1The University of Sydney Page 1
Topic
PRINCE2: Project Initiation
Document, Business Case
Dr Peter John Kavalamthara
The University of Sydney
Business School
The University of Sydney Page 2
Project initiation
– Baseline management products
– Project Initiation Document
Prince 2 business case
– Developing
– Verifying
– Confirming the benefits
Agenda
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Element 3: PROCESSES (from last session)
Pre-project
Initiation
stage
Subsequent delivery
stage(s)
Final delivery stage
Directing
D
ir
e
ct
in
g
M
a
na
g
in
g
D
e
liv
e
ri
ng
SU
SB SB CP
IP Controlling a stage Controlling a stage
Managing product
delivery
Managing product
delivery
Directing a project
SU = Starting up a project
IP = Initiating a project
SB = Managing a stage boundary
CP = Closing a project
The University of Sydney Page 4
Product-based Planning: Example (from last
session)
– Product Breakdown Structure (PBS) in the form of an indented list
Conference
1 Venue
1.1 Venue requirements
1.2 Candidate venues
1.3 Venue assessments
1.4 Selected and booked venue
2 Attendees
2.1 Mailing list (external)
2.2 Responses (external)
2.3 Booking arrangements
2.4 Final attendee lists
3 Speakers
3.1 Speaker options
3.2 Speaker invitations
3.3 Booked speakers
4 Publicity
4.1 Mail shot
4.2 Press release
5 Delegate handouts
5.1 Covers
5.2 Printed agenda
5.3 Slides and notes
5.4 Satisfaction survey form
6 Conference logistics
6.1 Selected subject matter (external)
6.2 Agreed date (external)
6.3 Agreed programme
6.4 On-the-day staff
7 Previous conference lesson & materials
(external)
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– Purpose:
– Answers the question as to whether it is a worthwhile and viable
project
– Objective
– Appoint the project team
– Ensure project aims are known
– Decide on the project approach to deliver a solution
– Define customer expectations
– Results in the project initiation plan and initiation request
Processes: Starting up (from last session)
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– Purpose
– Establish solid foundations, enabling the organization to understand the
work that needs to be done to deliver the project’s products before
committing to a significant spend
– Objective
– Common understanding of main aspects of the project
• Reasons, benefits, risks, responsibilities
• How quality will be achieved, baselines established and progress
monitored
Processes: Initiating (from last session)
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Evolution of baseline management products
Source: AXELOS, 2017. Managing Successful Projects with PRINCE2
The University of Sydney Page 8
– Project Brief contains
– Outline Business Case with sufficient information to justify
carrying out the initiation stage, and
– Project Product Description which includes aspects such as
the customer’s quality expectations and acceptance criteria for
the end product of the project.
– The Project Brief can be seen as a refinement of the Project
Mandate and is created in starting up a project, and in a
similar way the Project Brief will be refined further within the
initiation stage to become the Project Initiation Documentation
(PID).
Project Brief
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– PID defines the project and forms the basis for its management and
an assessment of its overall success. The PID gives the direction and
scope of the project and (along with the stage plan)
– PID forms the ‘contract’ between the project manager and the project
board.
– The three primary uses of the PID are to:
– To obtain commitment to the project from Project Board
– Assess progress, issues and ongoing viability of project
– Provide ready reference to new staff about the project and how it is
being managed.
– The PID should be regularly updated to communicate the current
status, plans and controls of the project.
Project Initiation Document (PID)
AXELOS, 2017. Managing Successful Projects with PRINCE2
The University of Sydney Page 10
– Project definition
– background
– project objectives and desired outcomes
– project scope and exclusions
– constraints and assumptions
– the user(s) and any other known interested parties
– Interfaces
– Project approach
– Defines the choice of solution and delivery approach used in the project to
deliver the business option selected from the business case,
– Should consider the operational environment
– Business case
– The justification for the project based on estimated costs, risks and benefits.
Please attach details about Business Case as an appendix to the PID.
– Project management team structure
– A chart showing who will be involved with the project
Project Initiation Document (PID) - Contents
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– Role descriptions
– roles of those in the project management team and any other key
resources
– Quality management approach
– quality techniques and standards to be applied, and
– responsibilities for achieving the required quality levels.
– Change control approach
– how and by whom the project’s products will be controlled and
protected.
– Risk management approach
– specific risk management techniques and standards to be applied, and
– the responsibilities for achieving an effective risk management
procedure.
Project Initiation Document (PID) - Contents
AXELOS, 2017. Managing Successful Projects with PRINCE2
The University of Sydney Page 12
– Communication management approach
– the parties interested in the project, and
– the means and frequency of communication between them and the
project.
