A Project Is Expected To Produce Cash Flows Of The Nuts and Bolts of Preparing a Business Case

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The Nuts and Bolts of Preparing a Business Case

Change is a challenging prospect, especially when it is geared toward improving business operations. There is a lot at stake here, and project proponents need to secure stakeholder buy-in to make effective business changes. However, shareholders won’t just roll over and say “okay”. They want everything in black and white. The first document they want to see before they buy is the business case.

A business case is therefore a very powerful and important document. It will be used to communicate and persuade the core group of people, the stakeholders. It is a logical argument that explains in clear terms why a project should be supported.

This document answers, financial and other consequences of taking one or another action. It supports:

• Planning

• Decision making

• Vendor selection

• Implementation

An effective business case suggests:

• Expected cash flow effects of the action over time.

• Methods and rationale for quantifying benefits and costs.

• Overall impact of the proposal in terms of discounted cash flow, payback period and internal rate of return.

Ensuring an effective business case

You have now decided to write your business case with the proverbial “bull by the horns”. However, you are wondering, “How can I make it powerful?” “How can I be sure it’s good?”

To make a good case you must have:

• Thorough (make sure you research all possible outcomes, costs and benefits).

• Be clear and logical (clearly write the chain of cause and effect) in your presentation

affects each cost/benefit).

• Objective (If your presentation is subjective, it will hurt you. Make sure

Good and bad points are incorporated into your finished product).

• Systematic (It is important for you to be consistent and systematic in your presentation

conclusion and your summary).

Getting started

Writing a business case is not a one-person endeavor. This is a team event, so get your team together to start the “ball rolling”. While usually one or two people do the writing, it takes a whole team to provide the necessary information. A team in about 4-5 meetings can provide you with invaluable information to use.

How the team works

Having a team behind your efforts has many benefits. For example, the team will:

1. Assist with information on cost and benefit models, including line items and ideas.

2. Spread a sense of ownership for the business case. After all, they are involved.

3. Act as a buffer for critics of the proposal.

IT Managers: Provide information on the cost and value of impact on IT operations.

Financial experts: Provide useful information to determine the contribution to expected business benefits.

Human Resource Personnel: Recognize the cost of people.

Senior Managers: Help prioritize the company’s strategic business goals, legalize and assign value to any contribution.

Composition and content

There is no set template for writing business cases; However there are sections that should be included to ensure a well-rounded proposal. These are:

• Overview/Introduction

• Procedures

• Business impact

• Risks and contingencies

• Conclusions and recommendations

By Carol Peterson

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