Business Case: the Basics and a Template

Many projects start with energy and good intentions. However, doubts arise along the way. Does this still fit in with our goals? Is it worth the money? What are the concrete benefits for the organization and for the people who have to work with it? The Business Case method helps you to clarify this. You clearly list the reasons, goals, costs, benefits, risks, and feasibility. This allows you to make better choices before you start and to stay on track during the project. For managers, it is a practical tool for steering based on value, priorities, and decision-making. For employees, it provides clarity about why the project exists, what success means, and where the focus lies.

In this article, you will discover what the Business Case method is, where it comes from, and when to use it. You will learn which components are essential, how to realistically estimate costs and benefits, and how to identify risks and assumptions. We will also show you how to use the business case as a living document, so that you can make adjustments when the situation changes. This article also includes a business case template to get you started right away. Enjoy reading!

What is a Business Case?

Every business aims at a good cost / benefit ratio. A Business Case (BuCa) can be very useful in determining this. Using this well-structured document, a good and clear cost and benefit analysis can be produced, with which a business consideration is made to either start a project or not.

Business Case: the extensive form

In a BuCa the costs are carefully balanced against the benefits. This project management tool can be used in a simple and in an extensive manner.

In the extensive form a Business Case will focus on the starting points of the project, the various decision criteria, external factors, expected return, added value and possible risks.

Furthermore, the financing of a project will also be considered carefully. The information received from the business case determines whether a project will be carried out or not.

When is a business case really necessary?

A business case is not necessary for every small improvement idea. It is primarily a tool for situations in which an organization has to make a clear choice about a larger investment, a risky project, or a change with a major impact on processes, customers, or employees. The higher the stakes, the more important a well-founded business case becomes.

In practice, this concerns projects with a substantial financial scope, a multi-year lead time, or a high degree of dependence on external parties. Examples include the introduction of a new ERP or CRM system, the construction or closure of a location, the introduction of a new production line, or a strategic digitization program. In these types of situations, management or the steering committee must be able to see the associated costs, benefits, and risks, as well as the alternatives that have been explored.

Even for projects with a relatively limited investment, a business case may be necessary if the strategic impact is significant. For example, when a proposal affects market positioning, customer service, or the way employees organize their work. In that case, not only is the financial justification relevant, but also the question of how the initiative contributes to the long-term goals of the organization.

Many organizations work with threshold amounts and simple guidelines. Small improvements with limited risk can be decided at the departmental level, based on a brief justification. If a certain amount is exceeded, if scarce capacity is used, or if there is increased risk, a full business case is mandatory. This makes the decision-making process transparent for the project leader, the client, and the financial function.

Finally, the level of risk also plays a role. A project with a modest budget but with a high degree of dependence on a single supplier, a new technology platform, or critical laws and regulations is more likely to require a business case than a routine improvement. The business case then helps to clarify the possible scenarios, the control measures to be taken, and when a project needs to be adjusted or stopped.

Up-to-date

In most cases, the BuCa is not a static document, it changes continuously. During the course of the project, information must be updated by team members and adjusted in the BuCa. By carrying out reviews the project remains valid and recent changes can be applied.

Each BuCa may have to deal with changes and revisions. It should be noted that such a revision can lead to a change or sometimes to a termination of the project.

Business Case Analysis

In most cases, a BuCa can be divided into four basic elements. The downloadable template contains 4 additional sections. Depending on the project, you can add or remove sections. In this article, the basic four elements are discussed.

Firstly, there is the strategic context of the business case. In all cases, a convincing argument must be presented showing that change is necessary. An economic analysis is then performed, to determine the return on investment. This is done using financial help tools. The next sections contains information about the project definition itself, and lastly there is an element of project organisation.

Various managers are involved in working with the business case. The management approach includes assigning different roles, governance structure, etc.

Decision-making around a business case

The BuCa is evaluated and revised at so-called decision gates, as more accurate estimates and information sources become available.

An approved BuCa clearly shows how decisions of the board affect the return on the investment, and how the highest return can be achieved.

By merging these approaches, the BuCa simply becomes an overview of the recommended options with substantiation and evidence to support the decision.

When the presentation of the business case has been received successfully, this results in the formal start-up of a project, portfolio, or program. The sponsor owns the business case and the project.

What are elements of a good Business case?

In every good business case several components must be discussed. Follow the guidlines below to write your business case.

