Initiating a Project: Business Case, Charter, and Feasibility
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Most project failures begin before the work does. Projects that start with unclear purpose, unrealistic expectations, or no real sponsor are in trouble from the first day.
Defining the Problem or Opportunity
Start by stating, in a few sentences, the problem to be solved or the opportunity to be seized, who is affected, and why it matters now. For a student, this may be the research problem, the client's need, or the design challenge in a capstone.
The Business Case
A business case explains why the project is worth doing. It typically covers:
The problem or opportunity.
The options considered, including doing nothing.
Expected benefits, costs, and risks.
A recommendation and the criteria for success.
PRINCE2 holds that a project should have continued business justification throughout its life, meaning that the business case is reviewed at every stage, and the project is stopped if it is no longer worthwhile (Knowledge Train, n.d.).
Measuring Value
Common financial measures include:
Payback period: how long it takes to recover the investment.
Return on investment (ROI): net benefit divided by cost.
Net present value (NPV): the sum of discounted future cash flows minus the initial investment.
Worked example. A laboratory spends 10,000 on equipment that saves 4,000 per year for three years. At a discount rate of 8%, the present value of the savings is about 10,308 (4,000 multiplied by an annuity factor of about 2.577), so the NPV is about +308. The simple payback period is 2.5 years, and the undiscounted ROI over three years is (12,000 minus 10,000) divided by 10,000, or 20%. The project barely clears the hurdle, which is a signal to examine the assumptions carefully (Larson & Gray, 2021).
Not all value is financial. In academic and public-sector projects, the benefits may be knowledge, learning, safety, or social good, which should still be stated and, where possible, measured.
The Project Charter
A project charter is a short document that formally authorizes the project and gives the manager authority. A typical charter includes:
| Element | Purpose |
| Title, sponsor, and manager | Who is accountable |
| Purpose and objectives | Why the project exists |
| Scope summary and exclusions | What is in and out |
| Deliverables and milestones | What will be produced and when |
| Budget and resources | What is available |
| Success criteria | How success will be judged |
| Key risks and assumptions | What could go wrong, and what is taken for granted |
| Approval | Signatures or formal acceptance |
For a student project, the equivalent is the project proposal, approved by the supervisor or committee.
Feasibility
Before committing, check feasibility from several angles, which are sometimes remembered as TELOS:
Technical: do we have the knowledge and tools?
Economic: can we afford it, and is it worthwhile?
Legal and ethical: are there regulatory or ethical barriers?
Operational: will it work in practice?
Scheduling: can it be done in the time available?
Defining Success
Cooke-Davies (2002) drew a useful distinction between project success (meeting time, cost, and scope targets) and project management success, and others distinguish both from product or business success, which is whether the outcome delivers lasting value. Agree early on how each will be measured, and who decides.
CHAPTER 5