The main purpose of the business case

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  • #14483

    Paul Naybour
    Moderator
    6a) The main purpose of the business case is to facilitate the investment decisions about the project.It summaries the costs, benefits and the risks and enables the organisation to take a decision about funding the project or not. This is important because it enables the organisation to take an informed decision based on realistic facts. In comparison to the PMP the Business case needs to be more concise and written form a business perspective.

    Components of a business case are:

    1) Costs,
    2) Benefits,
    3) Risks
    4) Timescales.

    The costs in the business case will be inevitably high level. This is because we have not yet completed the detailed work required to produce a baseline costs. They need to have sufficient detail and accuracy to enable an effective investment decision. Typically some organisations were these and +/- 30% estimates.
    The benefits in the business case will define the return from the completion of the project. Typical they are monetary in nature. For example, they might include the revenue from the sale of houses or income from a wind farm. They are important because they will be evaluated against the cost to see if the business case is justified.
    The risks in the business case include the risks to the delivery of the project and the benefits. Again, at this stage they will be quite high level. In comparison to the risk log in the PMP they will include risk the benefits whereas the PMP mostly focuses on delivery. Nethertheless the risk are very important in reaching the right decision.

    The BC will also include high level timescales. These are important to define when the benefits will start. The will be used as part of the cost benefit for the project. This is because the timing of the benefits can be affected by discounting factors. The benefits may also be subject to changes in the project context. For example change in political or economic conditions.
    #14485

    Ana Belen
    Participant

    Dear Paul. Thank you for explaining these major topics of the BC. Although they are key headings, on some occasions there might be some dependencies of the chosen project option (legal or political) that impede progress of the business case. A project closed during the development stage comes to mind. There was a legal issue that did not emerge at the definition stage.

    #14484

    Paul Naybour
    Moderator

    Yes indeed. This is a typical answer for the APM PMQ exam, sure lots of other things could be included on a case by case basis.

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