Most likely, you’re reading this post to learn how to create a business case. Perhaps your company is starting a significant effort to create a new product. Or maybe you’re considering moving to a better area for your family’s lifestyle. You make a business case in either scenario to ensure the investment is beneficial.
You can build a business case with a few resources and some forethought to help you obtain the funding and assistance required to operate a project successfully. This manual outlines a business case document’s structure, topics, and methods of production.
Table of contents
- What Is A Business Case?
- Business Case Benefits
- How Is A Business Case Different From A Business Plan?
- What Are The Different Types Of Business Cases?
- How To Write A Business Case
- Free Business Case Templates for IT, Project Management, and More
- Conclusion
- Frequently Asked Questions
- References
- We Also Recommend
What Is A Business Case?
A business case is a project management document that details how a project’s advantages outweigh its drawbacks and justifies its execution.
It collects the financial appraisal, proposal, strategy, and marketing plan in one document and offers a full look at how the project will benefit the organization. Once your business case is approved by the project stakeholders, you can begin the project planning phase.
According to workfront, a business case is usually flexible and may need further development as part of a detailed investigation. Therefore, it should be developed incrementally so that time and resources aren’t unnecessarily wasted on the impractical.
Succinctly put, it is nothing more than an observation of what’s wrong without that long-lasting adjustment.
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Business Case Benefits
Business cases serve two essential purposes. They assist organizations in understanding project possibilities and the time, money, and opportunities lost or gained associated with each.
Second, they demonstrate to decision-makers that specific courses of action are supported by rigor.
A business case, for instance, can show that, after analyzing two IT systems, it was determined that one particular provider would better suit the company’s needs. Business cases demonstrate that choices are made based on information and facts rather than a single person’s judgment. They may assist companies in defending their expenditures and safeguarding project leads in the event of a mishap.
Organizations are impacted significantly by business cases. They guide everything, from little choices to those that permanently alter the direction of enterprises. You can improve your ability to develop business cases in the future by learning how to create them following best practices.
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How Is A Business Case Different From A Business Plan?
Business plans and business cases can both be used to persuade important decision-makers to take a particular course of action. However, a business case and a business plan have important distinctions:
| Business case | Business plan | |
| What for? | Decision-makers use business cases to compare different project possibilities. They are employed for internal budget approval and strategy prioritization. | Business plans give out comprehensive ideas for brand-new ventures, significant alterations to already-existing ventures, or broad goals for a company’s future. |
| Who for? | The right internal parties, such as those with the authority to approve budgets, are shown business cases. | In businesses, business plans are given to shareholders, investors, or the senior leadership team. |
| Focus? | Business cases are more focused and include a problem, solution, budget, risks, and benefits presentation. | Business plans have a broader focus and may also include a marketing strategy and a presentation of the business model. |
What Are The Different Types Of Business Cases?
There are many stakeholders who wish to weigh in on any business case. These project stakeholders are from various business departments and have various stakeholder interests.
A strong business case framework is necessary to account for the many stakeholders’ varying and occasionally competing interests. The Five Cases Model, which requires that a business case be presented from five distinct perspectives—strategic, economic, commercial, financial, and management—is one model that offers this framework.
1. The Strategic Case
The purpose of the strategic case is to present a case for change and demonstrate how it strategically fits with the course of the company. To do this, you must match the project’s aims and objectives with the company’s.
Describe the business issue that needs to be resolved, the extent of your goals, and the associated rewards and risks in order to make the strongest strategic case possible. Describe how a certain process would help the business as a whole if it were effective.
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2. The Economic Case
The objective of the economic case is to determine which of the solutions you are putting up offers the highest value to the company, taking into account more general factors like social and environmental implications. This is crucial if you’re making a case for a project that the general public will use, like creating a product or building.
Show that you’ve evaluated numerous possibilities (i.e., made a big list), eliminated options based on cost and value (i.e., created a shortlist), and then thoroughly examined what each remaining option offers in order to make the strongest economic case possible.
3. The Commercial Case
The commercial case follows the economic case in a natural progression. When considering a project from this angle, demonstrate your ability to properly and efficiently find vendors (or internal resources).
Predict the resources you’ll require and then account for any potential unforeseen circumstances that may arise throughout the project’s delivery in order to make the strongest possible commercial case.
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4. The Financial Case
This type of business case shows that the company can afford to fund the preferred choice you are offering when thinking from a financial case standpoint.
In order to achieve this, you must show that you have examined the capital, revenue, and total cost of ownership of your preferred alternative. Use a profit and loss analysis or other financial ratio analysis to do it in a structured way.
5. The Management Case
The management case should also demonstrate to managerial stakeholders that there are suitable processes in place for delivering, monitoring, and evaluating your preferred alternative.
You can achieve this by outlining a strategy for how your chosen alternative will be handled as a project in accordance with best practices and by demonstrating that independent assurance is available if needed. Consider contract management as an illustration, and how to guarantee that advantages are realized and human resources are utilized fairly and effectively.
How To Write A Business Case
Business cases are essential records for organizations that can direct strategic choice-making. As a result, it’s critical to comprehend the proper, organized way to develop a business case. Following a list of what should be in a business, the case is a thorough explanation of each item.
