The business case is the motivation for an organization to start a specific project. This concept includes consideration of the benefits that the company will receive as a result of the project. In addition, the business case considers various alternatives and also analyzes the project from a financial and economic point of view. The latter allows you to evaluate the investment attractiveness of the project. How to write a business case? An example is in this material.
The essence of the concept
The business case is reminiscent of the analysis that we carry out, planning some serious purchase. For example, your own car. Suppose that for this acquisition we can allocate 35 thousand US dollars from the family budget. The first step is to find out exactly which automobile concerns produce cars of the class of interest to us. Then we determine the main technical characteristics and agree on the final price with the company that sells these products. But that is not all. How to write a business case? An example is the question of choosing a payment scheme.
At the same time, there may be another situation when the buyer is primarily interested in the total amount that will have to be paid for a new car. This is especially true in a situation where the final price is affected by the amount of interest when it comes to buying on credit. In this case, it is advisable to choose exactly the option that provides for the lowest interest rate. Another way is to search for offers with the lowest monthly payment. Such an acquisition will allow you to stretch payments for as long as possible. At the same time, the monthly amount of such a payment will not hit much in the pocket. In the implementation of the financial and economic justification, attention is paid to similar aspects.
Components of the business case
There are no clear rules for documenting a business case. Its main task, as in the case with the feasibility study of the project, is to determine the tangible or intangible results of its implementation. Material results are those that can be measured.
The following is a list that gives an idea of the material components that are relevant in the process of preparing the financial and economic feasibility study. By the way, it will be said that not all of them require mandatory documentation. The need to fix them on paper depends on the complexity of the project, the cost and the number of risks for the enterprise.
Material elements of a business case
So, the main material components of the business case include saving, reducing costs, the likelihood of generating auxiliary income, increasing the market share owned by the company, customer satisfaction and cash flow assessment. In addition to the material components of the economic justification, intangible components must also be present in it.
Intangible elements of a business case
Among them may be probable, but not planned in advance costs of the company. Among the main intangible elements of the business case are the costs of the transition phase, operating costs, the transformation of business processes, as well as the reorganization relating to company employees. In addition, the non-material components of the business case include recurring benefits. Still how to write a business case? An example is below.
