Business Value vs. Business Case: PMP Topics to Learn

Business Value vs. Business Case: PMP Topics to Learn

Now that you have learned the basic knowledge of Project Management from the previous blogs, it's time to understand the associated terms and concepts. One of them is a Business Value vs. Business Case. These two phrases do not sound as similar.

However, they have a lot in common as well. Both of these phrases compare costs and benefits. The difference is value is a long-term outcome. In contrast, a business case justifies how a project achieves the set result.

The PMP certification is the most widely-recognized project management certification in the world. However, it's also an expensive exam that can take months to prepare for, so it's important to know what you're getting into before committing to it.

What is the business value?

Business value is the importance of a project to the business. It's measured by the amount of money a project will bring in or save for the company and its impact on its operating efficiency.

PMI defines business value as "the positive impact a project or program has on the organization's strategic goals, key performance indicators, and other important measures of success."

The Components of a Business Value

The Business Value is usually not part of the business case. Still, it should be considered to understand why we are doing a project. The business case is a document that describes the business value and provides justification for how it's measured.

The components of a business value are:

Business goals: The goal is to achieve something important to the organization. It might be increasing sales, reducing costs, or improving customer satisfaction.

Benefits: Benefits are the result of achieving your goal. For example, benefits could include increased revenue and market share if your goal is increasing sales.

Costs: are anything that can be measured in money — such as salaries, materials, and supplies — and any other expenses incurred during a project.

In addition, they include indirect costs such as lost production time due to illness or injuries on the job, travel expenses when traveling for company meetings, etc.

Risks: Risks adversely affect the company if your project doesn't work out as planned.

What is Business Case?

Business cases justify how much money should be invested in a project. These documents include cost-benefit analyses and other information that support the decision whether or not to invest in a project.

The business case's purpose is to ensure that any risks are mitigated by identifying potential problems before starting work on the project.

The Components of a Business Case

A business case is a document that describes the reasons, goals, and objectives behind a project. It explains how a project will achieve its aims, which it will benefit, and why it is worth investing in.

A business case should be carefully planned, organized, and written so that it can be easily understood by everyone involved with the project.

It should also contain detailed information about costs, timeframes, and resources required to complete the project.

The components of a business case concerning PMP are:

Executive Summary: This section overviews the project or initiative and its goals and objectives. It also explains how each goal/objective will be achieved by implementing related tasks. This section can be prepared by someone who is well versed with the subject matter or by someone who has been assigned this task by management (e.g., Project Manager).

The Problem Statement: A problem statement describes what needs to be done to resolve an issue or problem within your organization. It identifies the problems that need solving and outlines how they could be resolved.

The Solution Statement: The solution statement includes all possible solutions for resolving each problem identified within your organization. It should consist of pros and cons for each key and any estimated costs associated with implementing each one.

The Value Proposition: The value proposition identifies how each potential solution will benefit your company or organization by reducing costs or increasing revenues over time.

Business Value Analysis: A business value analysis (BVA) identifies how an investment will improve company performance through increased revenue, decreased expenses, or enhanced competitive advantage. It quantifies the financial impact of implementing a solution on a company's bottom line.

Business Case vs. Business Value

The difference between these terms is that a business case focuses on the financial aspect of a new or existing project. In contrast, a business value focuses on how the project will help your organization achieve its goals.

The business case is a set of metrics to justify a proposed project or initiative. It includes the projected cost savings from implementing a project, along with any costs associated with implementing it.

Business Value is the actual benefit that a project delivers to an organization. It is measured in terms of how well it meets stakeholder needs and expectations, how efficiently it uses resources, and how successfully it meets objectives.

The difference between the business case and business value may seem subtle at first glance, but they are not interchangeable concepts. Project managers should understand both concepts and be able to explain them clearly when their superiors or client stakeholders ask during proposal development meetings, status reviews, or other discussions about a project's viability.

In PMP certification, you need to understand the two terms clearly to make strong statements about your projects when needed. If you have a good understanding of both, it would be easier for you to convince others about your project's worth and necessity.