As a project manager, you may be asked to write a business case at some point. It is a detailed document with analysis, projections, and recommendations for a proposed project. A business case is used to seek approval from upper management or another decision-making body.
Preparing a business case can be daunting, especially if it’s your first experience. However, this article will help you get started. In addition to a step-by-step guide, we have a free business case template you can download.
What Is a Business Case?
A business case is a thorough study used to seek approval for a new project or initiative. It typically includes a variety of information, such as a description of a problem or an opportunity the project will address. It also includes a list of the project’s goals and objectives, a description of the scope and boundaries of the work, a detailed analysis of the potential benefits and costs, and a list of any risks or challenges that may impact the project.
All of this information is used to evaluate the potential value of a project. If the project is determined to be viable, the report will be used to try to convince executives, investors, or board members to vote in its favor. Therefore, a business case is crucial for convincing stakeholders to move forward and to secure the necessary resources and support to be successful.
Why Is a Business Case Needed for a Project?
A business case provides the justification for starting a project. It provides a clear and concise assessment of the benefits, costs, and risks associated with a new endeavor. This in-depth look at a new project helps decision makers determine whether or not it is worth pursuing.
There are several reasons why a business case may be needed for a project:
- To obtain approval and funding: A business case is often used to obtain approval and funding for a project from upper management or external stakeholders.
- To allocate resources: A business case will detail the demand for resources if the project is accepted. By evaluating the pros and cons of a project, an organization can make better decisions about which projects to invest in and which ones to pass on.
- To track progress: A business case outlines the key milestones and deliverables to be achieved. It will help project managers track progress and measure the ongoing success of a project.
- To identify risks: Another use of the business case is to identify and assess potential risks associated with a project. Contingency plans can then be made to mitigate them and ensure success.
As you can see, a business case is an important tool for businesses and organizations. It not only helps them decide which projects best align with their goals and objectives, but it also helps them determine which projects they feel can be executed successfully based on the resources and support required.
Key Elements of a Business Case
Each of the key elements in a business case serves a specific purpose in supporting the overall case for the project.
- Executive Summary: This includes an overview of the problem and the project or initiative proposed to solve it. It also includes anticipated outcomes, recommendations, and justification for the project.
- Business Case Analysis Team: Team members who worked on the business case will be listed here along with the role they played.
- Problem Definition: This section includes a problem statement, organizational impact, and technology migration.
- Project Overview: This overview includes a description of the project, goals and objectives, performance criteria, assumptions, constraints, and milestones.
- Strategic Alignment: Describes how the project aligns with the organization’s strategic plans and how the project supports them, as well as any value added.
- Cost Benefit Analysis: This section outlines the benefits including a potential return on investment, and the costs associated with the project.
- Alternative Analysis: This section outlines the alternative solutions that were considered and why the proposed project was selected instead.
- Approvals: The business case will elicit a definitive answer on the project with either a formal approval, or disapproval from the executive review board.
While the key elements listed above are a good place to start, not every business case has the same parameters. It will depend on your organization and its requirements. You should adapt your business case according to your unique environment.
How to Write a Business Case
The first step is to be clear about what your project or initiative is. Are you trying to solve a problem or take advantage of a situation. What is the opportunity for the company? Is this a good time for the company to jump into this project? The proposed project must be clearly described and supported with research.
Next, list the alternative solutions. Explore their benefits versus costs. How feasible are they and what risks do they pose? Consider coming up with a ranking system and rank the options. Include this along with the ranking criteria in the business case so stakeholders can clearly see how you arrived at your recommendation.
Finally, describe in detail how your project will unfold. This will give decision makers the confidence you have done the research and have charted the best course for achieving the goal. The business case is created during the project initiation phase, but it will be used as a reference throughout the life cycle of the project.
Detailed Steps for Writing a Business Case:
- Identify the purpose. Determine the main goal of the business case. Is it to secure funding or to gain approval for a new initiative? Clearly defining the purpose will guide you as to what information is most important to include as you begin writing.
- Define the project. Clearly describe the project, including its scope, objectives, and deliverables. Explain how the project aligns with the company’s goals and objectives.
- List benefits. How will the project benefit the company? Include items such as cost savings, increased efficiency, improved customer satisfaction, or any other tangible or intangible benefits.
