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What are the tell-tale signs of an effective business case?

13 February 2015   |   Risk and Benefits Management, Better Business Cases, Risk and Benefits Management

Chess King- Business Concept Series - Competition, Leadership, CAn effective business case is important because it justifies the viability of a proposed project or business undertaking; ensuring that it is the right investment, affordable, achievable, within the risk tolerances, and it offers value for money to shareholders and customers. A good business case provides the evidence to support high-level decision-making and also assures and informs the stakeholders of the responsible action that will be undertaken by the company.

Business cases are not only for large-scale investments, they are just as necessary for smaller projects, albeit scaled down.

The business case process should include a multi-faceted in-depth analysis of the financial and strategic implications surrounding a proposed project. After all, ambition, if not accompanied by diligent financial management and applied governance can lead to ruin. A thorough business case creation process combined with rigorous assessment will ensure that the best solution will be chosen.

The reality is that a bad business case usually leads to an unsupported project, a real pity when that project is a vital contributor to strategic objectives. Also, expensive resources are wasted when a business case has not been developed through a proper methodology with applied governance. A business case is not simply a bureaucratic necessity in order to get the approval on a project, it is a document that facilitates evidence-based decision-making so as to make a successful argument for investment.

Recent research has pinpointed key reasons why projects fail. 

  • Lack of clear link to the organisation’s key strategic priorities;
  • Lack of clear senior management ownership and leadership;
  • Lack of effective engagement with stakeholders;
  • Lack of skills and proven approach to project and risk management;
  • Project not broken down into manageable steps;
  • Evaluation of proposals linked to short term affordability rather than longer term value for money;
  • Lack of understanding of and contact with suppliers; and
  • Lack of effective integration between the client, supplier and supply chain.

It goes without saying that anyone who is serious about their business would want to address these causes of failure to ensure that they are able to consistently deliver successful projects. This is where the Five Case Model to Better Business Cases comes in; it effectively addresses every one of the reasons for failure mentioned above.

 The Five Case Model

Quite recently best practice has introduced us to a “Better Business Cases” framework for generating successful business cases. This Five Case Model addresses the key indicators or questions to ask of a successful business case. These are:

  1. Is there a compelling case for change?
  2. Does the recommended option optimise value?
  3. Is the potential outcome appealing to the market place?
  4. Is the spending proposal affordable?
  5. How will the proposal be delivered successfully?

These questions are expressed in the Better Business Cases Five Case Model which covers the five key elements of best practice business cases as depicted below.

Business Cases

 

The Five Case Model provides the framework and tools to allow effective decision-making when scoping and planning budget proposals in a robust way and can be used at strategic programming and individual project levels. You should always use it in proportion to the level at which it is being applied as well as the cost and risk associated with the investment. Make sure that the BBC approach is integrated into your business change life cycle, from the start all the way through to the post project realization of benefits.

A business case is much more than a component or dimension of project management; it is the documented rationale for the investment of taxpayers’ and shareholders’ funds, and should be the overarching information that supports senior management to make the right decisions.

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