Project justification with a robust business case

Hello. I'm Mike Clayton and I am the founder of online PM courses, which is a website and also a YouTube channel. In this talk, I want to look at how we justify our projects with a robust business case.

In my talk on project governance, one of the most important tools that I highlighted was that of the business case. This is a governance tool with a fundamental purpose to support decision-making. I would define a business case as an analysis of the benefits and costs of making a change in the way things are done. It's good practice for a business case to compare several different project options, to give decision-makers a real choice. One option should always be the do nothing option unless of course isn't an appropriate option to 'do-nothing'. If the organisation is required by new legislation to make a change, then we can't do nothing about that, but we may have a range of options about how we address it. One of those is to do minimum, to do the least we possibly can to comply with legislation and that should always be an option.

Perhaps the best way to think of a business case is as a pair of scales rather like the scales of justice that we often see being supported by a blind lady sitting on top of the courts of law in the capitals of our countries. Consider that on one side of these weighing scales you have all the reasons why you should do the project, the benefits, the value that the project will deliver, all the advantages that you will get as an organisation having completed this project. On the other side of the scales are all the reasons why you might not do it the costs and also the risks that you will incur. What matters of course is where the point of balance comes. If the benefits outweigh the costs, then on the face of it, we have a strong business case and therefore a justification for doing the project. However, it is not enough for the benefits to outweigh the costs because what we know is that most projects end up costing more than we budgeted it and many projects fail to deliver all the benefits we are promised. So, if the benefits outweigh the costs by a small margin at the start of our project when we're considering whether to do it, then there's a good chance that margin will get eroded and there will be no net benefit. So, I believe that for a business case to succeed and justify a project, there needs to be a big enough margin between the total benefit and the total cost, but if there is a big margin between benefit and cost, then on the face of it we should just jump at this project maybe not, but because most organisations have more ideas for projects than they have the capacity to deliver and one of the biggest reasons why organisations fail to deliver projects is not bad project management. It's taking on too many projects and therefore not having enough resource or indeed enough management time and attention to properly manage all the projects we do. Very few organisations have the capacity to properly take on all of the projects that get suggested from within the organisation so we shouldn't just do the projects where the benefits outweigh the cost and we shouldn't just do the projects where the benefits outweigh the cost by a big enough margin. We should also look to see if the project outweighs the costs more than the next best project. Because we should only do the projects which have the biggest margin which are the most valuable, most critical, most vital to the organisation because if we take on too many projects, then some of them are going to fail. It's unlikely that those that fail will always be the least important, least valuable to deliver the projects that matter we must choose which projects we do even when some of the projects we reject are on the face of it, good projects with a net benefit.