I’ve held on to Business Case Essentials: A Guide to Structure and Content by Marty J. Schmidt for quite some time, so apologies to the author for taking so long to review it. The reason it’s taken a while is because I’ve been using it.
The book started life as a white paper in 1998 and has grown to book size over the years in response to requests from Schmidt’s consulting clients. The author’s aim is to provide a step-by-step guide for building a business case.
Project managers sometimes get involved in the analysis that goes into working out if a project is worth doing or not, and that’s where the business case comes in. The book is set out logically, and is very pragmatic:
“A successful business case meets these criteria:
- Credibility: The case is believed.
- Practical value: It enables decision makers and planners to act with confidence.
- Accuracy: It predicts what actually happens.”
The book uses examples from real business cases to illustrate what should go into a case and how best to structure the business case document. Schmidt favours an approach that includes an executive summary, sets out various scenarios, documents the business objectives and describes the proposed actions. This is set out in Chapter 2, and the remainder of the book is given over to putting some content into each of those sections, with specific emphasis on financial metrics.
The approach to benefits is particularly useful, as people often struggle to quantify the benefits that projects deliver. It also cuts through the bad practices you may have come across in the past: “Truly intangible benefits and costs do not belong in a business case,” Schmidt writes.
In fact, even if you aren’t preparing a business case, some of the information about cost modelling in Chapter 3 would be useful for planning a project budget. Ideally, you’d see the business case (if you weren’t involved in developing it) but for projects that are approved without one, the cost model section in the book would help you construct a valid and pragmatic budget.
There is a lot of information about Monte Carlo simulation and risk analysis in Chapter 5. This section is technical, as Monte Carlo simulation requires simulation software designed for the purpose. However, there is also a short section on simple sensitivity analysis, which is basically changing the underlying values and assumptions in your cost spreadsheet and watching what happens to the results.
Overall, this is a useful reference book to have for those times when someone says, “Can you help me write the business case for my project?”