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I am starting a project of going through the 6th Edition of the PMBOK® Guide and blogging about its contents.    The 6th Edition was released on September 22nd by the Project Management Institute, and now that I am done reviewing the first three chapters on projects, the environment in which they are done, and the role of the project manager, I am excited to start the fourth chapter on the first of the 10 knowledge areas, that of Project Integration Management.   This post starts a series of posts on the first project management process, process 4.1 Develop Project Charter.

In the last post, I answered some general questions people have on the process it.   Now I am going into the details of the inputs to this process.   Here are the four inputs to the process 4.1 Develop Project Charter

1. Business documents
2. Agreements
3. Enterprise environmental factors
4. Organizational process assets

The last two inputs are generic inputs you see with many project management processes; I won’t spend a lot of time on them.   The second input, Agreements, is for when you are doing a project for an external organization.   “Agreements” are the PMI term of art for legal contracts.   The first input, Business documents, has two components

• Business case
• Benefits management plan

The business case document has been around for a while; the benefits management plan, however, is a new document that PMI proposes be done in conjunction with the business case document.    The business case document shows how business value or benefits are going to be created by the project; the benefits management plan shows how those benefits, once created by the project, will be maintained by the organization that does the project.

Since both of these business documents are important for the creation of the project charter, let me do a post on each of them.   In this post, therefore, I’ll start with a description of the business case document.

Business case

The business case puts together three elements that answer three questions:

• What is the product, service, or result to be delivered by the project?   This narrative description is sometimes referred to as the statement of work.   Consider it the “seed” of the project.   A seed contains the DNA of an organism, its genetic blueprint of what it will become once it germinates and comes to fruition.  Similarly, the statement of work contains the conceptual blueprint of what the project will create once it comes to fruition.
• Why is the project being done?   This question is being asked from the standpoint of who is the recipient of the benefit of the project:   it could be the customer, or in the case of an internal project, a department or even an entire organization.    This is the business need, and the project could be being done inresponse to market demand, organizational need, customer request, technological advance, legal requirement, ecological impact, or social need.
• Why is the project being done?   This question is being asked from the standpoint of the organization doing the project:   it answers a strategic objective of the company

You put these three together and you get:   the business case document!    Now, please make a distinction between the business need and the business case.   The business need is the reason why the project is being done.   The document that puts together the product scope description (aka the statement of work), the business need, and the strategic plan of the organization is the business case.

There may be also be a cost-benefit analysis, showing that the project is expected to achieve a certain objective measure of benefits in relationship to the costs of the project.  This is important!    For example, let’s say your project was picked because it had a higher benefit-cost ratio than other projects that could have been selected.   What happens if there are a lot of cost overruns on your project as it is being executed?   Then the benefit-cost ratio will go down, and perhaps become unfavorable to some of those other projects which will now be looking like good investments in comparison.   This could lead to your having the plug being pulled on your project.

Now, the business case document is not a project document, but a business document, and it is often created by business analysts.   One of the trends in project management is to have project managers involved in what normally is done by business analysts, like helping create the business case document.   This is also the case of the other business document, the benefits management plan, which will be the subject of the next post.

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