How to write a business case (+ free template and example)
Last updated on: April 26, 2023
Let’s say you are a project manager — and you notice the communication tool your team is using is outdated and difficult to use.
It frequently causes issues in communication — team members don’t always receive meeting invites, messages get lost, you can’t save important information without writing it down somewhere separately, etc.
You discovered a new communication tool that you think would be great to switch to, but that would require the whole company to transition from one to the other. You can’t just suggest this to your superiors, without offering concrete evidence as to why the switch is necessary.
This is where a business case comes into play. It outlines why and how an endeavor or a project is worth undertaking. In this text, we will talk about:
- What a business case is,
- How it differs from similar documents,
- How to write and present a business case,
- The Five Case Model for preparing a business case, and
- The key elements of a business case.
We will also provide you with a business case template you can use, and an example you can reference.
What is a business case?
As per the PMBOK 7th Edition, “a business case is a value proposition for a proposed project that may include financial and nonfinancial benefits.”
On top of this, “a business case can contain information about strategic alignment, assessment of risk exposure, economic feasibility study, return on investments, expected key performance measures, evaluations, and alternative approaches.”
Basically, a business case is a document that acts as the summary of your project idea, providing the reasons it should be executed and focusing on the benefits it brings.
Writing one should be among the first steps to starting your project — as you will use it to gain the attention of the stakeholders and convince them to support your project.
We’ll get into detail on writing it, but first — let’s clear up the difference between a business case and some terms it’s often confused with.
Business case vs. business plan
A business case and business plan seem similar at first glance — they both outline a project and can be used for stakeholder propositions.
In reality, though, they are used for different things.
The main difference between the two is what they focus on.
Business cases are created for endeavors within a business — projects, acquisitions, events — while business plans are typically used when starting a new business.
A business plan will contain broader aspects of a business — like a mission statement or target market. Business cases are more specific, and they deal with an aspect of a business — be it an issue or an opportunity.
Business case vs. project plan
A business case can also be confused with a project plan. However, a business case should justify why a project should exist. Only after a project is approved, post business case review, a project plan is created.
Where a business case will speak on how a project should look, a project plan will determine how it will look. Meaning, business cases are broader and more theoretical. Project plans need to be exact, as they will serve as guidelines for all project team members.
Business case vs project charter
The main difference between a business case and a project charter lies in their similarities — a business case is used to justify a project’s existence, while a project charter is used to authorize its execution. Again, a business case is created before the project charter.
The second difference between the two is in how concrete they are. A business case suggests project managers, while the project charter authorizes them. Essentially, the project charter makes the final calls on how things should be done.
The same goes for the project scope — while a business case can suggest the schedule and budget of a project, the project charter will make the final decision.
How to complete a business case in 3 steps
The business case is one of the most important documents to create for your project. Therefore, you should approach the process of making one with utmost care and attention.
For ease of reference, this process can be separated into the following steps:
- Do your research,
- Write incrementally, and
- Present your business case.
Step #1: Do your research
Rushing into things blindly will practically always result in failure. So, before you begin writing a business case, you must gather as much information as possible regarding the desired project.
It’s good to seek out information on matters you know little about. Consult experts in the fields required for your project.
For example, if you are creating an app to help tourists experience lesser-known landmarks, you want to consult both with IT experts and tourism experts for the appropriate locations.
Now, instead of relying on data you’re unsure of, you have concrete, confirmed information that you can create your project around.
Basically — you’re taking the guesswork out of the equation.
Step #2: Write incrementally
Now that you have all the information necessary for your project, it’s time to start writing your business case.
This is where you’ll determine where certain pieces of information you’ve gathered will fit — which piece of your project they are necessary for.
Knowing how to utilize what you’ve learned is essential for this step. For example, if you’ve gathered information on what it would take to create your app, you should know the:
- Employee skill sets required, and
- The number of employees needed for your project.
Once you have all the information, try to present it in a concise but compelling manner.
It’s good to check in with your project stakeholders for updated information and change the business case incrementally with their input. After all, the stakeholders have your project’s best interest at heart, so their advice is to the project’s benefit.
You want to save the executive summary for last since it will be a recap of all you’ve written in your business case.
Step #3: Present your business case
Now that you’ve completed your business case, it’s time to convince your stakeholders that it’s an endeavor worth pursuing.
Whether it’s external financiers or company seniors, you need to have important stakeholders on your side for the project to take off.
Your business case might be incredible, but if you cannot sell the idea you’re pushing, it will be difficult to get any backing. So, organize a presentation for your stakeholders or try an elevator pitch — a quick way of presenting your key points.
If you’re inexperienced with presenting your ideas, practicing an elevator pitch is a great way to realize what the main selling points of your project are.
An elevator pitch should last around 30 seconds — about as much as an elevator ride lasts — and include the main reasons someone should invest (be it their time, funds, or effort) into your project.
The Five Case Model for developing a business case
When writing your business case, you should not only be concerned with what the contents of your business case will look like but who will be reading that content as well.