- Executive summary
- Background information
- Project definition
- Business Requirements
- Option presentation and evaluation
- Presentation of a preferred option
- Strategic alignment
- Benefits
- Risks
- Project implementation plan
- Financial Analysis
- Resources required
- Authorizations
- Appendices
1. Executive summary
It’s crucial to start business cases with an executive summary because they can grow to be documented with more than 100 pages. The business problem, the suggested solutions, and the preferred solution should all be briefly described in the executive summary.
2. Background information
Your business case will be important to a large number of people, many of whom may not be familiar with the project’s background. As a result, you must include project background information. Background details could include the necessity of the project, examples of similar projects that have been completed, and events leading up to the creation of the business case.
3. Project definition
Describe all of your project’s crucial elements in this area. Describe your project in full, mentioning the business issue it will help to resolve.
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4. Business requirements
There are a variety of business criteria for every project. For instance, does the company have a list of preferred vendors? They may have had a budget. Did they specify a deadline by which the return had to be realized? Indicate these specifications and how your proposal complies with them.
5. Option presentation and evaluation
This section’s goal is to demonstrate to stakeholders that you looked into your options and chose the best one for your company.
You might be required to perform research, present a lengthy list of possibilities, and then narrow the list down (and make a final selection) based on certain criteria in some business scenarios. All you will need to do in other business cases is to offer a succinct overview of your possibilities. The scope of the project will determine what is appropriate.
No matter how you offer your options, be sure to demonstrate how you have assessed them in light of the given standards. For instance, you might check the cost of the software or weigh the trade-off between cost and functionality. To demonstrate that you have arrived at a reasoned decision, use the criteria you choose to evaluate all possibilities equally.
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6. Presentation of a preferred option
Give your favorite choice. Explain your choice and why it best satisfies the evaluation criteria. Show how it complies with business needs.
7. Strategic alignment
It may be clear for projects within smaller organizations how they fit in with the strategic goals of the company. For instance, a business case for an EFTPOS system at a restaurant enables customers to pay for their meals, which directly affects the cash flow of the enterprise. The congruence between a specific project and the company’s goals, however, might not be as obvious for larger firms.
Your chance to show how your project actively contributes to the larger business and strategy initiatives of your firm is in the strategic alignment area.
8. Benefits
A business case’s benefits section is essential. Here you are expected to list the glaring advantages of your preferred solution.
The advantages you list have to have two components. They should first go over the reasons why the project should move forward in general. In order to persuade stakeholders that what you are advising is the best course of action moving forward, they need also briefly describe its advantages.
9. Risks
People frequently worry that if they go into too much detail about a project’s hazards, decision-markers won’t decide to move forward with the project. This can’t be. All projects carry some level of risk, so you must disclose those risks in an open and honest manner while developing your business case.
Describe the dangers and the possibility that they may materialize in this section.
10. Project implementation plan
Stakeholders need a clear understanding of the project’s implementation in order to approve it. Describe this plan in detail.
Give stakeholders a quick overview of the project’s process, including a list of the stakeholders who must be involved, the resources needed, and a timeframe.
11. Financial analysis
Your business plan’s financial analysis part is crucial in proving that the project is reasonable for the company, that they can fund it, and that it will provide financial value over the short and long terms.
Depending on how big your project is, you might only need a quick analysis, or you might need to become specific and offer estimates and other financial reports.
12. Resources required
Include all of the resources your project will require in this section, including any physical assets, intellectual assets, human resources, and financial resources.
13. Authorizations
The authorizations section specifies who must give their approval and at what time.
14. Appendices
Important information that doesn’t belong in the body of your business case is contained in the appendices, such as in-depth financial models or project plans, further risk and benefit analyses, or more in-depth study on the possibilities you’ve presented.
Free Business Case Templates for IT, Project Management, and More
- One-Page Business Case Template
- Project Business Case Template
- Construction Business Case Template – Word
- Simple Business Case Template
- IT Business Case Template
- Life Sciences Business Case Template
Conclusion
Every project needs a business case since it establishes the project’s justification. It is an essential project document that ensures the organization’s resources are allocated to the proper projects and aligns activities with their value.
Frequently Asked Questions
A business case is a well-organized, thorough document that explains why allocating money and other resources to a project is justified. You can use business cases to convince management and other stakeholders to support your initiatives and give them the go-ahead.
A successful business case may live a long time. Although the business case ultimately belongs to the project sponsor, the project manager is the one who uses it as a roadmap for expectations and dependencies. Additionally, the business case takes on significance in a company’s project portfolio management procedure. A business uses this procedure to determine the viability of all the initiatives it takes on by balancing its resources and strategic goals.
Business cases serve two essential purposes. They assist organizations in understanding project possibilities and the time, money, and opportunities lost or gained associated with each. Second, they demonstrate to decision-makers that specific courses of action are supported by rigor.
References
- online.jcu.edu – How to Write a Business Case: Tips, Resources and Examples
- www.projectmanager.com – How to Write a Business Case (Template Included)
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