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Business cases, benefits and potential value

SERIES ARTICLE

The impact of planning fallacy, optimism bias and strategic misrepresentation on the road to success

Advances in Project Management

By Prof Darren Dalcher

Director, National Centre for Project Management
University of Hertfordshire

UK


Recent articles in this column focused on the preference for planning over plans, the wider need to consider the inevitable role of uncertainty in change programmes, the social element of projects, and the increasing necessity for flexibility, resilience and agility, in preference to strict organization and control. They also addressed a need to rethink how projects are initiated and managed.

In general, projects now encompass extended life cycles and time horizons, which require managers and stakeholders to engage with and address wider time horizons, realised benefits, decommissioning, long terms environmental impacts, societal considerations, accrued value and changing and evolving uses. The shift implies that projects are mutating from temporal operational undertakings into more influential strategic endeavours.

Such a shift places an even greater importance on the writing of comprehensive and well-reasoned business cases that can be used to underpin proposed undertakings.

Business cases

The sixth edition of the APM Body of Knowledge positions the business case within integrative management, clarifying that “all projects and programmes must have a business case that demonstrates the value of the work”.

The APM body of Knowledge explains that business cases provide justification for undertaking projects or programmes. A business cases evaluates the benefit, cost and risk of alternative options and provides a rationale for the preferred solution.

During the concept phase of the life cycle an outline document is prepared and utilised by senior management in order to determine whether to give the go-ahead for the definition phase. The document is developed iteratively through a process of progressive elaboration adding and refining details as information becomes available and the required level of accuracy is achieved. During the definition phase the detailed business case is completed. Such a document typically encompasses:

  • A strategic case, including the context, background and rationale
  • Options appraisal, indicating which options have been considered, and why
  • Expected benefits, ideally including unavoidable disbenefits
  • Commercial aspects, including costs, investment appraisal and preferred funding arrangements
  • Risk, identifying the key risks, opportunities and issues and their impact on the proposal and business case
  • Timescales for key outputs, and for the realisation of benefits, and delivery of value

Business cases are used to translate ideas into tangible documents, identify and compare alternative schemes, justify investment, inform decision-making, secure funding, underpin governance structures, create baselines for managing the undertaking and realising the benefits, mobilise support, establish a platform for measuring progress and defining business success and impact expectations that extend beyond the traditional measures of delivery.

Sponsors support projects and programmes in order to ensure that the benefits are realised and the promised value is delivered (i.e. in order to satisfy some business goals, strategic objectives and intentions). Business cases may be prepared by project or programme managers, although in many organisations, they may be undertaken by other domain specialists, such as business analysts, systems analysts, enterprise specialists or solution architects.

Crucially, business cases are not static documents. Once approved, cases should be kept up to date, reflecting approved changes and agreed modifications, thereby facilitating their use as a primary document during gateway reviews, governance audits, and in establishing the residual success (including in terms of benefit realisation and value delivery) of the programme or project, at the relevant timeframes.

Well-developed business cases are used to communicate a compelling argument to key stakeholders whose active support is needed to define an opportunity and deliver the required change. A convincing argument will identify and compare multiple alternative options, making a solid case for the selection of the preferred alternative whilst indicating the pathway needed to turn that choice into action.

Fallacy, bias or misrepresentation?

Given that business cases are used to drive the development efforts through projects and programmes, the projections and assumptions embedded within the cases are fundamental to assessing the success and achievement levels of such efforts.

More…

To read entire article, click here

 

Editor’s note: The PMWJ Advances in Project Management series includes articles by authors of program and project management books published by Gower in the UK. Each month an introduction to the current article is provided by series editor Prof Darren Dalcher, who is also the editor of the Gower Advances in Project Management series of books on new and emerging concepts in PM. Prof Dalcher’s article is an introduction to the invited paper this month in the PMWJ.

 



About the Author

pmwj36-Jul2015-Dalcher-PHOTO
Prof Darren Dalcher, PhD

Series Editor
Director, National Centre for Project Management
University of Hertfordshire, UK

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Darren Dalcher
, Ph.D. HonFAPM, FRSA, FBCS, CITP, FCMI is Professor of Project Management at the University of Hertfordshire, and founder and Director of the National Centre for Project Management (NCPM) in the UK. He has been named by the Association for Project Management (APM) as one of the top 10 “movers and shapers” in project management in 2008 and was voted Project Magazine’s “Academic of the Year” for his contribution in “integrating and weaving academic work with practice”. Following industrial and consultancy experience in managing IT projects, Professor Dalcher gained his PhD in Software Engineering from King’s College, University of London. Professor Dalcher has written over 150 papers and book chapters on project management and software engineering. He is Editor-in-Chief of Software Process Improvement and Practice, an international journal focusing on capability, maturity, growth and improvement. He is the editor of the book series, Advances in Project Management, published by Gower Publishing of a new companion series Fundamentals of Project Management.

Heavily involved in a variety of research projects and subjects, Professor Dalcher has built a reputation as leader and innovator in the areas of practice-based education and reflection in project management. He works with many major industrial and commercial organisations and government bodies in the UK and beyond. He is an Honorary Fellow of the APM, a Chartered Fellow of the British Computer Society, a Fellow of the Chartered Management Institute, and the Royal Society of Arts, and a Member of the Project Management Institute (PMI), the Academy of Management, the Institute for Electrical and Electronics Engineers, and the Association for Computing Machinery. He is a Chartered IT Practitioner. He is a Member of the PMI Advisory Board responsible for the prestigious David I. Cleland project management award and of the APM Professional Development Board. Prof Dalcher is an academic editorial advisor for the PM World Journal. He can be contacted at [email protected].

To see other works by Prof Darren Dalcher, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/darren-dalcher/.