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How to Develop a Business Case for a Project

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  • 0:00 Business Case
  • 0:59 When Is a Business…
  • 1:32 Steps in Creating a…
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Lesson Transcript
Instructor: Karen O'Brien

Karen has 14 years of experience in consultancy, including creation of training materials and running courses for IT professionals.

Without a business case, your project will never get off the ground since the case contains all the reasons that your project should go ahead and receive investment. This lesson provides step-by-step instructions and what to include in your business case.

Business Case

Let's say that you have an idea to create a new television set. This new television set is significantly more expensive than existing ones. However, it has several special features. It will cost $10 million to fund the project that designs, develops, markets, and produces this set. In order to secure the investment required to do this project, you must write a business case detailing why this project is worth $10 million.

A business case is a document that provides the justification for your project. You can think of the business case as a document that researches, details, and justifies the investment in a project. It provides the rationale and motivation to do a project, and its purpose is for decision-makers to agree to begin the project. It assesses and measures the benefits, costs, and risks associated with the investment being made in a project, or it assesses and evaluates the options available to solve a business issue.

When Is a Business Case Developed?

The document is created during the initial investigation of a project, when you've thought of an idea that may be valuable. Before there's any other documentation or investment in the project, you create the business case to provide the reasons and rationale for doing the project. Without motivating factors, whether it's to save money, make money, become more efficient, or solve a problem, a project is without value and therefore probably shouldn't be undertaken. The business case doesn't just tell you if you should do a project, but it can also indicate that the original idea needs to be tweaked.

Steps in Creating a Business Case

Executive Summary

The executive summary is a synopsis of what the project is, how it works, and most importantly, why it is needed. It should include a brief summary of the sections mentioned below, and it should detail the rationale behind the project idea and the impact of not doing the project.

Benefits

This is possibly the most important section of your business case. There should be a well-founded reason for doing this project. In this section, you're providing decision makers with a call to action and a motivation to undertake this project. Most projects seek to do one of the following:

  • Cut costs
  • Generate additional revenue
  • Solve a problem
  • Undertake something compulsory, such as a new law that requires this project
  • Fix a problem, such as resolve a potential health and safety issue

Project Description

One of the first questions you'll be asked is how much the project will cost. Every project costs money, and nobody will invest in your project without a sound idea of the projected costs. In order to ascertain costs, you'll need to plan out the project in some detail and provide a sound basis for your projected costs. The plan does not need to be exhaustive. However, it must provide an indication of project timelines and resource estimations.

It would also be valuable to include potential risks and pitfalls in this section. What are the biggest barriers standing in the way of success, or what are the unknowns? For instance, you may not have completely identified a physical location for the project data center, although you have provided valid estimated costs. These are all variables that, until decided and contracted, may impact the project. Providing this information allows decision-makers to make an informed decision. The business case must communicate that the plan is thought through and that risks and unknowns have been identified.

The most important information in this section is the possible return on investment (ROI), which is how much the project will make or save the company after project costs. If the project will cost more than the estimated gain, it is unlikely the project will get the green light unless it is a mandated project. Keep in mind that the project could be so groundbreaking that financials are difficult to ascertain. An attempt should still be made to detail costs and the ROI.

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