Business Case and Feasibility

Why should we spend this money?

Before buying a car, you’d think about why you need it, what you can afford, the running costs as well as the price, and whether a bike or the bus would do instead. A business case does the same for an IT project.

A business case explains why an investment should be made. It’s the basis for the decision to fund a project and, later, for checking whether it delivered. It’s owned by the sponsor.

Typical contents:

the business need or opportunity, and its link to strategy
options considered, including doing nothing
costs over the whole life: buying or building, implementing, training, running, maintaining, and eventually retiring the system (total cost of ownership)
benefits, tangible and intangible, with how and when they’ll be measured
risks of the project, and of not doing it
financial analysis: return on investment, net present value, internal rate of return, payback period
the recommended option and an outline plan

The five feasibility questions

Technical, economic, operational, legal and schedule feasibility.

Dimension	The question
Technical	Is the technology available and mature? Will it work with our existing systems?
Economic	Do the benefits justify the costs?
Operational	Does it fit our processes, skills and culture? Will people actually use it?
Legal / regulatory	Data protection, licensing, contracts, sector rules
Schedule	Can it be delivered in time?

The feasibility study also weighs build versus buy, and whether an existing system could meet the need.

Revisit, don’t file away

Draft, approve, revisit at each gate, change or stop, measure benefits.

The business case should be reviewed at every stage gate. If costs rise, benefits shrink or the business need changes, the steering committee decides whether to continue, change direction, or stop. Carrying on because money has already been spent is the sunk cost trap.

Example. A warehouse system was approved on a business case of 1.2 million cost and 400,000 a year in savings. Halfway through, costs are forecast at 2.5 million, and the company has outsourced half its warehousing, halving the savings. The auditor checks whether the steering committee re-evaluated the case. It hadn’t, and the project carried on under the original approval.

How the exam asks about it

If the question asks…	The answer is usually…
Who owns the business case?	The project sponsor
When the business case is reviewed	At each major stage gate, and when circumstances change
The business case is no longer valid	Change or stop the project
A cost element often left out	Running, maintenance and retirement costs
The feasibility dimension about user acceptance and fit	Operational feasibility

In short

The business case justifies an investment: the need, the options, costs, benefits, risks, and how benefits will be measured.
It's approved before significant money is committed and reviewed at each major stage gate.
A feasibility study checks whether a solution is technically, economically, operationally, legally and schedule feasible.
Options should include 'do nothing', and alternatives such as buying, building or outsourcing.
Financial measures include return on investment, net present value, payback period and total cost of ownership.
If the business case is no longer valid, the project should be changed or stopped.

Exam traps

The business case isn't a one-off document; it's revisited throughout the project.
Costs must cover the whole life: running, maintaining, training and retiring the system, not just building it.
Intangible benefits still need a way to be measured or evidenced.
The sponsor owns the business case, not the project manager or IT.

Slides

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