Test Yourself

This section offers ten multiple-choice questions to help you identify your baseline knowledge of developing a business case.
Answers to the questions are given at the end of the test.

1. When creating an implementation plan for your business case, it is generally advisable to do all of the following except?

a. Include people’s names when assigning accountability for a task.

b. Use specific due dates for each milestone.

c. Clearly describe your milestones.

2. In which of the following situations would you prepare a business plan instead of a business case?

a. To demonstrate the value a new product offering brings to the organization.

b. To decide how to prioritize projects in your group and which ones to eliminate.

c. To plan how your business unit will change over the next five years to adapt to competition.

3. You’ve defined an opportunity and identified several viable alternatives. Which of the following is the best strategy for narrowing those options?

a. Eliminate any choices that are likely to be unpopular with a key stakeholder.

b. Eliminate elaborate, high-risk options.

c. Eliminate the status quo option if it seems unlikely.

4. Which of the following statements about the data-gathering and analysis phases of building your business case is accurate?

a. Much of the information you gather relies on estimates and assumptions.

b. All of the information you’ll need can be gained by talking with stakeholders.

c. The return on investment (ROI) should be the primary financial driver for your decision making.

5. You’ve analyzed your alternatives for pursuing a particular business opportunity. What is the best next step?

a. Draft a high-level implementation plan.

b. List the risks associated with each alternative.

c. Identify a rationale for making a decision.

6. Your colleague, Jack, has made a business case for a project that requires help from outside consultants. He received approval for the project, but the finance department never transferred money for the consultants’ fees to his budget. He most likely failed to:

a. Establish who would be accountable for the project and get a commitment from these individuals.

b. Clearly identify the need to add money to his budget in order to implement the project.

c. Choose a feasible alternative.

7. Which of the following is not good advice for presenting your business case to decision makers?

a. Include all your calculations up front to show the depth of your analysis.

b. Be concise so your audience focuses on the most important information.

c. Tell a convincing story using descriptive language.

8. Which of the following is the best definition of a business case?

a. A document that presents the rationale for a decision you’ve made.

b. A guide to how an organization will navigate through a changing business landscape.

c. A tool for identifying and considering multiple alternatives before recommending one option.

9. You’ve defined the opportunity for your business case. What is the best next step?

a. Generate a list of possible alternatives for addressing this opportunity.

b. List the business objectives you think key stakeholders will likely support.

c. Consider how this opportunity could help your company meet vital business goals.

10. You must be able to express each alternative’s potential impact in dollar amounts. True or false?

a. True.

b. False.

Answers to test questions

1, b. You should try to use generic due dates rather than specific due dates in a business case—for example, “year 1” or “six months from contract approval.” Specific dates are not usually necessary at this stage of developing your business case. Moreover, it is not advisable to lock yourself into meeting particular due dates early in the process. If you commit to certain dates on paper, you may be held accountable for achieving them—even if they are not realistic.

2, c. You would use a business plan to anticipate how your business unit will change over the next five years to adapt to the competitive market. Business plans generally feature long-range projections of revenues, expenses, and other information needed to secure financing from investors or to plan strategy execution. A business case, on the other hand, focuses on a single action or decision and its alternatives. Managers create business cases to gain support for all manner of decisions, to initiate action, or to obtain resources for a specific initiative.

3, b. Once you have generated a list of alternatives, use your intuition to come up with a reasonable subset of alternatives that will likely address your most important business objectives and stakeholder needs. One strategy for narrowing your list of alternatives is to eliminate any options that seem excessively complicated or difficult to implement and to retain more feasible choices.

4, a. Much of the information-gathering and analysis process requires you to make estimates and assumptions. Do your best to come up with information that seems sensible and that you can defend. Be sure to document your estimates and assumptions so you can explain your reasoning to anyone who asks.

5, c. Once you analyze your alternatives, the next step is to identify a rationale for making your decision. Selecting a decision-making rationale isn’t an exact science, so you’ll have to rely on your intuition and best judgment. Remember to document your rationale so you can explain it to others later.

6, b. One common mistake managers make when creating a business case is failing to spell out the need for additional resources in the implementation plan. If decision makers are not explicitly informed of the need for resources, they may approve the project but fail to allocate the necessary resources. If you don’t show any movement of budget dollars and headcount as a step in your implementation plan, it may be overlooked—or stakeholders will assume that you will fund the project from your own budget.

7, a. One of the most common mistakes managers make is trying to convey too much information up front when presenting their business case to decision makers. It is tempting to try to demonstrate how much work and thought went into your decision, but resist the urge. Most executives are busy, and they only want to see the information they need to make a decision. You may want to create backup slides or include an appendix in your document that presents calculations and additional analysis for people who desire more detailed information.

8, c. A business case answers the question “What happens if we take this course of action?” For example, if your unit is considering expanding sales to a new market, your boss might ask, “Which of three alternative markets should we invest in to create the most value—and should we even make this investment?” Managers at all levels create business cases to gain support for various types of decisions, to initiate action, or to obtain resources for an initiative.

9, c. After defining the opportunity for your business case, your next step should be determining how that opportunity would enable your company to achieve its most important objectives. To find out what your company considers important, examine the key business metrics it tracks. Once you have identified several business objectives relevant to your company, prioritize them and choose three or four to use for your business case. To narrow the field, consider whose support you’ll need and who would be affected if your ideas were put into action. Spend time determining how these key stakeholders tend to make decisions and what business results are most important to them.

10, b. Most business cases aren’t built on numbers alone. In fact, many companies place high value on benefits that may be difficult to quantify, such as increased customer goodwill because of an action you’re proposing. You might not be able to attach a specific dollar amount to certain costs and benefits, but their impact might still be persuasive. In such cases, consider creating a pros and cons table for your alternatives to capture any positive and negative financial and nonfinancial impacts.