PRINCE2 Practitioner Business Case Masterclass
September 30, 2020
By Dave Litten
PRINCE2 Practitioner Business Case Masterclass
Answering Business Case questions correctly in your exam is crucial since the Business Case plays a central role in understanding and practicing the PRINCE2 Method.
PRINCE2 Practitioner exam candidates often fumble on Business Case questions due to a fundamental misunderstanding of how the Business Case is used to ensure that the project remains viable, desirable, and achievable.
The term “Business Case” suggests that all PRINCE2 projects must operate in a business environment. But this does not have to be the case. What about projects such as charities, the military, or research and development where the focus is not immediate payback.
And what about my own field, developing training projects. Such a project is there to develop job-related skills, but how do you measure a project like this and determine whether it has been successful?
The answer is by focusing on various success metrics, such as the number of people attending a specific training course, and then comparing which projects would achieve this aim for the best value for money.
Suppose an online course that costs $100,000 gets 100 people to sign up. This is not as good value as a $10,000 seminar that signs up 1000 members. the key here is to focus on what level of investment can achieve certain quantifiable capabilities.
What is the PRINCE2 Business Case theme?
The purpose of the Business Case theme is to set up a series of mechanisms to ensure that the project remains desirable, viable, and achievable. Here is their definition:
A desirable project is one where the positives that a project will bring to an organisation, such as increased sales or decreased operating costs, outweigh the costs and risks of carrying it out
A viable project is one where, given any technical, time, and/or resource constraints, it is possible to deliver the project’s products
An achievable project is one where the end results are that people can use the products as intended and achieve the predicted benefits
The Business Case theme helps evaluate whether a business justification exists for carrying out the project. It ensures that the desirability, viability, and achievability of the project are considered in all the major decisions made about the project.
As an example, here, whether the project should even start in the first place, should it go on to the next major stage, or whether it should finish.
It also ensures that when the project management team is making decisions on proposed changes or how to deal with risks, the impact on the Business Case will be taken into consideration.
PRINCE2 Outputs, Outcomes, and Benefits
Outputs are the things the project produces. Sometimes, outputs are not tangible things you can see and touch, for example, a process.
There is another type of product called management product, and these are the documents that are created to help manage the project.
The aim of projects is not just to produce products, you want to get some benefit for your organization out of these outputs. It is all too easy to focus on the outputs of the project and forget to measure that the organization benefited in the way you had predicted.
This is mainly because benefits usually happen sometime after the project has finished, and this may be months even years before you will know whether the benefits have been realized.
Before you get to benefits, PRINCE2 introduces an interim step called outcomes.
An outcome is the result of the change derived from using the project’s products.
A benefit is a measurable improvement that results from the outcome.
Sometimes, a project might have negative consequences which PRINCE2 calls dis-benefits.
Do not confuse these with risks as there is uncertainty over whether a risk will occur, whereas a disbenefit is a definite consequence of the project.
Using the PRINCE2 Business Case Theme
The following four main groups of Business Case theme-related activities are carried out before the project, during the project, and after the project:
Develop
The Business Case document, or more correctly, the management product, is created in the develop activity. Think of it as containing a prediction of the benefits the project will bring and details of the costs, time, and risks of the project.
Verify
At various times, the Business Case is reviewed to see if the project is still A worthwhile initiative. In the verify activity, the project team regularly reviews the predicted benefits to see if they still outweigh the estimated costs, time, and risks that the project needs to take on.
Maintain
As the project progresses, things will change. Costs might rise, new competitors might enter the marketplace, or work might overrun. All these changes might have an impact on the Business Case, so the Business Case needs to be regularly updated in the maintain activity.
Confirm
The purpose of the confirmed activity is to determine whether the benefits predicted were achieved. Confirming benefits usually takes place post project. however, this will not be the case when using methodologies such as agile to tailor the PRINCE2 Method.
In such situations, there are highly likely to be benefits that are realized during the life of the project.
Even non-agile projects may realize benefits during the life of the project as certain products are transferred to the operational areas of the customers or users.
PRINCE2 Business Case development
The Business Case is developed both before the project starts and during the initiation stage.
Before the project starts, corporate, programme management, or the customer creates a project mandate, which contains the reason for the project. Remember, that the project mandates can be either high level or detailed.
Whatever form it takes, the mandate should at least have some valid reasons for the project.
Once the project mandate has been created, the starting up a project process begins. This is a pre-project process with a set of activities focused on determining whether the project idea is worthwhile and viable.
The executive role within the project board (the main decision-maker and the representative of the business perspective on the project), is accountable for creating an outline Business Case based on the information in the project mandate.
The executive may delegate the preparatory work to someone else, such as the project manager, but they are still accountable for ensuring this work is completed properly.
The next step occurs in the initiation stage. The initiating a project process is used to manage this stage where the project manager creates the project plan.
The project manager takes the estimates for time, cost, and potential risks from the project plan and uses this information to refine the Business Case.
At this point, it becomes the initial Business Case.
The project team does not have to create a separate Business Case document.
For small or less formal projects, they may decide to just include a few lines of text in another document or a set of slides in a presentation to explain the business justification for the project.
