How to build a business case part 1 – benefits, costs and timescales

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How to build a business case

[/vc_column_text][vc_separator type=”transparent”][vc_separator type=”small” position=”center”][vc_column_text]There are only three components to a business case: benefits, costs and timescales. In understanding how to build a business case, it is important to know how to quantify these components and how to present them in order to sell the project.[/vc_column_text][vc_separator type=”transparent”][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”1/4″][vc_single_image image=”16516″ img_size=”325″ qode_css_animation=””][vc_widget_sidebar sidebar_id=”sidebar”][/vc_column][vc_column width=”3/4″][vc_column_text]

Benefits

[/vc_column_text][vc_separator type=”transparent”][vc_column_text]Whatever the project there needs to be a reason for doing it that can be described in quantifiable benefits. A project may be worthy or seem like a good idea but the actual, measurable benefits need to be understood and quantified.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]The benefits could be financial, a saving in cost or a greater return on investment. They could be expressed in terms of the avoidance of a costly penalty. There may be no direct benefit but the penalty for not doing something may be costly. They don’t need to be financial benefits. The benefits could be expressed in terms of time as you can express the costs in terms of time also. It’s important that you use the same “currency” for benefits and costs. You have to compare apples with apples.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]

Costs

[/vc_column_text][vc_separator type=”transparent”][vc_column_text]All of the costs need to be included. Consider how many people will be involved in a project and how much they will cost. Is there a software cost? What about on-going support costs?[/vc_column_text][vc_separator type=”transparent”][vc_column_text]

Timescales

[/vc_column_text][vc_separator type=”transparent”][vc_column_text]It’s easy to forget timescales. With a simplistic business case you can simply compare the cost and the benefits. If the benefits outweigh the costs you have yourself a business. However, you need to go to the next level of detail. When will the costs be incurred and for how long and when will the benefits materialise. If all of the costs are incurred up front and there’s a long delay before the benefits materialize, that weakens the business case.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]

Numbers, numbers, numbers

[/vc_column_text][vc_separator type=”transparent”][vc_column_text]You don’t need to be a math genius to build a business case but you do need to be able to present numbers. Numbers are the most import part of the business case. Number of days or months to complete a project; amount of investment required; quantified improvements specified in numbers of course.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]Qualitative descriptions of benefits, costs and timescales such as “soon”, “very quickly”, “huge gains”, “affordable cost” – they’re all useless. “Show me the money!” Everything needs to be expressed in numbers.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]

Consistent Numbers

[/vc_column_text][vc_separator type=”transparent”][vc_column_text]If your business case talks about benefits that are expressed in cash, it’s no use expressing the costs in terms of person days. You need to compare like for like. The most common way to build a business case is the use cash to quantify cost and benefits. All of the benefits need to be expressed in term of cash. Any other benefits that cannot easily be expressed in terms of cash must be described outside of the business case.[/vc_column_text][vc_separator type=”transparent”][vc_column_text]This guide is in four parts that can be found here

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