Write a business case that compares options and shows costs, benefits, ROI and payback, so sponsors can decide whether to invest.
Why it matters
Every project competes for money and people with other projects. The business case is the document that justifies the investment: why do this, why now, why this option, and what will it cost and return? In many organisations the project lead helps the sponsor write it, and then uses it all the way through the project to check the investment still makes sense (that is what stage gates check). An IT project manager who can talk about value, not just tasks, earns a seat in better conversations.
What a business case contains
- Problem or opportunity. What is wrong today, with evidence.
- Strategic fit. Which organisational goal it supports.
- Options. At least three, including do nothing (or "do minimum"). The do-nothing option is your baseline: it has costs too.
- Costs for each option: one-off (build, licences, hardware, training) and ongoing (subscriptions, support, staff).
- Benefits: measurable ones (money saved or earned, hours freed), and non-financial ones (patient experience, compliance, risk reduction). Name a benefit owner for each.
- Financial summary: ROI, payback period and, for larger investments, net present value.
- Risks and assumptions.
- Recommendation.
The key numbers
Return on investment (ROI) over a stated period:
ROI = (total benefits - total costs) / total costs
Payback period: how long until cumulative benefits equal cumulative costs.
Net present value (NPV) recognises that money in the future is worth less than money today. Each year's net cash flow is discounted by the organisation's discount rate r:
NPV = sum over years t of net cash flow in year t / (1 + r)^t
A positive NPV means the investment returns more than the discount rate. Your finance team will usually tell you which rate and which measures they expect; ask them early.
Worked example: Northside Clinics
Problem. Phone lines are swamped at 8 a.m.: 22% of callers hang up before reaching anyone (from the phone system's reports), and 9% of appointments are missed because there are no reminders.
Options.
- A. Do nothing. Keep phones only. Costs continue: overtime for call handlers, and lost revenue from missed appointments.
- B. Add call handlers. Hire four more staff: $200,000 a year. Improves answer rates but not missed appointments.
- C. Online booking portal with reminders (the recommended option): $480,000 to build over nine months, then $60,000 a year to run.
Benefits of option C (each with an owner, the operations director):
- Reduce call-handling overtime: $90,000 a year.
- Cut missed appointments from 9% to 5% using text reminders: about $150,000 a year in recovered appointment revenue.
- Non-financial: better patient access, fewer complaints, retiring 300 shared logins (security).
Three-year view (benefits start in year 1 at half value, because rollout finishes mid-year):
| Year 0 | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|
| Costs | 480,000 | 60,000 | 60,000 | 60,000 |
| Benefits | 0 | 120,000 | 240,000 | 240,000 |
| Net | -480,000 | 60,000 | 180,000 | 180,000 |
| Cumulative | -480,000 | -420,000 | -240,000 | -60,000 |
Over three years: total benefits $600,000, total costs $660,000, so ROI = (600,000 - 660,000) / 660,000 = -9%. Payback comes in year 4 (cumulative turns positive when year 4 adds another $180,000).
That is an honest result, and it is useful. The sponsor might decide that a five-year view is fairer for a system expected to last eight years (five-year ROI is about +38%), or that the non-financial benefits justify it anyway. A good business case shows the numbers plainly and lets the decision-makers decide. It never stretches benefits to reach a target.
Making benefits credible
- Use a baseline measured today ("22% abandoned calls in Q1"), not a guess.
- Be conservative and show a range or a sensitivity: "if missed appointments only fall to 7%, the missed-appointment benefit drops to $75,000 a year and payback moves to year 6."
- Separate cash-releasing benefits (money actually saved) from efficiency benefits (hours freed that may be used elsewhere).
- Plan how each benefit will be measured after go-live, and by whom.
Common mistakes
- No do-nothing option, so there is no baseline.
- Counting only build costs and forgetting running costs, support and training.
- Optimistic benefits with no owner.
- Writing the business case once to get approval, then never looking at it again.
Quick recap
- A business case compares options, including do nothing, on costs, benefits and risks.
- ROI = (benefits - costs) / costs over a stated period; payback is when cumulative net turns positive; NPV discounts future cash.
- Credible benefits have baselines, owners, ranges and a measurement plan.
- Revisit the business case at every stage gate.
Try it
Open the Do tab and write a short business case for a project you know.