Business Cases are one of the most common business documents used today and yet their use is commonly misunderstood. Often business cases are seen as simply “step 4” on the path to a completed a project. Worst of all they are often written by someone who is incentivised to have the project approved. Indeed, in some cases, the quality of the business case is even assessed based on whether the project was approved.
This kind of “need-to-get-it-approved” bias leads to an underestimation of costs and risks and an overestimate of benefits. But often decision making bodies such as Boards and Steering Committees simply don’t have the time and/or expertise to delve into the detail sufficiently to detect this bias. They can ask some pointed questions, but essentially the costs, benefits and risk estimates in the business case are what the decision makers must use to make their decision. No wonder Standish Group keeps finding so many IT projects failing to achieve project benefits on-time and on-budget (over 80% failure rates for enterprise wide system implementations in a number of their annual surveys).
So what can we do to balance the ledger and ensure that we aren’t receiving an overly rose-coloured assessment of a potential project at the business case stage? Enter the Anti-Business Case. This is a business case written by the “opposition”, who are independently trying to prove to the committee that the project should not proceed. In many cases the cost of developing a business case is only 2-5% of the total cost of a project. Money well spent, if the benefit is a clear-eyed view of the real costs, benefits and risks before investing large in a new endeavour.
The concept is borrowed from the justice area where a plaintiff and defendant provide opposing views to a judge before the judge balances the evidence and argument and makes a decision. Similarly the parliamentary system which tends to have an opposition which provides an alternate viewpoint to the voters. These institutions have stood the test of time and have proven their worth against the risks of groupthink and biased provision of information.
However, in practice, developing an anti-business case does require some practicalities. There does need to be a coordinator that ensures the options being evaluated by both the business case and the anti-business case are sufficiently simlar to be of value. It is no point if the anti-business case is arguing against a “strawman”; something the business case is not recommending. It is also important that any factual information is available to both sides (equivalent to legal “discovery”). However, it is important the two efforts develop their cost, risks and benefit estimations independently.
At the end of the business case process we should have a number of outcomes beyond a simple “Approve” decision:
- The Sponsor asserts that they have researched the proposed project in sufficient detail using reliable approaches to accurately estimate/forecast the likely costs, risks, resource requirements and interdependencies. The Approvers accept the Sponsor’s assertion when approving the business case.
- The Sponsor commits to deliver the benefits identified in the business case document and has determined that it is possible to do so within the documented resource, timing and cost allocations and that any risks can be mitigated to an acceptable level as outlined in the business case. The Sponsor commits to do so in the manner described in the business case, which the Sponsor asserts is the most feasible manner to achieve the benefits within the resource constraints.
- By approving the business case, the Approvers (e.g. the Board or Steering Committee) accept the Sponsor’s assessment that the benefits are of value to the organisation and that they can be delivered within the resource, timing and cost constraints at an acceptable level of risk. The Approvers also agree that the manner of achieving the benefits outlined by the Sponsor in the business case is the most feasible approach.
- The Sponsor asserts and the Approvers agree that the expected business benefits are sufficiently high and delivered in time to justify the expenditure of the resources required to achieve them. The Approvers obtain the right to have the Sponsor or some 3rd party demonstrate that the benefits documented in the business case have been realised in the timeframes required at the end of the project.
- The Sponsor has asked for delegation of the resources, budgets and permissions required to undertake the project (or at least its next stage) and the Approvers have delegated those resources to the sponsor
- The Approvers commit to not approve alternate uses of the delegated project resources in the future and will not approve future projects that presume that this project will not deliver the benefits (unless this newly approved project is altered accordingly)
- The Sponsor commits to use the delegated resources in the manner specified and for the achievement of the documented business benefits and not for other reasons or in other ways.
- The Approvers agree that any portfolio interdependencies of this newly approved project have been identified, resourced appropriately and that the interdependencies and their timing are acceptable to the organisation and the project/program portfolio. From approval onward, the Approvers agree to treat this newly approved project as part of the relevant program and portfolio.
- If there are any departures to organisational norms required by the project (e.g. relaxation of architecture standards, changes to policy), then the Sponsor commits to limit the departures to those documented. The Approvers indicate acceptance of the departures when approving the business case.
- The Sponsor commits to communicate the expected activities, resource impacts, timings, deliverables, etc of the project over the coming horizon to all stakeholders (at least to high level). The detailed project plan will provide these to a greater detail.
- If the Approvers accept the timing proposed by the Sponsor, then they are affirming that they believe that the proposed project has sufficient priority to deploy the resources required in the timeframes outlined. Approvers may approve a business case but ask that timings be changed to fit within a portfolio prioritisation. If this is so, then the Sponsor must affirm that this change has no material impact to the achievability of the benefits.
- If the Sponsor has come to the conclusion that the project is not advisable as a result of undertaking the analysis required to develop a business case, then the business case should still be developed to demonstrate to stakeholder the reasons why the project does not “stack up”. The Approvers are then affirming acceptance of the recommendation and agreement with the analysis and estimates in the business case. Obviously an anti-business case is not required in this scenario.
It is important that all stakeholders know what commitments they are making when submitting and/or approving a business case. It is not simply a “Go/No Go” decision. Given this range of commitments made by both the Sponsor and the Approvers it becomes clear that a reliable set of unbiased assessments of likely costs, benefits, risks, interdependencies etc are required to ensure that stakeholders can make those commitments in an informed manner. An Anti-Business Case may be appropriate in some circumstances to help stakeholders make approval decisions with confidence. Can you think of a time when your organisation should have appointed someone to undertake an anti-Business Case?