Lesson 17: Business Case Theme, Minimum Requirements
Each theme has specific minimum requirements in PRINCE2® that you must have. The rest depends on you and the way you’re going to tailor PRINCE2 for your project. So, what do you think would be the minimums necessary for this theme?
Based on AXELOS PRINCE2® material. Reproduced under licence from AXELOS. All rights reserved.
Note: PRINCE2 2017 edition is now called PRINCE2 6th edition.
- 00:09 – PRINCE2 has outlined a number of items that each project should be doing from a Business Case theme point of view
- 00:16 – Therefore, this section is called the Business Case Theme minimum requirements
- 00:21 – You will also see how the Business Case is used in a project
- 00:26 – Let’s jump back to the IP process for a second
- 00:29 – So the purpose of the IP process is to establish a solid foundation for the project
- 00:35 – And this solid foundation produces the documents; a Project Plan, a Business Case, the Benefits Approach document, and information on controlling a project
- 00:45 – And this is all put together in one package we call the PID
- 00:49 – So that’s where the Business Case, the full Business Case document first appears
- 00:54 – Now let’s jump back to the SU process
- 00:57 – So, during the starting of a project process, the outline Business Case is created by the executive
- 01:03 – And the input for this will be the Project Mandate
- 01:08 – And also some information can come from the Project Approach
- 01:12 – It is then refined in the Initiation Stage, which we have just discussed, and becomes the full Business Case document
- 01:19 – The Project Board then will approve and check the Business Case every time they have to make a decision
- 01:27 – During the stages, the Business Case is considered when evaluating each issue and risk
- 01:33 – For example, the Project Manager will ask, “What impact will this issue have on the Business Case?”
- 01:40 – The Business Case document as well is a minimum requirement because you must provide a document to show a business justification
- 01:47 – However, each organization can have their own format
- 01:51 – So, I’ll just go through some of the options
- 01:53 – So, some companies might use an executive summary, they should be using reasons for the project because this gives good information
- 02:01 – The benefits as well should be a must, but not all Business Cases I have seen include dis-benefits
- 02:08 – Time, cost and return on investment should be a must because this is important data for a Business Case
- 02:14 – And the different approach options; this is not always documented, but it’s good to know the different approaches that were considered for each project and why one was chosen, so why one and not the other
- 02:28 – A list of major risks is also a must or should also be a must, but again not always included
- 02:34 – So that’s an overview, let’s say, of the main headings we might find in a Business Case document
- 02:40 – This is a simple example taken from a sample project which I have done called the U2 Driving School
- 02:48 – And you can find on the Internet, just search on Google for U2 Driving School
- 02:53 – This example makes it much clearer and easier to explain, and also easier for you to understand them
- 02:59 – So we have the executive summary, so you see here this is a very, very short statement on why this project from a business point of view
- 03:08 – The reasons? Well, these are clear and they can come from the Project Mandate document
- 03:14 – The options? This is a simple example of three options which I have included
- 03:19 – And I started with the Do Nothing, which is always a good way to start
- 03:22 – So what happens if we do nothing? What are the consequences then?
- 03:27 – So here, the consequences are we will lose 4% of our clients every year
- 03:31 – Okay, that’s clear, so how can we improve on that?
