Business case development

In the ideal world, all substantial projects should be preceded by a solid plausible business case. Not only is the basis for judicial expenditure, but it also allows the financial stakeholders to assess to ensure that project will meet the minimum hurdle rate to warrant the project. Furthermore it is also useful to obtain buy-in from key stakeholders.

Not only do business cases require sound financial modeling, but often there is insufficient information to build accurate models. The key to a good business case is therefore in the art of making good assumptions. We will never claim that assumptions in our business cases are accurate, but the scale will be correct and in most instance the assumption will err on the conservative side. All assumptions remain visible and editable – this allows the stakeholders to review the business case as the project matures with more and better information.

Our typical model contains several years of projections. This allows a fairly good view of the cash flow and project expenses. In the ideal world this is the guide that the project manager should use to drive their projects and to manage the benefits tracking. That way the organisation can quickly tell if the project is not meeting the business case projections, which in turn enables better management by either correcting assumptions in the business case, or tighter project execution.

Our business case development approach is an iterative process where the consultant gathers information and then builds a first pass high level business case. This tests the quantum of the financials and should be sufficient to give a high confidence in the viability of the project. This is to avoid a any investment in a detailed business case – which can take many hours to complete – which is likely to fail. Once the high level case is accepted the more detailed model is developed. Here we will make more assumptions, build the cash flow projections and other detailed work. This is done in collaboration with the organisation’s subject matter experts and the financial stakeholders, as we cannot claim absolute knowledge of our client’s domains. This ensures buy-in right from the start, but may also instill ownership that is arguably the most valuable output.

For more information please contact us…