Business Justification in Scrum

June 9, 2014

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).


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