There are many different kinds of stakeholders, and all of them will be looking for different appeals in your business case. To help you write one that can get positive remarks from all of them, you can use the Five Case model.
It suggests that a business case should be written from five different points of view, named:
- The strategic case,
- The economic case,
- The commercial case,
- The financial case, and
- The management case.
POV #1: The strategic case
The strategic case is written from the perspective of the business itself. It aims to show how a project will keep in line with the business objectives, goals, and vision — and benefit them.
The goal is to show how this project will positively impact the business — whether directly, through perhaps a product, or indirectly, through something like a PR stunt.
POV #2: The economic case
The economic case is written to show how the project brings social value, including environmental effects. The most important part of the economic case is the options analysis, which we will touch on in the next segment.
Not surprisingly, you want to focus on the economic case if you are making a project that will interact with the public.
POV #3: The commercial case
The commercial case is written to show the commercial strategy and cost-effective procurement of project resources. It shows that you have a good understanding of the marketplace by assessing supply options.
You’ll need to keep updated on costs, the resources you’ll need, as well as any risks that might come when acquiring them.
POV #4: The financial case
The financial case, in essence, wants to answer the question — can we afford it? It speaks on the funding of the project and the support of stakeholders and customers.
For the financial case, you need a thorough understanding of the capital, revenue, and whole-life costs of your project. You also need to address any possible gaps in funding that might arise during the course of the project.
POV #5: The management case
The management case is written to show the delivery, monitoring, and evaluation of the project. You need to assure your stakeholders that your project will be managed with the best practices and that all timelines are set with appropriate goals assigned to them.
It mostly covers the project governance and risk management elements of the business case, which we will talk about soon.
7 Key elements of a business case
A business case can have many elements — there can be over 50 elements in a detailed document.
However, we can divide and combine them into 7 key elements that should exist in every business case, namely:
- Executive summary
- Financial assessment
- Business objectives
- Project options analysis
- Cost-benefit analysis
- Project governance
- Risk management
Let’s dive further into them and see what you should look into when writing each of these elements in your business case.
Element #1: Executive summary
You could view the executive summary as a retelling of the essence of the business case. It gathers all the most important information from the rest of the document in one place.
An executive summary should start with an introduction and answer the following questions:
- What issue does the project solve or what opportunity does it take advantage of?
- What options exist to tackle this issue/opportunity?
- What option is the preferred solution?
Next, you want to present the research you went through to create this business case. Then, go through your recommended actions — the conclusion of your research. This is essentially where the bulk of your project expectancies go.
By the end, the reader of your executive summary should understand what they’re getting into for the rest of the document.
Element #2: Financial assessment
In the financial assessment, you want to predict the cash flows of your project. The first thing you want to show in this section is detailed cost estimates and risks.
You should produce cost estimates for different aspects of the project — for the app example, think UI design or marketing — and determine them at both the P50 and P90 levels of confidence.
P50 means a cost estimate with a 50% probability of not exceeding it, and P90 means a 90% chance of the same.
For example, you’re 50% sure that the UI design costs will not exceed $50k, but you’re 90% sure they won’t be over $70k.
Next, you want to present the following:
- Project funding analysis,
- Development analysis (the cost of scoping a project),
- Staffing impact summary, and
- Summary of costs for each project phase.
Element #3: Business objectives
The business objective answers a simple question — why are you doing the project?
Think back on what we described first in the executive summary. What opportunities or issues arose that require this project to exist?
How does this project relate to the current business strategy? You need to convince everyone reading that your project needs to happen.
What are your project goals? Once you determine project goals, you can determine:
- Project scope,
- Project constraints, and
- Project deliverables.
Element #4: Project options analysis
Now that you’ve justified the reason your project should exist, it’s time to take on different options for its execution.
This element is dedicated to analyzing the strengths, weaknesses, opportunities, and threats of each option — basically, doing a SWOT analysis for each of them.
Then you want to shortlist the options by discarding the ones that don’t lead to the desired outcome. Finally, do a reassessment of the shortlisted options and discard options accordingly.
Take a look at the external stakeholder impact of each option. More specifically, you want to look at the nature and level of impacts, specify the negative ones, and propose how they should be managed and mitigated.
While this boils down to a risk analysis for each option, it’s broader and used to determine the overall risk of each option. A more detailed risk analysis, determining the weight of specific risks and building contingency plans, comes later.
The project that comes out of this will be the preferred option for tackling the issue or opportunity described, which will be used as a reference when the actual project is executed. Finally, determine target outcomes for the reference project, measured with project KPIs. The targets must be realistic and measurable, yet challenging.
Element #5: Cost-benefit analysis
A cost-benefit analysis is used to prove that your project is worth doing from a business point of view. It proves that the benefits of doing a project are greater than the costs, thus justifying the project.
The cost-benefit analysis is done in 4 steps:
- Establish a framework — in this step, ask yourself what the measurement of your project’s success is (hint — take a look at the KPIs you’ve determined) and make sure both costs and benefits are measurable.
