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PRINCE2 Foundation

Lesson 4Business Case Theme

Based on AXELOS PRINCE2 material. Material is reproduced under licence from AXELOS Limited. All rights reserved.

PRINCE2 is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.

AXELOS is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.

The Swirl logo is a trade mark of AXELOS Limited, used under the permission of AXELOS Limited. All rights reserved. Copyright 2014, Simplilearn, All rights reserved.
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Objectives

After completing Define a Business Case theme


this lesson, you will
be able to: Explain the PRINCE2 approach to Business Case theme

Describe the development of a Business Case

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Purpose of Business Case Theme

The purpose of the Business Case theme is to establish mechanisms to judge whether the project
is (and remains) desirable, viable and achievable as a means to support decision making in its
(continued) investment.[1]

After synthesising the need for Business Case theme, the main elements to be understood are:

Desirablemeans the cost/benefit/risk balance.

Viableimplies that project can deliver the product.

Achievablemeans the products can deliver the benefits.

! For composition of Business Case, please refer PRINCE2 Manual Appendix A.

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Business CaseIntroduction

The definition of Business Case is as follows:

The Business Case presents the optimum mix of information used to judge whether the project is (and
remains) desirable, viable and achievable, and therefore worthwhile investing in.[2]

The salient features of Business Case are:


Business Case is continually updated with costs, timescales, risks and benefits.
Outline Business Case is developed during Starting Up a Project process.
Detailed Business Case is developed during Initiating a Project process.

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Outputs, Outcomes and Benefits of a Project

The outputs, outcomes and the benefits are considered while deciding the desirability of a project. Let
us look at these terms individually:

A projects output is any of the projects specialist products whether tangible or


Output intangible.
Example: New Enterprise Resource Planning (ERP) system for the HR department.

An outcome is the result of the change derived using the projects outputs.
Outcome
Example: Faster application and approval of leaves.

A benefit is the measurable improvement resulting from an outcome that is


perceived as an advantage by one or more stakeholders.
Benefit
Example: Employee productivity up by 5%, employee satisfaction levels up by
7.5% and revenue increased by 10% annually.

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Relationship between Outputs, Outcomes and Benefits

The figure illustrates the relationship between Outputs, Outcomes and Benefits.

Figure 4.1 Relationship between outputs, outcomes and benefits. Copyright AXELOS
Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
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Benefits Review Plan

The Senior User specifies the benefits and is accountable for the benefits realisation.
The different features of Benefits Review Plan (BRP) are the following:
Every Project should have a Benefits Review Plan or BRP.
BRP is first created by the Project Manager in the initiation stage and submitted to the Project
Board for approval when seeking project authorisation.
BRP defines the scope, timing and responsibility of reviews depending on the expected benefits.
BRP is updated at the end of each stage by including the actual benefits achieved (if any).
BRP is different from project plan and stage plans.

! For composition of BRP, please refer PRINCE2 Manual Appendix A.

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Business Case for Different Types of Projects

The nature of the project determines the objectives to verify the desirability of the project. Later, it is
confirmed whether the projects products have met the objectives.

The various types of projects are compulsory, not-for-profit, evolving, customer/supplier and multi-
organisation project.

Some of these projects may be measured principally on Return on Investment, however others like
the not-for-profit projects may be measured on other non-financial benefits.

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PRINCE2 Approach to Business Case

Continued business justification is ensured by assuring the justification of the project when starting
and also re-verifying this at the end of every stage.

In PRINCE2, the Business Case is developed at the beginning of the project and maintained

throughout the life of the project, being formally verified by the Project Board at each key decision

point, such as end stage assessments, and confirmed throughout the period that the benefits
accrue.[3]

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PRINCE2 Approach to Business Case (contd.)

Let us look at the terms develop, verify, maintain and confirm individually.

Develop
Business Case should be first developed in the beginning of the project and maintained through the life of the
project.

Verify
The Project Board needs to verify to make sure that project is desirable, viable and achievable as per the Business
Case.

Maintain
The Project Manager needs to update Business Case with actual costs and timescale data of current stage and
provide the forecast of the costs and timescales of the upcoming stage.

Confirm

An assessment to confirm whether the planned benefits have been or will be realised.

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Development of Business Case

In PRINCE2, Executive is responsible for the Business Case. Development of the Business Case may
be delegated to a Business Analyst or a Project Manager. The other features of Business Case are:
The outline Business Case is derived from the project mandate and developed pre-project in the
Starting up a Project process.
The detailed Business Case is derived from the outline Business Case, the Project Plan, which
provides inputs like costs and timescales and the Risk Register.

