Business Justification in Scrum
One of the basic questions that comes to the mind of a new member in a project, programme
or portfolio team is ‘why are we doing this project?’ Business justification of the project not only
answers this question but also makes the team understand the importance of the project.
Let us now understand what business justification is, especially, in the context of Scrum projects. In simple
words, business justification is the reason for undertaking an endeavor and the benefits outweighing
the costs and risks. However, there is more to the assessment of business justification of a project.
An important part of establishing business justification is estimation of the project value. Project
value is determined by considering various factors such as project reasons, benefits, costs,
timescales, risks, dis-benefits, etc. Estimating the project value helps the decision makers make the
vital decision such as to continue with the existing project or not. And the Guide to Scrum Body of
Knowledge (SBOK) delineates various methods to effectively measure the project value. The project
value can be estimated by using various methods such as Return on Investment (ROI), Net Present
Value (NPV), Internal Rate of Return (IRR), etc.
In a project, business justification is first assessed before project initiation, hence it is important for a
team to perform a proper business justification analysis and create a viable Project Vision Statement
prior to starting any project. The business justification is then continuously verified throughout
the project lifecycle at regular intervals and when significant events occur. This is one of the key
advantages of Scrum methodology as there is scope for significant changes in the various aspects
of a project during the course of its lifecycle leading to loss of expected benefits or increase in costs
and risks, etc. The project should not only make business sense at the beginning but also in each and
every part of its lifecycle.
Analysis of business justification helps decision makers in understanding the business need for a
change or for a new product or service and the need for moving forward with a project. It also helps
the Product Owner to create a Prioritized Product Backlog along with the business expectations of
Senior Management & Stakeholder(s).