We take enormous effort to compute the project’s workload, effort and costs for the Business Case. And then we try to find enough benefits to justify the costs or generate a positive ROI or clear the capital hurdle rate to gain approval.

The Current Business Case Approach Is Upside Down.

Instead - 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 then we will know how much each benefit will cost; that means high cost, low value ‘benefits’ can be deleted - leaving us with our project value optimized.

The Value Equation for the Business Case consists of:

  • the desired business outcomes (business end states) to be achieved,
  • the associated (measurable) benefits:
  • their measurable value (as money, KPIs or proxy measures) ;
  • the complete identification of all of the change activities required. 

The Value Equation is what the project ‘contracts’ to deliver as a result of the project and its associated investment.

The Business Case spells out what the organization is contracting to commit — the required funding, staffing, governance team commitments, and other resources.

The Investment Committee who approves the business case is not, therefore, just ‘approving’ the project. Rather it is 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.

In Conclusion

We need to rethink the business case and focus it on the value equation, not a cost equation and we need to treat it as a ‘contract’.

So something for you to think about - what’s stopping your organisation from making the business case a contract?

You can learn more about the Value Equation here:

DOWNLOAD OUR BOOK Understanding the TOP Value Equation

Topics: Business Case, Fifteen Critical Insights


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Revision History

First published: Simms, J. (Jan 2009) as "Critical Insights (2) - The Business Case Is A Contract"

Updated: Chapman, A. (March 2020), Revisions and Corrections