By María Lorena López Rosales, MSc., MAP.
Professor of the Project Feasibility course in the Master in Project Management Program at the University for International Cooperation.
One of the first demands a project manager faces when in charge of a big, public project has to do with communication. The press, political groups, community organizations, and usually a very diverse group of stakeholders expect to be well informed as soon as the project has financial resources and starts the initiating process. Commonly the project manager is recently appointed, is new to the project and to this group of project followers. How can the project manager rapidly gain command of the project’s background, and the relevant facts and/or issues for this audience so he can start communicating effectively and building the credibility and confidence of this audience as the project’s leader?
According to Mulcahy (2013), the initiating process in project management states that a project manager must “understand the business case” of the project (2013, p. 50, Rita’s Process Chart) and to “know why the project was selected and how it fits into the organization’s strategic plan” (p. 118). So it may seem the business case is the document or source of information to resort to for the initial understanding of the decision making process that came before project approval. No mention of feasibility studies is made.
However, when speaking of public projects, the term “business case” can be a somewhat confusing terminology because the types of reports done for making a decision to proceed with a public project are usually a collection of feasibility studies in various critical topics, and also because the term “business case” can seem somewhat unrelated to public projects that are not typically considered a business venture or business project, but a public service focused primarily on social and development objectives. As an example, many projects will not even have revenues of any kind for the organization and the benefits are of a general socio-economic nature. Now, depending on the legal nature of the government institution, in some cases there can be business goals to respond to and a business plan, but usually not always as a substitute of the feasibility studies.
A quick research of definition of the terms business case and feasibility study does always coincide in scope and is not always clear. Sometimes it even seems the content is the same for both terms. For project managers it’s always useful to take a look at A Guide to the Project Management Body of Knowledge (PMBOK Guide) to verify definitions, in this case business case. The definition is very concise:
Business Case: A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities. (2013, 5th edition, Glossary, page 530)
This is a common definition and it clearly emphasizes the feasibility of economic issues. PMBOK also says “the business case or similar document describes the necessary information from a business standpoint to determine whether or not the project is worth the required investment” (p. 69). Although it still emphasizes “a business standpoint”, it does mention a “similar document”, so for public projects one can reasonably conclude this document is most likely a feasibility study that clearly shows how the public interest is satisfied with the investment.
Generally, the term feasibility study (the document) of a project is a collection of specific feasibilities; it is not limited to economic issues and contains much more ample criteria as a base of the go/no-go decision for the project. Feasibility studies include ample environmental, legal, operational, socio-economic and financial topics. The formulation and evaluation process may have required complicated discussions, analysis, solutions, and even social negotiations with stakeholders to assure the project’s viability. Also, these projects are faced with strong competition for resource allocation making them sensitive and prone to wide public scrutiny. So its clear project managers in public projects will probably have to resort to the feasibility studies, not to a business case, to gain as much knowledge of the project’s background, justification and expectations as necessary to cope with early communication needs of stakeholders and to plan accordingly. Hopefully good executive summaries of the feasibility study will be a good guide, but will not suffice.
Feasibility studies are a real asset to the project manager during the initiation process and will facilitate communication and relationship with stakeholders. It must be kept in mind that it is not unusual for some of the stakeholders to know these studies very well, so familiarity with them will give the project manager assuredness in meeting early communication needs.
A well written and organized feasibility studies serves as an important bridge of information left by the planners to the project management team. Generally the project manager is not part of the evaluation stage of the project, and on the other hand, often times the planners are not available after a decision is made to go on with the project. So these documents are the best most complete source of information available.
Finally, another useful communication related reason to know the feasibility studies is that throughout the execution of the project, financial institutions and other primary stakeholders will be requiring communication on the progress of expected results and conclusions of these studies, which by the way, are not only the end result itself, but may be benefits of the process itself. For example: the employment policies and hiring expectation in the area during a construction process or the negotiated benefits for the community, the mitigation of environmental impacts, etc.
As a general conclusion, feasibility studies are documents that are more widely used for public projects compared to business case documents. The project manager in charge of a significant, public project can acquire the knowledge he needs for effective communication as the project initiates and thereon. Their content is very comprehensive and covers many topics that will facilitate the understanding of the background discussions and the most sensitive issues of the project. This will enable the project manager to communicate well, using relevant data, and to build the confidence and credibility he needs with the stakeholders as soon as communication demands arise during the initiation process.
PMI. (2013). A Guide to the Project Management Body of Knowledge (PMBOK Guide), (5th Edition).Project Management Institute
Mulcahy, R; PMP, et al. (2013). PMP Exam Prep. (8th Edition). RMC Publications