Whichever format the business justification takes, it must clearly explain why the project is desirable, achievable, and viable.
Maintaining the PRINCE2 Business Case
As the project progresses, it is likely that the information in the Business Case will become outdated. Costs will rise, new risks will be identified, and the estimates for the project’s benefits will change.
It may be the external forces are at play here, such as the general market changing. In such circumstances, the Business Case and its projected time scales costs and benefits may need to be updated to reflect this new reality.
So, it is important to regularly update the Business Case. The project manager does this at the end of each management delivery stage by using the managing a stage boundary process.
This is the maintain step of the Business Case development path that I mentioned earlier.
There is one other situation when the project manager might maintain the Business Case, and this occurs when the project is in exception because tolerances are forecast to be breached.
In such situations, the project board might ask the project manager to create an exception plan to show how the project will recover after this forecast breach in stage or project tolerances.
The exception plan is also created in the managing a stage boundary process, and once the plan has been created, the project manager will update the Business Case with any new information.
Verifying the PRINCE2 Business Case
At the end of each stage (both initiation and delivery), the project manager must go to the project board (who are the main decision-making body of the project) and ask for authorization to continue to the next stage.
The Business Case is one of the main things that the project board considers when giving the authorization to move forward.
They will want to see that the Business Case is up to date and that it represents a valid business argument for continuing with the project.
Throughout the project, the project manager will be regularly reviewing the issue and risk situation. When a new risk or issue is discovered, the project manager will review how it will affect the project objectives, including the Business Case.
For an issue, this is referred to as carrying out an impact analysis, whereas for risk, this is called a risk assessment. In both cases, the Business Case will be reviewed to verify that there is still a valid business argument for proceeding with the project.
Confirming the PRINCE2 Business Case benefits
The confirming the benefits activities look to see if the benefits were achieved. As I have said, most benefits will become apparent after the project has completed.
The benefits management approach is used to plan the review of benefits.
This contains a series of activities necessary to see if the project’s benefits have occurred, along with who is responsible for those activities and when they will occur.
Most of these activities will be planned for after the project.
The project manager creates the benefits management approach during the initiation stage, it is then updated with any relevant new information at the end of each management delivery stage.
The Business Case is then updated at the end of the project as the last management stage ends, to ensure all the post-project reviews of benefits are included.
The PRINCE2 Senior User role
The senior user has a leading role in confirming the benefits.
The senior user has two important responsibilities that are connected to the Business Case theme, first, to forecast the benefits from the project, and second, to be accountable that the project’s products are used and that the benefits actually happen.
In other words, to confirm the benefits
Remember that the senior user is a role within the project board, the main decision-making body. Several people may be carrying out senior user roles and they will all be representing some form of use of the project’s products.
Confirming Benefits
Finally, in relation to confirming the benefits, two other roles are important.
The executive is responsible for managing benefit reviews during the project. Corporate, programme management, or the customer is responsible for managing post-project benefit reviews.
Another aspect of confirming the benefits is making sure the products from the project are used in the way that was envisioned
There are many examples of projects that create great products, but for a variety of reasons no one uses them post-project, so the benefits are never achieved.
This is quite a common scenario.
Organizations may underestimate how difficult it can be to change to a new way of working and not provide enough support or training to staff post-project, or not all of the organization and/or Senior management is totally bought into the change.
To attempt to mitigate this problem, PRINCE2 recommends that the project team plan management actions in the benefits management approach to ensure the products will be used.
As a project manager, it is therefore important to ensure that the project personnel and some senior management’s job description is amended and that they were rated on their adoption of the new project approach as part of the company’s appraisal system.
These management actions should be included in the project’s benefits management approach. Quite often these actions will take place after the project has finished, as this is often the time when a project’s product is used.
Corporate, programme management, or the customer is accountable for ensuring these post-project management actions take place.
PRINCE2 Business Case – Practitioner exam insights
Memorize the following:
- A project’s output is any of the project specialist products that are handed over to a user or users
- An outcome is the result of the change derived from using the project’s outputs. It is something you that can be done because of the project’s outputs
- A benefit is a measurable improvement resulting from an outcome that is perceived as an advantage by one or more stakeholders.
- A dis-benefit is an outcome perceived as negative by one or more stakeholder. Do not confuse the sections within the PRINCE2 Business Case, the terms reasons and benefits.
- Business Reasons are historical – they are the root cause triggers that caused the project to be started in the first place. They normally address problem situations such as missing opportunities for new customers or falling sales figures.
- Business Benefits. By way of contrast, the benefits are the future. As mentioned above these will provide a measurable improvement derived from the use of the project’s products.
Although the definition of an output is a product, sometimes it is not a product in the conventional sense (such as a computer or a car) as an example, here, a decision can be a product.
The best way to think about outputs is that they are the result of a series of tasks or activities.
An example here could be the project management team discussing a number of potential approaches to a project (these discussions are activities), and the result of the discussions is a decision on which option to pursue (the decision is a product or an output).
Don’t confuse disbenefits with risks. Risk can be potentially bad things that result from the project, whereas disbenefits are actual consequences that will definitely occur.
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