Figure 4.2 The development path of the Business Case. Copyright AXELOS Limited 2013. Material is reproduced under licence from AXELOS. All rights reserved.
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Verify and Maintain Business Case

It is the responsibility of the Executive to assure the projects stakeholders that the project remains
desirable, viable and achievable at all times. To drive the decision making, the Business Case should
be reviewed by:

Approves the Outline Business Case. Reviews the Detailed Business Case as part of Benefits
Corporate or
programme Review.
management

May review the Outline Business Case during the Starting up a Project process to take a call on
whether to initiate the project.
Project Board

Refers the Business Case while assessing impact of any change, issue or risks.
Project Manager
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Content of Business Case

Business Case comprises:


An Executive summary
Business optionsDo nothing should always be the starting option
Expected benefitsQuantification of benefits is necessary for setting up the benefits tolerances
Expected dis-benefitsNegative outcome of carrying out a project
TimeframesWhat period the project cost will be incurred and when to expect benefits
CostsOn-going operations and maintenance costs and their funding arrangements
Investment appraisalIncludes the development, operations and maintenance costs
Major risksDocument the major risks foreseen in the project

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Roles and Responsibilities in Business Case Theme

The table lists the responsibilities of Corporate or programme management and Executive in Business
Case theme.

Role Responsibilities

Corporate or Provide the project mandate and defines any standards to which the Business Case needs to be
programme developed.
management Hold the Senior User(s) to account for realising the post-project benefits enabled by the
projects products.
Responsible for the Benefits Review Plan (post-project).
Executive Responsible for the Business Case for the duration of the project.
Responsible for the Benefits Review Plan (for the duration of the project) unless being managed
by corporate or programme management.
Oversee the development of a viable Business Case, ensuring that the project is aligned with
corporate strategies, and secure the funding for the project.

Text in box is from Managing Successful Projects with PRINCE2. Copyright AXELOS Limited 2013.
Material is reproduced under licence from AXELOS. All rights reserved.

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Roles and Responsibilities in Business Case Theme (contd.)

The table lists the responsibilities of Senior User(s) and Senior Supplier(s) in Business Case theme.

Role Responsibilities
Senior User(s) Responsible for specifying the benefits upon which the Business Case is approved.
Ensure the desired outcome of the project is specified.
Ensure that the project's products deliver the desired outcomes.
Ensure that the expected benefits (derived from the projects outcomes) are realized.
Provides actual versus forecast benefits statement at the benefits reviews.
Senior Supplier(s) Responsible for the supplier Business Case(s) (if they exist).
Confirm that the products required can be delivered within the expected costs and are
viable.

Text in box is from Managing Successful Projects with PRINCE2. Copyright AXELOS Limited 2013.
Material is reproduced under licence from AXELOS. All rights reserved.

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Roles and Responsibilities in Business Case Theme (contd.)

The table lists the responsibilities of Project Manager in Business Case theme.

Role Responsibilities
Project Manager Prepare the Business Case on behalf of the Executive.
Conduct impact analysis of any new or revised issues or risks that affect the projects
desirability, viability or achievability against the original basis for approving the project.
Assess and update the Business Case at the end of each management stage.
Assess and report on project performance at project closure.

Text in box is from Managing Successful Projects with PRINCE2. Copyright AXELOS Limited 2013.
Material is reproduced under licence from AXELOS. All rights reserved.

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Roles and Responsibilities in Business Case Theme (contd.)

The table lists the responsibilities of Project Assurance in Business Case theme.

Role Responsibilities
Project Assurance Assist in the development of the Business Case.
(business Verify and monitor the Business Case against external events and project progress.
assurance Ensure the project fits the overall programme or corporate strategy.
responsibilities) Monitor project finance on behalf of the customer.
Ensure the value-for-money solution is constantly reassessed.
Monitor changes to the Project Plan to identify any impact on the needs of the business or
the Business Case.
Review the impact assessment of potential changes on the Business Case and Project Plan.
Verify and monitor the Benefits Review Plan for alignment to corporate or programme
management.
Project Support The Business Case should have a baseline and therefore be under configuration management.
Project Support should advise the Project Manager of any proposed or actual changes to
products that affect the Business Case.

Text in box is from Managing Successful Projects with PRINCE2. Copyright AXELOS Limited 2013.
Material is reproduced under licence from AXELOS. All rights reserved.
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Quiz

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QUIZ How does the Business Case theme support the continued business justification
1 principle?

a. Allows projects not delivering direct benefits to proceed without a


Business Case
b. Removes the need for a separate Business Case where a project is part
of a programme
c. Mandates that even the simplest of projects should have a Business
Case
d. Ensures a new Business Case is created at the end of each stage to
confirm the viability of the next stage

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QUIZ How does the Business Case theme support the continued business justification
1 principle?

a. Allows projects not delivering direct benefits to proceed without a Business Case

b. Removes the need for a separate Business Case where a project is part of a programme
c. Mandates that even the simplest of projects should have a Business Case

d. Ensures a new Business Case is created at the end of each stage to confirm the viability
of the next stage
Answer: c.
Explanation: The Business Case theme supports the continued business justification
principle by a mandate that even the simplest of projects should have a Business Case.

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QUIZ In PRINCE2, the desirability of the project is determined by analysing which of the
2 following?

a. Business Case

b. Project Plan
c. Checkpoint Reports

d. Stage Plan

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QUIZ In PRINCE2, the desirability of the project is determined by analysing which of the
2 following?

a. Business Case

b. Project Plan
c. Checkpoint Reports

d. Stage Plan

Answer: a.
Explanation: In PRINCE2, the desirability of the project is determined by analysing the
Business Case.

