PRINCE2 Business Case Requirements
Developing the business justification
In PRINCE2, the executive is accountable for ensuring that the business justification is produced and approved, however development of the business justification may be delegated, to the project manager for example.
If the project is part of a program, then an approved business justification may be provided as part of the project brief. Whoever is given the task of developing the business justification, it is important to ensure that they have the appropriate business skills required – cash flow forecast, profit and loss account, and the balance sheet for example.
An initial version of the business justification should be derived from the project mandate as part of the PRINCE2 Starting Up a Project process if it is not provided by some other pre-project processes.
Typically, this will be documented in a formal Business Case, although some organizations may use other documents, such as business plans. The initial business justification must be approved by the Project Board in the directing a project process to initiate the project.
In most cases the project costs, timescales, products and risks will not be sufficiently understood to provide and robust justification of the project and this initial version will need further development and refinement as the project progresses.
The initial version of the business justification is referred to as the ‘outline Business Case’.
Typically, a more detailed Business Case will be developed from the outline Business Case during the Initiating a Project process periods it might be that the Business Case will undergo further refinement across the management stages as project costs, timescale, products and risks are further understood and refined.
The term ‘detailed Business Case’ is used to describe this Business Case.
The business justification for a project should include not only the costs of developing the products produced by the project, but also any changes to operational costs post project. Most organizations have policies that define how these costs should be accounted for in business justifications.
PRINCE2 Verifying and maintaining the business justification
The continued business justification drives all decision-making by ensuring that the business objectives and benefits being sought, can be realized.
The business justification must be reviewed and verified:
- At the end of the Starting Up a Project process by the Project Board, to authorize project initiation based on a reasonable justification
- At the end of the Initiating a Project process by the Project Board, to authorize the project
- As part of any impact assessment by the project manager of any new or revised issues or risks
- In tandem with an exception plan by the Project Board, to authorize the revised management stage and the continuation of the project
- At the end of each management stage by the project manager to determine whether any of the costs, timescales, risks or benefits need to be updated
- At the end of each management stage by the Project Board, to assess the projects performance against its requirements and the likelihood that the outcomes will provide the expected benefits
- As part of the benefits reviews (possibly by corporate, programme management or the customer), to determine the success of the project outcomes in realizing their benefits
It is the responsibility of executive to assure the project stakeholders that the project remains desirable, viable and achievable at all times.
PRINCE2 – Ensuring and confirming that benefits are realised
Projects deliver outputs which results in outcomes in the business, which in turn, provide benefits to the organization. For benefits to be realized, the outputs should be achieved, which means the outputs from the project must be used in the way intended.
Often the products from a project are never fully utilized, organizational changes were never fully implemented, and IT systems never fully used. This can thwart the linkage between products, outcomes, and realized benefits.
There are many reasons why they should occur, including:
The scope of the project explicitly excludes benefits realization. This will, may be the case where the project is part of a larger programme and the projects only delivers some of the products required to achieve the outcomes from the program or project
Failure of the project team to fully understand everything that needs to be done to help the organization use and achieve benefits from the projects products. Examples here are training and support.
Commitment to the changes introduced by the project is either overtaken by more pressing business as usual priorities, or simply just fades
Parts of the organization were never fully committed to the changes (were the operational managers measured against implementing new systems?)
Benefits are seldom realized unless, along with business changes, they are proactively managed during the life of the project – even if the outcomes and benefit realization are not within project scope.
If this is not understood by the project management team, it is unlikely to be able to develop the right outputs, and able to build and sustain the commitment and confidence to the changes during the project’s lifecycle.
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