- Analyze costs and benefits — measure the costs and benefits of your project separately. Some are obvious — material or employee costs — but some are more elusive. If you are using an owned facility to house the project in, you are not spending any money for rent, per se — but that facility’s worth is being directed towards your project, so it’s an indirect cost.
- Establish a value for the costs and benefits — to compare the costs and benefits, they must share an equal “value unit”. Traditionally, monetary currencies are used, but you can be more creative if the situation calls for it. Intangible costs and benefits can be difficult to place a specific value on, but not impossible to achieve still.
- Compare the value of the costs and benefits — compare the sums of both the costs and benefits of your project. If the benefits outweigh your costs, your business case is good to go. If it’s the opposite, maybe you should revise the option you chose in the previous element.
Element #6: Project governance
Who will do what in your project? This is the question you want to answer in the project governance element of your business case. A typical hierarchy is set as:
- Responsible minister,
- The project control group,
- Project sponsor, and lastly,
- Project team.
Next, you want to analyze communications. In essence, how and how frequently will you communicate with certain stakeholders?
You can use:
- Progress reports for superiors,
- Team meetings for team members as internal stakeholders, or
- Even social media for communication with customers as external stakeholders.
💡 Plaky Pro Tip
If you want to know more about the importance of communication in a project, check out this article:
Element #7: Risk management
Lastly, an element you mustn’t underestimate is risk management. Risk assessment is so vital to every project that it’s done while writing a business case, so even before the project is approved.
Risks are analyzed through 2 criteria — likelihood, and impact.
By likelihood, they can be:
- Almost certain,
- Possible, and
By impact, they can be:
- Major, and
These criteria are used to create a risk matrix, determine the categories of risks, and make us aware of how urgent action is. Safe to say, if a risk is both catastrophic in impact and almost certain in likelihood, action on it is prioritized over any other.
You can vary these parameters of likelihood and severity to keep your analysis flexible, as seen here:
After all the risks have been identified, you want to construct a risk management plan, outlining all risks and their categories, as well as figuring out contingency plans for all of them.
💡 Plaky Pro Tip
If you want to learn more about managing risk in your projects, check out this guide:
Business case template + example
Knowing the steps to make a business case, however, does not properly explain what a business case looks like.
A business case can be very detailed — the sheer number of points in it could be as long as an academic paper.
But, we’ve created a business case template with 7 of the most important points it should have:
- Executive summary
- Financial assessment
- Business objectives
- Project options analysis
- Cost benefit analysis
- Project governance
- Risk management
🔽 Get the free business case template here
A filled-out business plan template can be extensive, spanning many pages of documentation. So, to give you an idea of what you should be writing about in a specific situation — we have filled in a business case template with the thought process that will come into writing each element:
Project title: Poetry Night event
Start date: 10/5/2023
Project manager: William Cambridge
Contact info: firstname.lastname@example.org
Executive summary: Reasoning for a poetry night might come from doing a poll, showing that the local area has no such events, yet the populace shows a good number of aspiring writers and poets.
Financial assessment: Cost estimates for this project may vary — renting space may be mandatory, and you might want catering for the event. Both of these may vary in cost depending on the number of attendees, so for your P90 analysis you should take a look at the poll results to estimate the maximum number of guests.
Business objectives: This project is done for public benefit, but can also serve to boost the PR of an organization. The project goals might be viewed through the attendees’ satisfaction, a boost in your organization’s online presence, or a rise in the popularity of a poet you were trying to promote with the event.
Project options analysis: This section would be dedicated to analyzing the different kinds of executions of the poetry night. Should it be in public, or in a closed rented space? Should there be light music in the background, and would it be beneficial to the event if the music was live? If you’re unsure of the answer — consult with stakeholders. In this case, you could do another poll.
Cost benefit analysis: The benefits of this project will largely be intangible — the rise in your organization’s popularity or the satisfaction of attendees would be difficult to quantify with dollar signs. However, there might be tangible benefits to find — if your organization offers a product or service, is there an expected rise in procurement after the project’s completion?
Project governance: Who will be in charge of the organization of the project? Who will be the sponsor? Who will tend to the catering? Who will be the presenter, and whose poetry will be presented? Answering these questions gives us project governance in this example.
Risk management: Is there a possibility that very few people will show up? Is there a possibility that the vendor of the rented space or the catering cancels last minute? In that case, is there a backup you can use and how can you notify all attendees of the change effectively?
And below, you can see how our example looks when we add it to our business template:
Conclusion: Use a business case to pitch your ideas correctly
By now, you should be aware that just having an idea usually isn’t enough to make someone want to support it. Analyzing it, justifying it, and creating a detailed business case around it are the essence of selling an idea to superiors or potential investors.
Always start with the idea itself — the best way to bring someone closer to it is to explain how you came up with it in the first place. Be sure to compare with alternatives, and show why your case is the one to go with.
A business case is a great tool to facilitate growth, whether it be small or large in scale.
✉️ Do you have experience with writing business cases and have additional advice on the subject? If yes, write to us at email@example.com and we may include your advice in this or future articles.