A well-prepared business case is the cornerstone of a successful project. However, navigating the intricacies of business case preparation can be challenging, and common pitfalls can undermine and derail the decision-making process.

Whether you’re seeking investment approval, external funding or making the case for change, a clear narrative underpinned by reliable data is fundamental.

Crafting comprehensive, robust business cases is our bread and butter. Whether you need full business case development or support in preparing your own, our proportionate approach to HM Treasury Green Book guidance is what our clients come to us for. Our vast experience in this area enables us to share some top tips for developing a sound and robust business case:

1. Be proportionate

The process of creating a business case should be scalable and proportionate to the size, strategic importance of the decision to the organisation, and be tailored to the costs, risks, benefits and other project specific requirements of each proposal.

Often organisations attempt to apply a ‘one size fits all’ approach, regardless of scale or complexity, to preparing business cases which can result in the process becoming cumbersome, resources being wasted and ultimately ending in ineffective, ill-informed decision making.

2. Clearly show the strategic alignment

An effective business case will clearly articulate the problem and business need and show a clear link to how the spending proposal supports the achievement of the strategy. The Strategic Case forms the foundation of the business case, and captures the project’s context and how it aligns with the organisation’s strategic goals. It establishes the “why” behind the project and defines the objectives that the project aims to achieve. The best business cases clearly communicate what the project hopes to achieve and how it intends to do so. This up-front clarity focuses and simplifies the decision-making process.

Some business cases lack a clear intervention rationale, making it challenging for stakeholders and decision-makers to understand its ‘purpose’ i.e. what it is seeking approval for and what the decision is that is needed. Additionally, failing to set Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) objectives and showing how these are aligned with the organisation’s vision can create a risk that resources are misallocated, and a project is undertaken that doesn’t ‘fit’.

3. Fully consider all the options

The options appraisal within the Economic Case is one of the most important components of the business case. It is where different options to solve the business problem or take advantage of an opportunity are assessed, and the best way to deliver the project or programme is determined. It should include a comprehensive, wide range of potential solutions, including a Business as Usual (BAU) and ‘Do Minimum’ option to understand the imperative for action. It needs a clear process for comparing options side by side and shortlisting with the benefits and risk of each explained. Well-considered alternatives strengthen the business case and support sound decision-making.

Neglecting the completion of a comprehensive options appraisal can lead to missed opportunities for more cost-effective solutions. Furthermore, failing to consider the ‘Do Minimum’ scenario can skew cost-benefit analysis and hinder decision-making or in the worst-case scenarios a business case can sometimes be prepared to ‘back justify’ an already identified preferred option. Without a clear and robust options appraisal approach there can be ‘gaming’ to sway the preferred option to align with individual stakeholders or interests.

4. Take stakeholders on the journey

A business case should develop iteratively over time with more detail being added and developed to allow stakeholders to ascertain that proposals are supported by a robust case for change, optimise value for money, are commercially viable and financially affordable and can be delivered successfully. Aspects of the business case should be socialised early, and stakeholder engagement conducted throughout the process. Embedding review and challenge throughout is important to garner and maintain stakeholder support to enable effective decision-making.

Sometimes business cases are developed in isolation of key stakeholders and in the absence of securing sufficient stakeholder buy-in prior to the business case decision. Without appropriate consultation, particularly during the course of the options appraisal process, there is a risk of slowing down or derailing the decision-making process.

5. Understand the budget and the operational financial impact

The Financial Case should present the financial implications of the project, including cost estimates based on robust and reliable sources, and consider the project’s operational and revenue impacts to provide a comprehensive financial picture. A robust and sound business case will base cost estimates on robust and reliable sources, ensuring accuracy and credibility. It will perform sensitivity analysis to communicate best and worst-case scenarios in order to help stakeholders understand potential risks and rewards. It will determine whether the proposal is affordable in light of the budget or funding available and also consider resourcing requirements.

Failure to fully understand the budget can result in unfunded proposals. Relying on unreliable cost estimates can lead to budget overruns and hinder project progress. Ignoring sensitivity analysis can leave stakeholders unaware of the potential impacts of changing circumstances. Moreover, neglecting operational and revenue implications may lead to unforeseen challenges during implementation.

Conclusion

Avoiding common pitfalls in business case preparation is essential for project success. By following the top tips provided and avoiding common pitfalls, organisations can ensure the creation of robust and effective business cases. A well-prepared business case will not only garner stakeholder support but also pave the way for successful project implementation, achieving objectives, and delivering value for money.

The current fiscal environment means business cases are even more important in helping organisations decide where to invest. In these circumstances, the business case process needs to be well designed to avoid common pitfalls and ensure that the business case remains at the centre of effective decision-making.

If you are interested in finding out more about Business Cases or our Proportional Business Case offering, please contact Laura on laura.bridges@31tenconsulting.co.uk or visit the Business Cases area of our website: https://www.31tenconsulting.co.uk/our-expertise/business-cases/