Project Hacks: How to Write a Business Case
9 min read

Project Hacks: How to Write a Business Case

A complete guide to writing a business case from an industry expert, including special tips on how to do it quickly and effectively.
Project Hacks: How to Write a Business Case

What is a business case?

I quickly Googled it, here’s the textbook definition of a business case:

A business case provides the underlying arguments and justification for undertaking an initiative, project or program. It evaluates the benefit, cost and risk of alternative options and provides a rationale for the preferred solution.

That’s a good description and is true in organizations where business decisions are made based on research and fact. You might also find yourself using a business case as:

  • An exercise to mitigate the personal career risk of a project,
  • A tool used to create the impression that a pet project or initiative should go ahead by putting lots of fancy looking work behind it, or
  • A tool used to slow down a pet project without having to tell someone that you simply don’t want to do it.

I think the business case is a super valuable tool for organizations of all types and sizes (that’s why I’m writing this). It’s a great way to flesh out thinking, make sure all available options have been considered, and get many diverse stakeholders on the same page. So I’ll spend the rest of the time focusing on how to do one quickly, with the least amount of stress possible.

When do you need a business case?

The short answer: When you need to get an initiative, project or program approved. That means you need to unlock funding, investment and permission to move forward.

The longer answer: You should prepare a business case when there is a meaningful new initiative, project or program being considered, but no existing documentation explaining the why or the how of the activity. There are two key parts to that sentence I’ll double-click into:

  • Meaningful: The threshold for meaningful will differ by organization, that’s why I didn’t quantify it. Some organizations have a predefined cutoff for projects that require approval and therefore documentation, say for example every investment over $500,000. If your organization doesn’t have a predefined cutoff just use common sense and ask yourself: is this an important investment for the organization, or a lot of money being invested?
  • New: If this is a normal activity in line with business as usual, there is already pre-approval or the investment is very well understood and documented, you generally won’t need a business case and should proceed with the investment. In all other scenarios a business case will most likely be valuable to prepare.

Another common time people look to prepare a business case is when they are asked to do one, but you don’t want to find yourself in this position as it means you aren’t being proactive and preparing the documentation required to proceed. Generally a bad sign. Nevertheless, if this describes you, you’re in the right place.

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How long should it take to prepare a business case?

This really depends. There are a broad range of factors that will determine the time required to prepare a business case. One shorthand is to consider the investment being made. Here’s a guide based on:

  • Less than US$500K: Give yourself at least 1-2 weeks, and 10-12 pages.
  • From US$500K to US$5M: Plan for between 3-4 weeks, and around 20 pages.
  • From US$5M to US$25M: Plan for between 6-12 weeks, and around 50 pages.
  • From US$25M to US$50M: Plan for between 10-12 weeks, and around 100 pages.
  • Over US$50M: Plan for between 12-24 weeks, and around 200 pages.

As you well know by now, the longer you give yourself the better to collect data, perform research, think through the structure, consult stakeholders, win support and make any changes required. Generally try to budget 2x the times listed above and be prepared to go through three iterations to get it right.

What are the typical sections in a business case?

There is some variability here and certain professionals have a personal preference for different structures. My preferred table of contents (and therefore business case sections) is:

  1. Background
  2. Current State
  3. Case for Change
  4. Future State Options
  5. Recommendation and Benefits
  6. Implementation Plan
  7. Risks and Mitigations

This has been a trusty format for me for many years. For me, the most important section to nail is the “Case for Change” as it contains the entire argument for action, for doing something, for investing real money. You must nail this. I’ll explain how this all holds together next.

How should you structure and what are the steps to complete a business case?

Okay, you asked for it. Here’s how to do a business case:

Background

This is where you get to set the stage and frame up where the particular initiative, project or program you’re proposing fits, and how this business case relates to other activities. For example, start with the organization as a whole and then drill down to the appropriate level of where this business case sits. Also acknowledge any other ongoing initiatives, projects or programs that this one is related to or would impact. Basically, you want the reader to have the context they need to understand and “place” this particular investment request.

Current State

Whether it’s a product, business unit or function that this business case is related to, you need to describe in as much detail as possible it’s present situation. This is otherwise known as Point “A”. For example, say you’re making the case for combining three separate business units into one single business unit. You’ll want to draw out the current structure (three business units), describe how each individual business unit is structured (e.g. the organizational structure), what each business unit does, their individual capabilities, etc. etc. It’s important to be as accurate as possible here as you don’t want the decision makers to disagree with your version of “A” as it is the way the business units currently run, so is known and observable.

Case for Change

Now you need to make a convincing argument for why your organization needs to go through all the effort to move from Point “A” to Point “B”. Why does anything even need to change in the first place? There are many ways to make this argument and they will be specific to the business case you are making. Usually they fall into two brackets, either (i) there is a fundamental problem with Point “A” or (ii) something has changed which makes Point “B” significantly more desirable than Point “A”. This is where storytelling and narrative formation will really help you be compelling as you make “A” look untenable or “B” look like nirvana.

