One of the most important phases in program and project management is the thorough completion of the project discovery phase, which includes business case development, objectives, key deliverables, and high-level risks and assumptions. All of these artifacts combined make up the project charter. The project charter establishes the relationship between the costs of the project and the company’s strategic initiatives, and it secures funding and resources for the effort. The charter establishes the sponsor and project manager and gives the project manager the authority to execute the project with the funding and resources secured.
Top-down estimating was used in the case below (typically within a 25% to 75% accuracy range); however, I then combined it with the PERT formula to produce estimates that are both “optimistic” and “pessimistic” in value to try and achieve a more accurate estimate. In summary, the estimated cost of this project is $97,000, with a four-year anticipated payback achieved through efficiency gains, increased memberships, and saved expenses. The project is expected to take approximately eight months. A charter document has been completed with the business case data.
Business Case Background
In today’s digital landscape, for this example a non-profit membership organization’s website serves as its online storefront and primary communication channel with customers. When a website becomes outdated—especially one that is over ten years old, running on SQL 2012, and lacking compliance with PCI (Payment Card Industry) and PII (Personally Identifiable Information) regulations—it poses significant risks. This case outlines best practices for constructing a compelling business case for replacing such a website, focusing on a strategic initiative capital project.
Business Case Statement
The current website of Non-Profit Membership Organization is over a decade old, built on outdated technology, and does not comply with PCI and PII regulations. This has resulted in vulnerabilities that threaten customer data security and the integrity of our payment processing system. To mitigate these risks and enhance customer experience, we propose a strategic initiative to replace the existing website with a modern, secure, and compliant platform.
Objectives
- Enhance Security: Ensure the new website is compliant with PCI and PII regulations to protect customer data and prevent unauthorized access.
- Improve User Experience: Create a user-friendly interface that facilitates easy navigation and payment processing for membership fees.
- Increase Operational Efficiency: Streamline the content management system (CMS) to allow non-technical staff to easily update content and manage memberships.
- Future-proof Technology: Implement a scalable solution that can adapt to future technological advancements and business needs.
Key Performance Indicators (KPIs)
- Compliance Rate: Achieve 100% compliance with PCI and PII regulations within six months post-launch.
- User Satisfaction Score: Target a user satisfaction score of 85% or higher based on post-launch surveys.
- Transaction Success Rate: Achieve a transaction success rate of 98% for membership fee payments within three months of launch.
- Content Update Efficiency: Reduce the time required for content updates by 50% within the first quarter post-launch.
Risks
- Budget Overruns: The project may exceed the initial budget due to unforeseen complexities in migration or integration.
- Timeline Delays: Potential delays in project delivery could impact business operations and customer experience.
- Data Migration Issues: Challenges in migrating existing data to the new platform may result in data loss or corruption.
- User Adoption: Resistance from staff or customers in adapting to the new system could hinder the project’s success.
Assumptions
- Availability of Resources: Sufficient internal resources, including IT staff and budget, will be allocated to support the project.
- Stakeholder Buy-in: Key stakeholders will support the initiative and prioritize it within the organization’s strategic goals.
- Vendor Support: The chosen vendor will provide adequate training and support for a smooth transition to the new website.
- Regulatory Compliance: The new website will meet all current PCI and PII compliance requirements upon launch.
Define Costs and Benefits
Estimated Costs
- Development Costs: Cost of hiring a vendor or internal team for website development.
- Licensing Costs: Costs associated with any software or tools required for the new website.
- Training Costs: Expenses for training staff on the new system.
- Maintenance Costs: Ongoing costs for maintaining the website post-launch.
- Contingency Costs: Additional budget set aside for unforeseen expenses.
Estimated Benefits
- Increased Revenue from Membership Fees: Projected increase in membership due to improved user experience and secure payment processing.
- Cost Savings: Reduction in costs associated with data breaches, compliance fines, and manual content updates.
- Enhanced Customer Retention: Improved customer satisfaction leading to higher retention rates.
