Chapter 5 - Business Case

Question 1

What is the purpose of the business case practice?

Answer 1

The purpose of the business case practice is to establish mechanisms to judge whether the project is (and remains) desirable, viable, and achievable as a means to support decision making in its continued investment

Question 2

Define a dis-benefit

Answer 2

The measurable decline resulting from an outcome that is perceived as negative by the investing organisation and which detracts from one or more business objectives

Question 3

Where is the business justification usually documented?

Answer 3

In a business case

Question 4

As well as confirming the reason for the project, the business case should confirm whether the project is:

Answer 4

Desirable (the balance of costs, benefits and risks); viable (able to deliver the products); achievable (whether use of the products is likely to result in envisaged outcomes and resulting benefits

Question 5

Who confirms the business justification and authorises the project manager to initiate the project?

Answer 5

The project board

Question 6

The project mandate is:

Answer 6

Provided by the business and sets expectations and constraints

Question 7

The project brief:

Answer 7

Contains the outline business case in response to the mandate

Question 8

The business case:

Answer 8

Provides the full business case in response to the project brief

Question 9

How are benefits realised in a project?

Answer 9

Outcomes must be achieved, meaning that the outputs from the project are used as intended, new capability is defined, and barriers to the use of the new capability are identified

Question 10

What issue may arrive if the project includes benefits that cannot be measured?

Answer 10

It may become impossible to determine whether it has been a success or provided value for money

Question 11

Define benefits tolerance

Answer 11

The permissible deviation in the benefit performance targets that is allowed before the deviation needs to be escalated to the next level of management. Benefits tolerance is documented in the business case

Question 12

Define sustainability tolerance

Answer 12

The permissible deviation in the sustainability performance targets that is allowed before the deviation needs to be escalated to the next level of management. Sustainability tolerance is documented in the business case

Question 13

What is the four-step business case management technique?

Answer 13

Develop, check, maintain, confirm

Question 14

When is the business case checked by the project board?

Answer 14

At every key decision point (e.g. stage boundaries) and confirmed throughout the period that benefits accrue

Question 15

What does ‘develop’ mean in the business case through the project lifecycle?

Answer 15

Means to explore options and get the right information upon which investment appraisal: decisions can be made

Question 16

What does ‘check’ mean in the business case through the project lifecycle?

Answer 16

Means to assess whether the project is (still) worthwhile

Question 17

What does ‘maintain’ mean in the business case through the project lifecycle?

Answer 17

Means to keep the business case updated with actual progress and current forecasts (including forecast benefits)

Question 18

What does ‘confirm’ mean in the business case through the project lifecycle?

Answer 18

Means to assess whether the intended benefits have been (or will be) realised. Confirming benefits will mostly take place after the project has been closed, although benefits may be realised during the project when products are delivered and released iteratively.

Question 19

What are the three basic business options concerning any investment?

Answer 19

Do nothing differently; do the minimum; do more than the minimum

Question 20

Which business option in the ‘develop’ phase should be the first option?

Answer 20

The ‘do nothing differently’ option should always be the first option and act as the basis for quantifying the other options. The difference between do nothing differently, do the minimum, or do more than the minimum is the benefit that the investment will buy

Question 21

How does continued business justification drive all decision making?

Answer 21

Ensures that the business objectives and benefits being sought can continue to be realised

Question 22

As a minimum, the project board should check the business case:

Answer 22

At the end of the process of stating up a project to authorise project initiation; at the end of the process of initiating a project to authorise the project; at the end of each stage to authorise the next stage and the continuation of the project; when assessing an exception plan to authorise the revised stage and continuation of the project

Question 23

The project manager will check the business case:

Answer 23

When assessing progress, risks, and issues to determine their impact on the business justification; during the final stage, as part of closing a project, to assess the project’s performance against requirements and the probability that the outcomes will provide the expected benefits; when consulting with stakeholders to determine whether any goals have changed

Question 24

Who is responsible for specifying the benefits from the project and accountable for confirming that the forecast benefits are realised?

Answer 24

The senior user

Question 25

Who is responsible for ensuring that benefits reviews are planned and executed?

Answer 25

The project executive

Question 26

For post project management activities, the responsibility for benefits reviews transfers from who to who when the project closes?

Answer 26

From the project executive to the business

Question 27

What is the purpose of an investment appraisal?

Answer 27

It compares the costs of developing, operating, and maintaining the project product with the value of the benefits over a period of time. The investment appraisal looks at the relationship between benefits, costs and risks. It should cover both the project costs and the ongoing operations and maintenance costs.

Question 28

Provide some examples of investment appraisal techniques

Answer 28

Whole life costs, net benefits, return on investment, payback, net present value, internal rate of return, options analysis, sensitivity analysis

Question 29

Provide some examples of the multi-case model of different investment perspectives

Answer 29

Strategic perspective, economic perspective, financial perspective, implementation and commercial perspective

Question 30

What is the purpose of the project brief?

Answer 30

To provide a full and firm foundation for the initiation of the project

Question 31

What is contained within the project brief?

Answer 31

Project definition; outline business case; project product description; project approach; project management team structure and role descriptions; references

Question 32

What is included in the project definition within the project brief?

Answer 32

The background; project objectives; desired outcomes; project scope and exclusions; constraints and assumptions; project tolerances; users and any other know interested parties

Question 33

What is the purpose of the business case?

