Business Case for a Project: When “Necessary” Is Not “Sufficient”

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The preparation of a business case is one of the first steps of deciding whether or not a project is worth the investment. It, however, doesn’t authorize a project to proceed.

After reading this article, you’ll be able to:

  • understand the processes needed to develop the business case
  • discuss the difference between preparation of a business case and approval of a project.

Image titled business case for a project

What Does a Business Case Contain?

The PMBOK® Guide, Fifth Edition, describes a business case as “A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition.” It further explains that a business case “is used as a basis for the authorization of further project management activities.”1

Even if business cases can vary quite a lot, depending on what an individual organization requires to assess if a project should go ahead, they most typically contain the following information:

  • business need, issue, or opportunity
  • critical assumptions and constraints
  • financial benefit of completing the project
  • budget estimate
  • schedule estimate
  • potential risks.

This project management internal deliverable is usually completed by a business analyst or, in case of extensive business cases where the organization might lack the necessary internal competencies, by external consultants.2

Business Case Preparation Vs. Project Approval

A business case development is part of the pre-initiation tasks that lay the foundation for a project before its formal beginning.

15 main activities are involved in the process:3

  1. Identify stakeholders.
  2. Investigate the problem or opportunity.
  3. Gather relevant data to evaluate the situation.
  4. Draft the situation statement.
  5. Obtain stakeholder approval for the situation statement.
  6. Assess the current state of the organization.
  7. Determine the required capabilities needed to address the situation.
  8. Assess the current capabilities of the organization.
  9. Identify gaps in organizational capabilities.
  10. Recommend action(s) to address business needs.
  11. Identify constraints, assumptions, and risks for each option.
  12. Assess the feasibility and organizational impacts of each option.
  13. Recommend the most viable option.
  14. Conduct cost-benefit analysis for the recommended option.
  15. Assemble and value the business case.

All projects that have been authorized have had a business case completed and approved during the feasibility phase of a project life cycle.

Appropriate stakeholders consider the information contained within the business case and then a decision is made.

All projects that have been authorized have had a business case completed and approved.

Because such outcome can also consist in declining projects or giving a lower priority, developing a business case sets an approval milestone for moving on to further planning, but it neither guarantees nor authorizes the project to proceed.

A project is authorized by the project charter.

In Summary

A business case documents the justification for the undertaking of a project, but it doesn’t officially authorize its existence.


1 Project Management Institute (2013). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 5th ed. Newtown Square: Project Management Institute, P. 530.

2 Nielsen, K. (2017). The Business Case, Product and Process. Retrieved from–Product-and–i-Process–i-

3 Nielsen, K. (2015). Achieve Business Analyst Certification. Plantation, FL: J. Ross Publications.

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Hi, I am Stefania, hearth and keyboard behind Tipsographic, a free online resource for everybody interested in project management and agile. I specialize in project management tips, tools, and tricks. When I'm not writing, you can find me road cycling around Tuscany or spending time with friends and family.

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