If you want to optimize your business projects’ chances to meet their objectives, then your project management should be supported by sufficient buy-in from the right parties. – And an effective and comprehensive business case can make this task easier and better.
In the corporate world, each day, many projects are made and work out. These projects are based on the economic model of the company and various other factors. To carry out these business projects smoothly, the project members make a business case that efficiently delivers the project’s work.
Project management is a complicated thing. It requires many elements and integrated work of all members. A good business case always serves the purpose and makes the project a success in hitting its objectives in the respective time.
It is reported that in many corporate offices, some projects fail to deliver their objectives. It is due to the lack of a compelling business case.
Without this, all business projects are incomplete.
The business case makes the work of project management smooth, delivering all objectives in the allotted time. This post will take you deep into the world of a business case and how you can create the one that fulfills all your purposes of accomplishing business/project objectives.
What is a Business Case?
In simple words, a business case is created to make the project’s outline smoother to decide what and why, and how the project is going to deliver.
This whole process is done in the initial phase of project management. The business creator must know all the factors of the concerned projects to create one. The most critical aspect of business case creation is to understand the benefits drawn from the project.
These benefits should be clear to transmit the changes to all fellow members.
The business change should be well indicated in the business case for proper communication of all project managers. A business case is different from the project outline in every possible way.
The project management only focuses on the business vision, needs, time and cost, benefits and strategies, etc. But the business case focuses on all aspects of business change other than this all key elements. It has all the core values included in it.
The business case is created during its project initiation phase comprising all details about the business change and its aspects. The project sponsor reviews the business case and then gets approved by the stakeholders. The business cases can be rejected, deferred, and also revised in this phase.
The development of a business case should be done incrementally as the business always expands from time to time.
So, the business case should be created as per the needs of the corporate world. Moreover, during the business case development, the creator should make it more elaborate to join every nook and corner.
Why use a Business Case?
There are a handful of reasons why a business case is needed in every corporate office.
These reasons make business cases more desirable according to all aspects. The business case involves the assessment of the following elements in its project outlines:
- Benefits were drawn from the project
- Risks are taken for the project.
- Business problems and opportunities
- Costs of all types, including investment appraisal
- Operational impacts
- Technical solutions
- Organizational capabilities
The above assessment areas make an important part of the business case. The creators express all problems with current situations and overview the whole process to conclude.
The business vision is necessary here to create the business case.
How to Develop a Business Case
Business cases clearly show every type of element in it. The case includes the current scenarios with all future changes in the business. It is done to make it clearer to all fellow members about the project or business change soon.
Following are the steps by which the business case is created:
Step 1: Devise an opportunity to frame your business case.
Include clearly about the situation and business opportunities for making a good proposal impact. The project’s background is also necessary for this with investment, logistics, and high-level business requirements. Engage everything in the business case for further processing.
Step 2: Analysis of all shortlisted alternatives and options
Get along all the alternatives in the analysis process. Note down all shortlisted options there and include them while creating the business case. Identify the possible alternative approaches and analyze every aspect of it.
This is done by gathering all information about each alternative and creating a good option for creating a business case.
Select three or four options for the analysis process. It provides enough time for analyzing each alternative considerably.
Step 3: Evaluation of options and alternatives
After the analysis process, the next step is to evaluate your alternative approaches and options. Observe how the alternatives are going to impact the whole business as a preferred option.
Take account of all options and alternatives.
The financial and strategic values and risks are well evaluated in this step for making a sound business case. Also, make a note of all preferred options and observations to create one business case.
Step 4: Implementation strategy
After the evaluation step, the next step comes is the implementation strategy that makes the business case executioner.
The business case creator develops the plan for preferred options that have details to achieve the respective goal.
The business objectives are met with this step. The implementation of the strategy is done here to reach the goals of the business.
The creator should know how to mitigate the risks to achieve the objectives of the business.
Step 5: Recommendation
The last step is the recommendation process. Here in this step, the recommended option is taken into account. The business case documents are created in this final step for all members.
The business case creator presents the complete documentation in front of the board and management for approval purposes. The approval is necessary to proceed further.
All the steps are followed to make a good business case.
Structure of Business Case
A good business case needs to have the ability to make its readers lead through the problems presented in it. The readers have to consider all problems and make the decision to solve it.
To solve the problem, the readers have to read the business case very thoroughly.
They have to consider all points minutely. To conclude a good decision, the business case should have a clear structure with plenty of headings and sub-headings to convey all information to the concerned readers.
