A business case is a calculation of the overall economic consequences of a potential investment in a project or programme. It is based on an analysis and a statement of the change desired and how to achieve it.
The objective of the business case is to clarify and calculate costs and benefits as well as to estimate the economic consequences of potential risks. On this basis, a solid foundation can be established for assessing the economic justification of the project or the programme.
The governmental business case model
The business case model consists of two scenarios: one in which the project or the programme is implemented (scenario 1) and one in which it is not (scenario 0). The benefits of the project or the programme are calculated by comparing the differing scenarios.
Risk and uncertainty
There is always an element of uncertainty when estimating the costs of a business case. Estimating an unknown cost, that is sure to materialize, is categorized as an uncertainty. The business case operates with an interval within which the costs will appear. This is done using three-point estimation. Estimating a cost, that may or may not materialize is classified as a risk. The business case ensures that funds are set aside in a risk pool.
Quality assessment of the business case
The guide to the governmental business case model contains guidance on how to employ the model correctly. In addition, the Inter-ministerial Project Office offers to do a quality assessment of the business case and PID for IT projects before these documents are submitted to the Danish Council for IT Projects for risk assessment.