– Project plan
– how and when the project’s objectives are to be achieved, by showing
the major products, activities and resources required on the project.
Please attach a project schedule using Microsoft project as an
appendix to the PID.
– a baseline against which to monitor the project’s progress, management
stage by management stage
– Project controls
– project-level controls such as management stage boundaries, agreed
tolerances, monitoring and reporting
– Tailoring of PRINCE2
– summary of how PRINCE2 will be tailored for the project.
Project Initiation Document (PID) - Contents
AXELOS, 2017. Managing Successful Projects with PRINCE2
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PRINCE2 Business Case
Definition
A Business Case is used to document the justification for the undertaking of a
project, based on the estimated costs against the anticipated benefits to be
gained and offset by any associated risks
Prince2 Business Case | Download template https://www.stakeholdermap.com/project-templates/prince-2-business-case.html
The University of Sydney Page 14
PRINCE2 Business Case
Source: AXELOS, 2017. Managing Successful Projects with PRINCE2
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PRINCE2 Business Case
– The purpose of the Business Case theme is to establish mechanisms
to judge whether the project is (and remains) desirable, viable and
achievable.
– It is a PRINCE2 principle that a project must have continued
business justification.
– The business justification is the reason for the project. Without it no
project should start.
– The reasons for undertaking the project must drive decision making.
When projects face changes or risks, the impact analysis should
focus on the Business Case.
– The ongoing and ever-present decision regarding the Business Case
is whether the project can (still) be justified.
– The Senior User(s) is responsible for specifying the benefits and
subsequently realising the benefits through the use of the products
provided by the project.
– The Executive is responsible for ensuring that those benefits
specified by the Senior User(s) represent value for money, are
aligned to corporate objectives, and are capable of being
realised.
The University of Sydney Page 16
PRINCE2 Business Case
In PRINCE2, the Business Case is developed at the beginning of the
project and maintained throughout the life of the project, being formally
verified by the Project Board at each key decision point, such as end
stage assessments, and the benefits are confirmed as they start to accrue.
– Outputs, outcomes and benefits
– A project's output is any of the project's specialist products (whether
tangible or intangible)
– An outcome is the result of the change derived from using the project's
outputs
– A benefit is the measurable improvement resulting from an outcome that is
perceived as an advantage by one or more stakeholders.
– Example of output, outcome and benefits
– Output: New sales system
– Outcome: Sales orders are processed more quickly and accurately
– Benefits: Costs are reduced by 10%, volume of sales orders increased by
15% and sales revenue increased by 10% annually.
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– Executive summary
– Highlights the key points in the Business Case, which should include
important benefits and the return on investment (ROI)
– Reasons
– Defines the reasons for undertaking the project and explains how the
project will enable the achievement of corporate strategies and
objectives
– Business options
– Analysis and reasoned recommendation for the base business options of:
do nothing, do the minimal or do something
– Expected benefits
– The benefits that the project will deliver expressed in measurable terms
against the situation as it exists prior to the project. Benefits should be
both qualitative and quantitative. They should be aligned to corporate
or programme benefits. Tolerances should be set for each benefit and
for the aggregated benefit. Any benefits realization requirements
should be stated
PRINCE2 Business Case Contents
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– Expected dis-benefits
– Outcomes perceived as negative by one or more stakeholders.
– Dis-benefits are actual consequences of an activity whereas, by
definition, a risk has some uncertainty about whether it will materialize.
– Timescale
– Over which the project will run (summary of the Project Plan) and the
period over which the benefits will be realized. This information is
subsequently used to help timing decisions when planning (Project Plan,
Stage Plan and Benefits Review Plan)
– Costs
– A summary of the project costs (taken from the Project Plan), the ongoing
operations and maintenance costs and their funding arrangements
– Investment appraisal
– Compares the aggregated benefits and dis-benefits to the project costs.
– The analysis may use techniques such as cash flow statement, ROI, net
present value, internal rate of return and payback period.
– The objective is to be able to define the value of a project as an
investment.
– Major risks
– Gives a summary of the key risks associated with the project together
with the likely impact and plans should they occur. Please attach Risk
Register as an appendix to the business case.
PRINCE2 Business Case Contents
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Quality criteria for a good Business Case
– The reasons for the project must be consistent with the corporate or
programme strategy
– The Project Plan and Business Case must be aligned
– The benefits should be clearly identified and justified
– It should be clear how the benefits will be realized
– It should be clear what will define a successful outcome
– It should be clear what the preferred business option is, and why
– Where external procurement is required, it should be clear what the
preferred sourcing option is, and why
– It should be clear how any necessary funding will be obtained (???)
