A Business Case Analysis (BCA) provides a best-value analysis that considers not only cost but other quantifiable and non-quantifiable factors supporting an investment decision. This can include but is not limited to, performance, producibility, reliability, maintainability, and supportability enhancements. The BCA is a useful tool that assists in refining the myriad of decisions that go into determining the best value strategy. It follows an iterative process, conducted and updated as needed throughout the life cycle as program plans evolve and react to changes in the business and mission environment.
A Business Case Analysis:
- Is used in the initial decision to invest in a project.
- Guides the decision to select among alternative approaches.
- Is used to validate any proposed scope, schedule, or budget changes during the course of the project.
- Should also be used to identify the various budget accounts and amounts affected by the various product support strategies.
- Should be a living document ‘ as project or organization changes occur they should be reflected in updates to the business case.
- Should be used to validate that planned benefits are realized at the completion of the project.
As a minimum, a BCA should include:
- An introduction that defines what the case is about (the subject) and why (its purpose) it is necessary. The introduction presents the objectives addressed by the subject of the case.
- The methods and assumptions that state the analysis methods and rationale that fixes the boundaries of the case (whose costs and whose benefits examined over what time period). This section outlines the rules for deciding what belongs in the case and what does not, along with the important assumptions.
- The business impacts are the financial and non-financial business impacts expected in one or more scenarios.
- Risk assessment that shows how results depend on important assumptions (‘what if’), as well as the likelihood for other results to surface.
- Conclusions and recommendations for specific actions based on business objectives and the results of the analysis.
DoD has promulgated the Guiding Principles for conducting a Performance-Based Logistics (PBL) BCA in USD(AT&L) Memorandum, Performance-Based Logistics (PBL) Business Case Analysis (BCA), 23 January 2004. OSD has issued guidance emphasizing the use of the Business Case Analysis as a fundamental tool to support PBL support strategic decisions.