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A routine question before starting a project is “Why is this needed?” Such a question might be posed by primary school students who are assigned to create a diorama about the water cycle. But the question is just as likely to be raised when dealing with large projects in the corporate world. The answer to “Why is this needed” lies in the business justification, which includes the reasons for undertaking a project, according to A Guide to the Scrum Body of Knowledge (SBOK™).

Business justification drives decision making, so it is important to assess the potential of a project before committing to significant investment at early stages and to verify the business justification throughout the lifecycle. A project should be terminated if it is deemed unviable. The decision should be escalated to relevant business stakeholders and senior management. The business justification for a project must be assessed at the beginning of the project, at pre-defined intervals and at any time when major issues or risks emerge that threaten viability.

There are numerous factors a Product Owner must consider to establish the business justification for a project. Here are some of the more important ones:

• Project Reasoning: Includes all factors that necessitate the project, whether positive or negative, chosen or not. Examples include inadequate capacity to meet existing and forecasted demand, decrease in customer satisfaction, low profit and legal requirement.
• Business Needs: Those business outcomes that the project is expected to fulfill, as documented in the Project Vision Statement.
• Project Benefits: Include all measurable improvements in a product, service or result that could be provided through successful completion of the project.
• Opportunity Cost: Determine the value of the next best business option or project that was discarded in favor of the current project.
• Major Risks: Include any uncertain or unplanned events that may affect the viability and potential success of the project.
• Project Timescales: Reflect the length or duration of a project and the time over which its benefits will be realized.
• Project Costs: Investment and other development costs for a project. Business justification is first assessed prior to a project being initiated and is continuously verified throughout the project lifecycle.

Let’s take a look at how business justification is determined:

Assess and Present a Business Case: Business justification for a project is typically analyzed and confirmed by the Product Owner. It is documented and presented in the form of a project Business Case prior to the Initiate phase. Once documented, the Product Owner should create a Project Vision Statement and obtain its approval from the key decision-makers in the organization. Generally, this consists of executives or some form of a project or program management board.

Continuous Value Justification: Once the decision makers approve the Project Vision Statement, it is then baselined and forms the business justification. The business justification is validated throughout project execution, typically at predefined intervals or milestones, such as during portfolio, program and Prioritized Product Backlog Review Meetings and when major issues and risks that threaten project viability are identified. This could happen in several Scrum processes including Conduct Daily Standup and Refine Prioritized Product Backlog. Throughout the project, the Product Owner should keep the business justification in the Project Vision Statement updated with relevant project information to enable the key decision makers to continue making informed decisions.

Confirm Benefits Realization: The Product Owner confirms the achievement of organizational benefits throughout the project as well as upon completion of the User Stories in the Prioritized Product Backlog. Benefits from Scrum projects are realized during Demonstrate and Validate Sprint, Retrospect Sprint, Ship Deliverables and Retrospect Project processes. When you’re in school, you can scrap a project at any point and the only thing that’s on the line is an assignment grade. But unacceptable project results in the professional world are far-reaching. To give yourself the best opportunity for success, you should always ask “Why is this needed?” and lean on the business justification to find your answer.