What is the PRINCE2 Business Case

PRINCE2 Business Case

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.

It is a PRINCE2 principle that the project must have continued business justification.

The business justification is the reason for the project. Without it no project should start. If business justification is valid at the start of a project, but disappears once it is under way, the project should be stopped or changed.

In PRINCE2, the business justification is documented in the business case describing the reasons for the project based on estimated costs, risks and the expected benefits. The reasons for undertaking the project must drive decision-making. When projects face changes all risks, the impact analysis should focus on the business case, remembering that the project is only a means to an end and not the end itself.

The on-going and ever present decision regarding the business case is whether the project can still be justified. This is based on whether the project is desirable (the cost//benefits) risk balance, viable (the project can deliver the products) and achievable (the products can provide the benefits).

The senior user is responsible for specifying the benefits and subsequently realizing the benefits through the use of products provided by the project. The executive is responsible for ensuring that those benefits specified by the senior user, to represent value for money, are aligned to corporate objectives, and are capable of being realized.

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 points, such as end stage assessments, and the benefits are confirmed as they start to accrue.

In some cases the project may be initiated with a pre-existing business case (from corporate or programme management), in which case it will be refined during initiation.

What is a PRINCE2 business case?

The business case represents the optimum mix of information used to judge whether the project is (and remains) desirable, viable and achievable, and therefore worthwhile investing in.

The project board and stakeholders must have confidence at all times that the project remains viable.

In PRINCE2, the business case provides the vital test of the viability of the project. It provides the answer to the question: is the investment in this project still worthwhile?

Since this viability question is on-going, the business case is not static. It should not be used only to gain initial funding for a project, but should be actively maintained throughout the life of the project and be continually updated with current information on costs, risks and benefits.

When making investment decisions, it is important to ascertain what benefits can be gained when, and what degree of risk and from what level of investment.

Project should be evaluated on how well they will contribute to corporate objectives.

Such analysis enables one project to be compared with another so that the organization can choose to invest in the best set of projects.

Outputs, outcomes and benefits in PRINCE2:

• A project’s outputs is any of the projects specialist products (whether tangible or intangible)
• An outcome is the result of the change derived from using the project’s outputs
• A benefit is the measurable improvement resulting from an outcome that is perceived as an advantage by one or more stakeholders

As the project outcomes and benefits are often only realized after the project has closed, it is unfortunately easy for projects to become focus solely on creating products (the outputs).

The link from the projects outputs to outcomes and benefits should be clearly identified and made visible to those involved, otherwise the original purpose of the project can get lost

Types of PRINCE2 business case

The reasons for undertaking projects vary enormously and are largely driven by the environment.

The nature of the project will determine the objectives that will be used to verify the desirability of the project and later to confirm that the projects products have met those objectives.

Such objectives will be measured differently depending on the type of project, for example:

• Compulsory project
• Not for profit project
• Evolving project
• Customer/supplier project
• Multi organization project

Some of these projects may be measured principally on “return on investment”, but others (particularly the compulsory or not for profits projects) may be measured on other non financial benefits.

Regardless of the type of measure being used, the question remains: for this level of investment, are the anticipated benefits more desirable, viable and achievable than the other options available?