Developing a Business Case for Programs

Developing a business case for a program is critical to the future success of the program. A business case provides all a program’s stakeholders the confidence and the clarity in the viability of the program. This post covers critical information related to the value of developing a business case for each program.

PgMP Framework for Program Management

developing a business case

The Value of a Business Case

A program’s business case is usually created long before the start of the program and the program benefits immensely by the preparation of a business case. The following lists some of the points.

A program’s business case validates the need to undertake the program by highlighting and proving its value and outcomes. When the program or initiative that the organization wishes to work on is selected to meet its strategic objectives, there usually is no deeper analysis done at that stage. Therefore, even though the program is selected earlier as a potential solution to meet an organization’s certain strategic objectives, the detailed feasibility on whether the program is appropriate for the organization from an overall ‘business value’ standpoint is not performed until later. Preparation of the business case is that step that validates the need for the program and in many cases the approval of the business case provides enough reason to the program sponsors to charter the program that in turn triggers the start of the program.
The development of a business case also helps to formalize the intent of the program’s sponsors to invest in the program. This formal intent to invest in the program signals their long term interest and support that the program manager in turn will need throughout the program’s lifecycle to make the program a success.
The business case is an important enough document that it along with the program mandate is required before a program can be officially chartered. So, it’s one of those documents that is created very early on – sometimes a while before a program is officially initiated.
As a business case attempts to justify investment in the program, it lists the preliminary organizational benefits that the organization is intended to get from the program. This list of program benefits are then expanded upon later in the program’s lifecycle.
Next, although the business case is created before the start of the program, it is constantly referenced throughout the program’s duration and lifecycle, especially during the critical review stages of the program. This ensures that the ongoing program stays aligned with the organization’s strategy, value, and the needs that were established earlier and if anytime the program deviates from its course or if the business case no longer stays valid, this is brought to the attention of the program sponsors to reassess the future course of the program.

program management business case

Business Case Contents

Next, we will look at the various sections that are usually included in a business case document. The actual sections may vary depending on each organization or situation. What’s important to remember here is that as the business case analysis document is being prepared to sell the program to senior management and / or sponsoring organization, it’s important to keep their questions and concerns in mind. The business case document, therefore, should answer the questions of its intended audience, who in turn will use this document to decide whether or not to charter the program.

Here are some typical areas of analysis and corresponding sections that are included in a business case document.

The first main section of the business case document describes the problem that this specific program or initiative seeks to solve or opportunities that the program wants to exploit for the benefit of the organization. The section describes the problem in detail to make the readers understand the severity of the problem as that can help them better evaluate the solutions that will be presented later in the document. Also, the business case may not be about solving a specific problem but instead to capitalize on a given business opportunity. Even in that case, the opportunity and what it means to the organization should be elaborated in detail.
Next, the business case document should elaborate on the imperative for the change. So, if the proposed program is to solve a specific problem, the document should discuss the consequences if the program’s business case is not approved. For example, if a program is to be launched to modernize Information Technology systems to boost employee productivity, then staying with the old system may mean continuous decrease in employee productivity and how that in turn may impact the overall business of the enterprise. Similarly, in case the program is to capitalize on an opportunity by developing a new product or service, the section should elaborate on the implications of not following through with the opportunity. This, for example, may mean losing the opportunity to gain certain market positioning, more revenue, etc.
The ‘program description’ section of the business case document should elaborate on the program and how it proposes to tackle the problem or opportunity at hand. The description doesn’t have to be very detailed, because other relevant sections related to the program are included in the rest of the business case document.
The business case document also includes an analysis section that analyses the problem and the organization’s approach to solve the problem under review. In this context, various types of analysis can be done. For example, comparative advantage analysis analyzes other initiatives that may be in place to resolve a similar situation. A historical analysis may look at past efforts to solve this specific problem. Similarly, other types of analysis and feasibility analysis may be included in the business case document to provide the complete picture of the effort that is being undertaken.
The business case document also includes the various solutions that may be at the organization’s disposal in trying to resolve the problem and an analysis and evaluation of the various solutions. The pros and cons of each solution are also listed to provide the decision makers with enough information to help them make their decision.
Next, the specific benefits that the program is meant to deliver are delineated with an explanation of each benefit and how each benefit contributes to meeting the program’s strategic objectives. This list of benefits also becomes the starting point for the program manager to track the program’s benefits during the course of the program. Although this list may change but the changes are governed by the program’s governance processes.
The ‘cost / benefit’ analysis section is one of the most important of the business case document. This analysis conducted to prepare this section is also referred to as Benefit Cost Analysis or BCA and is usually performed for most critical investment decisions. This form of analysis typically does a monetary and financial comparison of the benefits of the solution under consideration and the related costs. Due to the widespread use of this method in all forms of investments, a number of formal methodologies are available. Naturally, the primary reason for doing this analysis is to assess whether the investment in the program is worth the time, effort, and cost for the organization.
When doing the business case analysis, the team should also lists all the risks and assumptions related to the solutions that are presented. This helps put the full set of proposals in full perspective of the decision makers.
Finally, based on the analysis presented in the business case analysis document, the business case analysis makes a recommendation for a specific set of solution that is being pushed by the team to the sponsoring organization.