Benchmark

Explanation about the background and origin of the project and its current status. The BuCa will be given a project name.

Context

The company objectives and business opportunities are outlined, so that the expected results become clear.

Profit proposal

Apart from a profit calculation, it also important to incorporate the profit planning and an extensive cost and benefit analysis and to elucidate the possible (financial) risks.

Delivery

In addition to the profits, possible benefits are identified as well as the internal and external impact of the project.

Workload

An estimate will have to be made of the deployment of resources and the organization of staff availability.

Considerations

It is important to draw up a business case at the earliest possible stage. Initially, this need not always be a detailed document. However, it is wise to make some considerations in advance.

Cost-saving or profit generating?

Where to put the emphasis? Is it about generating a profit or about austerity measures? If it is about of austerity measures, it is often difficult to make an estimate in advance. In case of a profit targets, the activities are related to increasing turnover.

Operational or strategic?

It is important to know in advance whether the Business Case will be integrated as an important part of the business strategy or whether this will be more department focused and whether this will be fulfilled by a team.

Quality or quantity?

Is the Business Case about an increase in turnover (quantity) or is it more aimed at better work processes and an (internal) added value for the organization as a whole (quality)?

Lean business case

A common mistake is to treat the business case as an oracle that ensures results in the future. The business case should be seen as a theoretical and strategic hypothesis supported by evidence gained through research.

To ensure this, it is important that the case remains focused, useful, and practical. Below are some tips to write the business case in such a way that it is in accordance with Lean principles.

Keep the case strategic

Make sure that as many strategic elements as possible are included in the BuCa. Analyse current market and industry factors and adjust the project strategy accordingly.

Distinguish facts from hypotheses

Identify and rank risky assumptions. Then prioritise these assumptions and evaluate the risks associated with deploying those assumptions.

Facts are only facts when the result of a particular experiment is the same time and time again. Some facts can also cease to be true when environmental factors change. Keep this in mind.

Check and revise

Run the project through a series of iterations. A product and business model evolve as the path to the customer is narrowed. If nothing changes in the course of months, this may be a point of reference that the team is insufficiently concerned with the market and industry factors. Start small, and add depth as the project progresses.

How do I write a business case?

In most organizations the (financial) managers are involved in drawing up and writing a Busines Plan. Broadly speaking, there are three steps that can be taken in the process of creating a Business Case. Work through the step-by-step plan listed below, to start using business cases in your work environment.

Step 1: Determine the reason

Why is the Business Plan drawn up? What needs to be improved? What are the business objectives? By carrying out a SWOT Analysis or Strengths and Weaknesess Analysis, an understanding of the company’s strengths and weaknesses can be obtained as well as the external threats and challenges. This will determine the course of action in creating the plan.

Step 2: Conduct a cost-benefit analysis

By having a good understanding of the costs and benefits of the organization in advance, it will become clear what the business case could lead to.

Step 3: Make an investment decision

It is important to have an insight into the finances. It is important to have a good understanding of the financing arrangements. How is the company doing in financial terms and what return does the organization anticipate after the business case has been implemented? Apart from making use of internal leaders, the expertise of external agencies can be involved for the drawing up.

Business case example

Below, you will find a brief explanation of the four basic parts of a business case. You will also find an example of a business case in the form of a practical template. The business case consists of about eight sections. Depending on the project and its size, parts can be omitted or added.

1. Executive Summary of the business case

Depending on the length and depth of the business case, it is wise to include a high-level summary of the project.

The executive summary is the very first section of the business case, but is written last. It is a very important part of the Business Case.

In fact, it is a very concise summary of the entire business case, containing essential information about the ins and outs of the project. It could be that the person who gets hold of the business case only reads the summary and then decides to actually read the report. So make sure you have a good quality document. First impressions can be very important, especially considering this is the only part many members of the management team will read.

2. Finances of the business case

The financial part of the business case is intended for people who have to decide on, or approve the budget. The financial part, plus the first half of the project definition, is very important to people like project sponsors.

When preparing the financial appraisal, advice is usually sought from professional experts on the content and presentation to the financial public.

The purpose of the financial appraisal is to identify all financial implications of the project, to ensure that the project remains affordable, and predict cash flows. Investors and other assessors will look for return on investment data. Read about the different calculations in this article, or download the Business Case template.