Answer 33

The purpose of the business case is to document the business justification for undertaking a project, based on the estimated costs against the expected benefits to be gained and offset by any associated risks. It should outline how and when the expected benefits can be measured.

Question 34

What is included within a business case?

Answer 34

Executive summary; reasons; business options; expected benefits and dis-benefits; sustainability targets; time; costs; investment appraisal; major risks; references

Question 35

What is the purpose of the benefits management approach?

Answer 35

The purpose of the benefits management approach is to define the benefits management actions and benefits reviews that will be established to ensure that the project’s outcomes are achieved and to confirm that the project’s benefits are realised

Question 36

What high-level content is included as part of the benefits management approach?

Answer 36

Scope; benefits realisation process; benefits measurement; benefits tolerance guidance; responsibilities; resources; supporting tools and techniques; standards; references

Question 37

What is the purpose of the sustainability management approach?

Answer 37

The purpose of the sustainability management approach is to define the actions, reviews, and controls that will be established to ensure that sustainability performance targets for the project are achieved

Question 38

What high-level content is included as part of the sustainability management approach?

Answer 38

Scope; measurement; responsibilities; resources; supporting tools and techniques; standards; references

Question 39

What are the key responsibilities for the business layer associated with the business case practice?

Answer 39

Provide the project mandate and define any standards to which the business case needs to be developed; hold the senior user(s) accountable for realising the post-project benefits enabled by the project product; be accountable for the benefits management approach (post project); set project level benefits tolerance

Question 40

What are the key responsibilities for the project executive associated with the business case practice?

Answer 40

Be accountable for the business case for the duration of the project; approve the benefits management approach and sustainability management approach; set stage level benefits tolerance; oversee the development of a viable business case, ensuring the project is aligned with business objectives; ensure the project remains desirable, viable, and achievable; secure the funding for the project; ensure the benefits specified by the senior user represent value for money, are aligned with business objectives, and can be realised; ensure the delivery method and costs proposed proposed by the senior supplier represent value for money

Question 41

What are the key responsibilities for the senior user associated with the business case practice?

Answer 41

Be accountable for specifying the desired outcome and benefits upon which the business case is approved; agree the benefits managed approach and sustainability management approach; be accountable for realising benefits and ensure that the project produces products that deliver the desired outcomes and that those outcomes will generate the desired benefits; confirms that the expected benefits are realised or able to be realised; provide statements of actual benefit achievements versus forecast benefits at benefits reviews

Question 42

What are the key responsibilities for the senior supplier associated with the business case practice?

Answer 42

Be accountable for the supplier business case; confirm that the products required can be delivered within the expected costs and are viable

Question 43

What are the key responsibilities for the project manager associated with the business case practice?

Answer 43

Be responsible for development of the business case, benefits management approach, and sustainability management approach as delegated by the project executive; review impact of issues and risks on the continued viability of the business case; assess and update the business case, benefits management approach, and sustainability management approach at the end of each stage; assess and report on project performance at project closure; consult with stakeholders throughout the lifecycle of the project to check whether goals have changed

Question 44

What are the key responsibilities for the team manager associated with the business case practice?

Answer 44

Implement the benefits management procedures agreed in their work package description

Question 45

What are the key responsibilities for the project assurance associated with the business case practice?

Answer 45

Check that the project fits with overall business objectives; advise the project manager on the benefits management approach and sustainability management approach; confirm to the project board that the benefits management approach and sustainability management approach are compliant with business policies; check and monitor the business case against external events and project progress; monitor project finance on behalf of the business; monitor changes to the project plan to identify any impact on the needs of the business or business case; review the impact assessment of potential changes on the business case and project plan; assure the project board on the implementation of the benefits management approach and sustainability management approach

Question 46

What are the key responsibilities of the project support associated with the business case practice?

Answer 46

Maintain baseline and change control for business case, benefits management approach, and sustainability management approach; advise the project manager of any proposed or actual changes to products that affect the business case

Question 47

How is the principle of ensure continued business justification achieved and what is the outcome?

Answer 47

Achieved by: creating and maintaining a business case for the project to assess whether it is (and remains) desirable, viable and achievable; Resulting in: confidence that the investment is worthwhile

Question 48

How is the principle of learn from experience achieved and what is the outcome?

Answer 48

Achieved by: using lessons to inform business justification; Resulting in: confidence that the business case is developed from previous experiences

Question 49

How is the principle of define roles, responsibilities and relationships achieved and what is the outcome?

Answer 49

Achieved by: clarifying the responsibilities for developing and maintaining the business case and benefits management throughout the project; Resulting in: clear understanding of expectations for business case and benefits management

Question 50

How is the principle of manage by stages achieved and what is the outcome?

Answer 50

Achieved by: ensuring decisions made at stage boundaries are checked for business justification; Resulting in: confidence that the investment remains justified through the project

Question 51

How is the principle of manage by exception achieved and what is the outcome?

Answer 51

Achieved by: measuring the impact of issues and risks to the business case and escalating when these are forecast to exceed tolerances; Resulting in: clear understanding of potential impacts on the business case to foster effective decision making

Question 52

How is the principle of focus on products achieved and what is the outcome?

Answer 52

Achieved by: ensuring that the products produced can lead to the required outcomes and benefits; Resulting in: project benefits that are achievable

Question 53

How is the principle of tailor to suit the project achieved and what is the outcome?

Answer 53

Achieved by: ensuring that the formality and level of control for business case development, approval and review are appropriate for the type, size and complexity of the project; Resulting in: governance of the business case that is fit for purpose