Business Case VS Statement of Work

sow vs business case

What is a Business Case ?

A Business Case document describes the necessary information from a business standpoint to determine whether or not the project is worth the required investment.

Typically Business need and Cost benefit analysis information are present in the Business case. It answers the questions, why the seller should do the project ? what value does this project bring to the organization ? and how this project fits into the strategic goals of the organization ?

PMBOK definition: Project Business case is a documented feasibility study used to establish the validity of benefits of a selected component lacking sufficient definition, and that is used as a basis for the authorization of further project management activities.

We saw that a Business case document has Cost benefit analysis information, So how is Cost benefit analysis information presented in the business case document ? It is often presented through one of the below items

  • Net Present Value (NPV) or
  • Internal Rate of Return (IRR) or
  • Return on Investment (ROI)

Typically, Business case is prepared by a business analyst using various stakeholder inputs. The sponsor should agree to the scope and limitations of the business case.

What is Project Statement of Work (SOW)?

The SOW is a document that has a overview and description of the products, services or results that the project intends to deliver. It will also include what are included / NOT included in the project.

Who Provides SOW ?

For Internal Projects : Project Initiator or Sponsor provides the SOW.

For External Projects:  Customer provides the SOW as part of Bid documentation.

 

Project Statement of Work (SOW) and Business Case are key inputs to Develop Project Charter process.

 

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