PRINCE2 principle: continued business justification

As already described, the 7 PRINCE2 principles are the bedrock upon which everything else in PRINCE2 is based. Your project is not a PRINCE2 project unless you are applying all of these principles.

The first principle is that a project must have continued business justification. This means that projects must be aligned to the business objectives of the customer organization. This principle prevents organizations from starting or continuing projects that cannot be validated in terms of corporate strategy.

The primary way in which the customer organization is able to determine whether the project has continued business justification is by having an acceptable Business Case. The Business Case is perhaps the most important of all of the 26 management products. This is because the Business Case describes the reasons for doing the project, the forecasts for the expected benefits that the project will realize, forecasts for both the project costs and ongoing operational costs, and the timescales for both the project and the operational timescale (i.e. the period of time over which benefits shall be realized by using the project’s products. The Business Case also summarizes the main risks to the project.

The Business Case is initially developed in outline form before the project begins and is refined in more details during the initiation stage of the project. It is then updated at the end of each stage to reflect updated forecasts for time, cost, benefits and risks. At the end of each management stage, the Business Case is reviewed to determine whether the project should continue.

Therefore in PRINCE2, investment decisions taken to determine whether the project is a worthwhile investment is not just a one-off decision taken early on at the beginning of a project, but form a series of ongoing investment decisions. The question being asked is “is the project still a worthwhile investment of not?” If not, the project should be closed. If it is, then the project can proceed to the next stage.