Business case
A business case is the document that justifies a proposed investment or change by setting out the problem, the options considered, costs, benefits, risks, timing and the recommended option. It is approved before funding and revisited at each stage gate.
Roles that need it
What it is
A business case explains why a project should be done and which option is best. Public sector and many private frameworks, such as the UK Treasury’s Green Book with its five-case model, organise it around a few questions: is there a clear need (strategic case), which option gives the best value (economic case), can it be bought and delivered (commercial case), is it affordable (financial case) and can it be managed (management case).
A typical banking business case includes the problem statement, objectives, scope, at least three options including “do nothing” or “do minimum”, one-off and running costs, quantified benefits, key risks and assumptions, a timeline, and the measures used to track benefits.
Why it matters
Change budgets are limited, and the business case is how a firm compares a regulatory project, a cost-saving automation and a growth initiative on the same basis. It also sets the baseline for later decisions: if costs rise or benefits shrink, the steering committee can check whether the case still holds. For mandatory regulatory change, the case focuses less on whether to act and more on the cheapest compliant option and the risk of delay.
Worked example
Illustrative numbers. A finance team proposes automating its month-end reconciliations. Option A (do nothing) costs nothing extra. Option B (tool purchase) needs 600,000 euro upfront and 100,000 euro a year to run, and saves 8 full-time equivalents at 60,000 euro each, or 480,000 euro a year. Net annual benefit is 380,000 euro. Over five years, undiscounted, the net benefit is 5 times 380,000 minus 600,000, or 1.3 million euro, and payback comes in about 19 months (600,000 divided by 380,000 a year). Discounted at 8 percent, the net present value is about 917,000 euro. The case recommends option B, with the risk that savings arrive later if data quality needs work first.
Who uses it
Programme and project managers write or own the business case and keep it updated. Management and financial services consultants help structure options and quantify benefits. FP&A (financial planning and analysis) analysts check costs, savings and their impact on budgets. Portfolio analysts in the PMO compare business cases across the change portfolio to rank investments. Steering committees and investment committees approve or reject them.
Common confusions
A business case is often confused with a project plan. The plan says how and when; the case says why and whether. Another confusion is to treat it as a one-off funding document; a case that is never revisited cannot stop a failing project. Finally, benefits should be measurable and owned by the business, since vague benefits such as “better data” cannot be tracked in benefits realisation.