Purpose of Business Case

A project has to be completed within the limitations of time, budget, and scope and is deemed to be successful when it achieves the desired outcomes on time, within budget, and with agreed deliverables. Lately, however, different organizations have realized that success can not be ensured just by building the expected deliverables. Now the stress is increasingly on the result a project brings for the organization so the focus is shifting to the value a project adds to the organization. It is no more about what is created, it is more about justifying the time and resources spent on creating it. This means that in these times of faltering economies, organizations have to think about spending their limited resources discreetly and with an assurance that it would be beneficial for the organization. And the name given to the exercise to justify using resources for a particular project is "Business case." No organization can afford to invest its time, effort, and other resources without knowing how it will benefit the organization. So, a business case has become a necessity not only for businesses but even for non-business organizations like governments and other non-commercial organizations.

What is a Business case?

The purpose of a Business case is to provide reasons for doing a project. It is a point of reference for everyone concerned before, during, and after the project. A Business case also sets up the real and abstract goals of a project from what is to be done to why it is to be done before starting the project, becomes a guide all through the project, and assesses the project's outcome once it is completed. It is a kind of management tool for all the stakeholders and decision-makers so that decisions based on evidence can be taken transparently. A Business case brings out the opportunities, risks, and threats in a project so that the investment involved in the project can be seen from the right perspective. So, we can say that a Business case is not just a document showing the Return on Investment (ROI) but it presents the outline of all the benefits that can accrue from the project. 

For any organization, doing the right project comes before doing the project right. When a Business case is built at the outset of a project, it sets up the project's strategic direction. It also ensures from the very start that you are doing the right project and that the project is right for both the organization and the client. A classic Business case convinces the decision-makers to support some idea or action. 

Also, Check:how to write a Business case

Importance of Business case

Project management has a very important rule: create a strong Business case that is functional and scalable. So, let's see why a Business case is important for a project.

1. It provides a perception

A strong Business case provides a clear perception of the project. It is only the Business case on which organizations base their business analysis and assess the value that will be added by the project to the organization. Therefore, a Business case is a very useful and important instrument for providing insight to the organization about the business scenarios in front of it and what to expect from it.

2. Helps in saving resources

A common business plan gives a broader picture of the business objectives, but a Business case provides a detailed account of what has to be done and why. Thus, a clear picture emerges that helps the organization to identify and filter out unexpected situations and prepare for them. This way, it ensures that the organization uses minimum resources for evaluating the initial business ideas and saves both cost and time.

3. Improves managerial efficiency 

The pre-planning of business activities before implementation, which is inherent in the business case, naturally improves managerial efficiency. 

Besides, as a Business case details the activities to be performed and a clear-cut idea of the ROI the organization will get from the proposed project, it makes raising the funds easy. It also becomes a sort of guide to plan ahead and manage time. Apart from this, if the Business case is not written, the organizations would find it hard to prioritize projects and decide their order of importance. This is because there is no measure to decide the value. This shows the lack of a clear strategy. Further, since the project's outcome will not be clear, there may be reasons for disappointment once the project is completed. This will happen because, without a business case, the project manager would not be clear about the expectations of the project. 

Business Case Benefits:

Writing a Business case brings many benefits to every organization. They are described below.

• Ensures project and strategy alignment - The first benefit of a Business case is that it ensures that the project aligns with the organization's strategy. Since in most organizations, there are budget constraints and human resources are also scarce, it becomes imperative that the project is fully aligned with the organization's strategy or goals. It becomes important to ensure that the time, money, and other resources being allocated to the project are worth it and will produce the desired results. There has to be an absolute surety that this allocation justifies itself. Otherwise, all these valuable things would be wasted. The organization can see that it can invest time and money in more worthwhile endeavors. Moreover, some members of the top management may have their own favorite projects, which may or may not be aligned with the organization's objectives. The Business case would ensure that such things do not cloud the decision-making process. When the what and why of the project are documented, they can be analyzed against the strategy, which would help in making a well-informed decision.
• Makes sure that the project has been thoroughly thought about - A Business case lends seriousness and discipline to the decision-making and approval process. The sponsor will have to present a rational well-thought Business case to enhance the chances of getting approval. Since the business case captures and evaluates the project's main features, a certain level of analysis must be carried out. This helps in identifying the issues at an early stage and a different way of working may be adopted or a project may even be rendered unviable saving a lot of time and resources, including money. Investing the money first, then finding that the approach is not right, and then spending more money and resources to search for an alternative is something every organization would want to avoid.
• The business case helps make the sponsor responsible - Seeing the Business case as a contract between the sponsor and the organization is good. The sponsor asks for a certain sum of money and assures certain profits or benefits. Therefore, it is quite logical that the sponsor is made accountable for this contract and ensures that he does not spend more money than the budget allocated and provides the promised benefits within the agreed timeframe. When the sponsors know that they would be evaluated against the criteria laid down in the Business case and they have actually to deliver the benefits, the risk of being overly optimistic about the cost and benefit (promise of low cost and high returns) would be mitigated.
• Ensures a logical and reasonable review of the proposal - It is not in the interest of any organization that a senior manager proposes and approves their own project. And that too without it going through proper and detailed scrutiny. The Business case allows others to review the project and understand its logic. This enables informed decision-making, which is healthy for every organization. This also ensures that any project not aligned with the business strategy or does not have a strong Business case doesn't get approved.
• It makes tracking of progress and results possible. A business case that has been approved also becomes the commencement point of the project. So, the information contained therein can be locked down and placed under control for any changes. Then the project's progress regarding the Business case can be tracked and managed. This will not only provide more transparency to the whole process but will also highly enhance the chances of the project is managed correctly and the outcomes in terms of benefits being realized. This also makes the sponsor and the project manager stay focused on achieving the results. 
• Shows the value of the project in advance - Each project undertaken by the organization has to benefit it. No organization would like to take up a project that provides little or no value to the organization. So, they would want to know what value the project will bring before starting a project. The business case shows the organization, in advance, exactly why a project is being proposed and what value it will bring to the organization. So, once again, this aids in making informed decisions.
• Ensures that the project team has focus at the right place - With the Business case as the baseline, the project manager and the team are encouraged to focus on what they are building and how it would be used. This reduces the wastage of resources and the likelihood of focusing on projects that do not bring justifiable benefits. When the value of each project is clear, their prioritization becomes a lot easier, which, once again, saves a lot of time and resources.

The Business case is the foundation and the heart of a project. A Business case created to perfection can evaluate every approach that can lead to successfully accomplishing the best possible solutions to the organizational objectives and problems. It also gives power to the management to make correct decisions and choose the right project that would fully align with the organizational strategy and provide a defined value to the organization. The Project managers working with a Business case do not need any special degree or qualification. Still, they need to pay more attention to what the organization is trying to achieve through a particular project. A well-planned and managed business case increases the chances of a project's success manifoldly. 

Conclusion:

The purpose of a Business case extends far beyond merely justifying the use of resources for a project. It is a vital instrument for organizations to strategically evaluate and prioritize their projects, ensuring alignment with overarching goals and objectives. Simpliaxis offers Business Case Writing Training, empowering professionals to acquire the skills necessary to craft robust Business cases, laying the groundwork for successful project execution and realization of anticipated benefits. Business cases play a pivotal role in driving organizational success by providing a clear perception of projects, optimizing resource allocation, enhancing managerial efficiency, and fostering informed decision-making. Embracing the principles of Business case development enables organizations to navigate challenges effectively and seize opportunities for growth and innovation in today's dynamic business landscape.