What Are the Components of a Business Case Analysis?

What Are the Components of a Business Case Analysis?
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Development Of a Business Case

A business case analysis for a project is a significant phase in the project lifecycle since it portrays the foundation of the project initiation. Generally, the completion of a business case is the preliminary action toward the project initiation in business

organizations. The business case validates the project, with a description of the prevalent business opportunities or issues that may exist. The various options for solution delivery are discussed, including the respective advantages and associated costs. Subsequently, the solution is recommended for approval.

When the solution has been agreed upon, a plan is defined for execution. During, or may be following the business case creation, it may be essential to conduct a feasibility study to confirm the implementation of the identified solution. The documentation of the business case is followed by its sanction by the project sponsor.

During the project execution, the business case is the reference document for the sponsor, and the project management team and is essential in project tracking. The project is managed by the sponsor via authorization, fund allocation from the approved budget, and ensuring achievement of goals by an active participation in the phase end reviews. The development of a business case should not be extended too long since project delays cause project cost increases and a valuable opportunity may be lost due to such delays.

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Business Case Analysis Contents

The business case layout and theme may be different between organizations. However, a business case analysis may essentially include numerous fundamental elements. The amount of detail required will be influenced by the monetary resources required for the project, and the complication involved in the business. If the project is complex, the creation of a preliminary business case may be necessary to obtain project sanction in principle. This may permit the initial funding for creation of a complete business case. The particular business case layout and theme may be different between organizations, but normally, the following are considered essential for inclusion in a successful business case analysis:

Motives Project Initiation

The rationale for initiation of the project is explained, including the market opportunities that are planned to be captured, or the issues that need to be addressed. This information will create a common understanding between the project management team and the sponsor. Thus, the project will be aligned toward the achievement of the organizations’ strategic goals.

Market Opportunity

Details of the market opportunity that is desired to be captured are mentioned, including the description of end users. Drivers of the strategic business, factors that establish user needs and priorities, growth prospects, and the industry standards that affect the business are specified. The market potential and the accepted market share are evaluated. The case studies examples, competition, potential threats, and organization advantages related to delivery, strategy, and joint ventures.


The benefits the project is expected to achieve are explained. The benefits may be tangible, like monetary gains, or intangible like customer satisfaction or an improvement in project human culture, or even a combination of tangible and intangible objectives. Project objectives may also entail conformance to state, or industry regulations.

Contents of a Business Case Analysis

Project Costs

The project costs are determined from the project plan, based on the schedule and resources required. Continuing management costs, after the project closure, may also be included. It is useful to split the costs into segments, like design, human resources, structures, information systems, etc. Engineering materials and evaluation costs also need to be included in the project costs. Software is mostly used for tracking project costs, like Primavera project management software, Primavera p6, is extensively being used as a modern tool for cost management. The buyers closing costs for a residential home project may be conveniently determined by a closing costs calculator. Construction cost estimating software can be used for an accurate evaluation for the construction projects.

Authorized Time-Phased Budget

Establishment of a time-phased budget is essential, since it permits the project expenditures according to the specified time periods, like monthly, quarterly, yearly, etc. Expected monetary benefits, and the period of their occurrence is important information for the project sponsor. Information concerning return on investment is an important aspect that may require attention by the project management team or leader. A project producing a lesser rate of return may not be feasible to be executed. A business may have an option to select a project from several options that may be available. The rate of return may be the crucial deciding factor for the selection of projects.

Project Duration

The duration of the project is indicated for evaluating the business opportunities that may occur during this period.

Performance Measurement

The methodology to be used for the measurement, and tracking of project performance is vital information for the stakeholders. Use of Gantt charts may be recommended for tracking project performance.


It may be essential to mention the assumptions on which the business case is based, and the actions that would be necessary if the assumptions are not proved to be valid.

Potential Risks

The prospective risks that a project may encounter during execution are evaluated, including the potential risk responses.

Consequences If Project Not Performed

An evaluation is also carried out regarding the option if the project concerned is not performed, including the disadvantages to the organization. Implications, including the opportunities lost, are critically analyzed. The alternatives available are examined.

Data Sources

A business case analysis will essentially include the details of reference materials so that they can be consulted, when necessary. This includes statistical data, business case examples, budget spread sheets, diagrams, etc., that contain information related to the project.

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