Chapter 6: Business Case Flashcards
What is the purpose of the Business Case Theme in PRINCE2?
The purpose of the Business Case Theme in PRINCE2 is to establish mechanisms to judge whether the project is (and remains) DESIRABLE, VIABLE, and ACHIEVABLE as a means to support decision-making in its (continued) investment.
All projects must have a documented business justification to clarify the reason for the project, but also to confirm whether the project is
DESIRABLE
VIABLE
ACHIEVABLE.
What do those three mean?
DESIRABLE - the balance of costs, benefits and risks
VIABLE - able to deliver the products
ACHIEVABLE - whether use of the products is likely to result in envisaged outcomes and resulting benefits
Outputs, outcomes and benefits (and dis-benefits) are not the same in PRINCE2. What is the difference between them, and how are they connected?
PRINCE2 projects deliver OUTPUTS in the form of products.
The use of outputs results in changes in the business, which create OUTCOMES.
The outcomes allow the business to realize the BENEFITS that are set out in the business justification for the project.
Dis-benefits are outcomes that are perceived as negative by one or more stakeholders.
What are the minimum requirements for the Business Case Theme? (four requirements)
- Create and maintain business justification for the project (usually in the form of a business case)
- Review and update the business justification in response to decisions and events that might impact the desirability, viability, and achievability of the project
- Define the management actions that will be put in place to ensure that the project’s outcomes are achieved and confirm that the project’s benefits are realized.
- Define and document the roles and responsibilities for the business case and benefits management
What are the 2 management products that are produced and maintained for the business theme? What do those provide?
- Business Case - provides the costs, benefits, expected dis-benefits, risks and timescales against which viability is justified and continuous viability is tested.
- Benefits management approach - defines the management actions that will be put in place to ensure that the project’s outcomes are achieved and confirm that the project’s benefits are realized.
There are three possible “stages” of a business case. What are those and when are they created and verified (meaning checking if the project is still worthwhile)?
The three stages of a business case are “outline business case”, “detailed business case”, and “updated business case”. These are not three separate documents.
The outline business case is created and verified at the end of the pre-project phase. The detailed business case is a more in-depth version of the outline business case and it is verified at the end of the initiation stage.
Then,
the Business case should be maintained during the delivery stages of the project. Before the final delivery stage of the project, the updated business case is verified one more time. This happens at the same time as the benefits are confirmed for the first time.
When are the benefits of the project confirmed?
- Before the final delivery stage
- After the final delivery stage
- During the post-project period
TRUE or FALSE:
The business justification for a project should include both costs for developing the products produced by the project and any changes to operational costs post-project.
TRUE
When should the business justification of a project be reviewed and verified?
- at the end of the “starting up a project” process by the project board (to authorize project initiation)
- at the end of the “initiating the project” process by the project board (to authorize the project)
- as part of any impact assessment by the project manager
- in tandem with an exception plan by the project board (to authorize the continuation of the project)
- at the end of each management stage
** by the project manager (to determine if any of the costs, timescales, risks or benefits need to be updated)
** by the project board (to authorize the next management stage & the continuation of the project) - during the final management stage by the project board (to assess the project performance against the requirements and the likelihood that the outcomes will provide the expected benefits)
- as part of the benefits reviews by corporate/programme management/customer (to determine the success of the project outcomes in realizing their benefits)
Who is responsible to specify the benefits for the project & accountable to confirm if the benefits of a project are realized?
Who is responsible to ensure that this person reports back that the benefits of the project are realized?
The senior user
The executive
TRUE or FALSE:
When a project is part of a programme, the programme will typically define both the approach to business case development and provide an outline business case for the project.
TRUE
Who is usually defining, tracking and managing the benefits of a project when the project is part of a programme?
The programme management team
Give some examples of Investment Appraisal techniques (see p. 55)
- Whole-life costs
- Net benefits
- Return on Investment
- Payback period
- Discounted cash flow
- Net present value
- Sensitivity analysis (when there are uncertain forecasts)
What is the usual composition of a business case?
- Executive summary
- Reasons - why do we undertake the project
- Business options - analysis and reasoned recommendation of the base business options to DO NOTHING, DO THE MINIMUM, and DO SOMETHING. Do nothing should always be the starting option to act as a basis for quantifying the other options.
- Expected benefits - benefits should be measurable
- Excepted dis-benefits
- Timescales
- Costs
- Investment appraisal (e.g., net benefits)
- Major Risks
