The following list may help you if you are not clear on the different types of project justification:
Benefits. Although not listed in the PRINCE2 Manual among the other types of justification, most projects are benefit-driven because it is covered in the main Manual text.
Compulsory project. This is the compliance type of project, where the project must be run because of instruction or perhaps because it is a legal requirement.
Not for profit. This term is strange because it usually refers to organizations such as charities, where even though the organization does not make a profit, the project must show clear justification and, usually, benefits.
However, it is possible that an organization has to do something such as a building maintenance project that does not show business benefits, so the project is a “not for profit”.
Evolving project. This is a project, such as in research, where people believe that the project will deliver benefits or may do, but they still need to learn how much benefit or when.
Customer/supplier project. This could not be very clear because even a customer/supplier project has to show some justification, such as benefits. Why else do it?
Costs can indeed be affected, such as a supplier of room to work for free in exchange for gaining experience in running a type of project, but that is more a matter of cost-sharing than a type of business case.
Multi-organization project. This is also strange because the IRR should still be some justification for running a project, even if several agencies are sharing it.
A multi-organization project will, however, have an aspect of the business case format: it may be segmented, with each partner organization having benefits in its area of interest.
Recognizing a Business Case benefit when you see it
It is vitally important that you understand what a benefit is and what is not, so as a quick test, answer whether you think the following techniques samples are a benefit or not; I give the answers at the end:
- The project will deliver a fully automated, self-levelling overhead cam follower.
- The new Computer System will go a lot faster than the old one.
- The saving in staff time of the new business procedure to be delivered by the project is expected to be £350,000 per year.
- The project involves staff training, and using the organization’s own resources staff to do this training will be £9,600 cheaper than buying it from a specialist outside the training company
- The new display, installed by the project in the call centre, will allow operators to see how long the next caller has been in the queue waiting for the call to be answered.
- There will be some disruption to the production line war machines are replaced as part of this upgrade project. Over the project’s life, the downtime for replacement and testing will result in an estimated reduction loss of 14,200 units worth £645,000.
- The product improvements delivered by the project are expected to lead to £870,000 per year in increased sales. This estimate is based on the market research in the consultant’s report to the senior management team last March.
- Customers visiting the company will have a much better first impression of the organization after the project to modernize to reception and waiting area.
- The new Computer System will have a fully integrated database.
- The managing director has instructed that this project be carried out after a significant customer personally complained to the managing director, expressing strong dissatisfaction.
How did you do? Here are the correct answers:
- This is not a benefit but an output and describes something that the project is delivering.
- This is not a benefit, as the system going faster won’t necessarily be a benefit. If the system going faster is not something that the operator can use to generate a benefit, then it is not a benefit. In addition, PRINCE2 says that a benefit should be measurable, and going a lot faster is not a measurement.
- Yes, this is a measurable benefit because it saves staff time that can be expressed in cash.
- No, this is not a benefit resulting from the project; instead, it is an option for doing part of the project, which will be cheaper than any other option. It would be included in the business case as part of the costs, but it is not a benefit.
- No, this outcome will likely lead to the benefit of staff answering calls more quickly, which can be measured. When they see that the callers have been on the line for hours and hours listening to canned music, interrupted every 30 seconds with a message telling them that “your call is valuable to us.”
- I know this is not a benefit because it is a disbenefit.
- Yes, this is a benefit assuming that the consultants were right!
- No, this is not a benefit, even though you can measure the customer’s impression of the improvement with a questionnaire and get them to rate it on a scale of 1 to 10.
- However, what is the real benefit? The real benefit is undoubtedly an increase in sales, and can you prove the degree to which the new reception area influenced a cell? If the place had been dark and dingy, with the company have lost the order for a particular customer? This does not, therefore, fit within the PRINCE2 expectation of a measurable improvement.
- No, this is not a benefit. It is a technical feature which may or may not lead to benefits. If the integrated database means that staff no longer have to key the same information into three different databases, staff time will be saved, which is a benefit.
- This is not a benefit though it may justify a mandatory project.
Go To PRINCE2 Business Case Part 3 HERE!
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