Lesson 07: Business Case, Part 3

Based on AXELOS PRINCE2^® material. Reproduced under licence from AXELOS. All rights reserved.
Note: PRINCE2 2017 edition is now called PRINCE2 6th edition.

00:05 – Our next scenario. We have five banks that wish to create a new mobile payment app for the local market.
00:13 – So, in this project, let’s say we have one supplier.
00:16 – Now, so the question is, is it a good idea just to have one Business Case for the whole project or should each bank be allowed to have their own Business Case? What do you think?
00:29 – That’s complicated. So, the supplier will have their own Business Case, that’s something else, but for all those banks who are working as one customer, you’re asking if they can have more than one Business Case. Yes.
00:46 – I think that may create problems if they have more than one. Why?
00:52 – Because in that perspective, in that level, the Business Case is something that’s going to direct a project somehow, or maybe we can say to help directing the project and if there’s going to be more than one, then there will be some conflict.
01:07 – What do you think? Yeah, there should be a common Business Case between them.
01:13 – So basically one main Business Case for the whole project.
01:16 – The banks may have slightly different reasons for doing the project together, but these should be minor differences, and if there was a large difference, let’s say, some banks would gain a lot more than others, then this is very dangerous for their project, because some banks will feel that other banks are getting less out of it or getting more out of it, I mean, and then they will be less behind the project.
01:42 – Next question, the Executive and the Project Manager create a very detailed Business Case in the Initiation Stage.
01:51 – So let’s say we have a project which is just five stages, and the Executive decides there’s no need to update the Business Case during the project because benefits will not be realized in the project.
02:06 – Is that appropriate or is this a good idea or not?
02:09 – No, of course not. All documents, all plans that we create must be dynamic and updated because we want to use them to run the project and things change, everything is changing and all plans that we have, all documents that we create are just reasonable estimates about what’s going to happen or what can happen, and that’s the same for the Business Case. As we go on through the project, we will learn more about the cost of delivering the product and that can be reflected …
02:44 – should be reflected in the Business Case.
02:46 – Yeah, it’s always changing.
02:48 – Yeah, and also we may get a better understanding about the benefits that will be realized from the product, and that is partially because of the changes in the market, and we can never stop the market from changing. That is the outside world.
03:04 – Yes. That’s true. So to recap then, the Business Case, as you said, is a living document.
03:09 – So it shows the current Business Justification for the project and this justification can change at any time.
03:16 – The Business Case is updated towards the end of each stage in the Stage Boundary Process, and we take the performance of the last stage into account.
03:27 – So if we have, let’s say, the last two stages are gone over by 30% , then, of course, this will have a big impact on the return on investment, which should be represented in the Business Case.
03:39 – Yeah, and in most projects, people don’t really use the plans that they create, it’s just for formality and therefore they don’t need to update it.
03:50 – For the schedule, for example That’s a pity!
03:52 – Yeah, that’s terrible. They just prepare one schedule in the beginning of the project, they print it, they put it on the wall, and they don’t touch it anymore.
04:01 – That’s not what we want in a project management system. Yeah.
04:06 – Well, if you see that you are creating something and it doesn’t solve a problem for you, or it doesn’t help you with your project, it means that you’ve not done that properly and you need to revise the way you are using PRINCE2 or anything else. Yeah.
04:23 – For example, if you see that it’s too expensive for you to use PRINCE2, that’s because you’re not using it properly.
04:28 – Not tailoring it correctly. Yeah, tailoring, it’s all about tailoring.
04:32 – Good. Okay. So, let’s say moving ahead, the Project Board will typically review the Business Case after each Stage Boundary Process, or if tolerances have been exceeded because they need to review the Exception Report.
04:46 – So the scenario then. The Project Manager gave the following advice to the Project Board.
04:51 – All roles in the Project Board should own the Business Case equally, and if they don’t, this is a big risk for the project.
05:00 – Is that correct? So they’re all equal.
05:02 – Who said that? The Business … the Project Manager?