Future State Options

Now that you have convinced the decision maker that they need to approve funding or investment to make a change, what are you proposing? It’s always best to provide multiple options so that you are not narrow framing and can show the reader that you have considered all the possible solutions. So get to it, describe how the fundamental problem with “A” can be addressed, or what a more desirable “B” looks like. Usually you can map these along a spectrum from High Effort to Low Effort or High Risk to Low Risk (or H/L Investment, H/L Return, H/L Implementation Time, etc.) whichever dimension is relevant.

Recommendation and Benefits

Choose one of the options from the Future State Options that you are recommending the decision maker approved. Explain why. This is where you do a cost-benefit analysis of all the options together and pick your recommended option based on your organization's risk-return appetite.

Implementation Plan

Now that you have your recommended Point “B”, explain how you are going to make the move from “A” to “B” in as much detail as possible. What changes need to be made along important functions at your company (e.g. People, Process, Systems, Technology), who needs to be involved, who is going to do it, what is the timeline and how will governance work? Cover all these areas using as many timelines and Gantt charts as needed.

Risks and Mitigations

Probably the most ignored and overlooked section, but it is vitally important to cover the risks and mitigations to the course of action and implementation plan. Try a premortem and think of everything that could go wrong. Then write down what you’ll do in each of these scenarios. The mitigations will give the decision makers extra comfort that you have covered all your bases and thought of everything so they can approve your case and proceed with confidence. Their money and reputations are in safe hands.

That’s it. Simple right?

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Who do you need to engage when preparing a business case?

First off, for any transformative project there must always be both a Business Owner and a Sponsor assigned to the project. Here are their roles:

  • Business Owner: Will be responsible for the day-to-day execution of the project. They need to have the appropriate sway within the organization to rally the resources and talent needed to execute. This person reports to the sponsor.
  • Sponsor: Will be accountable for the results of the investment. They will generally be a senior member of the organization where the project falls into their area or portfolio. Ideally their incentives are tied to the success of the investment.

No organization should ever go ahead with a big internal investment that doesn’t have these two roles clearly defined and attributed. Otherwise, who is going to do it and who is going to be motivated to make sure it;s a success?

Next, in preparing the actual business case you must be sure to consult and/or inform any cross functional team that will be involved, key executives and importantly, the decision makers who ultimately approve any investment.

Finally, the team required to deliver the business case document will again differ by the size and scope of the investment. For small ones, a single person might take the lead and deliver it end-to-end. For larger ones, the team will typically be made up of business analysts and slightly more senior managers and a senior resource (usually the Business Owner).

Business analysts will do (a) the data collection, interviews, research and analysis, (b) build the relevant models like any financial models or cost-benefit analysis and (c) prepare sections of the document. The managers will structure the narrative, do the majority of the thinking and oversee the work of the analysts. The senior resource will engage senior stakeholders and oversee the preparation of the business case.

What are common mistakes to avoid when preparing a business case?

Don’t engage decision makers: Your business case should essentially be approved before it goes to the appropriate committee or forum. Many people don’t engage the decision makers along the way and allow them to shape it and have their say. Don’t make this mistake. Engage decision makers and key influencers early, often and along the way. Make them feel personally invested in the business case.

There is no clear cost-benefit analysis: Numbers scare some people, so the cost-benefit can be light or non-existent. But a cost-benefit analysis is only pluses and minuses. There is nothing complicated. What do you get, what does it cost? You’ll always be using assumptions so provide your estimates and show your working, but don’t leave it out!

The implementation plan is light on details: Some professionals can be inclined to get excited about ideas and the next new thing, and then things start falling apart where the rubber is meant to meet the road. Don’t lose steam and make sure you keep your focus and energy on the last two sections - the Implementation Plan and the Risks & Mitigations.

What are your top tips for preparing a business case?

Fine tune the case for change: Again, you need to nail this section. Organizations are famous for “Arrogance, Bureaucracy and Complacency” so there is always a big hurdle to doing anything at all. Inertia rules. Change requires dissatisfaction with the current state, a clear vision for a better future, a clear plan to get there and for the journey to be worth the cost and effort. So make sure you clear each of these hurdles with extra room to spare!

Give yourself more time: Projects famously take 2x the time and run 2x over budget. So make sure you are realistic about the time it will take to collect all the information you need, speak to stakeholders and put it all together across the numerous iterations it will take.

Thoroughly consider all options: Oftentimes I see one option have only been properly considered due to falling in love with an idea (and worse, sometimes only one is supplied when there are always more). Make sure to give all options equal consideration so that you can be sure you have selected and are presenting the best for your organization.

Test early and often: Take your idea, your working and your draft versions to decision makers and key influencers as early as possible. Worst case you’ll save yourself a lot of time, best case you’ll get a better and more certain to be approved business case. I know I’ve repeated this one throughout but it’s THAT important!

Before you go

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