TOP Ideas

Our consulting company, Capability Management International, is 15 years old this year. So we start the year with 15 of our most critical insights.

“The business case is a ‘contract’”

The current business case process is upside down. The project’s workload, effort and costs are computed and then we try to find enough benefits to justify the costs, generate a positive ROI or clear the capital hurdle rate.

We should start by defining the project and its value, knowing where and how each benefit is being generated. Then (and only then) should we compute the cost of delivery. Because we know how much each benefit will cost; high cost, low value ‘benefits’ can be deleted leaving us with our best value proposition.

This value proposition within the Business Case consists of the desired business outcomes (business end states) to be achieved, the associated (measurable) benefits and their value. This is what the project is ‘contracting’ to deliver as a result of the project and its associated investment.

The Business Case also spells out the organization’s ‘contractual’ commitments — the required funding, staffing, governance team commitments and other resources.

The Investment Committee is not, therefore, just ‘approving’ the project but committing the organization to supply the required resources when required and for as long as required in the (hopefully measured) expectation that the project will enable, support and deliver the associated value proposition.

Both sides then need to keep to their side of the ‘contract’. If the organization does not commit the resources or the governance team goes AWOL, it cannot expect the value proposition to be delivered in full.

However, if the organization meets its obligations, then the project has to deliver the promised value.

We need to rethink the business case and focus it on the value proposition (not the cost) and treat it as a ‘contract’.

What’s stopping us? Please post your comments below.

A new “How to build your business case” guide will soon be available from valuedeliverymanagement.com that takes you through the process of identifying and quantifying your value proposition and required workload.

© Jed Simms, Australia 2009.