Why is Project Required?
In particular in what way will the project enabled the achievements of corporate strategies and objectives. Note that the reasons for the project willusually be documented in something called the project mandate. Which is provided to the project by corporate or program management. Now for most projects it will be necessary to look at a number of business options before embarking on a project and the three basic business options concerning an investment good starting point for any project of these.
That do nothing option, That do the minimum option, Do something more than the minimum, and whatever the reason for the project it’s always a good idea to look at base three possible approaches.
By analysis of each option the project board and stakeholders can determine which option provides the best value. The business case for the selected option should be continually reviewed as changes, risks etc. might make one of the other options more justifiable.
The next section specifies the expected benefits, and every claimed benefits that will be achieved by the project’s outcome should be listed. The current status of each benefit should be stated in quantifiable terms, and the business case of state not only how the benefit should be measured up when.
Benefits can be financial or non-financial but they should all be:
Aligned to corporate objectives and strategy mapped from the project’s outputs and outcomes
Quantified and the quantification should include a tolerance
Benefits should be measurable. And they should be assigned. It is essential that clear responsibilities are assigned and they should be to individual named people where possible. The set of products to be produced is influenced by the list of expected benefits
Conversely, the project should not be producing products that do not enabled the expected benefits. Benefits should be expressed intangible ways,note that quantification leads to the ability to set tolerance is such as a reduction of between 15 and 20%. If the project’s benefits can’t be measured and proved it’s not possible to say that:
The project has been a success
The project has provided value for money
The project should be or should have been initiated
Benefits can be subjected to sensitivity analysis and the benefit all benefits that a particularly important can be subjected to specific monitoring and control now cause this is not always easy if you take the example of the London tourist attraction, the tourist attraction was built in US before its main benefit that is the benefit based on the number of visitors in a year and the value of that to London. That could not actually be measured and to what after the project itself was finished. But if you do have a benefit that is particularly important and that you can start to measure as soon as possible. Then its important to get monitored and control in place.
It is also often a good idea to assess the value of benefits in a “worst case scenario”, so in other words you look at the sort of things that might not work out the way you would like them to on your project and say what even if we only achieve this all will be the value of the benefits in that case. The activities that are needed to establish and correct the benefits measurements are documented in the benefits review plan. Now it’s time to look at expected and dis benefits. A benefit is an outcome perceived as negative by one or more stakeholders
The difference between a dis benefit and a risk
A dis benefit is a consequence of deliberate activity, so in other words we know that what we’re going to do will make this dis benefit happen where some risk involves uncertainty. Dis benefits need to be considered in the investment appraisal. The a section of the business case concerns timescale.
Corporates and all program management will want to note
The period over which costs will be incurred
The period of which the cost benefit analysis will be based
The timing for the accrual of benefits
The earliest and latest feasible stop dates
The earliest and latest feasible completion dates
On the knowledge of these timescales can influence the timing of benefits reviews
The cost derived from the project plan should be summarized in the business case. When we are dealing with project planning and with a long projects and where the project to rise and is not as long as the project itself. Then there will be an element of estimation in the cost. This should include ongoing that includes posts project operations and maintenance costs and how all these are going to be funded
The investment appraisal is a comparison of the development operations and maintenance calls with the value of the benefits over a period of time. The accounting rules to be applied may have been prescribed by the commissioning authority and it’s important to remember that the investment appraisal covers both the project costs and the ongoing costs. You don’t need to be familiar with any of these techniques in detail but you should recognize their names as investment appraisal techniques
So finally in the business case we have a statement of major risks. Most opportunities involve an element of risk and the project board need to know the risks involved and how they might affect the costs and benefits.
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