Project Business Case

Quick Summary
Create a compelling justification for your project by documenting the anticipated costs and ROI, in context of all the reasonable alternatives. Documenting a business case gives your sponsor information required to understand risks and get funding approval, and can give your team a barometer for success throughout the project.

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What this is

A business case is a formal document that describes the business reason for initiating a software development project. For example, a software project might decrease processing time for a specific task, and the "business case" may be that the existing staff can serve additional clients without adding additional resources. A well-written business case provides a compelling justification for a change by explaining what system or process is lacking and describes a high-level recommendation for the best possible solution.

A typical business case describes the business problem, the possible solutions, the risks and benefits of each course of action, and the solution recommended for approval. The scope of this document is proportional to the size and risk of the project. Larger, riskier, and more expensive projects typically warrant a more formal and quantitative assessment of the business rationale.

Why it's useful

In essence, the business case helps communicate the objectives of the project, and provides the information necessary to receive funding approval. Establishing the business case helps pinpoint the specific benefits and costs of a proposed solution—information the project sponsor needs to be confident in the selected approach. By describing the risks tied to each solution, the business case also allows decision makers to determine their level of risk tolerance, and establishes a realistic expectation of the amount of risk associated with the approved project.

By including information on all reasonable alternatives—including the option to make no change at all—the business case also requires that the project requestor(s) justify the value to the company. Project approvers review the relative merits of all available options, instead of making project selection decisions in a vacuum. This should result in the dismissal of any proposals that do not have demonstrable value.

However, the usefulness of the business case document does not end with the permission to move forward. Used properly and reviewed regularly, it can serve as a barometer throughout the project to insure the solution still meets business needs and the project is in tune with changing environments.

How to use it

  • Begin developing the business case as soon as you start the project—usually first thing after the project sponsor submits the initial project request. The Project Manager may enlist the help of the Business Analyst or other business resources in order to complete the information in this document.
  • Share the initial draft of the business case with the project sponsor and solicit feedback. Incorporate sponsor feedback into the document in order to complete the business case.
  • The project sponsor should share the completed business case with the appropriate parties in order to secure project funding. (This will vary from organization to organization.)
  • Once the business case has been reviewed and the project approved for funding, use the business case to establish the success criteria for the project. Your team will have a clear understanding of the key factors determining whether the project's goals have been accomplished (and the project completed).
  • Review the business case throughout the project to verify that the initial justification is still valid, and to verify that the project will deliver the solution to the business need. If a review shows that an original business need has changed, this may result in the termination of the project or serious changes to the project scope.

Throughout this document, annotations in blue italicized type will explain the typical use and content of each section of the document. Normal text provides an abbreviated example of typical document text. You should customize the text to fit your project and delete the blue annotations when finished.

About the Author

Sinikka L. Waugh, PMP, is the founder and head coach of the project management coaching firm Your Clear Next Step, L.L.C. Sinikka is an actively practicing project management consultant, known for consistently helping teams find innovative ways to leverage effective project strategies across multiple disciplines and technologies. With over 10 years in project roles (primarily program manager, project manager, and business analyst) Sinikka has successfully applied project and leadership expertise to improve project performance in a wide variety of industries, including publishing, education, product fulfillment and distribution, insurance, event and travel management, human resources, and financial services. As a coach, SinikkaÕs down-to-earth, Òtry this nowÓ approach blends with her passion for helping others improve. Her energetic and engaging style helps make both the art and science of project management accessible to those she works with.

Sinikka holds a BA from Central College, an MA from the University of Iowa, and is a certified Project Management Professional through the Project Management Institute.

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