Developing Guidance on when a Business Case is required
A Business Case is a proposal to invest significant resource in an undertaking (for example a project or business change) that will provide specific benefits to the owning organisation. In doing so, the business case must provide fundamental information to decision makers (those approving the business case) to ensure that the proposal is:
- in line with the goals, objectives and priorities of the business.
- affordable (and delivers value or return for the required investment).
- deliverable (i.e. the inherent risks have been considered and analysed), and therefore is:
- the right proposal to invest effort or resource in at the time, and that it will deliver value (benefit) for the resource it will consume.
A Business Case should define the underlying Business need or opportunity and potential options, together with ‘deliverability’ of those options in line with Business needs. It also provides the fundamental platform for defining the key aims (objectives) of a project and is a crucial input to the project definition process. Therefore, a Business cases itself has three key objectives:
- to define specific Business objectives and proposed option / proposal, and the tangible benefits this will bring.
- to ensure that the proposal is inherently ‘deliverable’ within the timescales and broad resources (costs) estimated.
- to provide the input to the decision making process that will confirm Business commitment to the proposal or otherwise.
When is a Business Case Required – or not?
It is important to provide some form of guidance as to when a business case is required or not, which is especially useful when the answer to that decision becomes less obvious. If it is a major change or investment or involves a major change to a core process within a business for example, it will be a simple decision. At the other end of the scale, we would not expect to write a full business case for relatively minor changes to business processes and systems. The challenge comes when we have items that sit exactly in the middle between these two extremes – that is where some form of clear guidance will be extremely useful. Finally, it is typically a mistake to define guidance (or some form of threshold) purely on the financial value of an investment (i.e. greater “x” $ etc) .
In most Businesses, projects often fall into three categories:
- Strategic: e.g. opening up new business lines or major new market opportunities
- Tactical: to improve core business or business processes
- Operational: delivering or maintaining core capability.
Business Cases should always be prepared for all category 1 & 2 projects, and usually for category 3. In category 3, where there are few decisions to be made, a full business case may not be required, however, the objectives of any project must always be recorded and validated with stakeholders as part of effective project management.
It is important to provide guidance in any business (by providing simple ‘rules’) for when a business case is required, otherwise a vacuum often occurs where staff are simply unsure when one is needed. The following is very simple but could at least be a starting point for doing this in your business:
|Very likely to require a Business Case:||Not likely to require a Business Case:|
|New business process / system||Minor system / process change|
|Major change to Business Process||Simple new report|
|Significant investment||Maintenance task|
|Major Asset procurement / development|
|Major Change in key business practice|
Other factors that influence whether a Business Case is required or beneficial
- degree of importance to the Business
- level of effort involved in delivering the solution inherent in the business case
- level of risk required in the proposal /solution / or benefits
- quantity of benefit in the proposal.
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