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Sample Outline: A Project Business Case And Plan

August 27, 2008

The following outline can be used to develop a business case for a project. The project team can then develop more detail for the business case during the planning process, when the business case becomes a business plan. The major difference between a business case and a business plan is the level of detail and the purpose.

The purpose of a business case is to examine the business dynamics of a proposed project as part of the evaluation and selection process. The business case demonstrates how the project coupled with its project outcome lifecycle (POL) is a complete business venture that will contribute to business results. Thus the case also demonstrates in concrete terms how the project will align with and support the strategy of the organization. Finally, it demonstrates how the project will contribute to the company’s economic value.

The business plan adds analysis and data collected during the planning phase of the project. It also highlights the assumptions that went into the business case and now are going into the plan and the actions, tasks, and events that need to take place to make the plan a reality. These assumptions and these actions, tasks, and events should be integrated into the project planning documents. They should become a living part of the project’s control process. The business plan should continue to be used as an active planning document during the project outcome lifecycle, serving those who have the responsibility of managing the POL. It is the most important baton that the project team hands over to the implementation team in support of the success of the venture.

The following outline includes cross-references to the chapters that contain concepts important to the outline point at hand. For more detailed explanations of how to work on some of the outline items and of how to go about business planning in general, we recommend that you begin with Tiffany and Peterson (1997). Ignore the title, Business Plans for Dummies. It is a good, solid introduction to business planning from an entrepreneur’s point of view. Now that you have read The Project Manager’s MBA, you are prepared to apply this business planning to projects and POLs. Henricks (1999) and Rich and Gumpert (1985) are two more resources worth looking at. Block and MacMillan (1995) and Pinchot and Pellman (1999) provide a perspective on venturing within the larger corporation.

  1. Executive summary (three- to five-page summary of the following information).

    1. Description of the project.

    2. Market, customer, and competition.

    3. Cost-benefit analysis.

    4. Sensitivity, risks, and contingencies.

    5. Definitions of success and failure.

  2. Description of the project.

    1. Purpose of the investment. Summarize what the company should expect to gain from its investment in this project.

    2. Key reasons for pursuing the project. Answer the questions: What are the major reasons for pursuing this project and not other projects like it? What is the business model that drives this project, and how will it contribute to a sustainable, repeatable, scaleable process for positive cash flow? Why does this project make the most business sense?

    3. Strategic alignment. Answer these questions: How will the project support the company’s strategy for sustaining competitive advantage? Is the POL part of a portfolio of outcomes that represent the implementation of a strategy, or is it an element in developing a new strategy? If it is simply a reaction to a development in the market, how will it support the strategy or at least not damage it?

    4. The value proposition. Answer this question (make your comments concise): What are the core characteristics that make this venture uniquely valuable to its customers and that will allow continued success over time?

    5. Project requirements. Prepare an executive overview of the requirements document for the project. The overview should connect the requirements with specific contributions to the business success of the entire venture (the project and the POL).

    6. Project goal, milestones, and major deliverables. List these items and relate them to the business success of the entire venture.

  3. Market, customer, and competition

    1. Market analysis.

      • 1.Critical success factors. Answer these questions: What critical success factors that the company depends on to compete in the marketplace will be supported, enhanced, or created by this venture? How will this project sustain, protect, or advance competitive advantage?

        2.Weaknesses. Answer this question: Are there any weaknesses along the value chain of this venture that must be strengthened to ensure success?

        3.Opportunities. Answer this question: What opportunity in the market is this venture going to capitalize on?

        4.Threats. Answer this question: Are there problems or threats that this venture must be aware of or problems that it has to solve? Address marketing risk as well as technical risk.

        5.Structure and size of the target markets. Describe these factors.

        6.Market trends. Describe the market growth the company might expect over the POL.

    2. Customer and end-user analysis

      • 1.Customer and end-user identification. Be specific about exactly who is expected to buy and who is expected to use the outcome of the venture. If it is an internal customer, trace your value chain out beyond that internal customer to the external customer who actually pays the bills, and if necessary to the end-user beyond that.

