What is a Business Case?
The Business Case is a one-off, start-up document used by senior management to assess the justification of a proposed project, or to assess the options for a project that has already received funding. If approved, it confirms senior management support and/or resourcing for a recommended course of action (option).
Why would you develop a Business Case?
A Business Case is developed to:
- gain approval to proceed with a project;
- obtain resourcing for a project through internal departmental processes; or
- where resourcing is already available, to document what the project will accomplish for the funding and how (gain agreement on the project scope).
The document enables those approving the resources to analyse the rationale for the project by assessing the economics and impact of the project and comparing these against other factors, such as the major risks and the prevailing political environment.
Where an Agency, Division or Business Unit has a number of project initiatives, the Business Case can be used as a tool to prioritise the various initiatives.
When would you develop a Business Case?
Approval to develop a Business Case is usually obtained from the Project Sponsor or Proposer. This may be as a result of acceptance or approval of a preceding stage such as a Corporate Plan for a Department or a Business Plan for a Business Unit. The Business Case expands the proposals developed in these documents in order to:
- obtain approval for resourcing for the preferred option;
- attain agreement on the scope of the project; and
- gain authorisation to proceed to the next step of the project (usually the Project Business Plan).
Alternately, direction may be given by the proposer of a project to proceed directly to the development of a Project Business Plan. This may cause problems if the scope has not been agreed or if there has been no assessment whether the resources are sufficient for the scope.
What you need before you start:
- Agreement to proceed with the development of the Business Case from the Project Sponsor or Proposer.
- Agreement establishing the scope of the Business Case (usually verbal or a short note).
Knowledge and understanding of the development of a Business Case, as outlined in the Project Management Guidelines. - Optional
- Any of the following documents - Project Proposal, Strategic Information Systems Plan,
- Process Review Report or Feasibility study.
- Knowledge and understanding of performing an economic assessment on the option(s), for example by preparing a Benefit/Cost/Risk Analysis.
- Corporate/Business Plan for the Department/Business Unit.
- Departmental Project Initiation Guidelines.
What you will have when you are finished:
A completed Business Case that is ready for acceptance by the Project Sponsor or Project Steering Committee through internal departmental processes or the Budget Committee process.
How to use this template?
The template contains sections which are either optional or can be developed at a number of levels of detail depending upon individual need. Sections that are not required may be deleted, indicate that the section is not applicable or refer to another document.
All documents developed based on this template should include an appropriate acknowledgement.
A number of different text styles have been used within the template, as follows:
- Text in italics is intended to provide a guide as to the kind of information that can be included in a section and to what types of projects it might be applicable.
- Text in normal font is intended as examples.
- Text enclosed in <angle brackets> is intended to be replaced by whatever it is describing.
Business Case template
How to use this Business Case template?
Describing - Introduction/Background
This is used to introduce the business problem, briefly describe what has happened in the past to address the problem, and what the current status is at the time of writing the Business Case. In other words, set the scene for the rationale or reason(s) for developing the Business Case at this particular time?
Vision
What is the goal of the project, what is it expected to deliver? A high level description of the objective(s) of the recommended option contained in this Business Case (a one liner).Organizational Objective
All projects should relate to and produce results that relate to a pre-defined organisational goal(s). This should be included here. The relationship between this initiative and the Corporate/Strategic plan should be described. The Relationship to the implementation of the organization Together benchmarks should also be described.
What is Purpose of the Business Case? - Describe in short
Why is the Business Case being produced?
Generally it is to: define the business need or problem in detail, analyse options (where resources have already been allocated this may involve determining what can be delivered with those resources), identify costs, benefits and risks, and to put forward a proposal to senior management for approval to proceed with the project, or to the funding source for approval for funding for the project.
Situational Assessment and Problem Statement
This section should clearly establish the benefit to the organisation for proceeding with the proposed project. It should contain:- a description of the relevant environmental conditions;
- an assessment of how the business needs are currently being met or not met;
- an analysis of the gap between the current situation and the stated objective(s).
Assumptions and Constraints
It is essential that assumptions made during the planning process are recognised and recorded.
Any requirements for specialist resources or skills should be identified and any dependencies that exist with other projects or initiatives.
Identification of Options
List the options that were identified for analysis. Generally if a detailed analysis of options is required, then fewer significant options are preferable to many. Some options that may need to be considered are:- Option 1- Do nothing
- Option 2 - An option that would achieve the same result as the preferred option
- Option 3 - The preferred option
Comparison of Options
Compare the options by summarizing the benefits, dis-benefits, costs, risks and issues. The following table is an example.
Criteria
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Option
1
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Option
2
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Option
3
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Benefits:
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$ or rating
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Dis-Benefits:
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Costs:
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Risks:
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Stakeholder Impact:
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Issues:
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How to define Implementation Strategy
Based on the information outlined in Section 6 for the option that was recommended, begin to scope the project that will implement the recommended option and describe how the project will be managed. The information in the following sub-sections are important, as they will form the basis of a Project Business Plan if the project/initiative proceeds. It defines the scope of the project!!
Benefit Analysis
For each option assess how each key stakeholder group (or individual stakeholders) may be impacted by the project and how they may impact on the project. This may be positive or negative. Allocate a rating, High = 3, etc and total in the right column.
Risk Analysis
For each option fill in the worksheet on the next page with the major risks.
Instructions:
- For each risk work out what grade there is associated with it. This is only a quick estimate using the table below to produce an A to E grading. Ignore those risks with a grading of D and E. (see risk management fact sheet for more details)
- For the A and B gradings estimate what minimisation and mitigation strategies should be put in place, their cost and the resultant grading (i.e. the impact of the strategy).
- For each grading allocate a numerical rating, eg A=5, B=4, C=3, D=2, E=1.
- Add these together to get a total grading for each risk. The lower the total score the lower the level of risk.
- Add the scores for each risk to get a total for the option. This allows a comparison to be made between options as to the comparative level of risk of each option.
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