05:04 – The Project Manager, yeah. They’re the ones who actually read the PRINCE2 manual and that’s what the information that they got and they remind the Project Board that you are all equal.
05:12 – Well, that cannot happen for many, many reasons, millions of reasons, I think, I hope that’s the right answer.
05:19 – Yeah, because I look shocked. Go on.
05:23 – Well, the Executive is the best person who understands that type of things, and that’s why we say that they own the Business Case and they are the ultimate person responsible, they are accountable for that.
05:36 – They come in from the business part of the project and they are usually answering to the other sections of the whole organization, but for example, let’s take the Senior Supplier. Yeah.
05:51 – They may even come from the supplier part.
05:54 – So, it doesn’t make sense to say that they will own the Business Case for their customer.
06:00 – They may even come from another company or on the other hand, in the Project Board, the ultimate person who decides is the Executive.
06:12 – The Senior Users and Senior Suppliers consult the Executive, but they don’t vote on ideas and when you cannot make the decision, you cannot take the ownership.
06:23 – Yeah. So actually, yeah, the ownership or accountability is important.
06:26 – The Executive is the ultimate accountable person, so it’s their neck that’s on the line if something usually goes wrong.
06:33 – So this statement from, let’s say, the Project Manager was incorrect.
06:38 – The Business Case … for the Executive, the Business Case is the main document that they will use during the project, and they should be always thinking about value for money and not getting carried away about super-fantastic benefits or happy users.
06:51 – The Senior User is more interested or should be more interested in getting a product to use, so they can start realizing the benefits, and the Senior Supplier is more interested in providing service and getting paid for it, that’s normally how they think.
07:07 – Also making sure that it’s possible to do the project the way it is imagined. Yes. Yeah.
07:12 – What was the word? Achievable? Viable?
07:16 – Those things that we talked about in the last lesson.
07:18 – Desirable, viable, and achievable. Okay.
07:20 – And achievable is the benefits one.
07:23 – So viable, so the Senior Supplier is really involved in the the viability, yeah, yeah. the viability.
07:29 – Yeah, that’s a good question because the Team Managers then that work under them will be the ones which will make sure that each product description that is created is actually viable.
07:39 – That’s the time to decide whether or not something is viable. Good.
07:43 – The Project Board normally just comes together at the end of each stage or when there’s an Exception Report that needs attention, so they have to come together to discuss that.
07:52 – Now the scenario is the Project Board decide to run the Project Board like a democracy where everyone has equal say and it’s the best way to get everyone united behind the project.
08:04 – Is this appropriate? Is this is a good idea for them to do and to take this on?
08:08 – How can I answer and be politically correct? No!
08:12 – Give it a go. No, it is not really, but the main reason is that those people have different responsibilities coming from different parts of the company.
08:22 – Some of the Senior Users may be just representatives from the actual users.
08:28 – They don’t have a high level position in the company. Yeah.
08:33 – And it may not make sense to let them decide about the big investment that we have in the company, which is a project, or the Senior Suppliers, some of them are actually representatives from the supplier part. Yes.
08:48 – It’s really difficult to answer, to say that you can decide about the project like that.
08:54 – So, no, it’s never like that. The thing is the manual sort of gives an impression that they both or they all run the project together, even though it says the Executive is the number one person, so people might walk away with that idea without even realizing it.
09:10 – So it’s a good idea to point it out.
09:12 – So they’re there to provide information to the Executive. Yeah.
09:14 – It’s about the Executive and the rest are just consulting, they’re providing different types of information that the Executive needs to make the best possible decisions.
09:24 – Correct, yeah. Just to recap then, the Project Board is not a democracy, so each role provides their input, the Executive has the final word. So in some projects, let’s say, the Senior User can be very talkative and inspiring, and they will try to push their agenda because they’re the loudest person in the room, but the Executive should have the confidence and ability to remain focused and always look for value for money.
