Building a Business Case

Building a Business Case – How to achieve that Go/No-Go decision and avoid killing a project before it begins

Problems are the driving force behind projects that demand business solutions. Company leadership recognizes this need and relies heavily upon cross-functional teams to study feasibility and determine if a business case can be developed. Management uses a business case to quantitatively and qualitatively determine the economic feasibility of an effort that is currently lacking in definition. The business case is a key input to the project charter and will be a living document throughout the life of the project that serves as a litmus test against the project objectives.

Within the initiation phase of any project, you need to consider four fundamental components to business case development: business needs, situational analysis, recommendation and evaluation.

Determine Business Needs

Determining the business needs is an important first step in the process of developing a solid business case. Accomplish this by assessing needs, identifying stakeholders and identifying scope.

A needs assessment is a data collection process that identifies business needs versus wants and corresponds to the gaps between the current situation and the desired outcome. This manner of data collection involves understanding regulatory requirements, surveying stakeholders, analyzing historical data, as well as an important component of conducting a voice of the customer.

Stakeholder identification is a process in which you engage all key decision-making personnel to collaborate on determining the business need. Stakeholders often represent operations, maintenance, engineering, procurement, and environmental health and safety, in addition to a representative or champion from the steering committee or leadership. The challenge in stakeholder identification is ensuring that all key personnel are appropriately represented and engaged early on. Failing to involve all the proper stakeholders early in initiation can lead to oversights and misalignments later in the project effort.

Identify scope by determining what work is required to achieve the desired business outcome or objective. Scope identification relies heavily upon stakeholder identification to make certain there is early alignment with the business functions that the project effort will impact.

Analyze the Situation

Situational analysis is important to recognize the objectives, goals and strategies of the organization. Determine the root cause(s) of the problem or the conditions to leverage in the case of an opportunity. Consider conducting a gap analysis on the identified business need versus the current organizational capabilities. Discuss and capture the known risks, which may be high level at this point in the process and highlight factors that are critical to success of the effort, especially those quick wins and low-hanging fruit. Determine the decision-making criteria you will use to assess the course of action through the life of the project effort.

Through situational analysis, classify identified components as being required, desired or optional. This further qualifies needs versus wants and is essential to the objectivity of the business case. Take the time during situational analysis to identify options. This ensures to the business leadership that you have considered and vetted all avenues to determine the best course of action relative to an investment. Further classify options as doing nothing, doing the minimum, or going beyond the minimum to address the problem or opportunity.

Recommend Options

The recommendation section of the business case is often synonymous with the conclusion. It states to the business the most feasible option to progress with. A recommendation of an option includes a summary of the results compiled in addition to the risks, assumptions, constraints and interdependencies associated with the chosen option.

The recommendation should highlight the success criteria used to measure the outcome of the option pursued. Depending upon the nature of the business case and organizational requirements, consider including high level milestone schedule as well as a RACI (Responsible/Accountable/Consulted/Informed) chart accentuating roles and responsibilities as part of the recommendation.

Evaluate the Success

Finally, consider the evaluation part of the business case. The evaluation section determines the measure of success during the course of the project effort, handoff between project and operations, as well as the operational impacts beyond implementation. In essence, this statement and supporting information outline how you will measure the long- and short-term benefits of the project deliverables.

Conclusion

By following the steps identified above, your team can ensure that you have performed due diligence in developing the business case. Moreover, your company’s leadership can be assured that the business case is objective in nature, watertight and aligns with their organizational goals, objectives and strategies.

The more objective, concise and data driven the business case is, the more efficient the process will be to determining the payback of an investment, whether it be return on investment, net present value or other financial efficiency metric. The culmination of these components in a solid business case will allow for leadership to render a “go/no-go” decision timely and effectively.

Matrix Technologies is one of the largest independent process design, industrial automation engineering, and manufacturing operations management companies in North America. To learn more about how you can leverage our vast industry experience to assist your company with business case development in order to achieve that “go /no-go” decision, contact Brett Rygalski, PE, LEED AP, Program Manager for more information.

© Matrix Technologies, Inc.