      • 2.Fulfillment of customer and end-user needs. Answer these questions: Why will the targeted customer and end-user want to use the outcome of the venture? What would they do if it did not exist?

      • 3.Customer and end-user benefits. Be specific about what the venture will do along the value chain of the company to delight customers and end-users.

    3. Competitive analysis

      • 1.Identification of competitors. Answer these questions: If potential customers and end-users do not use the outcome of the project, what other product or service are they likely to use in its place? Who would provide this other product or service to them? (These are your competitors.) Supply this information about competitors for internal projects too.

      • 2.Competitors’ offerings. List the reasons why your customers would buy a competitor’s offering instead of yours.

      • 3.Competitive advantage. Describe the ways in which the project investment will enable the company to provide a better product or service to its customers than competitors can provide.

      • 4.Countermoves competitors might make. List the things competitors might do to block the desired advantage that your company intends to derive from the venture.

      • 5.New competitors. List potential competitors, those who are not active now but who might come out of nowhere to blindside the project.

      • 6.Contingency plans. Describe what you intend to do to meet countermoves by existing competitors and to prepare for new competitors.

  4. Cost-benefit analysis.

    1. Financial model. Present a financial model. For internal projects, compare the projected financial statement that would result if the project were not done with the projected statement that would result from doing the project. The net difference reveals the NPV, or EVA, of doing the project

      • 1.Cash flows in. List the POL revenues and where they will come from

      • 2.Cash flows out. List expenses including the cost of goods sold and SG&A expenses

      • 3.Financial analysis. Prepare financial statements projected out for five years, including the following

        1. Income statement.

        2. Balance sheet

        3. NPV.

        4. Discounted EVA.

      • 4. Assumptions. List all the important assumptions you have made about the financial model, market, competition, technology, and every other contingency you can think of that may influence the projected numbers of the financial analysis and consequently the success or failure of the venture.

      • 5. Assumption tests. List all the milestones and other opportunities that will allow testing of the assumptions in your models.

    2. Nonquantitative factors. These factors are especially relevant when a project is being taken on for strategic reasons and is difficult to justify financially.

    • 1. Opportunity costs. Describe the opportunity costs of doing this project. What else could the company do if it did not do this project, and what would it gain by doing the other project?

    • 2. Benefits. Describe any benefits that are difficult to quantify, such as supporting general capabilities of the company or providing benefits for other ventures not directly connected to the project.

  5. Sensitivity, risks, and contingencies.

    1. Sensitivity analysis

      • 1. Critical assumptions. From the complete list of assumptions you made earlier, identify those that are the most critical to the results of the venture by performing a sensitivity analysis on each one.

      • 2. Assumption changes. List the most critical factors identified by the sensitivity analysis, and show how they influence the results of the venture.

    2. Risk analysis.

      • 1. Identification of risk. Identify as many events as you can that might influence the critical factors.

      • 2. Quantification of risk. Assign a subjective probability of occurrence to each event, or simply rate each one high, medium, or low probability.

      • 3. Management of risk. Describe what you can do to prevent the high-probability events from happening.

      • 4. Contingency plan. Describe what you will do to minimize damage if a high-probability event occurs. Describe how you will monitor the medium-probability events.

    3. Contingencies and dependencies.

      • 1. Value chain analysis. List the things that must happen beyond the boundaries of the project to make the investment successful.

      • 2. Responsibility charting. List the roles of the people who will be responsible for making these things happen.

  6. Definitions of success and failure.

    1. Metrics.

      • 1. Economic factors. List the economic measures that will be used to define success.

      • 2. Strategic factors. List the strategic measures that will be used to define success.

    2. Methods.

      • 1. Process. Explain how data will be collected to report metrics.

      • 2. Responsibility. List the roles of the people who will be responsible for collecting the data.

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