How to write an effective Business Case?
In my previous article, I explained the Business Case, its purpose, and key elements. Let’s go ahead and see, how we can prepare an effective Business Case. I would suggest to go back and read the previous article on “What Is A Business Case?” if you haven’t yet.
How to write an Effective Business Case? It is a common question especially when you are new to Business Case. In this article I’ll try to cover important parts of the Business Case which will surely answer your question. Preparing an effective Business Case is an integral part of the planning and get investments from an organization for the project. In most of the scenario, Business Case is a fundraising process as it provides evidence that the project is a good investment for both the funding partner and the organization and it becomes more important as the cost and complexity of the project increases.
Usually, an organization has their own template which should be used to prepare the Business Case and improved regularly to meet the requirements. However, there is no standard format to prepare a Business Case as it could be presented in various formats i.e. presentation or standard document etc. but there are some common elements which need to be described clearly in the Business Case to get attention from your senior managers, approvers or supporting financial administration department.
Let’s understand the major elements of a Business Case and this will help in the understanding of making it. This will help to get started with a Business Case. Each organization has its own Business Case template but if you don’t have then you can use below elements in your document to create your own.
Key Elements of a Business Case are:
Business Case Title
Business Case title page should be simple, clear and justify the business case well and it should be easy to read because the title page is the first impression of your business case for the reader. Your business case title page should include below item:
- Project name
- Organization name
- Project status with last updated date i.e. draft, approved etc.
Table of Contents
The table of contents is a common section of almost every business case and it lists the major headings with page numbers on which it will be found in the business case. However, this section will be the last section to be completed when we will have all required details. It is placed immediately following the Business Case Title.
You can also call it as Project Summary and it is the first and most important part of the business case. Executive Summary of a Business Case gives the first impression of the project to the investors/stakeholders or any reader. It should highlight the summarized information about the project’s key elements in a concise and compelling manner. The executive summary will contain the major considerations that will be later discussed in more detail, including the timeline for business case implementation and completion, as well as the projected benefits and costs of business case implementation.
Some useful Guidelines for writing the executive summary for a Business Case are listed below.
- Project summary should be described precisely and concisely and avoiding excess descriptive words or technical jargons.
- It should tell the importance of project, benefits, the budget required, impact on Business if proposed solution is not implemented and risk or disadvantages (if any).
- Executive Summary should explain the best-suited solution to the current problem with reason.
- Final Business Case summary should be written once the business case is complete and it should be too long. It is best if could be covered within one page.
Mission statement of a Business Case is a concise statement of what the team/company intends to achieve by completing the project. It should be completed in a single statement if possible. It explains what is to be done, for whom, and why.
Objectives of the Project
Objectives of the project appear in the body of the report and in the project summary and it should be described clearly in one short statement for each without accompanying documentation. Objectives could be short term or long term and it should be clearly mentioned in the Business Case. If a short term objective of a project is to implement the in-house automated process then long term project could be opting for a standard and well-suited product available to fulfill the need.
Objectives explain the goal which will be achieved by completing the project? Objectives should be (S.M.A.R.T) i.e. Specific, Measurable, Achievable, Realistic, and Timely.). These define the results expected as a direct consequence of the project’s completion. Clearly, defined project objectives make the project saleable to the client or the investing entity.
Below are some examples of objectives:
- To save the time and increase revenue by automating the business processes.
- To get more customers by opting well-suited marketing strategy.
- To reduce the IT cost, opt for the new vendor.
- To improve the performance and error buying a new product.
The discussion following each objective clarifies the analysis or rationale for arriving at the objective. For example: As per the records, the current process is costing us 10 resources to handling and maintain the tasks each withdrawing $8000 per month as a salary. Automating the process will reduce the manpower intervention by 2 i.e. 8 less than the previous scenario and this would create an annual savings of $768,000 in handling and maintaining the current business process.
The problem statement should describe a straightforward explanation of the identified business problem or issue and it should discuss the business areas that the business case must address for successful implementation.
The first sentence of the problem statement should to concisely present the problem, issue or goal that the business case seeks to resolve. Properly assessed business problems explain why the problem needs to be addressed and it also provides the information as to whether the project should be undertaken at all.
The example of the first line in problem statement for our previous example could be: “ABC organization is interested in saving budget cost by implementing automated process in current business process.”
Below points could be considered while wiring a problem statement in Business Case.
- What is it?
- Why does it exist?
- Who is affected?
- What is the extent of the problem?
- What is the damage (liability) if the problem is not fixed?
Environmental Assessment (if applicable)
- Expert or firm providing assessment
- Result of assessment
- Environmental approval (Ministry of Environment)
Benefits from Correcting the Problem?
- Physical and environmental
- Financial: Added Returns
The technical analysis outlines the technical information used to make the decision and tells why the proposal represents the best or most cost-effective solution. It describes:
- What are the technical problems encountered in existing situation?
- What alternative solutions were considered?
- Why is this the best course of action to choose?
- Why this is the most cost-effective solution, or if not, why it was chosen?
- What innovative technologies are being used?
Project Plan Provides detailed timelines and timeframes for successful project implementation and spells out the terms that will form the basis of any contracts, including the jobs to be done, and milestones. It provides the ideal dates and worst case scenarios for plan implementation, as well as a more general time frame for business case plan implementation.
Business Case should outline the below points under Project Plan section:
- Key Activities with completion timeline (A Gantt Chart could be useful as it illustrates the timeframe for beginning and completing each task in the project.)
- Identified risk (if any)
- Deliverable along with key responsible consultants if known.
As a primary purpose of your Business Case, the financial plan shows how the project will be financed and how returns. It should explain in an introductory paragraph, why the funding is necessary for the project and what could be consequences if funding is not received. The financial plan should outline detailed budget, funding source, fund type i.e. cash or non-cash, cash flow statement and return on investment etc.
Possible solution and Proposed/Recommended solution:
The business case should include all possible solution to address the current business problem or to achieve the business goal. It should include the benefits of each approach, cost and time required, return on investment expected and risk involved in each listed solutions. This will support the proposed business solution provided these are realistic, and preferably supported by solid data and it should be based on a reasonable source, which you should cite if possible.
After you list all possible solution for the business problem, Business Case further explains the best-suited solution for the current business problem or the organization’s goal, after an evaluation and analysis of all relevant financial, marketing and business costs/considerations associated with project implementation.
The proposed solution should include detailed information about, how the proposed change/plan addresses and resolves the problem or organization’s goal including what are required in implementing the solution? What are the deliverables which should be implemented?
One can also include the information about meetings with respective departments and target audiences to support proposed solution.
Your chosen solution should be presented with supporting data and business case should highlight, why the chosen solution is the best. Alternatively, you could include a more detailed analysis in an appendix, including all the supporting data, or provide a later report with all the project details.
Appendices are pertinent documents that show support for or give validity to the project. They include:
- Important documents (assessments, etc.) showing the need
- Required approval copies
- Meeting minutes required supporting the Business Case.
Remember, A Strong and well prepared Business Case gives the confidence to the sponsoring organization that the management has thought about the entire project thoroughly and they will have the confident on the right decision that has been made. Funding organizations will be confident the project has been well planned, will provide the expected return and is in the best interests of the organization.
I hope you found this article useful. Do share your view on this subject and other important things which an effective Business Case should outline. I would be more than happy to see your comments on this post.
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