- Operational Efficiency: Time savings from streamlined processes allowing staff to focus on other initiatives.
Estimate Costs and Benefits Using PERT (Program Evaluation & Review Technique). The PERT formula uses three estimates for each activity to calculate the expected time or cost:
- Optimistic Estimate (O): The best-case scenario.
- Pessimistic Estimate (P): The worst-case scenario.
- Most Likely Estimate (M): The most probable scenario.
The formula for the expected cost (E) is:
[ E = \frac{O + 4M + P}{6} ]
Example Estimates for Costs
- Development Costs
- Optimistic (O): $50,000
- Most Likely (M): $70,000
- Pessimistic (P): $100,000
- Licensing Costs
- Optimistic (O): $5,000
- Most Likely (M): $10,000
- Pessimistic (P): $15,000
- Training Costs
- Optimistic (O): $2,000
- Most Likely (M): $5,000
- Pessimistic (P): $8,000
- Maintenance Costs (Annual)
- Optimistic (O): $3,000
- Most Likely (M): $5,000
- Pessimistic (P): $7,000
- Contingency Costs
- Optimistic (O): $2,000
- Most Likely (M): $5,000
- Pessimistic (P): $10,000
Total Expected Costs
Total Expected Costs = ( E_{Development} + E_{Licensing} + E_{Training} + E_{Maintenance} + E_{Contingency} )
Total Expected Costs = ( 71,667 + 10,000 + 5,000 + 5,000 + 5,333 \approximately 97,000 )
Estimated Benefits
- Increased Revenue from Membership Fees: Estimated increase of $30,000 annually (HIGH).
- Cost Savings: Estimated savings of $10,000 annually from reduced data breach costs and compliance fines.
- Enhanced Customer Retention: Estimated increase in customer retention leading to an additional $15,000 annually (HIGH).
- Operational Efficiency: Estimated savings of $5,000 annually from streamlined processes.
Total Expected Benefits
Total Expected Benefits = Increased Revenue + Cost Savings + Enhanced Customer Retention + Operational Efficiency
Total Expected Benefits = ( 30,000 + 10,000 + 15,000 + 5,000 = 60,000 )
Cost-Benefit Analysis Summary
- Total Expected Costs: $97,000
- Total Expected Benefits (Annual): $60,000 (HIGH – reduce by 50%)
Return on Investment (ROI)
To calculate the ROI, we can use the following formula:
[ ROI = \frac{Total\ Benefits – Total\ Costs}{Total\ Costs} \times 100 ]
Assuming the benefits are recurring annually, we can calculate ROI over a period (e.g., 3 years):
Total Benefits over 3 years = ( 60,000 \times 3 = 180,000 )
[ ROI = \frac{180,000 – 97,000}{97,000} \times 100 \approximately 85.57% ]
Business Cost-Benefit Summary
The Cost-Benefit Analysis using the PERT formula illustrates that while the expected costs for replacing the outdated website are approximately $97,000, the anticipated benefits over three years are around $180,000 (closer to $90,000). This results in a substantial ROI of approximately 85.57%, indicating that the investment in the new website is financially justified and strategically beneficial for website membership company.
Projected Timeline – Estimated 31 Weeks
| Phase | Estimated Duration 31W | Key Activities |
|---|---|---|
| Project Initiation | 2 weeks | Define scope, gather requirements, and secure approvals. |
| Vendor Selection | 4 weeks | Research, evaluate, and select a suitable vendor. |
| Design Phase | 6 weeks | Develop wireframes and design mockups for the new site. |
| Development Phase | 8 weeks | Build the website and integrate the CMS and payment systems. |
| Testing Phase | 4 weeks | Conduct user acceptance testing and security assessments. |
| Launch Preparation | 2 weeks | Finalize content, train staff, and prepare for launch. |
| Go Live | 1 week | Officially launch the new website. |
| Post-launch Support | 4 weeks | Monitor performance, gather feedback, and make adjustments. |
An associated Project Charter is attached below based on the Business Case justification above.
