Business case development
From CEOpedia | Management online
| Business case development |
|---|
| See also |
A business case is a document that captures the rationale for undertaking a project or task. It outlines the benefits and costs of a proposed project or course of action, and is created to determine if the initiative is worth pursuing. It is typically developed by a project manager in collaboration with stakeholders and is designed to provide a roadmap for the project's success. The business case should include an evaluation of the benefits, costs, risks, and other factors that will influence the project's success.
Example of business case development
- A company wants to expand its production to a new market and needs to determine if the project is financially feasible. The business case would include an assessment of the potential revenue and costs associated with the expansion, as well as an evaluation of potential risks.
- A company wants to launch a new product and needs to determine if the project is worth pursuing. The business case would include an assessment of the potential costs associated with the product launch, an evaluation of the market potential for the product, and an assessment of the potential revenue that could be generated.
- A company wants to invest in a new technology and needs to determine if the project is worth pursuing. The business case would include an assessment of the potential costs associated with the technology, an evaluation of the potential benefits of the technology, and an assessment of the potential risks associated with the technology.
Best practices of business case development
- Identify the purpose: Before developing a business case, it is important to define the purpose of the project and determine if it is feasible. This process should include an assessment of the project’s goals and objectives, the current state of the organization, and the resources needed to complete the initiative.
- Gather data and information: To create a comprehensive business case, it is important to collect data and information from stakeholders, industry experts, and other knowledgeable sources. This helps to ensure that all relevant considerations are taken into account.
- Analyze the data: Once the necessary data is collected, it is important to analyze it to identify potential risks, costs, and benefits associated with the project. This includes developing financial models and cost-benefit analyses to determine if the project is viable.
- Present the case: Before presenting the business case to stakeholders, it is important to develop a comprehensive and clear presentation. This should include a summary of the project’s objectives, benefits, costs, risks, and other relevant information.
- Obtain approval: After presenting the business case, it is important to obtain approval from the stakeholders. This process may involve further discussions and negotiations to ensure that the project is viable and will meet the organization’s needs.
- Monitor progress: Once the project is approved, it is important to monitor progress and review the project’s progress regularly. This includes tracking key metrics, monitoring costs, and assessing the effectiveness of the project’s implementation.
When to use business case development
Business case development is a powerful tool used to evaluate the cost, benefits, and risks of a proposed project or course of action. It can be used in a variety of situations, such as:
- When a company is considering a new product or service launch
- To help decide whether to approve a new business venture
- To evaluate the potential return on an investment
- To compare the costs and benefits of different approaches to solving a problem
- To assess the feasibility of a new project
- To help make strategic decisions about resource allocation
- To determine the impact of proposed changes to a process
- To evaluate the impact of a new policy or regulation
- To support decisions related to mergers and acquisitions.
Types of business case development
A business case can be developed in several ways, depending on the needs of the project and the stakeholders involved. Below are some common types of business case development:
- Feasibility: This type of business case considers the practicality and viability of undertaking a project. It includes an analysis of the potential benefits, costs, risks, and other factors that could influence the success of the project.
- Quantitative Analysis: This type of business case uses quantitative methods such as cost-benefit analysis and the return on investment to determine the best course of action. It considers the financial implications of the project and its potential for long-term profitability.
- Strategic Analysis: This type of business case looks at the strategic impact of the project. It considers the potential impact on the organization’s mission, goals, and objectives.
- Risk Analysis: This type of business case considers the risks associated with undertaking a project and the potential impact on the organization. It looks at the probability of risks occurring and their potential consequences.
- Stakeholder Analysis: This type of business case looks at the interests of the stakeholders involved in the project. It considers the potential impact of the project on their involvement, commitment, and satisfaction.
Advantages of business case development
A business case can be a powerful tool for project managers, stakeholders, and other interested parties. Developing a business case can provide numerous advantages, including:
- Clarifying the goals of the project and determining whether they are achievable. The business case will outline what the project is intended to accomplish and provide a framework for evaluating its success.
- Establishing a timeline and budget. Developing a business case can help project managers establish a timeline and budget for the project, which can ensure that the project remains on track and on budget.
- Outlining risks and opportunities. A business case can help identify potential risks and opportunities associated with the project and create a roadmap for addressing them.
- Building consensus. By creating a business case for a project, stakeholders can be consulted and their input incorporated into the project. This can help build consensus on the project objectives and create a unified team.
- Providing a benchmark for success. The business case can be used to measure the project's progress and success, helping project managers and stakeholders evaluate the project's performance.
Limitations of business case development
A business case is an important tool for guiding business decisions, but it is not without limitations. The following are some of the limitations of business case development:
- The development of a business case requires significant time, effort, and resources. This can be a challenge for smaller businesses with limited resources.
- The data and assumptions used in a business case can be subject to inaccuracies and bias. This can lead to an incorrect assessment of the project's benefits and risks.
- Business cases can be complex and difficult to understand. This can create a barrier to the stakeholders’ acceptance and understanding of the business case.
- Business cases are typically static documents. This means that they may not be able to capture the dynamic nature of the project or changing market conditions.
- Business cases can be difficult to update as the project progresses. This can lead to a disconnect between the project's goals and the actual outcomes.
Suggested literature
- Dyllick, T., & Hockerts, K. (2002). Beyond the business case for corporate sustainability. Business strategy and the environment, 11(2), 130-141.
