PRINCE2 Foundation and Practitioner - Business Case Theme Tutorial

4.1 Business Case Theme

Hello and welcome to PRINCE2 Foundation Certification Course offered by Simplilearn. This lesson is about Business Case, which is one of the seven themes of PRINCE2 methodology. Before beginning this lesson it is advisable that you go through the lesson on ‘Introduction to Processes”. Let us discuss the objectives of this lesson in the next screen.

4.2 Objectives

After completing this lesson, you will be able to: Define a Business Case theme Explain the PRINCE2® approach to Business Case theme Describe the development of a Business Case Let us look at the purpose of Business Case in the following screen.

4.3 Purpose of Business Case Theme

The purpose of the Business Case theme is to establish mechanisms to judge whether the project is (and remains) desirable, viable and achievable as a means to support decision making in its (continued) investment. In other words, the aim of the Business Case is to ensure that working on the project is justified, spending money on the project is justified and resulting output of the project will be worth the investment and associated risks. At any point, if it is realised that resulting output of the project is not beneficial enough and not as per the plan, project work should be stopped. That is the reason why in the definition, it states Project is and remains desirable, viable and achievable. Now, let’s look at the meaning of desirable, viable and achievable. Desirable means that cost, benefits and risk associated with the project balance out. In other words, one does not end up spending too much of money for little benefit and vice versa. Similarly, the risk associated with the project is worth the benefits that the project intends to provide. Viable means that the project is practical. A project is practical only if the output that the project intends to deliver can actually be delivered. In other words, project is realistic. Achievable means the products can deliver the benefits. Every project is started with some intended benefits and the current project should deliver those benefits. In a Business Case Senior User(s) is responsible for specifying the benefits and subsequently realising it, while executive is responsible for ensuring those benefits represent value for money. In the next screen, let us find out what a Business Case is.

4.4 Business Case—Introduction

The Business Case presents the optimum mix of information used to judge whether the project is (and remains) desirable, viable and achievable and therefore worthwhile investing in. The project board and stakeholders must always have confidence that the project remains viable. In PRINCE2, the Business Case provides the vital test of viability of the project. It provides the answer to the question: is the investment in this project still worthwhile? Since the viability question is on-going, the Business Case is not static. It should not be used only to gain initial funding for a project, but should be actively maintained throughout the life of the project and be continually updated with current information on costs, timescales, risks and benefits. Outlined Business Case is developed during Starting up a Project process, while detailed Business Case is developed during Initiating a Project process. When making investment decisions, it is important to ascertain what benefits can be gained when, with what degree of risk and from what level of investment. Projects should be evaluated on how well they will contribute to the corporate objectives. Such analysis enables one project to be compared with another so that the organisation can choose to invest in the best set of projects. Let us discuss the output, outcomes and benefits of the project in the next screen.

4.5 Outputs, Outcomes and Benefits of a Project

We spoke about output and benefits of the project in the previous screen. Let us look at these terms individually. A project’s output is any of the project’s specialist products whether tangible or intangible. If the aim of the project is to develop a new Sales Information System that captures all sales-related data of a company’s customer then Sales Information System is the output of the project. An outcome is the result of the change derived using the project’s outputs. By implementing the Sales Information System, the company executives are able to capture sales order more quickly and accurately. That is the outcome of this project. A benefit is the measurable improvement resulting from an outcome that is perceived as an advantage by one or more stakeholders. In this case, example of benefits would be costs associated with capturing sales order of customers reduced by 10 per cent possibly because, there is no double entry of same customer data in different systems or by different executives. Volume of sales order increased by 15 per cent, as executives are getting more time to focus on customers, and revenue increased by 10 per cent annually due to of better sales. For example, a new ERP system was installed for the HR department, which is an output. This installation led to faster application and approval of leaves, which is an outcome. The benefits of this installation were employee productivity increased by 5 per cent, employee satisfaction levels increased by 7.5 per cent and revenue increased by 10 per cent annually. In the next screen, we will discuss the relationship between outputs, outcomes and benefits.

4.6 Relationship between Outputs, Outcomes and Benefits

In the image on the screen, the relationship between outputs, outcomes and benefits have been represented in a graphical form. Dis-benefits is opposite of benefits. It can be considered as a negative impact of the project. Let’s understand what Benefits Review Plan is in the next screen.

