Based on AXELOS PRINCE2® material. Material is reproduced under licence from AXELOS Limited. All rights reserved. PRINCE2® is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved. AXELOS® is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.
The Swirl logo™ is a trade mark of AXELOS Limited, used under the permission of AXELOS Limited. All rights reserved. Copyright 2014, Simplilearn, All rights reserved.
Lesson 4—Business Case Theme
● Define a Business Case theme
● Explain the PRINCE2® approach to Business Case theme
● Describe the development of a Business Case
Objectives
After completing this lesson, you will be able to:
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.[1]
After synthesising the need for Business Case theme, the main elements to be understood are:
● Desirable—means the cost/benefit/risk balance.
● Viable—implies that project can deliver the product.
● Achievable—means the products can deliver the benefits.
For composition of Business Case, please refer PRINCE2® Manual Appendix A.
Business Case—Introduction
The definition of Business Case is as follows:
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.[2]
The salient features of Business Case are:
● Business Case is continually updated with costs, timescales, risks and benefits.
● Outline Business Case is developed during Starting Up a Project process.
Outputs, Outcomes and Benefits of a Project
The outputs, outcomes and the benefits are considered while deciding the desirability of a project. Let us look at these terms individually:
A project’s output is any of the project’s specialist products whether tangible or intangible.
Example: New Enterprise Resource Planning (ERP) system for the HR department. Output
An outcome is the result of the change derived using the project’s outputs. Example: Faster application and approval of leaves.
Outcome
A benefit is the measurable improvement resulting from an outcome that is perceived as an advantage by one or more stakeholders.
Example: Employee productivity up by 5%, employee satisfaction levels up by 7.5% and revenue increased by 10% annually.
Figure 4.1 Relationship between outputs, outcomes and benefits. Copyright © AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
Relationship between Outputs, Outcomes and Benefits
Benefits Review Plan
The Senior User specifies the benefits and is accountable for the benefits realisation. The different features of Benefits Review Plan (BRP) are the following:
● Every Project should have a Benefits Review Plan or BRP.
● BRP is first created by the Project Manager in the initiation stage and submitted to the Project
Board for approval when seeking project authorisation.
● 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.
For composition of BRP, please refer PRINCE2® Manual Appendix A.
Business Case for Different Types of Projects
The nature of the project determines the objectives to verify the desirability of the project. Later, it is confirmed whether the project’s products have met the objectives.
● The various types of projects are compulsory, not-for-profit, evolving, customer/supplier and
multi-organisation project.
● Some of these projects may be measured principally on Return on Investment, however others like
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.
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 at each key decision point, such as end stage assessments, and confirmed throughout the period that the benefits accrue.[3]
Let us look at the terms develop, verify, maintain and confirm individually.
PRINCE2® Approach to Business Case (contd.)
Develop
Business Case should be first developed in the beginning of the project and maintained through the life of the project.
Verify
The Project Board needs to verify to make sure that project is desirable, viable and achievable as per the Business Case.
Confirm
An assessment to confirm whether the planned benefits have been or will be realised. Maintain
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.
In PRINCE2®, Executive is responsible for the Business Case. Development of the Business Case may be delegated to a Business Analyst or a Project Manager. The other features of Business Case are:
● The outline Business Case is derived from the project mandate and developed pre-project in the
Starting up a Project process.
● The detailed Business Case is derived from the outline Business Case, the Project Plan, which
provides inputs like costs and timescales and the Risk Register.
Development of 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. To drive the decision making, the Business Case should be reviewed by:
Verify and Maintain Business Case
Refers the Business Case while assessing impact of any change, issue or risks.
Project Manager
Approves the Outline Business Case. Reviews the Detailed Business Case as part of Benefits Review.
Corporate or programme management
May review the Outline Business Case during the Starting up a Project process to take a call on whether to initiate the project.
Content of Business Case
Business Case comprises:● An Executive summary
● Business options—Do nothing should always be the starting option
● Expected benefits—Quantification of benefits is necessary for setting up the benefits tolerances
● Expected dis-benefits—Negative outcome of carrying out a project
● Timeframes—What period the project cost will be incurred and when to expect benefits
● Costs—On-going operations and maintenance costs and their funding arrangements
● Investment appraisal—Includes the development, operations and maintenance costs
Roles and Responsibilities in Business Case Theme
The table lists the responsibilities of Corporate or programme management and Executive in Business Case theme.
