Why Business Case Analysis?

Business case development is a step companies use for project selection. It analyzes how fulfilling the business case for the project will help to implement the Corporate Strategy and sustain the competitive advantage of the company.

The business case can further be developed into the business plan with the addition of more details. You can convert the business case to action steps and major milestones in order to develop a plan that will guide your venture through the entire project lifecycle, including that of the project outcome.



Generic Outline for Constructing a Business Case

Adapted from Project Manager's MBA by D.J.Cohen and R.J.Graham

Executive Summary

  • Description of the project

  • Market, customer, and competition

  • Cost-benefit analysis

  • Sensitivity analysis, risk assessment, and contingencies

  • Definitions of success and failure

Description of the Project

  • Purpose of the investment (expected gains from the project outcome during its lifecycle)

  • Key reasons for pursuing the project  (competitive advantages of the project against other project proposals; advantages of the business model, expected contribution to the shareholder value)

  • Strategic alignment  (contribution of the project outcome during its entire lifecycle to implementing the company's strategy for sustaining competitive advantage)

  • The value proposition  (core characteristics that make this venture uniquely valuable to its customers and will allow continued success over time)

  • Project requirements (an overview connecting the requirements with specific contributions to the business success of the entire venture)

  • Project goal, milestones, and major deliverables  (a list relating these items to the business success of the entire venture)



Market, Customers, and Competition

  • Market analysis

    • Critical success factors

    • Strengths, weaknesses, opportunities, threats (SWOT analysis)

    • Market size and segmentation

    • Market trends  (during the project outcome lifecycle)

  • Customer and end-user analysis

    • Customer and end-user identification

    • Fulfillment of customer and end-user needs

  • Competitive analysis

    • Identification of both direct and indirect competitors

    • Competitors' offerings

    • Competitive advantage to be produced by the project

    • Countermoves competitors might make  >>>

    • New competitors  (who are not active at present but may appear)

    • Contingency plans  (what you intend to do to meet countermoves by existing competitors and prepare for new competitors)



Cost-Benefit Analysis

  • Financial model

    • Cash flows in  (from output during its lifecycle)

    • Cash flows out  (direct and indirect expenses)

    • Financial analysis  (financial statements projected out for the required number of years, including revenue model and profit generation strategies, income statement, balance sheet, net present value, and discounted economic value added)

    • Assumptions  (about financial model, market, competition, technology and any other contingency that may influence the projected numbers of the financial analysis)

    • Assumption tests  (opportunities that will allow testing of the assumptions)

  • Non-quantitative factors

Sensitivity, Risks, and Contingencies

  • Sensitivity analysis

    • Critical assumptions

    • Assumption change  (critical factors and their influence on the results of the venture)

  • Risk analysis

    • Identification of risks

    • Quantification of risks

    • Risk management  >> 

    • Contingency plan  (minimizing damage if a high-probability event occurs; monitoring the medium-probability events)

  • Contingencies and dependencies

    • Value chain analysis  (what must happen beyond the boundaries of the project to make the investment successful)

    • Responsibility matrix  (the roles of the project team members)

Definitions of Success and Failure

  • Metrics

    • Economic factors/measures

    • Strategic factors/measures

  • Methods

    • Process  (how data will be collected to report metrics)

    • Responsibility  (roles of the people who will be responsible for collecting the data)





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