Establish financial business case


Many experienced readers of business cases will start looking for the numbers. They will look for the financial overview that summarizes costs, benefits, return on investment and net cash flow. Even though other parts of the business case may be equally important and even take more time to create, the financial overview (and its underlying details) is a key section for decision makers. The section can consist of the following building blocks:

  • Scenarios
  • Financial metrics
  • Costs
  • Benefits
  • Appendices containing relevant details


To create a solid financial overview, it will usually require a precise definition of the case subject and investigation of multiple scenarios. Benefits and costs do not exist independently of the product, the scope and the project approach.


Comments on financial overview building blocks

Scenarios: The financial overview should contain a trace to the scenario (solution, project approach, time frame, etc.) that generates benefits and costs. Comparability is vital if multiple scenarios are presented. If the case is about increased earnings or cost savings, an as-is scenario is the baseline for comparison (creating a precise baseline is often surprisingly difficult).

Financial metrics: Net cash flow over time (showing the inflow and outflow of real money over time) will often be the core financial metric of the business case. Based on the net cash flow, further analysis and metrics can be made such as payback time, cumulative cash flow and net present value (much time can be saved if financial metric requirements and definitions are defined up-front in case building).

Benefits: Most projects have a profile with high investment and money outflow at the beginning of the project.  Benefits generating inflow of money will follow and will usually have a ramp-up period where benefits increase over a period of time.  Therefore, the financial result of most business cases will be improved when longer periods are selected.

When building the business case, a main challenge is often to be precise on benefits, including key issues like forecasting sales and market response, estimating the financial value of benefits (many are difficult to valuate), being realistic with regards to ability to harvest benefits. Handling these issues often requires careful attention to establishing buy-in from key stakeholders to the benefits that are included, the way they are calculated, the assumptions they are based on and the associated risks.

Costs: Establishing the cost side of the financial overview case is usually the most time-consuming task in creation of the business case. It may typically take up to 80% or more of the total time ref. Tasks include establishing a cost model that provides transparency and comparability between scenarios, definition of the costs that belong to the case, estimation of costs, and aggregation of costs for presentation.

Appendices: Readers of business cases will normally not be interested in all the details that sums up to the financial overview but to make the case transparent, there should be an easy trace to the details. In general, it is often recommended to establish a dynamic business case model where assumptions and figures can be easily changed and adjusted. This makes it easy to test and try different scenarios.


References and more reading:

  1. Marty J. Schmidt, 2002, The Business Case Guide – Second Edition, Solution Matrix