Project business case

5 reasons why a project should have a business case

Team discussing a project business case5 reasons why it makes sense for a project to have a business case.  At the bottom of the post you will find a presentation version of this post.

1. Ensure project is aligned to strategy

In most organisations, budget and people are a scarce commodity.  Therefore, it is important that projects are aligned to the strategy or goals of the organisation, that there is a compelling reason to allocate time and money to the endeavour.  If not this is a waste as it probably means other more worthwhile projects cannot be started.

This also will help stop any “pet” projects.  It can be common for members of senior management to have projects that are important to them for business or personal reasons.  Unfortunately, this may not always be aligned to the goals and objectives of the organisation.  It is sometimes difficult for the sponsor to see beyond the desire for the project and, therefore, cloud the decision process.

Documenting the reason for the project formally allows the scope to be reviewed against strategy so an informed decision can be taken.

2. Ensure project has been thought through

The business case process forces a level of discipline and rigour to the project approval process.  In order to present the project to give the best chance of approval, the sponsor will need to present a logical thought through business case.  This means they will need to complete a level of analysis.

Using a business case to capture and analyse key aspects of a project, allows for issues to be raised early that may result in a different approach (or even making the project non-viable).

This is beneficial as it saves investing money starting a project, finding the approach is incorrect and then having to spend more time and money researching an alternative.

3. Ensure rationale and proposal is reviewed

It can be very unhealthy for a senior manager to be able to propose and approve their own project without it going through a level of scrutiny (peer review).

A business case allows for others to review and (hopefully) understand the rationale of a project so as to make an informed decision.  This means it is less likely that a project will be approved that is not aligned to strategy, has a weak business case, etc.

4. Hold sponsor to account

It is healthy for the business case to be viewed a contract between the sponsor and the organisation.  The sponsor is effectively saying “you give me £xxxxx funding and I will return £xxxxxx benefit” (note: benefit may not always be monetary).  So it is reasonable that the sponsor is held to this contract, specifically not spending more than the allocated budget and delivering the benefits within the agreed time frame.

If a sponsor is aware that they will be measured against the metrics in the business case and that they will be expected to realise the benefits, this will reduce the risk of the cost and benefit’s being overly optimistic (i.e. low costs and high benefits).

5. Allows progress and outcomes to be tracked

The signed-off business case becomes the high level baseline for the project.  Therefore, it should be possible to lock down the information, place under change control and then manage progress of the project against the business case.  This will result in greater transparency and a higher probability that the project will be managed correctly and benefits realised.  It also will ensure that the sponsor and project manager are focused on the outcomes.

In summary

Ensuring that all projects have an agreed, realistic and signed-off business case will help ensure that:

  • Projects are aligned to strategy and goals
  • Have been thought through to identify possible issues
  • Only are signed off if the business case is valid
  • Hold the sponsor to account giving high probability on outcomes
  • Provide agreed baseline to track progress.