1. Build a business case
A business case lies at the heart of every PRINCE2® project. It is a key component of all projects managed using the PRINCE2 method. A PRINCE2 business case is a control document referenced on a regular basis to ensure that the project remains viable.
In PRINCE2 a business case justifies the existence of a project. It states what is to be done and why it should be done now.
The format of a business case is not prescribed in the PRINCE2 methodology and will vary from business to business. Generally speaking however, it will contain answers to the following questions:
- Why should we start this project?
- What are the benefits of the project?
- What are the risks?
- How much will it cost?
- How long will it take?
Writing a business case is usually done by a programme manager, but some businesses may give the task to project managers or business analysts.
They are usually written with the support of other project team members and analysts who are charged with determining this like the cash-flow forecast or a profit-and-loss analysis etc.
Projects are about people, without them the tools, methodologies and software we commonly attribute project success to don’t work.
Make sure to consult everyone involved to determine which projects have the most support from stakeholders.
Ensure project proposals include shared data and come in a standardized format so that they can be measured against common criteria. This helps facilitate like-for-like comparisons and narrow down which of those projects should be embarked upon.
Prioritize projects that meet overall company objectives. Bear in mind that those projects that seem to fit in well with an organizations’ vision may also involve the greatest risk or cost and that these factors must be taken into account.
Pick the projects that promise the highest return on investment (ROI). A quick return of the funds invested might preferable to a complex project that, while potentially more lucrative, forces you to wait an extended period to see any value come of it.
ROI is only an estimate however, and only gives a narrow picture. Risks need to be discussed with stakeholders keeping in mind that they can fluctuate are sometimes intangible.
Picking the project with the least perceived risk may always seem like the correct option. Keep in mind however that project risk levels may change over the course of the project lifecycle as a result of either internal or external factors.
6. Opportunity cost
This final cost of any project is the sum of actions taken and actions not taken as a result.
It is always a good idea to mitigate opportunity costs by reallocating resources to help projects that are no longer needed by the top-priority project.
Determining which projects should be done can be based on a range of methods from balanced scorecards to cost/benefit analysis.
A key philosophy of the Office of Government Commerce (former owner of the PRINCE2 method) is including an analysis of possible positive change in the business case.
This ensures that the value of projects is understood in terms of long-term success and is another factor that helps projects to be compared fairly with others.
This cannot guarantee success, but it can help make the project selection process somewhat easier.
Knowledge Train® is a registered trademark of Knowledge Train Limited. Copyright © 2020 Knowledge Train Limited. 14 Charterhouse Square, London, EC1M 6AX, England, United Kingdom.
PRINCE2® is a registered trademark of AXELOS Limited. Used under permission of AXELOS Limited. All rights reserved.