012 What is involved in a business case
Summary
TLDRThis video discusses the importance of a business case in project selection and portfolio management. It explains that a business case must convince the board of directors to allocate resources to a project by demonstrating its purpose, financial viability, and potential gains. Using a showroom example, the video emphasizes the need for detailed financial analysis, including costs, revenues, and other financial metrics. Once approved, the business case serves as the official sign-off to start the project. The next lesson will cover defining the project scope.
Takeaways
- 🎯 The goal of the project is important and must align with organizational objectives.
- 📝 The business case is essential to convince the board of directors to invest in the project.
- 🏢 The showroom example illustrates how a business case should be structured to prove its worth.
- 📈 The project's purpose includes increasing revenue and brand awareness.
- 💰 The business case must include detailed financial analysis, covering all costs and potential gains.
- 📊 Key financial elements to describe include revenues, expenses, expected inflation, discounted cash flow, interest rates, and taxes.
- 🔢 Important financial metrics such as net present value and payback methods are crucial for large projects.
- 👥 The project sponsor and senior leaders are responsible for preparing the business case.
- ✔️ Approval of the business case often serves as the official sign-off to start the project.
- 🔍 Understanding the project's scope is the next step after approval, to ensure all aspects are clear.
Q & A
What is the primary purpose of a business case in project management?
-The primary purpose of a business case is to convince the board of directors to invest the company's resources in a particular project, highlighting its potential benefits and financial viability.
Why is the board of directors involved in project selection?
-The board of directors is involved in project selection to ensure that the projects chosen are worth the organization's time and resources, aligning with the company's goals and strategic direction.
What are the key elements that must be included in a business case for a project?
-Key elements of a business case include the project's purpose, financial analysis with costs and potential gains, detailed estimates, and descriptions of financial elements such as revenues, expenses, expected inflation, and discounted cash flow.
How does a business case contribute to the decision-making process for project investment?
-A business case provides a comprehensive analysis of the project's feasibility, expected outcomes, and financial implications, which helps the board of directors make informed decisions on whether to invest in the project.
What financial methods might be applied in a business case for multi-million dollar projects?
-Financial methods such as net present value (NPV), payback period, and consideration of interest rates and taxes may be applied in a business case for large-scale projects.
What is the significance of the business case approval in the project management process?
-The approval of a business case often serves as the official sign-off to start the project, indicating that the project has been deemed worthy of the organization's resources and effort.
What is the role of the project sponsor and senior leaders in preparing a business case?
-The project sponsor and senior leaders are responsible for preparing the business case, ensuring it includes all necessary financial analysis and justifications for the project's investment.
How does the business case help in estimating the potential gains of a project?
-The business case helps in estimating potential gains by providing a detailed financial analysis, including projected revenues, expenses, and other financial elements that contribute to the project's profitability.
What is the relationship between the business case and the project's purpose for the business?
-The business case must clearly explain the project's purpose and how it aligns with the business's goals, such as increasing revenue or brand awareness, to justify the investment.
What is the next step in the project management process after the business case is approved?
-After the business case is approved, the next step is to define the scope of the project, which involves understanding the specific tasks, deliverables, and objectives involved in the project.
Why is it important to adhere to established standards when creating a business case?
-Adhering to established standards ensures that the business case is comprehensive, credible, and follows a format that is easily understood by the board of directors, increasing the chances of project approval.
Outlines
🚀 Project Selection and Business Case Development
The script introduces the importance of a business case in convincing the board of directors to invest in a project. It uses the example of a showroom to illustrate how a business case should detail the project's purpose, expected revenue increase, brand awareness, and financial analysis. The financial analysis includes costs, potential gains, revenues, expenses, expected inflation, and discounted cash flow. It also touches on the application of net present value and payback methods for evaluating multi-million dollar projects. The business case serves as the official sign-off to start the project if approved.
Mindmap
Keywords
💡Project Selection
💡Project Portfolio Management
💡Business Case
💡Board of Directors
💡Revenue
💡Brand Awareness
💡Financial Analysis
💡Net Present Value (NPV)
💡Payback Period
💡Project Sponsor
💡Scope of the Project
Highlights
The project selection process involves the board of directors choosing projects worth the organization's time and resources.
A business case is essential to convince the board of directors to invest in a project.
The business case for a showroom project aims to increase revenue and brand awareness.
Financial analysis in the business case includes detailed estimations of costs and potential gains.
All financial elements such as revenues, expenses, expected inflation, and discounted cash flow are described.
For multi-million dollar projects, financial analysis includes net present value and payback methods.
The preparation of the business case is a responsibility of the project sponsor and senior leaders.
Approval of the business case serves as the official sign-off to start the project.
Having a project requires understanding the scope and what is involved in the project.
The next lesson will focus on the project's scope to provide clarity on what it entails.
The importance of adhering to established standards in the business case is emphasized.
The business case must provide a compelling argument for why the project is worthy of investment.
The showroom example is used to illustrate the process of proving a project's worth through a business case.
Financial analysis is crucial for justifying the investment in a big investment like a showroom.
Interest rates and taxes are considered in the financial analysis for large-scale projects.
The business case is a key document for gaining approval and moving forward with a project.
The transcript suggests that the business case is a comprehensive document covering various financial aspects.
The transcript will continue to explore project management topics in the next lesson.
Transcripts
so
our goal is worthy of a project 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
its job is to convince the board of
directors to invest company resources in
this project
not somebody else's let's take our
showroom example
to prove it's worth the business case
must adhere
to established standards
first we must explain the project's
purpose for the business
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
and it will increase brand awareness as
it will get a lot of exposure
then costs and potential gains
in the business case you will see all
the numbers and financial analysis
in our example a showroom is a big
investment
we must give a detailed financial
analysis
all costs and potential gains will need
to be carefully estimated and all
financial elements must be described
revenues expenses expected inflation
discounted cash flow if we're talking
multi-million 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
but don't stress too much this is for
the project sponsor and senior leaders
to prepare
however if the business case is approved
this often serves as the official sign
off to start the project
hurrah we've got the go ahead we have a
project
but you see it's one thing having a
project it's another knowing exactly
what's involved in that project
so next lesson we'll be looking at the
scope of our project
see you there
you
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