Chapter 6: Business Case Flashcards
What’s the purpose of the business case theme
Purpose is to establish the mechanisms to judge whether the project is desirable, viable and achievable as a means to support decision making in its investment
What is an outcome in regard to business change
Outcomes allow the business to realise the benefits that are set out in the business justification for the project
What is a dis benefit
Outcomes that are perceived as negative by one or more stakeholders are called dis-benefits
What are PRINCE2’s requirements for business case theme
- create and maintain a business justification for the project; usually a business case
- Review and update the business justification in response to decisions and events that might impact desirability and achievability
- Define management actions put in place to ensure project outcomes are achieved and confirm benefits are realised
- define and document the roles and responsibilities for the business case and benefits management
What must be produced for the business case theme?
- Business Case: provides costs, benefits, expected dis-benefits, risks and time scales
- Benefits management approach: defines the management actions that will be put in place to ensure that the projects outcomes are achieved
The business case theme is central to PRINCE2 projects as it’s the heart of why a project is being done
The business case theme is central to PRINCE2 projects as it’s the heart of why a project is being done
What is the outline business case and the detailed/full business case
In most cases, projects costs, timescale, products and risks won’t be sufficiently understood to provide a robust justification of the project.
This initial version will need further development and refinement as the project progresses
- The initial version of the business justification is called the ‘outline business case’
- The refined outline business case is described as the ‘detailed business case’ or ‘full business case’
When must business justification be reviewed and verified
- At the end of the starting up a project process by the project board, to authorise project initiation
- At the end of the initiating a project process by the project board
- As part of any impact assessment by the PM of any new/ reviewed issues or risks
- As part of benefits reviews
- In tandem with an exception plan by the project board, to authorise the revised management stage
- End of management stage, to determine if costs, timescales, risks or benefits need to be updated
Why is it advisable that the senior user comes from an area of the business impacted by the change
The senior user is also responsible for confirming that benefits are realised
- this many involve commitment beyond the life of the project as it’s likely that many benefits won’t be realised until after the project is closed
- for this reason, it’s advisable that the senior user comes from an area of business impacted by the change
What does the benefits management approach ensure
The benefits management approach defines the management actions that will be put in place to ensure the projects outcomes are achieved and to confirm that the projects benefits are realised
It’s first created by the PM in the initiating a project process during the initiation stage & is submitted to the project board for approval when seeking project authorisation
When should the benefits management approach be updated
Should be updated during each management stage with actual benefits achieved, and any updates for benefits management activities or benefits reviews
Who is benefits management approach managed by
May be managed by the project, by corporate, programme management or by the customer & is likely to be managed beyond the life of the project.
Any benefits that can be measured during the life of a project should be confirmed by the senior user for formal reporting by the project manager in the end stage reports and project closure report
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What does post project benefits review involve?
Post project benefits review involves corporate, programme management or the customer holding the senior user to account by asking them to provide evidence of how the individual benefits allocated to them have been gained in comparison with those benefits promised to justify the cost & risk of the project when it was authorised.
Post project benefits reviews also review the performance of the project product in operational use and identify whether there have been any side effects that may provide lessons for the other projects
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What is the responsibility of:
- corporate, programme management or customer
- Executive
- Senior user(s)
- Senior Supplier(s)
- Project manager
- Project assurance
- Project support
Corporate, programme management or customer
- provide mandate and define any standards for business case
- hold senior users accountable for realising post project benefits
Executive
- Accountable for business case during the project
Senior user(s)
- Specifying the benefits upon which business case is approved
Senior supplier(s)
- Confirm products required can be delivered within cost and viability
Project Manager
- Develop business case and benefits management approach
Project assurance
- Monitor business case against external events and project progress
Project support
- Advise PM of any proposed/ actual changes to products that affect the business
By default, the executive is responsible for ensuring the benefits reviews are planned and executed, but there are circumstances where this may not always be the case
- For projects in a programme environment, the projects benefits management approach may be produced & executed by the programme p
- For post project measurement activities, the responsibility for benefits reviews will transfer from the executive to corporate, programme management or the customer as the project closes
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A problem that commonly occurs is that projects are often successful from a delivery perspective, but fail from an investment perspective
- the link from the projects outputs to outcomes and benefits needs to be clearly identifies and made visible to those involved in the project, otherwise there is a danger that the original purpose of the project plans can get lost and benefits won’t be realised
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Info regarding customer and supplier business case
The business case for a customers project is separate from a suppliers business case for bidding for & working on that customers project
A supplier would have to ensure it will benefit from the work it undertakes on the project
How does a project within a programme affect business case
If the project is part of a programme, the programme will typically define both the approach to business case development and provide an outline for business case for the project
Give some examples of investment appraisal techniques
Whole life costs
- analysing total costs of implementation and any incremental transitional, operational and maintenance costs
Return on investment (ROI)
- profits/ savings resulting from investments expressed as a percentage of initial investment
Info regarding projects using agile approach
An agile approach may require more information on the tolerances around benefits with respect to priorities, timescales, and how much if the scope will be delivered in the product
