Starting up a project II: the outline business case, project approach and brief

The fourth and fifth activities of starting up produce the core content the project board will use to decide whether to authorize initiation. Preparing the outline business case answers why the project is worth investigating and what it might deliver. Selecting the project approach and assembling the project brief answer how the work might be done and pull everything together into one product. This lesson works through both activities with Ridgeline Water's starting up and builds the project brief that its board will review.

Prepare the outline business case

The executive is responsible for the outline business case, even though the project manager often drafts it. It is based on the reasons in the mandate, any corporate or program strategy, and whatever cost and benefit information can be gathered quickly. It is deliberately outline: its job is to show that the project is likely to be worthwhile and that the cost of initiation is justified, not to prove the full investment case. PRIN-130 showed how the business case develops from outline to detailed; here the focus is on what starting up needs.

This activity also produces the project product description: the description of the project's final product, including the customer's quality expectations and acceptance criteria. PRIN-131 studied it from the quality practice's side. The senior user leads on its content, with the project manager helping to make expectations measurable. Producing it now, before the approach is chosen, keeps the focus on what the customer needs rather than on how a particular solution would work.

A first look at the investment

Ridgeline Water's project manager reuses the cash flows from PRIN-130's appraisal to give the board a first indication of value. The code below calculates net present value, the discounted payback year and the simple payback for the smart-meter option, and repeats the NPV with the leak saving halved, because PRIN-130 found the case to be most sensitive to that benefit. At starting up this level of analysis is enough: it shows the case is promising, where the uncertainty lies, and therefore what initiation needs to examine.

rate = 0.05
capital = [5000, 4600]
benefit = 1240
def flows(net):
    return [-capital[0], -capital[1]] + [net] * 14
def npv(cf):
    return sum(c / (1 + rate) ** t for t, c in enumerate(cf))
def payback(cf, discount):
    cum = 0.0
    for t, c in enumerate(cf):
        cum += c / (1 + rate) ** t if discount else c
        if cum >= 0:
            return t
    return None
base = flows(benefit)
print(f"NPV at 5 %: {npv(base):,.0f} thousand")
print(f"Simple payback: year {payback(base, False)}; discounted payback: year {payback(base, True)}")
half_leak = flows(benefit - 640 / 2)
print(f"NPV with leak saving halved: {npv(half_leak):,.0f} thousand")

NPV at 5 %: 2,309 thousand
Simple payback: year 9; discounted payback: year 12
NPV with leak saving halved: -708 thousand

The smart-meter option has an NPV of about 2,309 thousand, pays back in simple terms in year 9 and in discounted terms in year 12, and turns negative if the leak saving is only half what is expected. That is exactly the kind of finding the outline business case should carry into the project brief: the project looks worthwhile, initiation is justified, and the detailed business case must test the leak assumption, which is why PRIN-130's plan included a pilot stage.

Select the project approach

The project approach describes how the work of the project will be done: the way the solution will be delivered and the way the project will be managed. It covers questions such as whether to build or buy, whether to deliver in one release or several, whether to use an agile or a linear delivery method, whether to use internal or external suppliers, and which standards and constraints the solution must follow. In PRINCE2 7 language this is often described in terms of the delivery approach and the overall project approach; check the manual's current wording.

Choosing the approach in starting up matters because it shapes everything that follows: the skills the team needs, the structure of the stages, the estimates for initiation and the risks. It should be informed by the lessons captured earlier, by the organization's standards and by the customer's quality expectations in the project product description. It should not be chosen simply because a supplier offered it or because the organization always does things that way.

For a Canadian public utility, the procurement route is often fixed by trade agreements and the municipality's own procurement bylaw: a contract of this size would normally need open competitive tendering under the Canadian Free Trade Agreement and possibly CETA thresholds. The project approach should state the route and its effect on the timeline, because tendering can take months.

Assemble the project brief

The project brief pulls together everything starting up has produced into one product that the board can review. It gives the board a firm basis for deciding whether to initiate the project, and it becomes a key input to initiation, which develops its contents into the project initiation documentation. Because it is assembled from the outputs of the earlier activities, a good project brief is short. Its value lies not in its length but in being complete enough for the decision.

Project tolerances deserve a special mention. The business layer sets them, ideally in the mandate, and the project brief records them. If the mandate did not include them, the executive should obtain them from the business layer before the brief goes to the board, because the board cannot set stage tolerances for initiation and later stages without knowing the limits it is itself working within. Ridgeline Water's general manager sets project tolerances of +5 % on cost and +8 weeks on time, a benefits tolerance of −10 % on the annual net benefit, and requires scope changes affecting more than two districts to come back to the business layer.

Checking the project brief is complete

Before submitting the brief, the project manager and project assurance check that it contains what the board needs. The code below checks Ridgeline Water's draft against a list of required elements and against two quality rules: that the project tolerances come from the business layer, and that the project product description includes acceptance criteria.

required = ["background", "objectives", "scope", "exclusions", "constraints", "assumptions", "project tolerances",
            "interfaces", "outline business case", "project product description", "project approach", "team structure"]
brief = {
    "background": "Manual reading; estimated bills; leaks",
    "objectives": "Accurate bills; earlier leak detection",
    "scope": "All 20 districts, about 40,000 connections",
    "exclusions": "Commercial bulk meters; billing system upgrade itself",
    "constraints": "About 10 million capital; council approval",
    "assumptions": "",
    "project tolerances": {"cost": "+5 %", "time": "+8 weeks", "set_by": "general manager"},
    "interfaces": "Billing upgrade (IT); customer portal",
    "outline business case": "NPV about 2.3 million at 5 %",
    "project product description": {"acceptance_criteria": ["98 % daily reads", "under 1 in 1,000 bills corrected"]},
    "project approach": "Pilot then staged rollout; hybrid delivery",
}
missing = [k for k in required if not brief.get(k)]
print("Missing or empty:", ", ".join(missing) if missing else "none")
tol = brief["project tolerances"]
print("Tolerances set by business layer:", tol.get("set_by") in {"general manager", "council"})
print("Acceptance criteria present:", bool(brief["project product description"].get("acceptance_criteria")))

Missing or empty: assumptions, team structure
Tolerances set by business layer: True
Acceptance criteria present: True

Two elements are missing: the assumptions are blank and the team structure has not been attached. Both matter. Unstated assumptions are invisible risks; for Ridgeline Water they include that the billing upgrade will be live before the pilot ends and that customers will accept leak alerts by text message. The team structure tells the board who it is and what each member is accountable for. The tolerances and acceptance criteria pass. The project manager completes the brief before moving to the last activity: planning the initiation stage.