PRINCE2 Practices · Topic 2 of 9
The Business Case Practice
PRINCE2 7 business case practice: purpose, links to principles, project brief and business case, benefits terms, the business case lifecycle and technique.
- 5 min
- Purpose: judge whether the project is and remains desirable, viable and achievable.
- Output, then outcome, then benefit, contributing to business objectives.
- Outline business case in the project brief; detailed business case in the PID.
What it is
The purpose of the business case practice is to establish mechanisms to judge whether the project is, and remains, desirable, viable and achievable, as a means to support decision making about its continued investment. It answers the question "why?".
Desirable means the benefits outweigh the costs, risks and dis-benefits. Viable means the project can deliver the products. Achievable means the products can deliver the intended outcomes and benefits.
How it works
Key concepts
| Term | Meaning | Example (new online booking system) |
|---|---|---|
| Output | A specialist product handed over to users | The booking system |
| Outcome | The result of the change from using the outputs | Customers book online instead of by phone |
| Benefit | A measurable improvement from an outcome, seen as an advantage by a stakeholder | 30% fewer calls to the contact centre |
| Dis-benefit | A measurable decline from an outcome, seen as negative by a stakeholder | Some older customers find booking harder |
| Business objective | A goal the organization wants to achieve, which the project's outcomes and benefits contribute to | Cut customer service costs |
The chain matters: the project delivers outputs, the business uses them to achieve outcomes, and outcomes lead to benefits that support business objectives. Dis-benefits are real consequences and must be included in the business case, not hidden.
Management products
| Product | Purpose |
|---|---|
| Project brief | Produced in starting up a project; provides a firm basis for initiating the project and contains the outline business case |
| Business case | Documents the justification: reasons, options, benefits, dis-benefits, costs, timescales and major risks; completed in initiating a project and maintained throughout |
| Benefits management approach (PID) | Describes how and when benefits will be measured, who is responsible, and the reviews needed to confirm them, many after the project closes |
| Sustainability management approach (PID) | Describes how the project's sustainability targets are set, measured, managed and reported, both in what it delivers and how it delivers it |
The business case lifecycle
The business case is not written once. It evolves with the project.
| Point | What happens |
|---|---|
| Starting up a project | The executive is responsible for the outline business case in the project brief |
| Initiating a project | The detailed business case is developed and approved with the PID |
| Each stage boundary and exception | The business case is updated with current costs, timescales, risks and benefits and checked by the project board |
| Closing a project | Benefits achieved so far are reported and the benefits management approach is updated for post-project reviews |
Aligning products to business objectives and tolerances
Each product should trace through outcomes and benefits to a business objective. If a product does not contribute to any objective, question why it is being built.
Tolerances for benefits and sustainability can be set just like time and cost, so the project board knows how far the expected benefits may fall before the project must escalate.
Establishing business justification
Justification compares the project's benefits with its costs, risks and dis-benefits, over a timescale that usually extends beyond the project. Several options are compared, typically including doing nothing, so the board can see why the chosen option is best.
The executive owns the business case and is accountable for the project delivering value. The senior user specifies the benefits and is accountable for realising them. Project assurance checks the business case on the executive's behalf.
The business case technique
PRINCE2 7 sources describe four steps: develop the business case, check it at each decision point so the board can confirm the project is still worthwhile, maintain it as costs and forecasts change, and confirm benefits as they are realised. Older material calls the second step "verify". Understand the idea of a living business case rather than memorise step names.
Relationship to the principles
| Principle | Link to the business case practice |
|---|---|
| Ensure continued business justification | The business case is the evidence that justification exists and continues |
| Learn from experience | Estimates of costs and benefits use lessons from earlier projects |
| Define roles, responsibilities and relationships | Executive owns the business case; senior user owns benefits |
| Manage by stages | Business case reviewed at each stage boundary |
| Manage by exception | Benefits tolerances trigger escalation |
| Focus on products | Products are traced to outcomes and benefits |
| Tailor to suit the project | Format and detail scaled to the project |
A worked example
A city library service starts a project for self-service book kiosks. The project brief contains an outline business case: kiosks (outputs) let staff move from checkouts to events (outcome), increasing event attendance by 20% (benefit) and supporting the objective of more community use.
During initiating a project, three options are compared: do nothing, kiosks in the main library only, and kiosks in all branches. At the end of stage two the kiosk price rises; the business case is updated and the board confirms the main library option is still justified. Attendance is measured six months after closure, as set out in the benefits management approach.
How the exam asks about this
- "Which term describes the result of the change derived from using the project's outputs?" Outcome.
- "Who is accountable for the business case?" The executive.
- "Which management product describes how and when benefits will be measured?" The benefits management approach.
What to remember for the exam
- Purpose: judge whether the project is and remains desirable, viable and achievable.
- Output, then outcome, then benefit, contributing to business objectives.
- Outline business case in the project brief; detailed business case in the PID.
- The business case is updated at each stage boundary and when exceptions occur.
- Executive owns the business case; senior user specifies and realises benefits.
An output is not a benefit. "A new website" is an output; "20% more online sales" is a benefit.
Common mistakes
Measuring benefits only at closure. Many benefits arise after the project, so post-project reviews are planned in the benefits management approach.
Leaving out dis-benefits. They are part of the justification and must be included.
Giving the business case to the project manager. The project manager may help prepare it, but the executive owns it.
Check yourself
What is a dis-benefit?
A measurable decline resulting from an outcome, perceived as negative by one or more stakeholders.
Where is the outline business case first documented?
In the project brief, during starting up a project.
Which approach describes how sustainability targets are set and measured?
The sustainability management approach in the PID.
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