3. Business Case Development Flashcards
3.1 Rationale for making a business case 3.2 Contents of a business case 3.3 Options 3.4 The financial 3.5 Investment Appraisal Techniques 3.6 Risk Analysis 3.7 Impact Analysis 3.8 Lifecycle for the business case 3.9 Terms of Reference (PID)
What is the rationale for making a business case?
The business case provides the customer with information about the available options so that they are able to make an informed decision when choosing an option.
What are the contents of a business case?
+ Description of the current situation (incl. business objectives that must be supported)
+ Description of options: incl. impact/risks, benefits and costs of doing nothing, an overview of all significant options and why they have been rejected, and detailed description of the recommended option(s)
+ Costs/Benefits: tangible and intangible, quantifying with assumptions
+ Cost Benefit Analysis using investment appraisal techniques
+ Risk Analysis
+ Impact Analysis
+ Recommendations and summary of decisions needed
What are some techniques to assess feasibility?
PESTLE
Force Field Analysis
What are examples of Financial, Business and Technical Feasibility?
Financial
+ Within Budget
+ Acceptable return on investment
+ Fast enough Payback
Business
+ Process compatibility
+ Within competencies
+Cultural fit
Technical Feasibility
+ Alignment
+ Compatibility
+ Scalability
How does a force field analysis work?
Looks at forces within and around the organisation that can get a proposal accepted or rejected.
Weaken opposing forces
Strengthen supporting forces
Or use a combination
How would you approach including intangible benefits and costs in the business case?
+ Identify them and let management make their own assessment of their worth
+ Avoid placing an unjustifiable value and avoid making extravagant claims
+ Don’t attempt to quantify if real data is not available or realistic assumptions cant be made
+ Be transparent with any assumptions made when quantifying costs and benefits
What are 3 Investment appraisal techniques?
Payback calculation
+ The year in which benefits accrued outweighs the costs
Net Present Value calculation
+ Discounts future values of money by a discount factor where money has less value in future periods. The resulting figure represents the money returned/lost from investment over the period
Internal Rate of Return calculation
The discount rate that results in cost and benefit exactly matching over a set period. This figure (percentage) is the rate of return for the set period of time.
What are the steps in Risk Analysis?
Identify the risk and assess the probability and severity of impact of the risks
Decide on risk management approach: identify measures to accept risks, avoid risks or mitigate or transfer the risks
Document the risks
What is the rationale for the business case decision gates?
To assess cost and benefits before major resources are committed
To reassess and confirm costs/benefits still hold up in light of detailed requirements analysis
To reassess costs/benefits once development costs are estimated
To reassess costs/benefits in the event the business situation has changed
To act as a reference when assessing the benefits realised from the change
What is the benefit of a PID for the selected solution?
Removes ambiguity about what is to be achieved by the project
Helps align the design of the solution to business objectives
What are the contents of the Terms of reference document?
Objectives
+ Business objectives: what the org hopes to achieve by commissioning the project
+ Project objectives: more specific than business objectives - precisely states what the project intends to achieve
Scope
+ Boundaries: departments/functions included in study
+ Activities: tasks that the BA will/will not undertake
+ Deliverables
Constraints
+ Time
+ Budget
Authority
+ Agrees to the PID and amendments
+ Resolves conflicts between stakeholders
+ Makes financial and other resources available
+ Promotes the project
+ Final acceptance of the results
Resources
+ Money, Equipment, Working space, user involvement
Assumptions
Why is a feasibility study done?
+ Ensures that a shortlist of only the best achievable options from a long list of options are taken forward into the business case
+ Gives an additional layer of information for the project sponsor to understand why options were eliminated