Role Responsibilities
Corporate or programme management
● Provide the project mandate and defines any standards to which the Business Case needs to be developed.
● Hold the Senior User(s) to account for realising the post-project benefits enabled by the project’s products.
● Responsible for the Benefits Review Plan (post-project).
Executive ● Responsible for the Business Case for the duration of the project.
● Responsible for the Benefits Review Plan (for the duration of the project) unless being managed by corporate or programme management.
● Oversee the development of a viable Business Case, ensuring that the project is aligned with corporate strategies, and secure the funding for the project.
Text in box is from Managing Successful Projects with PRINCE2®. Copyright © AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
Roles and Responsibilities in Business Case Theme (contd.)
The table lists the responsibilities of Senior User(s) and Senior Supplier(s) in Business Case theme.
Role Responsibilities
Senior User(s) ● Responsible for specifying the benefits upon which the Business Case is approved. ● Ensure the desired outcome of the project is specified.
● Ensure that the project's products deliver the desired outcomes.
● Ensure that the expected benefits (derived from the project’s outcomes) are realized.
● Provides actual versus forecast benefits statement at the benefits reviews. Senior Supplier(s) ● Responsible for the supplier Business Case(s) (if they exist).
● Confirm that the products required can be delivered within the expected costs and are
viable.
Text in box is from Managing Successful Projects with PRINCE2®. Copyright © AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
Roles and Responsibilities in Business Case Theme (contd.)
The table lists the responsibilities of Project Manager in Business Case theme.
Role Responsibilities
Project Manager ● Prepare the Business Case on behalf of the Executive.
● Conduct impact analysis of any new or revised issues or risks that affect the project’s desirability, viability or achievability against the original basis for approving the project.
● Assess and update the Business Case at the end of each management stage.
● Assess and report on project performance at project closure.
Text in box is from Managing Successful Projects with PRINCE2®. Copyright © AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
Roles and Responsibilities in Business Case Theme (contd.)
The table lists the responsibilities of Project Assurance in Business Case theme.
Role Responsibilities
Project Assurance (business assurance responsibilities)
● Assist in the development of the Business Case.
● Verify and monitor the Business Case against external events and project progress. ● Ensure the project fits the overall programme or corporate strategy.
● Monitor project finance on behalf of the customer.
● Ensure the value-for-money solution is constantly reassessed.
● Monitor changes to the Project Plan to identify any impact on the needs of the business or
the Business Case.
● Review the impact assessment of potential changes on the Business Case and Project Plan. ● Verify and monitor the Benefits Review Plan for alignment to corporate or programme
management.
Project Support ● 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.
Text in box is from Managing Successful Projects with PRINCE2®. Copyright © AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
QUIZ
a. b. c. d.
How does the Business Case theme support the continued business justification principle?
1
Removes the need for a separate Business Case where a project is part of a programme
Mandates that even the simplest of projects should have a Business Case
Ensures a new Business Case is created at the end of each stage to confirm the viability of the next stage
Allows projects not delivering direct benefits to proceed without a Business Case
a. b. c. d. QUIZ
Removes the need for a separate Business Case where a project is part of a programme Mandates that even the simplest of projects should have a Business Case
Ensures a new Business Case is created at the end of each stage to confirm the viability of the next stage
Allows projects not delivering direct benefits to proceed without a Business Case How does the Business Case theme support the continued business justification principle?
Answer: c.
Explanation: The Business Case theme supports the continued business justification
principle by a mandate that even the simplest of projects should have a Business Case. 1
QUIZ a. b. c. d. 2 Project Plan Checkpoint Reports Stage Plan Business Case
In PRINCE2®, the desirability of the project is determined by analysing which of the following?
a. b. c. d. QUIZ Project Plan Checkpoint Reports Stage Plan Business Case Answer: a.
