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Capital Budgeting

Preparing the Business Case and Decision Package
Overview
A business case is a structured proposal for business improvement that describes a proposed new change initiative in enough detail that the portfolio management team can determine whether to invest in the effort. If a feasibility study has been conducted, the business case includes or references information from the study. Whether or not
a feasibility study has been conducted, the business case includes a description of the business problem or opportunity, a list of the solution options, the costs and benefits associated with each solution option, and a recommended solution option with rationale. It’s also important to stress the strategic alignment of the solution option, including how the solution supports the organization’s strategies; if the solution sets priorities inconsistent with the organization’s strategies, include the rationale for considering the investment and any contingency plans to address those risks.[1]
Although not all companies require a business case for major project investments, the practice is becoming more prevalent among organizations attempting to implement strategic portfolio management techniques for project selection and prioritization. The business case, supporting information from feasibility studies, the business architecture, and other business planning and analysis documents are combined into a decision package and presented to the portfolio management team for a decision.
The following sections discuss the activities that are typically used to create a business case. Many organizations do not conduct formal feasibility studies and so incorporate some feasibility activities and analysis into the business case. Therefore, some of the feasibility activities discussed in the previous chapter are reiterated here as necessary components of the business case.

Assemble a Core Team
The business analyst assembles and collaborates with a core team of highly skilled and...