09:49 – Are you saying that PRINCE2 is not democratic?
09:53 – I’m not sure, but we have just to remind these roles of what they’re supposed to be doing, you know.
10:01 – Might be a good idea for the Project Manager to sit in on one or two meetings to see how they actually converse, you know, if that’s allowed, I don’t know.
10:10 – Maybe they want to talk about the Project Manager.
10:12 – Yeah, and that meeting they can skip.
10:15 – Now moving on to Outputs, Outcomes and Benefits.
10:18 – So I’ve seen some questions on this, so it’s very important to cover.
10:23 – So, I’ll give you a scenario first and then I’ll ask a question or three questions based on this.
10:29 – So the scenario is there is a project to organize a full-day workshop on green energy.
10:35 – So we’re going to talk about green energy, and the goals of the workshop are to get about five business leads for future projects or real business leads and we also want to cover the costs.
10:47 – We’re going to have about 80 people and we’re going to get them to pay about 50 Euro each for the event.
10:54 – Now, some questions based on this.
10:57 – First of all, a reminder of what an output is.
11:00 – So an output is what users will use or something that the users will use at the end of the project, like a new sales force application.
11:08 – So can you give me two examples of an output from this example, which I just discussed.
11:16 – Should I read the scenario again for you? Please, yes, thank you.
11:19 – Okay, yeah. I could see the look on your face. Okay.
11:22 – So the project is to organize a full-day workshop on green energy, and the goals of the workshop is to get about five business leads for future projects, and to cover the costs of the event itself and have about 80 people and we’ll charge them about 50 Euro each, but try to think out of the box for other outcomes which may happen as well.
11:46 – Okay, those five leads, that’s a type of result, that’s an outcome. Yes, Why do they want to have those five leads?
11:59 – They are probably thinking that maybe one of them will turn into a customer, and if it happens, then this is the amount of money we can earn in one year.
12:09 – That amount, that estimation, that amount of money, that’s the benefit. Yes.
12:14 – That’s the final thing. What else?
12:18 – Well, you can use it to help with your credibility in the market.
12:24 – Maybe people will build your brand and that’s a result. Correct, yeah. That’s outcome.
12:31 – So you have exposure in the press you mean or something like that, yeah.
12:35 – Yeah, that’s again outcome. Awareness of what we do.
12:38 – Now, why do you need why do you want that outcome?
12:42 – Because you estimate, you guess that by having a stronger brand like that, you may be able to increase your benefits by 2% or something like that. That’s again benefits.
12:56 – Okay, alright, because it’s not so easy to ask you, especially like this, so I will go through some of the ones I’ve picked out, but giving one is very good.
13:05 – So, some of the ones I’ve picked out and perhaps I should’ve asked you to stop the video and think about this and write some things down, but the workshop itself, of course, is considered an output.
13:19 – One of the talks in the workshop could be considered an output, an article in the local newspaper about the event as well or handouts which you give to the people who arrive and so on.
13:32 – So these are sort of all deliverables which are part of the workshop itself.
13:38 – Now, for outcome. So just a reminder of what an outcome is.
13:42 – So, the outcome is the result of using the product, so what helps me is if I think about the features, it reminds me of what an outcome is. It puts me in the right direction.
13:55 – So, for example, much easier to create reports or a search result in less than 2 seconds, you know, that’s a kind of an outcome or a faster research, a faster search result I should say. Yes, I suppose.
14:08 – So, can you give an example of an outcome which we might expect from this workshop?
14:13 – I gave you one. Oh yeah, okay.
14:16 – I’ll think again, okay. Another outcome.
14:20 – Maybe you can, by doing that workshop or event, you can realize how capable your own people in the company are in doing new things, different things.
14:34 – For example, organizing an event. That’s an outcome, that’s a result you can get, and based on that, you can see how you can use them in other things in your own company, and at the end, it will create some type of benefit.
14:49 – That’s difficult to say what type of benefits it will have, but there will be something.
14:54 – Yes, yeah, okay, good. So an outcome is more about the behavior change due to the workshop, that’s what we’re trying to get across here.
