Projects require an investment of not just money, but time and effort, thus, the key question a business case must answer is, is this project worth it? A business case is at the heart of any project and outlines the justification for undertaking the project. It is intended to convince key decision-makers of the merits of a particular course of action by describing the benefits, costs, and impact, plus a calculation of the financial case.
Basically, it would contain the reasons for project, the options available, the benefits of options, the cost evaluation, the timescales, and risk assessment. It can also be used to determine how the success of the project or investment will be measured to be able to ensure that any promised improvements can and will be delivered.
A business cases 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. It can also be used as a tool to prioritise the various initiatives.
How to Create a Business Case?
A well-crafted business case explores all feasible approaches to a given problem, and allow decision-makers to decide which course of action will be best for the organization. In short, the purpose of a business case is to weigh the costs of undertaking the project against the expected benefits of the project once completed. Here are the possible questions to be asked for preparing a business case:
- What does the business aim to achieve with the project? (How will value be created for the business?)
- What resources do we have? (What are the costs to the business of creating that value?)
- What are the costs and benefits? (Will the value created for the business be significantly greater than the costs incurred by the business.)
- Are there better alternatives? (Is this the best thing the business can be spending its resources on or are there better investments available?)
A Simple or Detailed Business Case?
A corporate business case for a large organization can be tens of pages long. However, for a small business, it’s best to keep the plan short and concise, here is a simple template for you to start with, and you may customize it to suit your needs:
Executive Summary: why should the business invest?
Costs: what is the project estimated to cost and how will this be funded? It’s often helpful to include figures and graphs here.
Expected benefits and timescales: what benefits will the organization receive once this project is complete and how long will these benefits take to achieve?
Return on Investment: based on the expected benefits and costs, what is the expected return on investment?
Options considered: A business case should weigh up the competing options that have been considered. After all, there is usually more than one option.
Risks: For any activity or project, it’s also important to understand the major risks involved. Risks are uncertain things that may or may not happen as expected during the period of the investment.