3. Business Case Development Flashcards
Why do we make business cases
They are a justification for a proposed project or undertaking on the basis of its expected commercial benefit. Feasibility of committing a project is examined
Informing business decision makers of the key aspects of a proposal so they can make a decision regarding the allocation of resources and finances.
addresses the highest level of business need for a specific project.
What are the expected contents of a business case
Background description AS IS Options and their descriptions Costs - Areas of cost - Tangible and intangible costs - Quantifying costs Benefits - Areas of business benefit - Tangible and intangible benefits - Quantifying benefits Cost/benefit analysis Risks - Areas of risk - types of risk - Risk analysis Impacts Recommendations
What is the difference between tangible and intangible
A tangible benefit is one with a “value that can be determined”, normally monetary
An intangible benefit is one where we “Cannot predict a value for the cost or benefit e.g. Our reputation will improve
What is the purpose of the ‘Do nothing’ option
To identify the risks or costs that may be occurred by the business if they chose not to dedicate resource to the proposed change
What option perspectives are there to evaluate feasibility of a business case
Business, Technical and Financial
What is the rationale for making a Financial case
To compare Financial benefits expected to flow from proposed projects given predicted costs
To determine if a project is worth undertaking
To evaluate Financial viability of a project proposal
A means of comparing projects and options
Name some investment appraisal techniques
o Payback period or break-even analysis
o Discounted Cash Flow/Net Present Value analysis
o Internal Rate of Return analysis
Pick 2 Investment appraisal techniques, why would you use these
Payback period as we can identify at a monetary level when each option would start to deliver value to the business.
Internal rate of return as we can compare in against the hurdle rate and this can quite clearly aid the making of a decision on whether to invest. (if IRR is higher than hurdle then worth investment) Hurdle set by organisation
What is Risk analysis
Rick analysis is the identification of risks to an organisation and how we evaluate and mitigate that risk
How do we assess the impact of a risk
We look at the scale of the damage to the organisation that would be suffered should the risk occurr
How do we assess the probability of a risk
We look at the likelihood of the risk occurring without mitigation to reduce or remove the risk
What are the risk management approaches
Risk acceptance - Make decision makers aware of circumstances, choose to do nothing
Risk Transference - shift to another party
Risk avoidance - reduce probability
Risk Contingency - Reduce impact on occurrence
What is Risk Impact analysis
Risk impact analysis is the process of assessing the probabilities and consequences of risk events if they are realized. The results of this assessment are then used to prioritize risks to establish a most-to-least-critical importance ranking.
What is the rationale of a business case review
Business case should be constantly revisited to ensure the intial benefits are being realised, epic requirements are being met, CBA was correct after costs confirmed, business objectives are followed at ever step
What is a TOR?
Terms of reference - Documentation that outlines the guidelines, RACI, shared agreed view and purpose for a project, sometimes called PID
