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The Self Evident Truths of Project Management: Truth #2 - The business case Is a ‘contract’

The Self Evident Truths of Project Management: Truth #2 - The business case Is a ‘contract’

The Business Case spells out an organisation’s ‘contractual’ commitments -- the required funding, staffing, governance team commitments and other resources.

The Self Evident Truths of Project Management: Truth #2 The business case is a ‘contract’.

The current business case process is upside down. The project’s workload, effort and costs are computed and then we try to find enough benefits to justify the costs, generate a positive ROI or clear the capital hurdle rate.

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 we know how much each benefit will cost; high cost, low value ‘benefits’ can be deleted leaving us with our best value proposition.

This value proposition within the Business Case consists of the desired business outcomes (business end states) to be achieved, the associated (measurable) benefits and their value. This is what the project is ‘contracting’ to deliver as a result of the project and its associated investment.

The Business Case also spells out the organisation’s ‘contractual’ commitments -- the required funding, staffing, governance team commitments and other resources.

The Investment Committee is not, therefore, just ‘approving’ the project but committing the organisation 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 organisation 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 organisation meets its obligations, then the project has to deliver the promised value.

We need to rethink the business case and focus it on the value proposition (not the cost) and treat it as a ‘contract’.

© Jed Simms, Australia 2009.


Further support and useful tools to help you manage your investments, projects and portfolio are available from valuedeliverymanagement.com.

For the previous article in this series visit The Self Evident Truths of Project Management: Truth #1 - We Do Projects to Realise the Associated Benefits.

For previous series of project management articles by Jed Simms visit How Do You Know if Your PMO is Successful and "PMO: What’s In A Name?".

Jed Simms is CIO magazine's project management columnist. Simms, founder of projects and benefits delivery research firm Capability Management, is also the developer of specialised project management and project governance Web site valuedeliverymanagement.com

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