The first in our new series of top tips features covering Agile, project, programme & change management.
Top 10 tips for Better Business Cases
A business case for any proposed or existing programme or project plays a critical role in establishing and demonstrating continued business justification in terms of viability (costs), achievability (risks) and desirability (benefits) using finite capital funds and people resources. What Better Business Cases provides is a structured approach to the iterative development of the business case to allow for progressive options analysis, investment appraisal and ultimately, portfolio prioritization.
As the business case provides a point-in-time baseline to capital investment decision making by the commissioning organization and accountable officer, approval – particularly the release of funds – should not be a one-off event. This is why the iterative development of any business case must never be perceived or used as a mere governance hurdle for gaining full capital investment approval, and why staged release of funding by gateway review is so important to continually assess initial and ongoing business justification.
The Five Case Model
When preparing any programme or project business case, the Five Case Model provides the commissioning organization and accountable officers with a proven framework for “structured thinking” and assurance that the proposed programme or project determines:
- A compelling case for change and holistic fit with the wider organization – the “strategic case”. This dimension looks at continual alignment with new strategy objectives and how the project will collectively contribute to the organization’s value proposition.
- Best value for money in terms of benefits versus costs and risks – the “economic case”. This dimension focuses on the critical success factors, options appraisal and the identification of the preferred way forward.
- An attractive deal to the market, that can be procured and commercially viable – the “commercial case”. This dimension focuses on the development and procurement of the potential deal for the supply of goods and/or services.
- Affordability with a confirmed funding source – the “financial case”. This dimension focuses on the whole of life capital and ongoing support costs of the proposed deal.
- Achievability in terms of management of the program or project, risks, benefits, contract and business change as well as arrangements for independent gateway assurance – “the management case”.
Other helpful tips
Below are some other helpful tips to developing a Better Business Case for better outcomes:
- Contrary to popular opinion, the project business case document size is not relative to its funding amount. A $1 million investment, for example, should not result in a 100-page or more business case document to establish a compelling case for change.
- A wide range of realistic and possible options for the delivery of the project should be identified from the outset. As such, nothing should be discounted from detailed analysis that potentially resolves the business problem. This is known as ‘the long-list’.
- It should demonstrate how an organization would perform if it did not pursue the investment proposal or otherwise change its method of operation (also known as business as usual). It is used to compare options against optimism bias.
- Be aware of cognitive biases like the anchoring effect (where decisions are influenced by a particular reference point) and the planning fallacy (where optimistic timeframes, costs and benefits are stated) that can respectively impact options analysis and the “management case” that ensures successful delivery of strategic objectives.
- Recognize that the business case and benefits realization plan are primarily concerned with informing decision making and optimization of benefits realization against funding allocation. As such, benefits stated in the business case are often better understood if the benefits realization plan is iteratively approved at the same time.
Summary / Closing Thoughts
The project business case is crucial as projects will only deliver their intended outputs that enable benefits realization if it is properly scoped, planned and cost justified from the outset. For this reason, the business case is considered a working document which must be developed and periodically revisited over the duration of the investment.
Like the UK Infrastructure and Projects Authority (IPA) states in ‘Setting Up for Success’, “if we invest time and energy in setting projects up for success [through better business cases, commissioning organizations and accountable officers] we can obtain a clearer overview of the project lifecycle and make any required design changes when the cost of making these changes is still relatively low”.
About the Author
We would like to thank Milvio DiBartolomeo for this top tips content.
About Milvio
Milvio is an ICT project portfolio management professional who has had a varied career. Starting in the private sector (working for some well-known multinational companies in business development) and later in the public sector in Queensland, Australia. For the past 13 years, he has worked on a number of transformational change initiatives across the entire programme and project lifecycle and worked as a business and process analyst, software tester and project manager.
References:
- APMG International (2014). Managing Benefits by Steve Jenner, 2nd Edition. The Stationery Office, Norwich.
- Infrastructure and Projects Authority (2020). Setting up for success: the importance of front end loading. Available at: https://ipa.blog.gov.uk/2020/09/09/setting-up-for-success-the-importance-of-front-end-loading/
