Explanation for A Business Case (Feasibility Study or Project Justification)

A Business Case

Organizations may have different titles such as a feasibility study or a project justification for what we call the business case. Its objective is to provide a rationale for the project by showing that the benefits of the project outcomes will exceed the costs of development, implementation, and operation (or production).

Typically a business case document might contain:

  1. Introduction and background to the proposal
  2. The proposed project
  3. The market
  4. Organizational and operational infrastructure
  5. The benefits
  6. Outline implementation plan
  7. Costs
  8. The financial case
  9. Risks
  10. Management plan

These sections will now be described in more detail.

Introduction and background

This is a description of the current environment of the proposed project. A problem to be solved or an opportunity to be exploited is identified.

The proposed project

A brief outline of the proposed project is provided.

The market

This is needed when the project is to create new product or a new service capability
This would contain information like the estimated demand for the product or service
And any likely competitors.

Organizational and operational infrastructure

This describes how the structure of the organization will be affected by the implementation of the project. This is of the relevance where the project is implementing or modifying an information system as part of a broader business change project. It would also be relevant if a tailored production or distribution system has to be set up when a new product is designed.

Benefits

Where possible, a financial value should be put on the benefits of the implemented project. For commercial organizations, this could be related to increased profits caused either by increasing income or by making savings on costs. For not-for-profit organizations, we would try to quantify the benefits even if we cannot quote a precise financial value. In an example, we used earlier relating to an IT system that improved the diagnosis of a particular disease, an increase in the rate of diagnosis might be quoted.

Outline implementation plan

In addition to the ICT aspects of the project, activities such as marketing, promotion and operational and maintenance infrastructures need to be considered. One consideration will be which project activities can be outsourced, and which are best kept in-house.
This will also detail the management of the implementation. The responsibilities are allocated for the tasks identified in the outline implementation plan. Key decision points or milestones, where a health-check on the state of the implementation is taken, should be identified. As we will see, for a large implementation a number of projects may be needed which can be managed as a programme.

Costs

Having outlined the steps needed to set up the operations needed by the proposal, a schedule of expected costs
associated with the planned approach can now be presented.
There will clearly be some uncertainties about some of the costs, especially as the details of the requirements have not yet been worked out.

The financial case

There are a number of ways in which the information on income and costs can be analyzed and these will be the subject of the section on evaluation techniques later in this chapter.

Risks

We note here that many estimates of costs and, more particularly, benefits of the project will be speculative at this stage and the section on risk should take account of this. We can distinguish project risk — relating to threats to successful project execution — from business risk – relating to factors threatening the benefits of the delivered project. In the business case, the main focus is on the business risk.

Leave a Reply

www.000webhost.com