Business Case
A documented justification for undertaking a project investment.
Detailed Explanation
The business case justifies why a project should be undertaken. It compares costs against expected benefits, providing decision-makers with the information to authorize or decline the investment. A comprehensive business case includes problem statement, alternatives analysis, cost-benefit analysis, and risk assessment.
Financial metrics like ROI, NPV, payback period, and internal rate of return should quantify benefits wherever possible. The PMBOK Guide 7th Edition connects the business case to the Business Environment performance domain.
The business case is typically created before the project charter by the project sponsor. It may be updated as the project progresses and more information becomes available through progressive elaboration.
Key Points
- Created before project authorization
- Quantifies costs, benefits, risks, and alternatives
- Includes ROI, NPV, payback period metrics
- Owned by the project sponsor
- Updated throughout the project lifecycle
- Basis for go/no-go decisions at phase gates
Practical Example
A company considers building an HR portal. The business case shows: EUR 200K development cost, EUR 80K annual savings, 2.5-year payback, 5-year NPV of EUR 150K. Alternatives (buy vs. build vs. outsource) are compared. The steering committee approves based on strong ROI and strategic alignment.
Tips for Learning and Applying
Quantify benefits in financial terms — avoid vague claims
Include at least 2-3 alternatives including 'do nothing'
Be transparent about risks — ignoring them destroys credibility
Revisit the business case at each phase gate
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