15:02 – So, for example, people might consider installing solar panels and do a calculation on their own house, or attendants might go away and buy LED bulbs and change all their existing bulbs and install the LED bulbs from now on, or people might be more open to buying an e-bike to get to work because it’s on green energy so that’s the kind of thing you want to get across.
15:29 – Now the benefits. So benefits are measurable improvements.
15:35 – So there’s always a percentage in there, it’ll improve by X%.
15:41 – For example, a 30% reduction in sales costs or a 15% increase in sales are good examples of benefits.
15:48 – Can you give me an example of a benefit of this organization?
15:52 – The previous scenario? Yeah.
15:55 – Well, you said that one of the expected results, outcomes is to have at least five leads, and then maybe you expect at least one of those five leads to turn into a customer. Yes.
16:06 – And you know that each customer on average generates about 100,000 Euros of profit for you every year. Okay.
16:15 – That amount of money is the benefit.
16:18 – Now you can, of course, turn it into a percentage based on the total benefits you have in your company, but it’s quantified, that’s important.
16:25 – Yeah, that’s the keyword, quantifiable.
16:28 – So benefits are the measured improvements and, for example, the five solid leads that you could get and then you FaceTime one of those, then that’s correct.
16:38 – We could actually say we could do home surveys and charge for those as well, which could be a benefit for the project. They’re smaller projects, but still a benefit, or even getting a photo in the local newspaper could be considered a benefit because that’s measurable.
16:53 – You check if the photo is in there, that’s something that’s measurable.
16:58 – Are you sure that’s a benefit? I mean, a photo?
17:02 – Because I see it more like evenAn outcome?
17:07 – Even output, having the photo in a magazine, that’s an output, that’s a product, that’s tangible, and then why is it important to have the picture there?
17:19 – We can say that it will result in having more exposure in the market, that can be the outcome.
17:26 – And then why is it important to have it there?
17:28 – Because then maybe out of 1000 people who will read the article, one of them will become a customer and then generate this amount of money.
17:37 – Yeah, yeah. That’s why sometimes you have to …
17:40 – it’s difficult to see which one is which, but it’s important to be aware just for the exam, so make sure that you study this and go over that section in the manual as well because I’ve seen a question on this where you’re asked what’s an output, what’s an outcome, and what’s a benefit.
17:56 – Okay, good. Next scenario, the Senior Director comes to the Project Manager, and they have a change request, and this person is very powerful, very loud in the company, and they’re very passionate about this change request, and they think, of course, it’s a great idea and you automatically think it’s a ridiculous idea, but you are the Project Manager. So how should you deal with this kind of situation and still keep your job?
18:30 – Well, I have a trick that I always use and I think it’s great. Never say no.
18:35 – Correct, yeah. But then there’s a certain process, but what if we have coffee and then talk about it in the next lesson?
18:41 – That’s a good idea.
18:43 – Alright. We’ll get back to you. Okay. We’ll be back.

Discussions on the Business Case theme continue in the next lesson.

Scenarios/questions we’ve discussed in this lesson

Scenario – a project where the customer is a group of five banks and one supplier: The objective is to create a mobile payment application for the local market. Is it a good idea to have just one business case for the whole project, or should each bank have its own business case?
Scenario: A PM and executive created a detailed business case during the IP process of a five-stage project. The PM informs the executive that there is no need to update the business case during the project as all project benefits will be realized after the project is complete. Is it appropriate for the PM to say this to the executive?
Scenario: A PM advises the project board that all project board roles should own the business case equally, as if they don’t then it will be a big risk for the project. Is it appropriate for the PM to offer this advice to the project board?
Scenario: A project board decides to run the project board like a democracy in which all three roles will have equal say, as this is the best way to get everyone united behind the project and make decisions. Is this appropriate?
Scenario: A project is set up to organize a full-day workshop on green energy. Give two examples of an output for this project. The goals of the workshop are as follows:
- Get five business leads for future projects.
- Cover the cost of the workshop. (Get about 80 people paying €50 each.)

Lesson 07: Business Case, Part 3

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