The business case

Q1 At what point in the project lifecycle should the business case be

prepared?
The short answer to this is before any serious work has been done
and before major resources are committed to the project. Many
projects are preceded by a feasibility study, the aim of which is to see
whether there is a prima facie case for undertaking the project and a
business case is often a major output from such a study.

In addition, IS studies often start with some form of requirements

analysis and specification. Where this is the case, the detailed
information discovered here may necessitate a reappraisal of the
business case, to make sure that the costs and benefits identified in the
feasibility study are still realistic.

In fact, the business case should be revisited at each stage of a project,

to make sure that the project is still on target to achieve the business
benefits for which the project has been initiated.
Q2 What should be the role of the project manager in relation to the business
case?
Ideally, the project manager should be appointed early enough to
contribute to the development of the business case or even to take
the lead in its development. At the very least, someone with a project
management background should be asked to review the business case
to make sure that the approach proposed is realistic.

If the project manager has not contributed to the creation of the

business case, then one of his or her first jobs after appointment
should be examine it and to satisfy themselves that they are happy to
take responsibility for the project. If they think that the scope, budget
or timescale is unfeasible, they should raise their objections with the
project sponsor and endeavour to negotiate a more realistic
programme.
Once the project is underway, the project manager needs to keep a
watchful eye on the business case to make sure that the way the
project is going is not going to compromise the achievement of the
benefits outlined in the business case.
Q3 Explain the term cost/benefit analysis
Cost/benefit analysis is the process of identifying, and as far as
possible quantifying, the costs of undertaking a project and
contrasting these with the benefits expected to flow from it. For a
project to be approved, senior managers will have to be convinced
that the benefits outweigh the costs.
Q4 What do you understand by the terms tangible and intangible when
applied to costs and benefits?
Tangible costs or benefits are those for which a plausible quantitative
value can be calculated, such as increased profits or reduced staff
costs. Intangible costs or benefits are those where it is not practical to
calculate a quantitative value.

In theory, almost anything can be quantified, given enough time and

the right resources to do the analysis. For example, improved public
image could be measured through opinion polls or surveys and could
even, perhaps, be linked directly to sales figures. However, in most
cases, the expert resources are not available to do the research and, in
any case, the results are often debatable and sometimes not believed
by the decision makers. It is generally better, therefore, when dealing
with intangible costs and benefits to explain in the business case what
they are and to let the decision makers put their own (subjective)
value on what they might be worth.
Q5 What is meant by the term benefits realisation and why is it important?
Benefits realisation is the process of managing a project and the
post-project operation of, for example, a new information system so
as to maximise the chances of getting the benefits claimed in the
business case. All projects should be followed, after a suitable
interval, by a post-project review, the main aim of which should be to
find out whether the expected benefits have been realised or not.