In addition, there is the sensitivity analysis within the financial part. This analysis mainly relates to the risks surrounding the project, and looks for alternatives by analysing the impact of assumptions which are uncertain. In fact, the sensitivity analysis allows management to experiment with possible scenarios.

3. Project definition

The project definition is actually a project plan, in thinned form. It also covers the majority of the business case. This section takes the reader to the what and why of the project or initiative. The first chapter consists of background information about the project, followed by the objectives/ problem. Later sections provide answers to a number of important questions, such as:

• What is the SMART Goals of this project?
• What is needed to solve the established problem?
• How does this project or initiative support the company objectives?

The benefits and limitations of the initiative are also weighed up and incorporated into the document.
Other elements that are reflected in the business case are:

• Identification and assessment of alternatives
• Reach, impact, and dependencies
• Market review
• Initial project planning
• Risk assessment
• Project approach
• Purchasing strategy

4. Project organisation

The last part of the business case is especially interesting for the project leader and the general management of the organisation. It mainly consists of information about who is responsible for delivering specific work packages, and how the project is set up. In addition, this section consists of information about:

• Roles and responsibilities
• Project standards
• Project board
• Decision making
• Reporting

Business Case template

Start setting up your business case by using this practical Business Case template.

Example business case: new CRM system

A medium-sized service provider notices that its current CRM system is outdated. Employees work with separate lists, information is scattered, and reports are inaccurate. Customers sometimes receive duplicate follow-ups or no follow-ups at all. This leads to error-prone processes and missed commercial opportunities. This situation is the reason for a business case.

In the analysis phase, the current situation is first described. The organization maps out how much time account managers spend searching for data, how many errors occur in customer data, and which sales opportunities are not being followed up on. Complaints from customers about unclear communication are also examined. This reveals what the problem is and what impact it has on turnover, customer satisfaction, and internal efficiency.

Various possible solutions are then explored. These include, for example, maintaining and upgrading the current system, purchasing a standard cloud CRM package, or developing a customized solution. For each option, the overall investment, lead time, required internal capacity, and dependence on suppliers are described.

The cost-benefit analysis elaborates on the most important elements. On the cost side, these include licenses, implementation, data migration, training, and internal deployment. On the benefit side, these include better lead follow-up, higher conversion, more cross-selling and upselling, less time wasted, and fewer errors. Where possible, these effects are quantified, for example, in terms of additional annual revenue or hours saved in sales and back office.

Risks and scenarios are then added. These include implementation delays, disappointing user adoption, or higher-than-expected management costs. The business case describes the control measures required for each risk, such as a pilot, phased rollout, training, and clear ownership of data and processes.

Based on this substantiation, management can make a decision. In the example, the organization opts for a standard cloud solution because it offers a good balance between investment, functionality, and flexibility. The business case is not then filed away, but used as a reference during the project. At important decision moments, costs, benefits, and risks are reassessed to ensure they are still in line with the original justification. The example shows how the business case forms the common thread from inception to implementation and evaluation.

Business case in agile and innovative environments

In traditional projects, a business case is often fully developed in advance. This is followed by a big decision: whether or not to start. In agile and innovation environments, this approach is less effective. Uncertainty is higher, assumptions have not yet been tested, and the market or technology is changing rapidly. In that context, it is wiser to view the business case as a working document that evolves with insights gained from experiments and iterations.

A first difference is the way assumptions are handled. With innovative ideas, a large part of the business case is based on assumptions about demand, customer behavior, costs, and technical feasibility. In an agile approach, these assumptions are made explicit and tested step by step. Small pilots, experiments, or a minimum viable product show which assumptions are correct and which are not. The business case is then adjusted based on real data rather than just models.

The way of investing is also changing. Instead of one large investment up front, organizations are increasingly opting for phased financing. The business case then describes, per phase or per release, which goals are being pursued, which assumptions are being tested, and which results are needed for the next tranche. If the results are disappointing, the organization can make adjustments, modify the concept, or stop the project before all resources have been spent.

For product owners and agile teams, this means that the business case is not just a document for decision-makers, but a reference during the work. With each sprint or iteration, it is possible to see which backlog items contribute most to the intended benefits. New insights from customer feedback and usage data are translated into an adjusted value proposition and, if necessary, into an updated cost-benefit estimate.

