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6.1 Business Case Question Attempt

Paul Naybour Paul Naybour

Published: 20th June 2012

Hi, this is my first attempt at a question please can you review and give me some feedback? Thanks.


Describe 5 main components of a business case.

The business case provides justification for undertaking a project, with its main purpose to obtain approval and commitment for investment of the project. Five main components of a business case are as follows.

1.       Benefits – A key part of the business case is to analyse the benefits of the project against the costs and the risks. The benefits of completing the project could be financial or non financial. For example the benefit of developing a new product may provide additional profit for a company, or alternatively the benefit of redeveloping a school may be to provide an improved learning environment.

2.       Options Appraisal – Options evaluation and justification allows an organization to review more than one option, this is good practice as it allows benefits of more than one viable solution to be considered. For the example of the school the options could be to refurbish the existing school building, to demolish and rebuild the school or alternatively to do nothing. An options appraisal gives the organization the opportunity to discard options which aren’t viable in favour of just one optimal solution which can be taken forward and developed. Financial investment appraisals can also be used to compare the financial viability of the options.

3.       Cost – The business case would initially include high level budgetary figures for what the project is expected to cost. As part of the business case these costs would be evaluated against the risk and benefit. As the plan develops so would the cost accuracy. As mentioned above financial investment appraisals can be used methods include paypack, net present value, and internal rate of return.

4.       Risk – The business case highlights the strategic risks associated with the project, focusing on what could go wrong or cause problems for the organization. This enables mitigation measures to be put in place prior to development of the project. A high risk project may still be seen as a viable option if the benefits of the project are proportionally high.

5.       Constraints – In addition to the risks associated with the project the business case would also include any constraints on the project. These are factors that the project has little or no control over but could have an impact on the success of the project. As an example a constraint of a construction project could be limited working hours. It is important to involve different groups, including suppliers and users in the development of the business case so these constraints can be fully understood.