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QUIZ To whom among the following can the Project Board assign the work of assisting the
3 development of Business Case?

a. Senior User

b. Senior Supplier
c. Project Assurance

d. Project Support

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QUIZ To whom among the following can the Project Board assign the work of assisting the
3 development of Business Case?

a. Senior User

b. Senior Supplier
c. Project Assurance

d. Project Support

Answer: c.
Explanation: The Project Board can consider using Project Assurance to assist the
development of the Business Case.

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QUIZ
Which of the following is not a business option in PRINCE2?
4

a. Do nothing

b. Do something
c. Do the minimum

d. Do everything

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QUIZ
Which of the following is not a business option in PRINCE2?
4

a. Do nothing

b. Do something
c. Do the minimum

d. Do everything

Answer: d.
Explanation: Do everything is not a business option in PRINCE2. The business options as
per PRINCE2 are: do nothing: always the starting option, do the minimum, and do
something.

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QUIZ Who among the following can the Executive use to verify the viability of the Business
5 Case?

a. Project Support

b. Project Assurance
c. Senior Supplier

d. Team Manager

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QUIZ Who among the following can the Executive use to verify the viability of the Business
5 Case?

a. Project Support

b. Project Assurance
c. Senior Supplier

d. Team Manager

Answer: b.
Explanation: The Project Board can consider using Project Assurance to assist with the
development of the Business Case. So an Executive can also use Project Assurance to verify
the viability of the Business Case.

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QUIZ
Who is responsible for ensuring that benefits reviews are planned and executed?
6

a. Team Manager

b. Executive
c. Senior Supplier

d. Project Manager

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QUIZ
Who is responsible for ensuring that benefits reviews are planned and executed?
6

a. Team Manager

b. Executive
c. Senior Supplier

d. Project Manager

Answer: b.
Explanation: By default, the Executive is responsible for ensuring that benefits reviews are
planned and executed.

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QUIZ According to PRINCE2, which is the starting business option that provides basis for
7 quantifying other options?

a. Do nothing

b. Do something
c. Do the minimum

d. Do everything

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QUIZ According to PRINCE2, which is the starting business option that provides basis for
7 quantifying other options?

a. Do nothing

b. Do something
c. Do the minimum

d. Do everything

Answer: a.
Explanation: Do nothing should always be the starting option to act as the basis for
quantifying the other options.

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QUIZ Which of the following would provide information that can be documented under the
8 reasons section of the Business Case?

a. End Stage Report

b. Project Brief
c. Project mandate

d. Project Plan

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QUIZ Which of the following would provide information that can be documented under the
8 reasons section of the Business Case?

a. End Stage Report

b. Project Brief
c. Project mandate

d. Project Plan

Answer: c.
Explanation: Project mandate covers the required reasons for the project.

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QUIZ Who approves or disapproves the outline Business Case that is developed in the
9 starting phase a project process?

a. Project Board

b. Executive
c. Project Manager

d. Senior User

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QUIZ Who approves or disapproves the outline Business Case that is developed in the
9 starting phase a project process?

a. Project Board

b. Executive
c. Project Manager

d. Senior User

Answer: a.
Explanation: Project Board approves or disapproves the outline Business Case. Based on the
approval, Initiating a Project process gets kicked off.

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QUIZ Who is responsible for reporting the benefits that are measurable during the lifecycle
10 of a project?

a. Project Manager

b. Senior User
c. Senior Supplier

d. Team Manager

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QUIZ Who is responsible for reporting the benefits that are measurable during the lifecycle
10 of a project?

a. Project Manager

b. Senior User
c. Senior Supplier

d. Team Manager

Answer: a.
Explanation: The benefits that can be measured during the life of a project should be
reported by the Project Manager in the end stage report.

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Summary

Here is a quick The Business Case presents the optimum mix of information used to judge
recap of what we
whether the project is (and remains) desirable, viable and achievable and
have learnt in this
lesson: therefore worthwhile investing in

The Senior User specifies the benefits and is accountable for the benefits
realisation

Development of the Business Case may be delegated to a Business Analyst


or a Project Manager

It is the responsibility of the Executive to assure the projects stakeholders


that the project remains desirable, viable and achievable at all times

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Thank You

Based on AXELOS PRINCE2 material. Material is reproduced under licence from AXELOS Limited. All rights reserved.
PRINCE2 is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.
AXELOS is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.
The Swirl logo is a trade mark of AXELOS Limited, used under the permission of AXELOS Limited. All rights reserved.
40 Copyright2014,
Copyright 2014, Simplilearn,
Simplilearn, All rights
All rights reserved.
reserved.
References

[1] Based on Managing Successful Projects with PRINCE2, by AXELOS. Business Case, Purpose.

[2] Based on Managing Successful Projects with PRINCE2, by AXELOS. Business Case, Business Case
defined.

[3] Based on Managing Successful Projects with PRINCE2, by AXELOS. Business Case, The PRINCE2
approach to the Business Case.

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