# Business case > Mediated Wiki article. Canonical URL: https://mediated.wiki/source/Business_case > Markdown URL: https://mediated.wiki/source/Business_case.md > Source: https://en.wikipedia.org/wiki/Business_case > Source revision: 1328529594 > License: Creative Commons Attribution-ShareAlike 4.0 International (https://creativecommons.org/licenses/by-sa/4.0/) A **business case** captures the reasoning for initiating a [project](/source/Project) or [task](/source/Task_(project_management)).[1] Many projects, but not all, are initiated by using a business case.[2] It is often presented in a well-structured written [document](/source/Document),[3] but may also come in the form of a short [verbal agreement](/source/Oral_contract) or [presentation](/source/Presentation). The [logic](/source/Logic) of the business case is that, whenever [resources](/source/Resources) such as money or effort are consumed, they should be in support of a specific [business need](/source/Business_needs).[2] An example could be that a [software upgrade](/source/Software_upgrade) might improve [system performance](/source/Systems_Performance_Engineering), but the "business case" is that better performance would improve [customer satisfaction](/source/Customer_satisfaction), require less task processing time, or reduce system [maintenance costs](/source/Maintenance_costs). A compelling business case adequately captures both the quantifiable and non-quantifiable characteristics of a proposed project. According to the [Project Management Institute](/source/Project_Management_Institute), a **business case** is a "[value proposition](/source/Value_proposition) for a proposed project that may include [financial](/source/Financial) and nonfinancial benefit".[4] Business cases can range from comprehensive and highly structured, as required by formal [project management](/source/Project_management) [methodologies](/source/Methodologies), to informal and brief. Information included in a formal business case could be the background of the project, the expected business benefits,[5] the options considered (with reasons for rejecting or carrying forward each option), the expected [costs](/source/Cost) of the project, a [gap analysis](/source/Gap_analysis) and the expected [risks](/source/Risk_management). Consideration should also be given to the option of doing nothing including the costs and risks of inactivity. From this information, the [justification](/source/Justification_(epistemology)) for the project is derived. ## Reasons for creating a business case Business cases are created to help decision-makers ensure that: - the proposed initiative will have [value](/source/Value_(economics))[6] and relative priority compared to alternative initiatives based on the [objectives](/source/Business_objective) and expected benefits laid out in the business case. - the [performance indicators](/source/Performance_indicator) found in the business case are identified to be used for proactive realization of the business and [behavioral](/source/Behavioral_economics) change. ## Development and approval process ### Business process design The business case [process](/source/Business_process) should be designed to be: - adaptable – tailored to the size and risk[2] of the proposal - consistent – the same basic business issues are addressed by every project - business oriented – concerned with the business capabilities and impact, rather than having a technical focus - comprehensive – includes all factors relevant[7] to a complete evaluation - understandable – the contents are clearly relevant, logical and, although demanding, are simple to complete and evaluate - measurable – all key aspects can be quantified so their achievement can be tracked and measured - transparent – key elements can be justified directly - accountable – accountability and commitments for the delivery of benefits and management of costs are clear. ## Components of a business case report A good business case report brings confidence and accountability into the field of making investment decisions. It is a compilation of all information collected during enterprise analysis and the business case process. The key objective is to provide evidence and justification for continuing with the investment proposition. A business case can include details such as [strategic alignment](/source/Strategic_alignment), [return on investments](/source/Return_on_investment), risk exposure assessment, [feasibility study](/source/Feasibility_study), expected [key performance indicators](/source/Key_performance_indicator), [evaluations](/source/Evaluation) and alternative measures.