5 May 2015

It’s the Business Case, stupid

Posted by Paul Atkin

It’s the Business Case, stupid

“It’s the economy, stupid” was the phrase that helped get President Clinton elected in 1992. Proof, if anything, that there’s a need to state the obvious. If there’s “one thing” that underpins a PRINCE2 project, it is the Business Case.  This document is the life support system of the whole PRINCE2 project.

President Clinton

The PRINCE2 thinking about the business case is straightforward:  your organization invests time and money resources in the project – so your organization should be getting something of value out of it.  Or, as the PRINCE2 manual puts it:  ” a project is a temporary organization created to deliver business products according to a specified business case.”

For PRINCE2 it is as simple as;  “no business case, no project.”  And the Business Case document is a dynamic one:  it’s not a case of write once and then get on with the project without further reference.  The Business Case has to be checked at least at the end of every stage and, if it not viable, you have a project off-ramp.   This means that projects which are not adding value to the organization can be stopped or, at least, paused, until they can get back on track.

In the methodology the Business Case crops up as a one of the 7 Themes and “Continued Business Justification” is the first and most important, of PRINCE2’s 7 Principles.  It’s an area where PRINCE2 adds significant value to PMP certified project managers. The PMBOK is a great framework but it does not say much (2 pages, in fact) about value-driven project management. In the governance of the PRINCE2 project, “the organization” is represented by an individual titled _the_ Project Executive.  This role has the final say over the “other” executive roles of Senior User and Senior Supplier.

How to write a PRINCE2 Business Case

After an Executive Summary, the Business Case has several headings

Reasons

Why is the project being undertaken and how does it support corporate or programme strategy?

Business Options

Because your first idea is always to most dangerous…  PRINCE2 says start with the Do Nothing option and then consider Do the Minimum and Do Something.  Do the minimum can be thought of as bare compliance and may be enough to satisfy the Reasons which justify the project.  Having look at these 3 options, the business case should state which is the selected option.

Benefits

Based on the selected option, the benefits list the good things which will be achieved by the project.  The benefits should be stated in measurable terms and say how and when this measurement is going to happen.  Benefits don’t have to be financial – they could be legislative or strategic.

Dis-benefits

Projects can have positive and negative outcomes, so the dis-benefits should be stated here.  For example – new system may lead to a reduced headcount.

Costs and Timescale

These can be extracted from the Project Plan document.  The costs should state not just the project cost but the whole costs of the new product which will be implemented, including operational and maintenance costs.

Major Risks

Not all risks, just the ones that will impact at the project level and need to be brought to the attention of the project board.  Risks and dis-benefits are different.  The first may happen and should be managed.  The second will happen and should be minimized.

Investment Appraisal

This is the total product costs vs the anticipated benefits.  There are different ways of measuring these and PRINCE2 suggests a number of techniques including payback period, return on investment or discounted cash flow.

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