project executive to help it decide if they should invest in a specific project.
In all cases, the business case must be written and approved prior to any major commitment of resources.
What form does a business case take?
Business cases can take many forms – digital or analogue. The tools you use to create one are also many and varied. Common business tools such as Microsoft Office might be used. Rather than being a document or slide deck however, it could equally be in the form of an email.
Equally, a business case could be written by hand on a whiteboard or flipchart, or on the back of a cigarette packet!
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.
Reasons
The reasons for the project are clearly spelled out when describing the 3 current problems which the company faces.
Options
In 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
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.