- 03:35 – The next option was a big marketing campaign, which was too costly
- 03:39 – And the other option was create an online driving test simulator, which is the one that was chosen
- 03:46 – Expected benefits, they’re also listed in there, including measurable improvements and the timeline on when we can expect these as well
- 03:55 – So that’s quite clear
- 03:58 – There’s a nice example then of the costs over a number of years and the return on investment over a number of years
- 04:05 – So, as you can see from this example, writing a Business Case is not that difficult, so it can be easy to do
- 04:12 – So there’s no reason not to do it
- 04:14 – The Business Case is also reviewed and updated at the end of each stage; so in the Stage Boundary Process
- 04:23 – As the real costs will keep changing and the Business Case document must reflect this because it’s a living document
- 04:30 – So for example, if the stages are costing 20% more, the last three stages are costing 20% more, then there’s a good chance that the rest of the project will also cost 20% more
- 04:41 – So the Business Case must be updated to reflect this
- 04:45 – The Business Case gets its final update in the Closing a Project process; so this is the final process of the project
- 04:53 – This is when we know then the full cost of the project just before the budget was switched off or slows down
- 05:02 – The project should also document the benefits and we use a Benefits or a document called the Benefits Management Approach, I refer to it as a Benefits Approach document
- 05:12 – And this is created in the Initiation Stage
- 05:16 – So here, the Project Manager will extract this benefit information from the senior users because they should know
- 05:23 – For example, the list of the expected benefits, the current status today, so we know how to compare
- 05:30 – And the expected benefits perhaps for the next six months over a couple of years or the next 12 months over a couple of years
- 05:38 – The purpose of this Benefits Approach document is to define the benefits that will be put in place to ensure that the project’s outcome are achieved
- 05:47 – So, help that happening; and confirm that the project’s benefits are realized
- 05:55 – During the Stage Boundary Process, we can check to see if some of the benefits have already been realized
- 06:03 – If its users are using part of the product or service from the project already
- 06:07 – So this happens a lot in IT projects where we deliver part of the products during the project and then it’s possible to check
- 06:16 – During the Closing a Project process, the Project Manager will check for benefits, if there are any,
- 06:23 – And plan for future benefit reviews that will take place post project, so after the project is closed
- 06:32 – Next, I will introduce two steps here for the Business Case
- 06:36 – We have Develop the Business Case and then Maintain the Business Case
- 06:40 – So we have covered these already, but now let’s cover them again
- 06:44 – So, first, develop the Business Case
- 06:46 – An outline Business Case is created in the starting of a project process
- 06:50 – This is a very, very light version of the Business Case; let’s say a half a page is sufficient here
- 06:55 – And then the full Business Case document is created towards the end of the Initiation Stage after we have a better idea of the costs of the project
- 07:05 – And this better idea on the cost will come from the Project Plan
- 07:09 – So, that’s develop the Business Case
- 07:13 – Next, maintain the Business Case
- 07:16 – The Business Case is updated at the end of the delivery stage
- 07:20 – So, as the costs, benefits and requirements are always changing
- 07:24 – So, we refer to this as maintaining the Business Case or keeping it up-to-date
- 07:30 – Now I look at something that PRINCE2 calls Verify the Business Case
- 07:34 – So, verify means assessing whether the project is worthwhile and still worthwhile doing from a business point of view
- 07:44 – This is first done at the end of the starting of a project process where the outline Business Case document is reviewed
- 07:53 – It is next done at the end of the Initiation Stage and there the Business Case document is reviewed for the first time
- 08:02 – And then from then on, at the end of each stage, the updated Business Case is reviewed
- 08:10 – Note, the Project Board can shut down the project anytime if the project is no viable from a business point of view
- 08:22 – Next we have Confirm the Benefits
- 08:25 – This means assessing whether the intended benefits have been or will be realized
- 08:33 – The benefits are outlined in the Benefits Approach document or the Benefits Management Approach document
- 08:39 – Confirming the benefits will mostly take place after the project is complete, so we call this post project
- 08:47 – So here is a quick overview now of the minimum requirements for the Business Case
- 08:53 – One, create and maintain a business justification for the project
- 08:58 – So this is usually the Business Case document
- 09:01 – And this is also one of the PRINCE2 principles, the PRINCE2 guidelines, so continued business justification
- 09:08 – Two, review and update the business justification in response to the decisions and events that might impact desirability, viability or achievability of the project
- 09:21 – For example, the following events will have an effect on the Business Case
- 09:25 – So, the costs of development is increasing or decreasing, future income expectations are going up or down,
- 09:33 – And the risks for the project, there may also be more or less risks
- 09:39 – Three, define the management actions that will be put in place to ensure that the project’s outcomes are achieved and confirm the project’s benefits are realized
- 09:49 – So that’s where the Benefits document comes into place
- 09:52 – And four, define and document the roles and responsibilities for the Business Case and the Benefits Management
- 10:01 – So one more comment I’d like to make here on the Business Case, and this is not a marriage proposal
- 10:06 – The Business Case team is central to the PRINCE2 projects as it is at the heart of why we do a project
- 10:13 – So, that’s the reason for the heart
Did you do the previous optional exercise of explaining the principles to your colleagues? It’s a good time now to go back, and tell them everything you know about the Business Case theme. Draw a timeline similar to what we have in the course, and use it to show the processes and products that relate to the Business Case theme.
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