Following sections are found in business case formats:
1. Executive summary
This summary involves the recommendation options that are found in the last step of business case creation. It is seen that the executive summary is written last in the business case format.
However, in some business cases, it is written in the first paragraph itself.
It should be written in crisp language to urge the readers to read more and further. While writing an executive summary, be clear, and add only relevant details to it.
2. Introductory paragraph
As the name suggests, this paragraph gives all insights into the business case to its readers. The work of the introductory paragraph is to make all readers know about the proposed change in business.
It briefly makes everyone aware of the business case.
3. Statement of the problem
This paragraph marks the problems of the business. The paragraph is short and has brief information about the problems.
The readers have to demonstrate the visions to solve the problems that are important for the organization.
4. Analysis part
This portion forms the body part of the business case. It has all detailed accounts of the problem and its importance to be treated well. The part also includes a full analysis of the problem by giving all insights about the problem.
The impact and various aspects of the problem are listed here. The analysis part is the most important part of the business case. All kinds of risks and other costs are enlisted in the analysis part of the business case.
5. Discussion part
The discussion part marks the discussion of all possible options. These options are used to address the problems. The readers and members discuss all options among them and conclude in a solution. The following are the discussion points that should be considered:
- Benefits: ask the business case creator about the benefits. What are the perks of making that change in the business?
- Costs: different costs and resources should be figured and clumped to make the business case more elaborate. Ask about all this also.
- Time-scale graphs: the questions should be asked about this topic also.
- Risks: the risks should be calculated further to make the business case more effective.
6. Conclusive part
The conclusion part should be there in the business case structure to tell readers about the analysis part. The recommendation is also included in this section. The various realms of the business case are present in this section for better analysis.
Let us now have a look at some of the key mistakes that you should avoid in your business case-
5 Business Case Mistakes you should avoid
Mistake 1: Thinking Business Case is “finance,” and financial specialists should do it
Business cases might use a few simple financial metrics for communicating results, but the main challenge is deciding which benefits and costs are associated with the case.
So, this is not related to finance at all, as it is just a matter of finding out all the key consequences of any proposed action thoroughly and systematically. By using some essential tools like the cost model and the benefits rationale, you can do it.
Mistake 2: Projecting income straight away instead of cash flow
Thinking that the business case analysis’s main result is a pro forma income statement is a common business mistake that you should avoid. You need to understand that the main metric here is cash flow, not income.
You can incorporate a projected income figure and the expected cash flow if the decision-makers know about the reported income per se. Otherwise, cash flow is always the first answer to check if a business decision is good or not.
Mistake 3: Incorporating financial metrics blindly
Business cases revolve around a few simple financial metrics, and their only purpose is to show the meaning of projected cash flow values. So, you should never blindly use different financial metrics in your business case.
Some of the common financial metrics that you can include are ROI (return on investment), NPV (net present value), IRR (internal rate of return), PBP (payback period), and TCO (total cost of ownership).
Mistake 5: Omitting some of the key benefits because they are intangible/soft benefits
Some of the key contributions crucial to important objectives are sometimes labeled “soft” or “intangible,” as they are non-financial. Then they are omitted from the business case, which is not a good practice at all.
However, including non-financial details related to key business objectives related to customer satisfaction, image, branding, quality, risk reduction, safety, professionalism, and employee satisfaction can be crucial as well as tangible.
If you can show a benefit in tangible terms and explain how your proposal contributes to any business objective, then that benefit should be part of your business case.
Now, let us understand the business case concept by delving into a brief template-
Business Case Template
Different sections that are key parts of a well-designed business case are-
1. Executive Summary
- Financial Appraisal
- Sensitivity Analysis
3. Project Definition
- Background information
- Business Objective
- Benefits and Limitations
- Option Identification & Selection
- Scope, impact, and interdependencies
- Outline Plan
- Market Assessment
- Risk Assessment
- Project Approach
- Purchasing Strategy
4. Project organization
- Project Governance
- Progress Reporting
A business case has impacted the corporate world by its benefits and outcomes.
Nowadays, every organization is utilizing a business case tool to gain insight into the problem and projects. This is done in great uniformity in the company.
The alternative approach acts as a balancing between the initial and final prospect of business change. In simple terms, it is said that the business case has become more popular than any of the business design tools of the corporate world.
It is developed by maintaining all elements of the projected deal.
How important do you consider business cases for creating successful business projects? Do you have some samples of good business case templates? Share with us in the comment section below.