Project business case: a worked example and structure
A customer portal promises fewer enquiries. A cheaper change might solve enough of the problem. Compare the options, cash, capacity and evidence before choosing a project.
A distributor wants a customer portal because its service team spends too long answering “Where is my order?” The proposal starts with screens and a supplier quote.
Before buying those screens, the team needs to compare the portal with other ways to reduce the enquiries.
A project business case explains why an investment is worth pursuing, using the options, expected benefits, costs and risks. It supports a decision to commit resources, and later gives the sponsor a reason to continue, change or stop the work.
APM's business-case guidance includes alternative options and a do-nothing reference. A document that only justifies the preferred purchase leaves that comparison undone.
Start with the problem the investment should solve
Our fictional distributor pays an external service provider €18,000 a year for order-status support. Its own service staff also spend time finding missing updates.
The proposal assumes that better status information could reduce the external bill. The team must check whether customers ask because information is hard to find, because promises are missed or because the records disagree. A portal displaying the same wrong status would leave part of the problem intact.
Consider three options: keep the current arrangement, improve a shared status record that the service team uses, or build a customer portal. All must preserve a usable route for disputed or missing information.
Business case example: compare the same three years
For the arithmetic, assume a three-year life, an illustrative 8% annual discount rate, upfront costs today and annual cash changes at year-end. All values are incremental to continuing the current service. The current €18,000 annual bill is not charged again as a new project cost.
| Input | Continue current service | Shared status record | Customer portal |
|---|---|---|---|
| Upfront implementation cost | €0 | €6,000 | €24,000 |
| External support cost avoided each year | €0 | €6,000 | €10,000 |
| Extra running cost each year | €0 | €1,000 | €4,000 |
| Annual net cash improvement | €0 | €5,000 | €6,000 |
| Three-year NPV at 8% | €0 | About €6,885 | About −€8,537 |
These are fictional appraisal assumptions. The cost reductions require an actual change to the external service bill. A supplier's promise that enquiries will fall does not establish that the contract can be reduced.
The portal has the larger annual benefit. Its higher implementation cost still leaves it below the current-service reference on this narrow cash appraisal. The shared record has the higher NPV under these assumptions.
The NPV vs payback example explains the discount calculation. The business case needs to carry the wider decision too: customer usefulness, operating risk, affordability and who will maintain the result.
Keep released time separate from a smaller bill
Suppose the shared record would also free 30 staff hours a month and the portal 60. That could help the team absorb growth or improve its response to difficult cases.
It is not automatically another cash saving. If payroll stays the same, adding those hours at a loaded hourly rate to the cash table would mix capacity with expenditure avoided.
Keep the expected hours visible as a separate benefit. Name the work they would support and how the team will check them. The benefits realisation Note follows that distinction after implementation.
What should a project business case include?
APM describes five common elements. Applied to this decision, they could fit into a short record:
| Element | What the distributor needs to establish |
|---|---|
| Strategic context | Why order-status service needs to change, with the current cost and customer problem |
| Economic analysis | Options, relevant cash flows, other benefits and uncertainty |
| Commercial approach | What must be obtained, supplier obligations and which existing charges can change |
| Financial case | Whether the organisation can fund the upfront and continuing costs |
| Management approach | Sponsor, benefit owner, delivery responsibilities and review points |
Other templates group these subjects into four sections or use different headings. The count does not settle whether the document answers the investment decision. Include the necessary evidence without writing a paragraph merely to fill a box.
The business case also differs from the project charter. The case explains why the investment makes sense. The charter establishes what work and authority have been approved. A favourable appraisal is not permission for every proposed purchase.
Test the assumption that could change the choice
The shared record's annual gross avoidable cost is the important uncertain input. At €6,000 it gives €5,000 annual net improvement after running costs. At only €2,000 avoided, the net improvement falls to €1,000 a year and its three-year NPV becomes about −€3,423.
For these inputs, break-even requires roughly €3,328 of gross annual external cost reduction, including the €1,000 running cost. That is a useful figure to discuss with the contract owner before committing to the €6,000 implementation.
A small trial can check whether the shared information answers the enquiries and whether the provider will reduce its charge. It should include delayed orders and missing records, not just orders whose status is already obvious.
If the portal offers an additional benefit such as supporting a new customer contract, document that separately with evidence. Don't inflate the existing enquiry saving until the preferred option wins.
Record the decision and when to revisit it
For this example, the sponsor could choose a bounded shared-record trial before approving full implementation. The service lead owns the customer outcome. Finance checks the bill reduction; the technical owner checks data and upkeep costs.
Record the reason, permitted spend, evidence needed and next decision date. Revisit the case if the trial finds that the record cannot be kept current or the assumed charge reduction is unavailable.
A business case earns its place when it can change the proposed project. Here, the team may still build a portal later. First it has a cheaper option to test and a clear cash assumption to verify.
Sources and calculation notes
- APM: What is a business case?, options, five-element structure, sponsor ownership and review over time.
- ACCA: Investment appraisal, relevant incremental cash flows and consistent appraisal assumptions.
The company, service contract, hours, options and cash flows are fictional. The 8% rate is illustrative. NPV excludes tax, financing, working-capital effects and residual value; a real case needs the relevant additions. Break-even is conditional on the stated timing and costs.