For clients and steering groups, this way of working requires a different attitude. Instead of demanding maximum certainty in advance, the focus is on clear learning objectives, measurement points, and decision moments. The question shifts from “Is the business case complete?” to “Are we learning enough per phase to make a responsible follow-up decision?” In this way, the business case remains the central instrument for justification, but as a dynamic compass rather than a static starting document.

This approach is well suited to organizations engaged in innovation, digitization, and new business models. By linking the business case to short feedback loops and controlled experiments, risks are reduced and greater flexibility is created. Successful ideas can be scaled up, while less promising initiatives are stopped in a timely and substantiated manner.

Relationship with other models and analyses

The business case does not stand alone. In practice, it makes use of various other models and analysis tools. These provide support for assumptions and strengthen the arguments presented to decision-makers.

Strategic analyses such as SWOT analysis and PEST analysis provide input for the rationale and context. They show the opportunities and threats in the market and how the proposed project fits in with these.

Financial instruments such as cost-benefit analysis, ROI and NPV help to calculate the expected effects as concretely as possible. They reveal what the investment will yield, over what period and under what assumptions.

During the development of the project proposal, prioritization and scope can be refined using the MoSCoW method. This makes it clear which components are necessary and which wishes will only be realized if there is room for them.

For roles and responsibilities, the business case logically ties in with the RACI Matrix. This model helps to determine who owns the benefits, who decides on changes, and who is involved in implementation and aftercare.

Finally, in the implementation phase, there is a clear link to risk management and issue management. Risks and issues recorded in these processes can reinforce, adjust, or, in extreme cases, undermine the original business case. By making this connection explicit, the business case becomes a central hub between analysis, decision-making, and implementation.

Recommended books and articles about business cases

These books and articles provide a solid foundation for understanding and applying the Business Case method. The sources explain why a good business case is essential for decision-making, value creation, and success in projects and strategy. By combining classical theory with empirical and practical insights, a clear picture emerges of what a business case is, how to structure it, and how to make results measurable.

1. Bryson, J. M. (2018). Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement. Hoboken, NJ: Wiley. → Provides a solid theoretical basis for the use of business cases in strategic planning and shows how to link objectives to measurable results.
2. Cooper, R. G., Edgett, S. J., & Kleinschmidt, E. J. (2001). Portfolio management for new product development: Results of an industry benchmarking study. R&D Management, 31(4), 361–380. → Shows how business cases are used to prioritize projects within portfolios and maximize value.
3. Flyvbjerg, B., Bruzelius, N., & Rothengatter, W. (2003). Megaprojects and risk: An anatomy of ambition. Cambridge, UK: Cambridge University Press. → Analyzes why business cases fail in large projects and what you can do to better balance ambition and reality.
4. PMI (Project Management Institute). (2017). A Guide to the Project Management Body of Knowledge (PMBOK Guide). Newtown Square, PA: PMI. → Establishes formal standards for business case aspects within project initiation and governance, which deepens the theoretical context.
5. Remington, K., & Pollack, J. (2007). Tools for Complex Projects. Farnham, UK: Gower. → Compares methods, including business cases as decision-making tools, with a focus on risk, value, and stakeholders.
6. Schwalbe, K. (2015). Information Technology Project Management. Boston, MA: Cengage Learning. → Places the business case in a project management context and links the plan to scope, time, and resource considerations.
7. Shenhar, A. J., & Dvir, D. (2007). Reinventing project management: The diamond approach to successful growth and innovation. Harvard Business Review Press. → Offers a strategic perspective on business cases as part of innovation and growth processes and shows how to link cases to success factors.
8. Ward, J., & Daniel, E. (2013). Benefits Management: How to Increase the Business Value of Your IT Projects. Chichester, UK: Wiley. → Links business cases to value creation and demonstrates how results are planned, measured, and achieved, using concrete methods for case development.
9. Ward, J., & Peppard, J. (2002). Strategic Planning for Information Systems. Chichester, UK: Wiley. → Describes how strategic business cases function within IT decisions and why a good case leads to better decision-making.
10. White, D., & Fortune, J. (2002). Current Practice in Project Management: An Empirical Study. Upper Saddle River, NJ: Prentice Hall. → Combines empirical research with practical insights and demonstrates the actual role that business cases play in project selection and success.

How to cite this article:
Janse, B. (2020). Business Case (BuCa). Retrieved [insert date] from Toolshero: https://www.toolshero.com/project-management/business-case/

Original publication date: 10/15/2020 | Last update: 01/03/2026

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