Creating a business case from the very beginning will help set the strategic direction of the project and ensure that you’re choosing the right project from the very beginning.
Doing a project right is different to doing the right project. That’s where the Business Case comes into play, ensuring from the very beginning that the project that you will be undertaking is right for your organization and client.
WHAT IS THE GOAL OF A BUSINESS CASE?
The point of a business case is that it should guide the client towards choosing the right project. A good business case will identify what the tangible benefits are and deliver the return on the investment the client is making.
Research from Edith Cowan University (ECU) supported by the Australian Institute of Project Management (AIPM) revealed that while 80% of projects have a business case, only half include the tangible benefits.
The research found that effective and efficient projects with clearly defined benefits and mechanisms for tracking these against the original investment are crucial in ensuring the success of a project.
WHAT EXACTLY ARE PROJECT BENEFITS?
As the name suggests, the project benefits are simply outlining what the advantages of the project are from the very beginning in the business case and other planning documentation. Benefits should be linked to the strategic priorities of the organisation.
As we look towards moving out of the COVID-19 period, Richard Hughes, Joint Chief Investigator from ECU recommends that “project managers focus on the specific strategic priorities that underpin economic outcomes such as a return on investment or changes in employment, as these are tangible and measurable.”
“Organisations should be looking at the financial and economic case for any future projects so that they only spend money on the most suitable projects to get the investment returns and value they need to maintain corporate health,” said Hughes.
STRATEGIES FOR CREATING A GOOD BUSINESS CASE
1. Consider the benefits when drafting a business case for an upcoming project. Ensure that any benefits are linked to the organisation’s strategic priorities. Write out benefits using simple clear language so that they can be used to communicate the reason for the project to different stakeholders.
2. Ensure that you have defining measures for the benefits outlined. The best benefits are those that can be measured against dollar values or percentage increases. Focus on those benefits that can be more easily measured, rather than those that will require surveys as this may cause additional work once the project has closed.
3. Adopt a process of tracking the benefits and communicating this to project stakeholders. Benefits are owned by the organisation, not the project. This means that the organisation needs to understand what they are, the importance to the strategic plan, and why they should have a benefits management framework in place.
4. Benchmark projects against each other to determine their efficiency. ECU research shows that projects can be benchmarked against those from similar or different industries. What matters is that the input data is comparable.
Begin with simple data related to efficiency which often focuses on costs and resourcing. Other measures can be added including rework and levels of training.
Identify project risks and how they’ll be managed
Every project presents some level of risk. The best cases scope them out and offer ways of offsetting them throughout the project.
- Financial: Will funding be sufficient to deliver the project, and will anticipated savings be achieved? In addition to finding similar projects that might provide relevant data, a sensitivity analysis will be helpful in accounting for variabilities in the cost/benefit analysis.
- Strategic: Will the funds be used appropriately, and in a way to support the organization’s ability to achieve other goals? How the project links to current policies, strategies and processes will help address this area of risk.
- Operational/technical: Is there a possibility that the project will interrupt normal operations? Appropriate managers and others with relevant expertise can be solicited to lend their thoughts on this area of risk management.
- Operational/safety: Will safety issues arise with the project? The safety risk assessment protocols that most companies have will need to be followed.
As the project moves forward, the business case can serve as a dynamic component of the decision-making process throughout the life cycle. Done right – and with initial buy-in and ongoing revisitation by team members and project owners, it can be a roadmap for Six Sigma project success.