The Value Proposition/Business Case should tell a story — why this project warrants investment. It should spell out the value and benefits to be gained — the 'prize' — and how they are going to be obtained and at what cost (in dollar, resource, technology, commitment terms).
A value-focused business case/value proposition inverts the traditional 'justify the cost' approach by taking a 'this is the value you'll get — and it will cost you 'x' to get it.' Now that the business case has changed, the first questions asked are "Why are we doing this? What's the value? And only then, "What will it cost?"
And speaking of cost, value-focused business cases don't have to be specific if they don't have the information to do so.
At the beginnings of a project the level of uncertainty, unknowns, and assumptions is usually very high. It stands to reason that any figures generated based on these unreliable bases are only going to be estimates and mostly wrong. They may be wrong by 10% or 100% or even 400%!
Because of this, value-focused business cases speak in terms of 'best case, worst case, and most likely' figures. Why pretend you know something you don't?
For example, a value-focused business case may posit "this project may cost $40m (worst case), as low as $20m (best case) but is most likely to cost $28m." This breadth of worst-to-best case deviation progressively reduces as the project progresses and more becomes known.
Evaluation committees now have a clearer view of the likely cost, but also the maximum and minimum levels of expenditure the project could incur. Had we used a single figure of $28m in the example above, it would have been misleadingly definite. If we instead use a figure somewhere between $20m and $40m, and most likely to be around $28m, it allows a certain amount of leeway.
When the same principle is also applied to the benefits, the cost and benefits worst cases can be compared to see if the project is viable in this situation.
Now everyone understands the project's likely, possible, and best case value.
This value-focused approach usually requires business cases to be improved. Comment on our blog at valuedeliverymanagement.com
Click here for the seventh article in this the series "Refocusing Projects onto Business Value, Part 7: Prioritization"
Click here for the first article in this the series "Refocusing Projects onto Business Value, Part I: The Need".
Jed Simms is CIO magazine's weekly project management columnist. Simms, founder of projects and benefits delivery research firm Capability Management, is also the developer of specialized project management and project governance Web site www.project-sponsor.com
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