How to Write a Project Proposal or Business Case
Justifying Projects by Fully Understanding Purpose, Costs and Risks
Successful project management needs senior management to formally approve scope and budget. Projects need proposal or business case justifying the scope, costs and risk.
Projects should only exist where they contribute to the strategic corporate objectives. A high level decision authorising a project to start should be made to ensure that is the case and the project is the most appropriate use of the organisation’s resources. The project management team then have a clear framework against which success can be monitored and measured.
Structure of a Business Case or Project Proposal
There are essentially five sets of questions that need to be addressed in a project proposal or business. These are usually formalised in large organisations into a set of standards that define the structure and format of project proposals. Broadly a taste of the areas of consideration are indicated in the following five questions.
Does the Project Fit with Strategic Plan?
Ideally the project should be identified as part of the strategic planning process and form part of an overall project or programme portfolio. In reality projects will originate from functional areas of the organisation and they should still be tested against the objectives in the Strategic Plan. The proposal should set out clearly how the project will contribute to the corporate objectives.
What are the Options and Preferred Solution?
For most projects there will be many ways of producing the required result. An analysis should be made using frameworks such SWOT, PEST or InSPECT. The preferred option should then emerge through proper consideration of the costs, benefits and risks. It will need to be refined and retested as part of the project definition and subsequent design phases.
What are the Procurement and Commercial Considerations?
How are the project components going to be purchased? Can they be provided in-house or will some form of external procurement be needed? In the latter case consideration needs to be given to the appetite and capability of the market to meet the project objectives. Will there be issues around the outsourcing or transfer of jobs and other legislative issues?
Are the Project Costs Affordable and Justified by the Benefits?
An assessment of the costs profile over time will be required as will a similar profile of the benefits that are expected. For all but short term projects these will need to be subject to a discounted cash flow to bring all the money together onto a common basis – money spent now is worth more than same sum as benefits achieved in the future. It needs to be mapped to the budgeting cycle and make a special case if the project will commit currently unplanned future budgets.
Is the Project Achievable?
The essential question is whether the project is feasible at the most basic level. Can sufficient resources be brought to bear, and managed, within the time scale proposed? This is often an optimistic assumption, even if it is considered at all. This needs to be assessed at a high level before diving into a detailed project plan that can say anything. At this proposal stage the plan should be at a major milestone level.
How will the project management work, what are the key decisions and most importantly the main risks? If any or all of those risks happen can the project still be achieved, and how? What is the organisation's appetite for risk and are senior management willing to accept the identified and real risks with the proposed plans for their management?
There should be a series of review points before each major financial commitment to the project where all these factors can be reconsidered. Over time the emphasis will shift from why the project should be undertaken to a focus on the agreed outcomes.
Constraints and Risks
The constraints that apply to the organisation and the project should be considered as part of each of the above questions. Similarly the risks and existing issues that will challenge the delivery of the project should also be addressed as part of each question. They should then be addressed more fully in the section on achievability.
Executive Summary
An Executive Summary is essential. It should be very brief but it should pull out all the key points needed to make the decision. The recommendations in the management summary should be substantiated n the main body of the document. The proposal itself should be backed up by the project team having done the detailed work so that the project manager really understands and can explain the issues and challenges.
Many of the responses to the above questions are relevant in more than one section which creates a challenge.. The art of writing an effective proposal is to keep it clear with the minimum or repetition or complex cross-referencing.
Project Management Gates and Project Reviews
After initial approval the project should be maintained and refined as the detailed understanding of the project grows. With routine project monitoring documentation business case should be reassessed at the transition points between phases when further finance is required.
Further Reading, Standards and Templates
There are many sources of templates and further reading. In the UK much of the most widely used project management standards are produced by the
- Office of Government Commerce who are perhaps best known for the PRINCE 2 project methodology. These are very simillar to most other project management methodologies.
As well as as day to project governance the business case or project proposal will be used asprimary documentation against which any project health check will be conducted: