How To Write Business Case – The business case is the most important document you will need to write for a project. It explains why your organization will invest time and resources in a project. Without a rock-solid business case your project is unlikely to get a return on investment. Writing a business case is usually a skill learned in a business analyst course.
This article explains how to write a business case. It includes 2 business case examples and a free business case template for you to download.
How To Write Business Case
You are probably reading this article because you want to know how to write a business case. Perhaps your organization is embarking on a major project to develop a new product. Or, maybe you’re thinking of moving house so your family can enjoy a better life. In either case, you write a business case to make sure the investment is worth it.
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In this article we will give you 2 business case examples, a simple business case template for you to use and how to write a business case.
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A business case is the justification for some activity (eg a project) undertaken by your organisation. It weighs the schedule, cost and risk of doing the activity against the benefits to be gained. Consider the pros and cons and then make the right decision.
You can also use a business case to justify the investments you’ve made in your personal life. For example, when you are planning to move home to another area. You and your partner need to understand the costs, time and risks of moving and weigh them against the benefits eg. Save time to go to your office, or your children can go to a better school.
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Projects should not be started just on a whim or out of vanity – even if a lot of money has been wasted on such projects over the years.
For commercial organizations, the justification of a project usually takes a commercial nature, i.e. assessing how much money can be made from the investment. For example, investing money in developing a new software app to be first in the market may be considered to bring some financial benefits (in terms of sales) that outweigh the investment costs.
For government agencies, the justification may not be commercial, but may be based on providing value for money to achieve some benefit. For example, a public health campaign touting the benefits of flu-vaccination for the elderly may be considered more value for money than no campaign and reliance on treating patients after contracting the virus.
With so many competing claims on scarce funds, organizations need to be sure that the decision they are making is the right one. Finally, there may not be enough funds to pay for all the project ideas floating around the organization.
Analyzing The Business Case
Business cases can be used by different levels of management in an organization. Not only are they used to justify investment in individual projects, they are typically used by the portfolio management office to help determine which projects will contribute to the organization’s strategic goals. In this way, they can filter out bad ideas for projects and fund only projects that will contribute to strategic goals.
A business case is used by project sponsors or project executives to help them decide whether to invest in a particular project.
In all cases, the business case must be written and approved before any major commitment of resources.
Business cases can take many forms – digital or analog. The tools you use to create one are also many and varied. Common business tools such as Microsoft Office can be used. However, instead of being a document or slide deck, it can also be in the form of an email.
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Likewise, a business case can be written by hand on a whiteboard or flipchart or on the back of a cigarette packet!
One thing you should always remember is that a business case does not have to be a long document. In fact, it should be as short as possible and include only the most important information. Thus it reduces the noise and provides the right information to the decision makers so that they can take the right decision.
For those of you interested in project management, the project management method known as PRINCE2 focuses on making decisions about a project with a viable business case.
We will now give you 2 business examples. The first example is one that you may find useful in making decisions in your personal life. The 2nd business case example is a more business oriented project.
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Let’s say you and your partner are planning to move into a new home. You need to weigh the pros and cons of moving. This is done using a business case. You might not call it that, but it is. Let’s see an example.
As you can see from the example, the first thing to be clear about business is the reason for doing the project or activity. In this example, the couple answered the question
A business case should consider competing options. After all, there is usually more than one option. Perhaps an alternative option is that John could have changed his job to one closer to his current home. However, this will not solve the school problem.
The benefits of a project or activity are the positive things you get back in return for your investment of time and money. In this case, the children will get a better education and John will save time every day.
How To Write A Business Case (with Examples & Template To Help)
It is also important to understand how long the investment of resources will take. This is so that the organization (or in this case the family) knows when resources will be freed up to work on other projects or activities.
There are generally 2 schedules to consider. First, the schedule of the project or activity – in this case 3 months to find a new home and get there. Second, the timing of benefits. In this case the children have 5 years until they leave school.
The next important piece of information is the cost of doing the project or activity. On this project, the cost of moving into a new home would be £5,000. These are the costs of the project.
However, the couple will spend an extra £2,000/year for each year that the business case is calculated. For a project in an organization, this is often referred to as the operational cost of maintaining and operating the project output e.g. An IT system. At this point, the couple knows the total cost over time when the benefits will accrue.
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For any activity or project, it is also important to understand the major risks involved. Risks are uncertain things that may or may not happen during the investment period. Only one risk is identified here, which is the risk that the couple may lose contact with friends who currently live close to them.
The next section is where costs and schedules and risks are calculated. For this project, it is an easy decision for the couple to decide whether it is worth spending money over the next 5 years to give their children a better schooling and save 2 hours of John’s commute.
For an organization to decide whether an investment is worthwhile, however, there are many ways to make an investment decision.
Organizations often have defined rules to help business analysts or project managers write what are called investment evaluations. In the next example, we will look at an example known as net gain.
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Imagine a heating repair services company that uses a paper-based set of forms filled out by an engineer during a site visit. Spare parts needed to fix the heater are recorded on a form that is given to employees to process back in the office. They then order the parts and schedule a follow-up visit with an engineer to repair the heater.
This sample business case contains an executive summary. This section briefly describes the chosen option and its main benefits.
The reasons for the project are clearly explained while describing the 3 current problems of the company.
In this example, there are 2 options (besides doing nothing) that are checked. A summary of each option is provided and reasons why option 3 is the preferred option are given.
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The expected benefits of reduced overhead are clearly stated. Benefits should be measurable and quantifiable. So its benefits can be measured later. But
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