A business case identifies the business need for doing a project. It effectively describes the linkage of the project with high-level strategic goals of the organization. It also explains the reason for project identification and selection. It is important to identify how a project is selected amongst so many projects in your organization. From PMP exam perspective, it is important to note the assumption that each project has a comprehensive business case. Any project that does not have a comprehensive business case is not appropriate.
In large companies, a project selection committee is established to gather information and data required for developing a business case. A project manager is not a part of the project selection committee. A project manager is aligned with the project after it is selected for execution. However, to develop an appropriate business case and to effectively achieve the desired results, the project manager needs to have an understanding of the reason for project selection. Different functions/departments of the organization present their ideas for several different initiatives in front of the project selection committee. Basis the focus of the organization and/or the themes identified by the organization for project execution, the selection committee selects the project.
Let’s look at an example of how a business case can affect the way the project is managed. A company has identified and selected a particular project because the project will add to its strategic plan of consolidating its vendors. The project manager has a project management plan that includes an approved schedule and resources. The project manager finds the approved schedule is a constraint that could delay the process of vendor consolidation. He asks for additional expert resources, rather than continuing with the project with approved resources as per the project management plan. If the project manager did not ask for the increase, the company may have been delayed in the exercise of vendor consolidation and that would have resulted in the loss or there may also be a situation where the contracts would have been renewed.
Thus, it’s imperative for project managers to know why the project was selected and how does it link with the higher organization objectives. The business case created should justify the existence of the project.