Introduction to Project Management - Business Case

Every project begins with an initial stage designed to validate the business case. The business case must address three key questions: 

1. Do we need this project? This is the most important question to consider before planning the project. Electrical utility companies that transmit electrical energy from generation to end consumers rely on overhead lines and cables as their means of transport, something like trucks or lorries moving goods from on warehouse to another. In this analogy, substations serve as warehouses, but with different technical purpose, as there is no effective way to store electrical energy. When the demand for energy increases, utilities, much like large distribution companies, evaluate whether to construct new substations or expand existing ones. This decision is never a straightforward one. While expansion may seem like a simpler and more cost-effective option, it can bring challenges such as long power outages during upgrades, compatibility issues with outdated equipment, and potential disruptions to ongoing operations. That’s why we need a feasibility study to help us evaluate practicality, risks and potential challenges of the project. 

2. Is this project viable? Feasibility study should provide general answer to this question. If we’re building a new substation to connect large industry complex, several critical variables must be considered, such as proximity of the consumer, the suitability of terrain for building new substation and the distance from the nearest power supply such as overhead line that will require modification for a line-in/line-out configuration. There is also a financial aspect of project viability, how much money would be allocated to carry out project and whether the investment will prove worthwhile. 

3. Will the project deliver the benefit? This the final aspect to consider. Sometimes, it may be beneficial to build a large substation which capacity widely exceeds the current consumption of the nearby estate, which is planned for large expansion in next ten years. Substations are long-lasting assets, typically designed for a 40 - 60 year life cycle and, therefore, it's important to consider the future developments and changes in the consumption region during the later stages of its life. One of the key phases of substation lifecycle are upgrades and modifications which typically start after 20 years of operation. Technology is constantly evolving, which is why regular upgrades are essential whenever advancements occur. Expansions are necessary when there are concerns that consumption will exceed critical capacity limits of the substation. Although it’s difficult to estimate all the benefits of the new substation, they are likely to be substantial due to its long lifespan. Every industrial project is considered feasible if it can return the investment within 7-10 years. Assuming 60 years life span, the substation provides 50 years of benefits, after the payback period, provided it undergoes regular maintenance and upgrades.

If we carefully evaluate all three questions and the answer is affirmative, we have a solid business case in place. A business case is a dynamic element that should be continuously monitored and reevaluated throughout the project's lifespan. If any of the key aspects are compromised, the project should be halted. Even well-established business cases can be compromised in certain situations, which is why regular revalidation is essential. Finally, the business case should be documented and regularly updated as needed. It's crucial to put everything in writing, as details can easily be forgotten. Ensure that each stage of the project is documented, so you can have a comprehensive overview at any time.