4.7 Benefits Review Plan

The Executive is responsible for the Business Case, however it is the accountability of the Senior User to specify the benefits and ensure that project benefits are realised. The Senior User represents the user community, who are expected to use the benefits of the project. Senior User is a part of the Project Board. Every Project should have a Benefits Review Plan or BRP. BRP defines how and when a measurement of the achievement of the project’s benefits can be made. If the project is being managed within a programme, this information may be created and maintained at the programme level. The Benefits Review Plan is first created by the Project Manager in the Initiation Stage and is submitted to the Project Board for approval when seeking project authorisation. The benefits review plan is developed by the project manager, however by default the responsibilities lies with Executive. BRP defines the scope, timing and responsibility of reviews depending on the expected benefits. BRP is updated at the end of each stage by including the actual benefits achieved (if any). BRP is different from project plan and stage plans In the next screen, we will discuss the Business Case for different types of projects.

4.8 Business Case for Different Types of Projects

The nature of the project will determine the objectives to verify the desirability of the project and later to confirm the project’s products have met those objectives. If a private company takes up a commercial project, the benefits are always measured in financial term. This might not be the case of a project undertaken by a government agency. The various types of projects are compulsory (to address compliance issues), not-for-profit project (used at British Council’s Centre of Excellence), evolving, customer/supplier (Accenture helped GlaxoSmithKline realise 1.5 billion GBP in 18 months) and multi-organisation project. Some of these projects may be measured principally on ‘return on investment’, however others like the not-for-profit projects may be measured on other non-financial benefits. Regardless of the type of measure, it’s important to ensure that project is and remains desirable, viable and achievable.

4.9 PRINCE2® Approach to the Business Case

Continued business justification is ensured by assuring the justification of the project when starting and also re-verifying this at the end of every stage. PRINCE2 advocates that project be managed in stages. In PRINCE2®, the Business Case is developed at the beginning of the project and maintained throughout the life of the project, being formally verified by the project board and confirmed throughout the period that the benefits accrue. We will discuss some of the key terms of this definition in the next screen.

4.10 PRINCE2® Approach to the Business Case (contd.)

Business case should be first developed in the beginning of the project and maintained through the life of the project. At the end of each stage of the project, the Project Board needs to verify to make sure that project is desirable, viable and achievable as per the Business Case. At the end of each stage, the Project Manager needs to update Business Case with actual costs and timescale data of current stage and provide the forecast of the costs and timescales of the upcoming stage. Finally, an assessment of whether the planned benefits have been or will be realised is made. Important point to note here is that, Confirming benefits may take place post project, i.e. all or most benefits may be realised post project. Let us find out how to develop the Business Case in the following screen.

4.11 Development of Business Case

In PRINCE2®, the executive is responsible for the Business Case. Executive is identified by the corporate or programme management as a person with overall responsibility of the project. Executive can also be considered as project owner. The responsibility of developing the Business Case is with Executive, which does not mean Executive writes the Business Case. Executive may delegate the development of the Business Case to a business analyst or to the project manager or take assistance from project assurance. As seen in the image on the screen, the development of the Business Case is a two-stage process. The outline Business Case is derived from project mandate and developed pre-project in “starting up a project” process. Every project requires a trigger and that trigger is called Project Mandate in PRINCE2 methodology. Based on this trigger, some quick initial work is done to check, whether it’s worthwhile to even Initiate the project. This is called Pre-project. The outline Business Case is developed at this stage. Approval on the Outline Business Case is required by the Project Board to initiate the project. The detailed Business Case is derived from the Outline Business Case, the Project Plan, which provides inputs like costs, timescales and products and the Risk Register. The process of developing the Business Case is iterative. In the following screen we will discuss verifying and maintaining the Business Case.

4.12 Verify and Maintain Business Case

It is the responsibility of the executive to assure the project’s stakeholders that the project remains desirable, viable and achievable at all times. The corporate or programme management Approves the Outline Business Case. Reviews the Detailed Business Case as part of Benefits Review. The Project Board may review the Outline Business Case during the Starting up a Project process to take a call on whether to initiate the project. At the end of “Initiating a Project” process, when the Detailed Business Case is available, project board takes the call on whether to authorise work on this project. There are some other cases also, for example, in case of Exception, Business case needs to be reviewed. Business case is also referred by the Project Manager while assessing impact of any change, issue or risks. It’s the Project Manager who updates the Business Case, with actual cost, time and benefits data at the end of each stage. In the next screen we will discuss the content of a Business Case.

