Business Case in the Initiation Phase

00:02 So our goal is worthy of a project.

00:06 But what's the next step? Remember the project selection and project portfolio management mentioned before where the Board of directors choose the projects that are worth the organization's time and resources. This is where the business case comes in.

00:21 Its job is to convince the board of directors to invest company resources in this project, not somebody else's.

00:29 Let's take our showroom example.

00:31 To prove its worth, the business case must adhere to establish standards.

00:38 First, we must explain the project's purpose for the business.

00:43 It will increase revenue as the new retail park is sure to be a landmark in the city for consumers looking for top of the range products.

00:49 And it will increase brand awareness as it will get a lot of exposure.

00:54 Then costs and potential gains.

00:59 In the business case, you will see all the numbers and financial analysis.

01:04 In our example, a showroom is a big investment.

01:08 We must give a detailed financial analysis.

01:11 All costs and potential gains will need to be carefully estimated, and all financial elements must be described.

01:17 Revenues, expenses, expected, inflation, discounted cash flow.

01:22 If we're talking multimillion dollar projects, interest rates, taxes and this is the time the net present value and payback methods will be applied, which we discussed in the additional materials from Section one.

01:35 But don't stress too much.

01:36 This is for the project sponsor and senior leaders to prepare.

01:41 However, if the business case is approved, this often serves as the official sign off to start the project.

01:48 Hurrah! We've got the go ahead.

01:50 We have a project.

01:52 But you see, it's one thing having a project.

01:55 It's another knowing exactly what's involved in that project.

01:59 So next lesson, we'll be looking at the scope of our project.

02:04 See you there.