The Business Case: Economic Feasibility for Project Authorization
PMBOK v8 Definition
A business case is a documented economic feasibility study used to establish validity of the benefits to be delivered by a portfolio component, program, or project. The business case helps to define a selected component that is lacking sufficient explanation and that is used as a basis for the authorization of further project management activities. The business case lists the objectives and reasons for project initiation and helps to measure project success at the end of the project against the project objectives.
Why It Matters for the Exam
The business case appears frequently in PMI exam questions about project initiation, authorization, and success measurement. Questions typically test your understanding of when the business case is created (before project initiation), its role in go/no-go decisions, and its distinction from project documents and the project management plan.
Key Points to Remember (for the exam)
- Definition: A documented economic feasibility study used to establish validity of benefits
- Timing: Developed prior to the project being initiated; used throughout the project life cycle
- Decision Tool: May result in a go/no-go decision for the project
- Document Type: Considered a business document, NOT a project document or component of the project management plan
- Success Measurement: Helps measure project success at the end against project objectives
- Key Content: Lists objectives and reasons for project initiation; outlines costs, benefits, and how value will be created
- Common Confusion: Business case is NOT part of the project management plan; it is a business document that originates outside the project
Typical PMI Exam Example
A project manager is assigned to a new project. The sponsor provides a document that outlines the costs, benefits, and economic feasibility of the proposed project. The project manager uses this document as a basis for further project management activities. Which document did the sponsor provide?
Answer: The business case
PMI Exam Traps
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Trap: Confusing the business case with the project charter Reality: The business case is developed before project initiation; the project charter authorizes the project. The business case is an input to developing the project charter.
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Trap: Treating the business case as a project document Reality: The business case is a business document, developed outside the project. It is not a component of the project management plan.
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Trap: Thinking the business case is only used at project start Reality: The business case is used throughout the project life cycle and is referenced after the project has been completed.
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Trap: Assuming the business case guarantees project approval Reality: The business case may result in a go/no-go decision; it does not guarantee project initiation.
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Benefits Management Plan | Complementary business document | Both developed prior to project initiation; both referenced after project completion |
| Project Charter | Input to | Business case is an input to developing the project charter |
| Project Success Criteria | Defined within | Business case outlines project success criteria and how value will be created |
| Project Initiation | Basis for authorization | Business case provides the economic feasibility basis for authorizing project activities |
Quick Review Questions
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Is the business case considered a project document or a business document?
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When is the business case typically developed in relation to project initiation?
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What decision may result from reviewing the business case?
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How is the business case used after the project has been completed?
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Which document outlines costs, benefits, and how value will be created together with project success criteria?
PMBOK v8 Reference
Section 2.2.1 – Key Concepts (Scope Performance Domain) and Section on Business Documents