4.13 Content of Business Case

The Business Case should explain the reason the project is required. The reasons are likely to be defined in the project mandate. It should contain an executive summary. The Business Case should also include details on which business option is to be selected in this project, out of three options concerning any investment. In any business concerning investment, Do nothing should always be the starting option, which acts as the basis for quantifying the other options. The analysis for each option provides the project board and the project stakeholders with sufficient information to judge which option presents the best value for the organisation. The Business Case should also include the expected benefits and dis-benefits, time and cost, investment appraisals and major risks associated with the project. The Business Case should list each benefit that it claimed would be achieved by the project’s outcome in quantifiable terms. The quantification of benefits is necessary for setting up the benefits tolerances. For instance, in our sales information system example, the expected benefit could be a 10-15 per cent increase in sale. The quantification also ensures that the benefits can be measured and can be proven. The benefits can be financial and non-financial. There could be some negative outcome of carrying out a project. For example, when the organisation decides to implement a new sales information system, the staff needs to undergo two days extensive training and hence there will be a delay in activities that they were supposed to do on those training days. Such negative outcomes are documented under Expected dis-benefits section in the Business Case document. The Business Case includes the timeframes. Corporate and/or program management is interested in knowing, over what period the project cost will be incurred and when the organisation can expect to accrue benefits. The Business Case also includes the earliest/latest feasible start date for the project and the earliest/latest feasible completion date. It should summarise the costs derived from the Project Plan together with the assumptions upon which they are based. The costs should also include details of the on-going operations and maintenance costs and their funding arrangements. Next, it should document the major risks foreseen in the project. Another important section is the Investment Appraisal which includes the development, operations and maintenance costs against the value of the benefits over time. In the following screen, we will look at the different responsibilities in a Business Case.

4.14 Roles and Responsibilities in Business Case Theme

The table on the screen lists the responsibilities of different roles in Business Case. The Corporate or programme management provides the project mandate and it should also define the standards to which the Business Case needs to be developed. The executive is responsible for the Business Case during the project. The Senior Users are responsible for specifying the benefits upon which the Business Case is approved. The corporate is also responsible for the post project benefits Review Plan. Senior supplier confirms that the products required can be delivered within the expected costs and are viable. Executive is responsible for the Business Case for the duration of the project. Another responsibility of Executive is the Benefits Review Plan (for the duration of the project) unless it is being managed by corporate or programme management. Executive also oversees the development of a viable Business Case, ensuring that the project is aligned with corporate strategies, and secure the funding for the project. The Senior User(s) is responsible for specifying the benefits upon which the Business Case is approved. Senior User(s) ensures the desired outcome of the project is specified, the project produces products which deliver the desired outcomes and the expected benefits (derived from the project’s outcomes) are realised. Senior User(s) provides actual versus forecast benefits statement at the benefits reviews. Senior Supplier(s) is responsible for the supplier Business Case(s) (if they exist) and confirms that the products required can be delivered within the expected costs and are viable. The project manager prepares the Business Case on behalf of executive and conducts impact analysis of any new or revised issues or risks that affect the project’s desirability, viability or achievability against the original for approving the project. Project manager also assesses and updates the Business Case at the end of each management stage and assesses and reports on project performance at project closure. The role of Project Assurance has business assurance responsibilities. It assists in the development of the Business Case and verifies and monitors the Business Case against external events and project progress. Project Assurance also ensures the project fits with overall programme or corporate strategy and monitors project finance on behalf of the customer. It ensures the value-for-money solution is constantly reassessed and monitors changes to the Project Plan to identify any impact on the needs of the business or the Business Case. Finally, Project Assurance reviews the impact assessment of potential changes on the Business Case and Project Plan and verifies and monitors the Benefits Review Plan for alignment to corporate or programme management. The Business Case should have a baseline and therefore be under configuration management. Project Support should advise the Project Manager of any proposed or actual changes to products that affect the Business Case. Let us move on to the quiz questions to check your understanding of the concepts covered in this lesson.

4.16 Summary

Here is a quick recap of what we have learnt in this lesson: The Business Case presents the optimum mix of information used to judge whether the project is (and remains) desirable, viable and achievable and therefore worthwhile investing in The Senior User specifies the benefits and is accountable for the benefits realisation Development of the Business Case may be delegated to a Business Analyst or a Project Manager It is the responsibility of the Executive to assure the project’s stakeholders that the project remains desirable, viable and achievable at all times

4.17 Thank you

In the next lesson, we will discuss the second theme organisation.

Find our PRINCE2® Foundation and Practitioner Online Classroom training classes in top cities:


Name Date Place
PRINCE2® Foundation and Practitioner 23 Nov -1 Dec 2018, Weekdays batch Your City View Details
PRINCE2® Foundation and Practitioner 7 Dec -15 Dec 2018, Weekdays batch Your City View Details
PRINCE2® Foundation and Practitioner 21 Dec -5 Jan 2018, Weekdays batch Your City View Details
  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

Request more information

For individuals
For business
Name*
Email*
Phone Number*
Your Message (Optional)
We are looking into your query.
Our consultants will get in touch with you soon.

A Simplilearn representative will get back to you in one business day.

First Name*
Last Name*
Email*
Phone Number*
Company*
Job Title*