[8][9] ## Example of a business case report structure Here is an example of a report structure for a business case:[10] - Preface - Table of contents - [Executive](/source/Business_executive) briefing - Recommendation - Summary of results - Decision to be taken - Introduction - [Business drivers](/source/Business-driven_development) - [Scope](/source/Scope_(project_management)) - Financial [metrics](/source/Performance_metrics) - Analysis - Assumptions - Cash flow statement ([net present value](/source/Net_present_value), etc.) - Costs - Benefits - Risk - Implementation plan - [Strategic](/source/Strategy) options - [Opportunity costs](/source/Opportunity_cost) - Conclusion, recommendation, and next steps - Appendix ## Review and approval At various stages in the project, the business case should be reviewed to ensure that: - The justification is still valid, - The project will deliver the solution to the business need. The result of a review may be the termination or amendment of the project.[11] The business case may also be subject to amendment if the review concludes that the business need has abated or changed,[2] this will have a [knock-on effect](/source/Knock-on_effect)[12] on the project. ## Public sector projects Many [public sector](/source/Public_sector) projects are now required to justify their need through a business case. In the public sector, the business case is argued in terms of [cost–benefit analysis](/source/Cost%E2%80%93benefit_analysis), which may include both financial and non-financial cost and benefits.[13] ## See also - [Business plan](/source/Business_plan) - [Project charter](/source/Project_charter) - [Case competition](/source/Case_competition) - [Innovation](/source/Innovation) - [Optimism bias](/source/Optimism_bias) - [Planning fallacy](/source/Planning_fallacy) - [Reference class forecasting](/source/Reference_class_forecasting) - [Win–win game](/source/Win%E2%80%93win_game) ## Notes 1. Project Management Institute 2021, pp. §Appendix X3.2 The PMO Value Proposition - Why have one?. 1. Project Management Institute 2021, §3.4 Focus on Value. 1. Project Management Institute 2021, §2.6.1 Delivery of Value. 1. Project Management Institute 2021, §Glossary Section 3. Definitions. 1. Project Management Institute 2021, §4.6.1 Strategy Artifacts. 1. Project Management Institute 2021, Section 3.4 Focus on Value. 1. Project Management Institute 2021, §2.7.1.2 Effective Metrics. 1. Project Management Institute 2021, §3.4 Strategy Artifacts. 1. Tamang, Suman. ["Business Case Study of Yahoo: The Rise and Fall"](https://web.archive.org/web/20231130082607/https://moneysifu.com/business-case-study-of-yahoo/). *Money Sifu*. Archived from [the original](https://moneysifu.com/business-case-study-of-yahoo/) on November 30, 2023. Retrieved December 2, 2023. 1. [Source: Messner, W.: More on Making the Compelling Business Case](http://www.globusresearch.com/business-case.aspx#info) [Archived](https://web.archive.org/web/20170406225608/http://www.globusresearch.com/business-case.aspx#info) 2017-04-06 at the Wayback Machine GloBus Research, accessed: 5 May 2013 and Messner, W. (2013): [Making the Compelling Business Case](http://www.thebusinesscase.info). Houndmills: Palgrave Macmillan. 1. Project Management Institute 2021, §3.4 The Tailoring Process. 1. Project Management Institute 2021, §2.8.3 Complexity. 1. Project Management Institute 2021, §4.4.1 Data Gathering and Analysis. ## References - Bentley, C.: *Practical Prince2* (The Stationery Office), ISBN 0-11-702853-3. - [Five elements to include in a compelling business case](https://www.industryweek.com/articles/five_elements_to_include_in_a_compelling_business_case_15594) - Messner, W.: *Making the Compelling Business Case. Decision-Making Techniques for Successful Business Growth.* Houndmills: Palgrave Macmillan, 2013 ([book companion website](http://www.thebusinesscase.info)) - OGC Guidance and templates on ['Business Case'](https://web.archive.org/web/20060901141349/http://www.ogc.gov.uk/documentation_and_templates_business_case.asp) - Project Management Institute (2021). *A guide to the project management body of knowledge (PMBOK guide)*. 7th ed. Newtown Square, PA. ISBN 978-1-62825-664-2. - Schaltegger, S. & Wagner, M. (Eds.): *Managing the Business Case for Sustainability. The Integration of Social things, and Economic Performance*. Sheffield: Greenleaf, 2006 ## External links - [Business Case article in PRINCE2 wiki](http://prince2.wiki/Business_Case) --- Adapted from the Wikipedia article [Business case](https://en.wikipedia.org/wiki/Business_case) by Wikipedia contributors ([contributor history](https://en.wikipedia.org/wiki/Business_case?action=history)). Available under [Creative Commons Attribution-ShareAlike 4.0 International](https://creativecommons.org/licenses/by-sa/4.0/). Changes may have been made.