Explanation: In PRINCE2®, the desirability of the project is determined by analysing the
Business Case. 2
In PRINCE2®, the desirability of the project is determined by analysing which of the following?
QUIZ a. b. c. d. 3 Senior Supplier Project Assurance Project Support Senior User
To whom among the following can the Project Board assign the work of assisting the development of Business Case?
a. b. c. d. QUIZ Senior Supplier Project Assurance Project Support Senior User Answer: c.
Explanation: The Project Board can consider using Project Assurance to assist the
development of the Business Case. 3
To whom among the following can the Project Board assign the work of assisting the development of Business Case?
QUIZ a. b. c. d. 4 Do something Do the minimum Do everything Do nothing
a. b. c. d. QUIZ Do something Do the minimum Do everything Do nothing Answer: d.
Explanation: Do everything is not a business option in PRINCE2®. The business options as
per PRINCE2® are: do nothing: always the starting option, do the minimum, and do something.
QUIZ a. b. c. d. 5 Project Assurance Senior Supplier Team Manager Project Support
Who among the following can the Executive use to verify the viability of the Business Case?
a. b. c. d. QUIZ Project Assurance Senior Supplier Team Manager Project Support Answer: b.
Explanation: The Project Board can consider using Project Assurance to assist with the
development of the Business Case. So an Executive can also use Project Assurance to verify the viability of the Business Case.
5
Who among the following can the Executive use to verify the viability of the Business Case?
QUIZ
a. b. c. d.
Who is responsible for ensuring that benefits reviews are planned and executed? 6
Executive Senior Supplier Project Manager Team Manager
a. b. c. d. QUIZ Executive Senior Supplier Project Manager Team Manager
Who is responsible for ensuring that benefits reviews are planned and executed?
Answer: b.
Explanation: By default, the Executive is responsible for ensuring that benefits reviews are
planned and executed. 6
QUIZ
a. b. c. d.
According to PRINCE2®, which is the starting business option that provides basis for quantifying other options?
7
Do something Do the minimum Do everything Do nothing
a. b. c. d. QUIZ Do something Do the minimum Do everything Do nothing Answer: a.
Explanation: Do nothing should always be the starting option to act as the basis for
quantifying the other options. 7
According to PRINCE2®, which is the starting business option that provides basis for quantifying other options?
QUIZ a. b. c. d. 8 Project Brief Project mandate Project Plan End Stage Report
Which of the following would provide information that can be documented under the reasons section of the Business Case?
a. b. c. d. QUIZ Project Brief Project mandate Project Plan End Stage Report
Answer: c.
Explanation: Project mandate covers the required reasons for the project.
8
Which of the following would provide information that can be documented under the reasons section of the Business Case?
QUIZ
a. b. c. d.
Who approves or disapproves the outline Business Case that is developed in the starting phase a project process?
9
Executive
Project Manager Senior User Project Board
a. b. c. d. QUIZ Executive Project Manager Senior User Project Board
Who approves or disapproves the outline Business Case that is developed in the starting phase a project process?
Answer: a.
Explanation: Project Board approves or disapproves the outline Business Case. Based on the
approval, Initiating a Project process gets kicked off. 9
QUIZ
a. b. c. d.
Who is responsible for reporting the benefits that are measurable during the lifecycle of a project? 10 Senior User Senior Supplier Team Manager Project Manager
a. b. c. d. QUIZ Senior User Senior Supplier Team Manager Project Manager
Who is responsible for reporting the benefits that are measurable during the lifecycle of a project?
Answer: a.
Explanation: The benefits that can be measured during the life of a project should be
reported by the Project Manager in the end stage report. 10
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
Thank You
Based on AXELOS PRINCE2® material. Material is reproduced under licence from AXELOS Limited. All rights reserved. PRINCE2® is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved. AXELOS® is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.
[1] Based on Managing Successful Projects with PRINCE2®, by AXELOS. Business Case, Purpose. [2] Based on Managing Successful Projects with PRINCE2®, by AXELOS. Business Case, Business Case defined.
[3] Based on Managing Successful Projects with PRINCE2®, by AXELOS. Business Case, The PRINCE2 approach to the Business Case.