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Building a Project's Business Case Print

By ExecutiveBrief Staff

Forward-looking project managers realize that to avoid failure, they should build the business case for their projects by getting intimately knowledgeable about the reasons why sponsors approved their projects.
Too many projects get the axe because of the lack of business cases that justify their existence. When project sponsors begin to see projects only in terms of costs instead of potential rewards, there are higher chances that the projects would be canceled.

It is not the job of the project manager to build the business case. Ideally, project stakeholders and sponsors evaluate the business value and possible ROI from a project. If the project is seen in terms of generating income or reducing cost, the project will have the green light. This is the situation in the ideal world, but this scenario happens a lot less than one would like to believe.

Forward-looking project managers realize that to avoid failure, they should build the business case for their projects by getting intimately knowledgeable about the reasons why sponsors approved their projects. A project manager should work closely with clients, sponsors and other stakeholders, and ask the following questions:

What problems should the project address?

By interviewing project sponsors, the project manager can determine their goals and discuss the issues that the project would solve. In addition to project sponsors, the ones who are dealing with the issues at the workplace, perhaps on a daily basis, are a good source of ideas about the extent and many facets of the problem. Looking at day-to-day challenges from end-users’ point of view enables the project manager to get a better handle of the requirements of the project in terms of design and technical upgrades, as well as in terms of how it will solve end-user problems.

What are the strategic goals of the project?

Is it an easier system? Increased productivity? Better networking? Conversion to a marketable product? No matter what it the goals are, they must also come from and supported by the end-users.  At the end of the day, it will all boil down to the business value of the project. And by business value, it means cost reduction, better productivity, and the possibility of selling the product or service to the wider public.  Make sure that the goals are clear and the project’s objectives must reflect these goals.

What are the project’s basic requirements and what can end-users live without?

Aside from building the requirements based on the needs of its users, the project manager should also build the projects’ technical and design requirements and ask what bells and whistles it should have. The project may have a lot of feature that do not have business justifications, resulting in features that took too long to build.  Separating needs from fluff allows the project manager to formulate requirements, identify scope, and allocate resources that are important in creating a working version of the project. The quicker the iteration, the better the chances are of project survival.

What is the project’s ROI?

Even at the early stage of the project, it is possible to envision ballpark ROI figures. Because all projects incur costs, a project manager should have a fair idea of when investments will be recovered and generate positive cash flow.

About the Authors


ExecutiveBrief, the technology management resource for business leaders, offers articles loaded with proven tips, techniques, and action plans that companies can use to better manage people, processes and tools - the keys to improving their business performance. For more information visit us at: www.executivebrief.com

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written by Rey Moe, November 10, 2010
I think that the article and Jim's response both have very salient points. I would say to Jim's first retort " PMs building the business case" that PMs in this day and age are required to prepare the business case in collaboration with financial, operational and maintenance persons weighing in heavily. PMs should be versatile and knowledgeable enough to understand that basics of ROI and cash-flow. Understanding the basics of these critical financial figures would not require any financial "wizardry", lends to good discussion and questioning, and this helps in decision-making. The PM of today's organization is expected to learn and know the technical aspects of the business very well (technical knowledge), understand how the business works and exhibit business intelligence (business know-how) and then move forward to sell the appropriate solution to Senior Mgmt to approve and initiate the project.
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written by Jim Dickson, March 02, 2009
I'm sorry but I have a hard time with this article. I am a 20 year project manager with PMP certification and have difficulty with some of the statements - such as "Forward-looking project managers realize that to avoid failure, they should build the business case for their projects". If the PM needs to build the justification for the project it is because either the sponsor is incapable of doing so and the project is in trouble from the start or there is no business case which doesn't mean automatic failure.

The next thing that bothers me is the question "What are the strategic goals of the project?". This should read - "what are the strategic goals of the organization?". Does the project even make sense?

No. 3 that bother me is the statement "the project manager should also build the project's technical and design requirements and ask what bells and whistles it should have."
What is the PM supposed to be? - a jack of all trades? Is he/she the only one in the organization? Is there no business analyst or technical analyst? You have the PM doing the work of the Sponsor, the analyst and the end users - I doubt he/she will have time to ensure the project is successful. And I am not even going to mention the statement that the PM should be a financial wizard and be able to determine and track ROI and cash flow.




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