By John Herman PMP, CQE, MPM.
There are many excellent articles and templates for demonstrating Business Justification, but a root-cause analysis reveals a very basic lesson in business acumen. There are only four major reasons for undertaking any business process or project.
Increase revenue: Obviously, increased revenue is expected to lead to increased profits, and may also lead to increased market share, brand recognition, and other favorable results.
Reduce costs: Reducing costs will also impact the bottom line. However, costs can’t be reduced below zero, so there are more limitations associated with reducing costs than with increasing revenue.
Improve quality: Although sometimes difficult to measure, improvements in the quality of products and services impact customer satisfaction and growth of the brand.
Attain or maintain compliance: Government regulations must be addressed or the business could be forced to close, or suffer irreparable damage to the brand. Some aspects in the compliance area include taxes, safety, and privacy.
And, of course, projects can cross boundaries and have more than one business justification.
It’s always a good idea to inform the project team why any particular project is being done. Not only is it good top-down communication, it will improve the team’s business acumen.
By John Herman PMP, CQE, MPM
About 40 years ago, a new strain of flu hit in New Jersey. During the analysis of that flu outbreak, critical thinking took a big step forward via questions asked by Dr. Russell Alexander, although no one probably realized the impact at that time. Alexander’s Question, as a management tool, was probably refined and documented for the first time by Richard E. Neustadt and Ernest R. May in their book, “Thinking in Time: The Uses of History for Decision Makers”.
In a nutshell, Alexander’s Question can be summed up like this:
“What information, if we had it, would make us change our decision?”
Follow-up activities are focused on obtaining that information so that the decision can be based on better information, and thus likely have better results.
The goal of Alexander's Question is to uncover assumptions and perspectives that may be clouding one’s judgment. By asking what information would be needed to change your mind, faulty reasoning can be intercepted and the decision can be based on more objective data. Alexander’s Question can also identify which facts should be researched before committing to a course of action.
Another, more detailed variation of Alexander’s Question focuses on Project Management aspects like risk, schedule, and quality management :
What new information would change your estimation? When would you need this information? Why would it change your estimation?
Regardless of how Alexander’s Question is written, the underlying principle is the same: Identifying information that would make the decision more firmly rooted in facts, and less based on subjective opinions.