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Business Case Development: Ignore the Fundamentals at Your Peril

Allen Black

Sound Familiar?

"We can't afford to fund every new project or development proposal anymore. We have to find a better way to prioritize proposals, decide which to continue, and which to drop."

"Starting this year, any request for non-budgeted funds is a non-starter without a strong business case behind it."

"New government policy says we have to produce a business case before going forward with major capital projects."

Clearly,in more and more places, the business case is no longer optional.

Fundamentals Matter

At the time of my first meeting with a client who needed help developing a business case - together with a SWOT analysis, process modelling, and making recommendations on options - I failed to get a firm statement about why the case was needed and what it would be used for. 

This is a fundamental that determines the order of design elements which go into a business case that I ignored, much to my chagrin as I was to find out. I thought I had enough to work with.

Left Scrambling

I decided to complete the SWOT analysis and process modelling first, followed by the business case.

By not getting a clear statement on the purpose of the business case I was left scrambling midway through the project, trying to make the results of the SWOT analysis and modelling fit the business case - clearly not a feather in my cap.

Had I had the purpose of the case clarified up front, the results of the SWOT analysis and modelling would have more logically supported the case, and the case would have been easier to develop.

Thankfully, in the end it proved not so difficult to do.

Is order important?

Strategy planning-250x165As many as twenty design elements could exist in a business case, starting with: subject, purpose, motivating factors behind the case (it is here that opportunities, threats, etc., would appear), and so on.

Although it is not expected that every case would need all twenty elements, following an order means that the design elements cascade – the later items depend on the results of the earlier items.

As mentioned, the fundamental I violated was in not following the order for designing the business case, and not being clear about its content.

What is the “Natural Order”?

Do you agree that there is a natural order for elements when designing a business case?

How does your order compare to the outline that I like to follow?


Design elements

  • Subject
  • Purpose
  • Situation and motivation


Design elements

  • Scope and boundary definitions
  • Financial metrics and other criteria
  • Major assumptions
  • Scenarios
  • Case structure
  • The cost impact model
  • The benefits model and benefits rationale


Design elements

  • Cash flow projections
  • The dynamic financial model
  • Financial analysis, development and financial metrics
  • Rationale for including non-important, non-financial impacts


Design elements

  • Sensitivity analysis
  • Risk analysis
  • Contingency analysis


Design elements

  • Results rationale
  • Choice of scenarios for action
  • Strategy and tactics for optimizing results


I think this natural order should be followed to a greater or lesser degree. Without the preliminary definition of the basics (such as the scope, problem statement, motivations and assumptions….) the foundation of the business case cannot be as strong.

The structure you set out here makes sense, and I especially like that “SENSITIVITY, RISKS, AND CONTINGENCIES” has its own, dedicated part. An analysis is only as good as its underlying assumptions!

By Rose on 2014/05/29

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About this Article

Posted by Allen Black
Posted on December 30, 2010

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Categories: lessons learned, planning & policy, strategy