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🚀 Planning & Initiation♟️ Leadership, Strategy & Decisions

Business Case

A business case is the justification for a project — it lays out the problem, the options, the costs and benefits, and the recommendation, so decision-makers can judge whether the investment is worth making.

A business case is a structured argument that a proposed project is a worthwhile investment. It defines the business problem or opportunity, evaluates options (including doing nothing), quantifies expected costs and benefits, assesses risks, and recommends a course of action with supporting financial analysis (typically ROI, NPV, IRR and payback). It is the document that turns an idea into a funded decision, and it remains a reference against which the project’s benefits are later measured.

Business Case at a glance

Category
Planning & Initiation · Leadership, Strategy & Decisions
Type
Concept
Appears in
2 sections
Related
Project Charter, Project Vision, Project Initiation Document

Why it matters

Organisations have more project ideas than money. The business case is how they choose: it makes the value, cost and risk of each option explicit and comparable, so scarce funding goes to the efforts that will return the most. It also protects the project — a clear, agreed rationale is the anchor when priorities are questioned mid-flight, and the baseline for judging whether the project actually delivered.

When to use it

Prepare the business case before a project is approved, as part of the selection and initiation process. For large investments it is formal and detailed; for smaller ones a lightweight one-pager suffices. It should be revisited at major stage gates to confirm the justification still holds.

How to use it

  1. Define the problem or opportunity and the strategic driver behind it.
  2. Identify and evaluate options, always including the "do nothing" baseline.
  3. Quantify costs (one-off and ongoing) and benefits (financial and non-financial).
  4. Run the financial analysis: ROI, NPV, IRR and payback period.
  5. Assess risks, state the recommendation, and define how benefits will be measured.

Example

A business case for warehouse automation compares three options against doing nothing. The recommended option costs €1.2M, saves €450k/year, has an NPV of €640k over five years at a 10% discount rate, an IRR of 22% and a payback of 2.9 years. The recommendation is to proceed, with benefits tracked via labour-cost and throughput metrics.

Template

A business case template covers executive summary, problem statement, options analysis, costs, benefits, financial appraisal (ROI/NPV/IRR/payback), risks, and recommendation.

Browse templates →

Tools

Excel / Google SheetsWord / DocsPowerPointFinancial modelling add-ins

Formula

ROI = (Benefit − Cost) ÷ Cost · NPV = Σ CFₜ ÷ (1+r)ᵗ − Investment

FAQs

What is the difference between a business case and a project charter?
The business case makes the argument for doing the project; the charter authorises it and empowers the PM afterwards. The business case answers "should we?"; the charter says "we will, and here is who owns it."
Should a business case include the "do nothing" option?
Yes — always. It sets the baseline against which every other option’s costs and benefits are compared, and sometimes it is the right answer.
How do you measure benefits after the project?
Through benefits realisation: define measurable benefit metrics in the business case, then track them during and after delivery to confirm the promised value actually materialised.

Alternatives

  • Cost-benefit analysis — the financial core of a business case, on its own
  • Feasibility study — assesses whether an option is viable before full justification
  • Lean canvas / one-pager — lightweight alternative for small initiatives