- Outline costs. What’s the bottom line when it comes to cost? Prepare a detailed accounting and don’t forget to include materials, labor, and other expenses.
- Develop Financial analysis. Use the information concerning the benefits and costs of the project to create a financial analysis that demonstrates the potential return on investment (ROI) of the project.
- Identify the risks and challenge. What are the potential risks and challenges of the project? How do you plan to mitigate or manage them?
- Review and Revise. You should plan to review the business case with key stakeholders. Come prepared to answer questions and be open to addressing concerns.
- Presentation. After you have made any necessary revisions, the business case can be finalized. All that is left it to present it.
We highly recommend that you use a template for writing your business case. A template provides a guide for organizing and presenting the information. It makes it easier for decision-makers to quickly see the key points and assess the potential value of the project—especially if you use the same format for all business cases in your organization.
A template is an easy way to make sure that decision makers have all the necessary information and that no important details have fallen through the cracks, strengthening your chances for approval.
What is a Simple Business Case?
A simple business case is one-page in length. For small projects, this is sufficient. Not every project requires pages and pages of analysis. Even though it is considered simple, it will still include the important components of a business case such as the executive summary, problem definition, project overview, strategic alignment, cost benefit analysis and approvals. However, each of these sections will be represented by only a few sentences that summarize the topic.
For example, let’s say the Chief Marketing Officer (CMO) wants to redesign the user interface on the company’s website. This is a relatively small project that won’t require a large amount of capital or company resources. But before the project can be approved, it’s important that the CMO presents a business case to upper management.
To get approval, management will need to know what the problem is, what the proposed solution is, whether the solution aligns with the company’s strategic goals, what benefits it will provide, and what the project will cost. This should provide enough information for the management to decide whether to approve or deny the project.
A simple project business case should include the following sections:
- Executive Summary: This gives the stakeholders a brief overview of the proposed project. In just a few sentences, it identifies the problem, the proposed solution, the expected outcomes, the recommendation for moving forward with the project, and the justification for implementing the project.
- Problem Definition: This section clearly defines the problem and the impact of the problem.
- Project Overview: This is a brief description of the project itself.
- Strategic Alignment: This section explains why you believe the project is compatible with the organization’s strategic plans, and thereby, why it’s valuable.
- Cost Benefit Analysis: This section presents the cost and benefits of the project.
- Approvals: This is a signature line where executive management can either approve or deny the project.
Project Business Case vs Project Charter
A project business case and a project charter are both developed during the project initiation phase and are necessary for project approval, but they serve two distinct purposes.
In simple terms, a project business case looks at all facets of the pros and cons of a proposed project. The study presents detailed information and analysis to decision makers and walks them through the justification for moving forward. The goal is to provide enough evidence to get a green light and secure the funding and resources that are necessary.
A project charter, on the other hand, marks the formal start of the project. It defines in great detail the scope of the project, its objectives, names the project manager, as well as key stakeholders. It serves as a reference point throughout the project’s lifecycle.
While both documents are used to plan and execute a project, the business case focuses on gaining approval for the project, while the project charter focuses on the details of the executing the project.
Where to Download a Business Case Template
If you’re feeling a bit overwhelmed at the prospect of creating a business case from scratch, relax. There is no need for that. Project Management Docs has a free business case template available for download that even includes sample answers to make your life easier.
This template provides a structured format for organizing and presenting the information in your business case, making it easier for decision-makers to understand and assess the potential value of the project.
The template will make sure you’ve covered all the bases. It includes everything the decision makers are looking for such as the project scope, objectives, benefits, costs, risks, and project plan—and it’s tailored to the needs of a wide range of industries and sectors.
By using this template, you can save time and effort in creating your business case, and you can be confident that you are including everything you should to make a strong case for your project.
Additionally, the examples included in the template can serve as a helpful guide in preparing your own business case. So, if you’re wondering what belongs in a certain section, the example will be there to give you an idea of what you need to write or include in that space. When you’re done, simply delete the example and move on to the next section.
Start Your Project Business Case Now
Using our free template will help you hit the ground running. You won’t have to think about where to start, just follow its lead and start completing the sections. It’s a huge time saver, and you can feel confident it will be done correctly.