To get your project approved, you often must first present a business case to the appropriate stakeholders. The business case provides the business rationale, normally in financial terms, of why the project should be done. But don’t let your business case be a dissertation on market statistics or a derivation of the net present value formula. Instead, think of your business case as a story.
Let’s look at the plot, the setting and the characters for the story. The plot is an adventure story. It starts with some business problem to be solved or opportunity to be realized (project goal). This problem or opportunity, when solved, will lead to a happy ending (business benefit). To project team will need to overcome some challenges and hurdles along the way (risks). The setting for the story is the business conditions (assumptions) and the project management methodology being used (constraints). The characters for the story are the project team, the business management, and if applicable, key customers (all are stakeholders).
With the story as a backdrop, build your business case using this four step process.
Step 1: Identify the business need or opportunity.
This step is usually done by the business unit who is the primary beneficiary from the project. Typically the need or opportunity is either implementing an element of the business strategy or is driven by a problem or issue within the business.
Step 2: Develop option(s) to meet the need.
This step is usually done by the organization or organizations that will conduct the majority of the project work. For instance on a new product development project, step 1 may have been completed by marketing or product management, but step 2 will be completed by research and development or engineering. At least one high level option is identified. Multiple options may be identified. If so, steps 3 and 4 will be done for each case and presented to the stakeholders along with a recommendation.
Step 3: Estimate relevant cash flows.
Estimate all the project costs or expenses for each option. Estimate the types of financial benefits for each option, such as cost savings or new sales. Normally detailed project planning has not been done yet, so these are just rough estimates – one or two significant digits.
Step 4: Determine ROI and make a recommendation
Use the organization’s preferred Return on Investment (ROI) technique, such as breakeven, payback, NPV or IRR. Your spreadsheet has formulas for calculating these. Based upon the ROI calculation, make a recommendation as to whether project should be funded or not. If there were multiple options, recommend your preferred option.
So let your business case tell your story – but be sure it is an adventure story, not a mystery, or worse yet a horror story.