– The Business Case includes non-financial, as well as financial, criteria
The University of Sydney Page 20
PRINCE2 Business Case
– Another format and example - Company expansion abroad - Think what
each part/section adds to the business case.
Executive summary
• Summary of the company, the country you want to enter,
entry mode & the strategy to be successful in the country
Introduction
• Brief background of the company (you have selected)
• Reason behind selecting this company
• Rationale behind this company going into international
market (or one more country besides its existing international
operations)
• Brief assessment of the attractiveness of host country (country
you plan to enter)
• Detailed Analysis of external environment of host country
• Evaluate the economic, political, legal, socio-cultural
opportunities and challenges
• Detailed Analysis of the industry you are entering in the host
country (You may use Michael Porter's five forces framework
industry) Critique of Porter!
Detailed Analysis of the resources & capabilities (internal
environment) of the company
• Evaluate the company's resources and capabilities
• What are the resources and capabilities that makes the
company compete successfully in the industry in home country
and around the world (if it is doing business in any other part
of the world)
• Does the company require resources and capabilities which it
can obtain by entering into the country of your choice?
Country Entry Strategy
• Identify the key objective(s) to enter the country of your
choice
• Identify an appropriate entry mode for the company to
enter the country of your choice
Post Entry Strategy (Maintaining business operations)
• How will you compete in the country of your choice
• What will be your strategy (adapt your strategy? Or
maintain your global strategy);
• How will you position your product and services (by
differentiating from existing competitors or adopt low cost
strategy)?
• Any other strategy in addition to above
Organization of Operation
• How will you organise your operations (what kind of
structure)
• What role will this subsidiary play in the overall
organization of the company?
• What will be the relationship with other subsidiaries (if the
company is operating in other countries)
• What decisions will be made in the subsidiary?
• Any other organizational issues in addition to the above
Conclusion and Recommendation
• What are main conclusions of your analysis
• What are the recommendations you want to provide to
the company
References
Appendices
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PRINCE2: Developing the Business Case
Developing the business case
– The outline Business Case is derived from the project mandate and
developed pre-project in the Starting up a Project process in order to
gain approval by the Project Board in the Directing a Project process
to initiate the project.
– The detailed Business Case is derived from the outline Business Case,
the Project Plan (costs, timescale, products) and the Risk Register. Due
to the inputs required to develop a Business Case, its development will
be iterative. There needs to be an initial justification to proceed with
the project, but until the project is planned in detail, the outline
Business Case is based on costs and timescales that are, at best,
approximate. Once the costs and timescales are better understood, it
may increase or decrease the desirability, viability and achievability
of the project and could therefore change the project approach,
leading to some replanning.
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PRINCE2: Verify the Business Case
– The Business Case drives all decision making by ensuring that the
project remains justified and that the business objectives and benefits
being sought can be realised.
– Example of an unverified business case
A project to build a tourist attraction in London was justified on the basis of
attracting 12 million visitors in its first year. The projected number of visitors
determined the revenue for the exhibition and, with the project team under
pressure to build a 'world class exhibition’. The project budget was set at a
level that was break-even with 11 million visitors. The projected 12 million
visitors was an untested assumption and significantly higher than the actual
4.5 million visitors. In project terms it was a success - the exhibition opened on
time, was within 5% of cost budget and had all the facilities that were
requested (so therefore met the acceptance criteria). However, the shortfall of
visitors significantly reduced revenue, which meant that the necessary
government grant increased from £399 million to £628 million. It was a
commercial and public relations disaster, illustrating that delivering a project on
time, within budget and to specification based on unsound benefit assumptions
negates the successful project delivery.
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PRINCE2: Confirm the Benefits
– Identify the benefits
– Select objective measures that reliably prove the benefits
– Collect the baseline measures (from which the improvements will be
quantified)
– Decide how, when and by whom the benefit measures will be collected.
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Without business cases
– Organisations waste resources
– Organisations have no clear basis to evaluate and prioritise projects
– Stakeholders can be disappointed because their objectives are not
met
– Targets for deliverables may not be linked to project goals
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Key Messages
Situation
Complication
Question
– Project Initiation Document is prepared to:
- to obtain commitment to the project from Project Board,
- assess progress, issues and ongoing viability of project, and
- provide ready reference to new staff about the project and how it is being
managed.
– A project should have a business justification. Without it, no project
should start.
– If you want to convince people of your argument you need to ensure
Business Case is clear, concise and well structured.