Project management has become a formal process in most organisations. If an organisation were to apply for a loan from a bank the bank would demand a business plan to justify the loan and explain how it would be repaid. This is what boards of directors are now demanding from project managers – if a project manager wants to implement a new project the project needs to be supported by a strong business case provided in a business case document.
Contents of a business case:
Organisations who have performed many projects will often have developed their own method of presenting a business case. However, they are likely to have the following key elements in common:
– An assessment of the current strategic position
– The constraints that are likely to exist for any project
– The risks that might arise for the project and how these will be managed
– An assessment of the benefits and costs of performing the project and how these will be managed
These key elements are now explored in more detail.
Strategic analysis:
The use of a SWOT analysis may be helpful to the project manager in communicating the organisation’s current strategic position and the justification of the changes proposed to this position through the implementation of the project.
Project constraints:
There are three key project constraints:
– Cost
– Time
– Scope
Risk analysis:
Risk is explored in more detail elsewhere in this text. For projects, a risk is anything that will have a negative impact on any one or all of the primary project constraints – time, scope and cost.
You should be aware that risk analysis has three key elements:
– Identifying risks
– Assessing risks
– Managing risks
Project benefits:
There can be a wide variety of benefits from new projects such as:
– Strategic benefits
– Productivity gains
– Management benefits
– Operational benefits
– Functional and support benefits
– Intangible benefits
– Emergent benefits.
Project costs:
In order to properly assess a project the potential benefits need to be measured against the potential costs. Typical project costs might be:
– Capital investment costs
– Development costs
– Centrally allocated costs/infrastructure costs
– External consultancy costs
– Resource costs
– Quality costs
– Flexibility costs
– Disruption costs.