Business Value vs. Business Case: PMP Topics to Learn

pmp business value business case

Have you ever been with a group of friends and everyone wants to do something different while you are together? When this happens, friends who feel strongly about what they want to do typically provide reasons why the group should do what they want. The friend with the most compelling reason usually can convince the rest of the group to go along with his plans.

Thinking of this example, your friend who convinced you to do what he wanted used the best business case to convince the group. Hopefully, from my use of business case in the former sentence and with the example above you are starting to see that a business case is also known as a justification for why you should do something.

In the friend example, the business case is a justification for why you should choose a certain activity. In project management, a business case is a justification for why your business should select a project.

Let’s spend some time explaining business case, when it is is used, and how it relates to business value.

PMP Business Case: Explained

A business case is something that you will work on very early in the project life cycle. It is a component of a project charter. As you remember, a project charter is the document you need to initiate a project.

A project charter has many components, which we discuss in another blog. However, for this blog let’s really examine the business case.

A business case has three components; the business need, the reasons to select the project, and the business value for completing the project.

Did you catch that business value? The business value is a portion of the business case. The value cannot stand alone, but the case is not complete without the business value!

The business need is what is happening in the organization, which facilitated the request for a project. For example, you might receive a request from HR that their current hiring process is very manual making it take roughly two months to hire a candidate. Thus, the business need is to improve the HR hiring process.

Next you need to explain why the project should be selected. In this portion, using our example above, you should explain that your organization is currently experiencing significant growth, and without a new hiring process positions cannot be filled in a timely manner. If the organization continues to use the current-manual HR process they stand to lose $100,000 on lost manufacturing because positions won’t be filled.

Finally, the business value explains what benefits the organization will receive if the project is completed. A business value can be different at each organization. For example, one might value financials while others might value recognition. In this example, you could explain the business value is an increase in hiring 5 employees a month which will increase revenue by $75,000.

Ultimately, the business case if very important in justifying why a project is important. Within that justification the business value is a very influential part of why the project should be selected. Therefore you cannot have a business case without a good business value, making these two concepts inseparable.

PMP Business Case: What’s Next

I keep talking about a good business case for the project to be selected. Well who is making this selection? that is a great question.

Most organizations have a process for HOW a project is selected. Although a project manager is not typically a part of this process it is important for you to understand that these process exist, for the PMP exam if nothing else.

Typically an organization will review all business cases for proposed projects during routine meetings. In theses selection meetings the group, usually made up of business leaders, will choose projects to complete based on cost-benefit analyses.

We won’t get into the specifics of a project selection process, other than ensuring you understand there is a process.

If you haven’t noticed yet, EVERYTHING within a good project management model has a process. There should be planning and systems put in place to ensure that a project can be successful, even as early as the initiation of an idea!

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