What is a business case and why on earth is it so integral to the world of project management? It is the foundations with which our project is built and as the complexities and costs increase, so does the importance of the business case. Here, lead PRINCE2 trainer Richard Lampitt discusses in further detail the fundamental importance of the business case in Project Management

1. Business cases – the project fundamentals, by Richard Lampitt
What is a business case and why on earth is it so integral to the world of project management? It is the
foundations with which our project is built and as the complexities and costs increase, so does the importance of
the business case. You will find it in every facet of the project, risk and programme management world. Whether
this a bespoke ‘Better Business Cases™’ course outlining the 5 case model or a component of PRINCE2®, MSP® and
MoR®. In fact, any best practice project or programme method. There is no escaping its fundamental importance.
It’s quite simple…every business case should answer and
document the basic, yet fundamental question - “WHY
are we doing this project”?
The business case is key to answering this question and
no project should start, or continue, unless the WHY
is sufficiently justified and backed up by a sound and
continuing business investment. But where do you start
to capture such information? Who should be involved
in the input of such information? What should happen
to the business case once it’s been created? These are
common questions which people ask us and without the
right information, projects often muddle along as simply
a means without an end.
Key components of a business case
The end result of a project and in turn the business case,
should be focussed on generating outcomes, changes
in circumstances, changes in real-world behaviour. This
should lead to measurable improvements.
What you need to check
• Benefits – what are they and how they should be
mapped, from the outcomes the project is aiming to
achieve.
• Outcomes – they will be derived from using the
products (outputs) the project is aiming to deliver.
• Products (outputs) - that they are capable of
generating the outcomes and consequently the benefits.
• Costs – make sure the investment of delivering the
project is not outweighing the benefits to be gained from
that investment.
• Risks – ensure that the risks of doing the project are
not outweighing the benefits.
• Project – finally, the project itself must have the
capability, capacity and means of delivering the products.
If any of these are not deemed to be the case, then the
project should be redirected or perhaps even stopped.
The business case should include sufficient information
to be able to answer these fundamental questions. The
information should include:
TRAINING PROFESSIONALS

2. What should happen to the business case information
during the project?
The business case will be created and approved at
the beginning of the project, but once the project is
underway the information should be updated if certain
project circumstances change, i.e. the project costs,
timescales, benefits and major risks could all increase or
decrease. If the business case is not updated to reflect
such changes in circumstances, then the ‘executive’ will
not be in a position to assess whether the project is still
viable. The current baselined version of the business
case should remain unchanged. However, a new version
should be created and the necessary changes applied.
Previous versions should be archived to assist with
assessing on-going project performance and overall
performance at the end of the project. The following is a
summary of the business case development path.
At the beginning of the project
During start-up, the executive role is responsible for
creating the ‘outline’ business case, but often assisted
by the project manager. You should involve other people
to help input to its creation. For example, the ‘senior
user(s)’ is responsible for specifying the desired benefits
and other people (such as business analysts), can help
with identifying the business requirements and finance
staff can help with collating the investment appraisal
information.
During initiation, the project manager is responsible for
taking the outline business case and extending it into a
detailed business case. The detailed business case will
include the estimated project cost and timescale and
the investment appraisal. During initiation, it is likely
that further benefits and major risks can be identified
whilst planning the project. This additional information is
included in the business case.
During the project
At the end of each stage, the project manager is
responsible for updating the business case to reflect
the new forecast cost and timescales of delivering the
project, changes in forecast benefits, major risks and
any external factors which could affect the business
justification for doing the project.
The project board (the executive in particular) will review
the updated business case at the end of each stage to
check that the project is still justified. I.e. that the project
costs and/or risks don’t outweigh the benefits, that the
project remains aligned with business objectives and that
it is still going to deliver value for money.
Whilst work is in progress during each stage, the project
manager should assess what impact any issues and
risks would have on the business case and escalate any
adverse effects to the project board for their attention.
At the end of the project
At the end of the project, the first version of the business
case is reviewed to compare the original planned time.
The cost and benefits are assessed against the final
version of the business case to help gauge project
performance and identify any lessons to be learned for
future similar project investments. I.e. what differences
are there between planned and actuals for costs,
timescales and benefits, and assessing why it’s any
different.
Key take outs
1. A business case answers the fundamental question
‘why do we need this project?’
2. What are the key components of a business case?
3. Who initiates and develops the business case?
4. What happens to a business case at the start, during
and end of a project?
• Reasons for doing the project - an explanation of the historical and/or current business problem/need/opportunity.
• Business options - explanation of the ‘do nothing’, ‘do the minimum’ and ‘do something’ options to address the
problem/need/opportunity and a synopsis of the chosen business option.
• Expected benefits - the improvements expected, expressed in a quantified and measurable way. Benefits can be
both financial and non-financial.
• Costs - a summary of the project costs including any ongoing operational and maintenance costs related to the
products being created. You must include the funding arrangements for both of these.
• Timescales - the key start and completion dates of the project and how long the project is expected to take. Also
include when benefits are expected to accrue and the period over which the benefits are expected to last.
• Major risks - the major threat-related risks which would significantly weaken and/or invalidate the business case.