Preparing a Business Case

Recognising a Need

This article provides some background information and general guidelines on the preparation of a business case. The word 'problem' is used synonymously with 'opportunity' in this page.

Typically, the drivers for projects stem from some general malaise or prospect. Often this is quite vague. Symptoms of problems can be experienced in the following ways:

  • Falling sales
  • Escalating costs
  • Low productivity
  • Low profitability
  • Low customer/staff/board satisfaction
  • Falling share price

Similarly, opportunities are things like:

  • Increase market share
  • Increase profit
  • Maintain competitiveness
  • Improve morale

The first task in relation to a symptom is to measure its severity. This is a matter of assessing various costs; financial costs, opportunity costs, hidden costs (after they have been found) and human costs. If it's significant, proceed.

The second task is to root out the underlying problem. Falling sales isn't the problem, it's the symptom. The 'real' problem might be product defect, market decline, inadequate marketing, or a mish-mash of all these.

Once you've got to the heart of the problem, the next step is to decide whether it's worth fixing. At this stage all that is required is a general agreement that the matter is worth following up. What will happen if you don't do anything? What is the likely impact if you do?

Armed with a correctly identified problem that is worthwhile, you can move to preparing a business case.

The Business Case

Identifying and Assessing the Alternatives

The challenge now is to weigh up the alternative solutions and get business buy-in. You need to identify the constraints and objectives of all serious alternatives. Constraints are the things that stand between you and implementation of that particular solution, including budget, technology, environment, people and skills.

Objectives are the things that you expect the solution to give you. What are the basic criteria for considering a project? Can we measure our success? Are we trying to improve gain or reduce pain?

Eliminate projects with too many constraints or too little impact.

Prepare a broad outline of the obvious risks and scope of the remaining alternatives, including preliminary costings and timeframes. The projects that survive this step are the ones that you want to get up.

Recommending a Solution

In terms of getting business buy-in this is the most important step. It is your chance to present your vision of what the world will be like after successfully implementing the selected project(s).

Your recommendation should be in the form of a Vision and Scope document, and include:

  • Concise statement of business requirements
  • Project description and goal
  • High level scope (major features)
  • High level cost/benefit analysis
  • High level risks
  • High level assumptions
  • Exclusions

When you get business buy-in, then the real fun starts…