Making the Business Case and Gaining Approval
The business case justifies investment and secures sign-off. Candidates must understand its typical structure: executive summary, strategic context, problem/opportunity, options considered, recommended option, costs and benefits, risks, timescale, and recommendation. Know the financial appraisal techniques: payback period (time to recover cost), net present value (discounted future cash flows), return on investment, and internal rate of return at a conceptual level. Understand whole-life costs (not just build cost), benefits realisation (benefits must be owned and measured), and the treatment of risk and optimism bias. Also know that approval depends on the decision-makers' criteria, which may include affordability, alignment, and deliverability, not just NPV.
Traps
A frequent error is comparing options on build cost alone, ignoring ongoing running costs and benefits timing. Another trap is treating benefits as automatic once delivered - without an owner and measure, they rarely materialise. Watch for confusion between payback (a time measure) and NPV (a value measure); NPV accounts for the time value of money, payback does not. Also beware business cases that omit the do-nothing baseline.
Rule of thumb
A business case is a decision document, not a sales pitch: present the recommended option, the evidence, the risks, and what would make the decision change.
Worked example
Option A costs £200k to build and £40k a year to run, saving £120k a year. Payback is roughly 2.5 years on build cost, but whole-life cost and discounted cash flows give a truer picture for approval.