Artifacts #
What this step produces.
Business Case #
A document that justifies the project: the problem, options, costs, benefits and risks. Decision-makers use it to decide whether to go ahead.
Cost-Benefit Analysis #
A table that sets the project's total costs against its expected benefits in money terms. It shows whether the benefits outweigh the costs.
Techniques #
Techniques used in this step.
Cost-Benefit Analysis #
A method of comparing what an option costs with what it returns, so the most worthwhile choice stands out. It is used to support the business case with numbers.
Alternatives Analysis #
Comparing the possible ways to reach the goal, including doing nothing, against the same criteria. It shows why the chosen option beats the others.
Return on Investment #
The profit from an investment as a percentage of its cost. It gives a simple measure of how worthwhile the project is.
Net Present Value #
Adds up all expected future cash flows, discounted to today's money, minus the initial investment. A positive result means the project creates value.
Internal Rate of Return #
The discount rate at which a project's net present value becomes zero. It is compared with the required return to decide whether the investment is worth making.
Payback Period #
The time needed for a project's returns to cover the money invested in it. It gives a quick view of how long capital is at risk.
