Common Business Case Mistakes and How to Avoid Them

September 16, 2026

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Common Business Case Mistakes and How to Avoid Them

Wednesday, 16 September 2026

Key takeaways

A business case justifies whether an investment should proceed. When it is done poorly, organisations commit public or shareholder money to projects that should never have been approved
The NSW Audit Office has identified recurring weaknesses across government business cases, including projects announced before a business case was developed and options analysis that was not transparent
The five most common mistakes are: skipping the problem diagnosis, conducting a superficial options analysis, inflating benefits, underestimating costs and writing the business case after the decision has already been made
The Five Case Model (strategic, economic, commercial, financial, management) provides the structure that prevents most of these errors
Business case capability is learnable and directly determines the quality of investment decisions across both public and private sectors

A business case is the document that determines whether an investment should proceed. It defines the problem, analyses the options, estimates costs and benefits and recommends a preferred approach. When it is done well, it protects organisations from committing resources to projects that do not represent value for money. When it is done poorly, the consequences range from wasted expenditure to programme failure. The NSW Audit Office’s evidence to the Public Accounts Committee identified common gaps across government business cases in recent years, including projects announced before a business case was developed, options analysis that was not transparent and major procurements that commenced without a business case at all. These are not isolated incidents. They are patterns that repeat wherever business case discipline is weak.

Mistake one: skipping the problem diagnosis

The most fundamental error in a business case is failing to define the problem it exists to solve. A business case that opens with a proposed solution rather than an analysis of the problem has inverted the logic. The purpose of the diagnosis is to establish why intervention is needed, what is causing the issue and what will happen if nothing changes. Without this foundation, the options analysis has no anchor. It becomes a comparison of solutions to a problem that has not been articulated.

In the Australian government, this manifests as business cases that describe a preferred project in detail but devote minimal space to the underlying service need, market failure or policy gap that the project is meant to address. The Department of Finance’s Commonwealth Investment Framework (RMG 308) requires that a business case support the investment decision by providing analysis of options, costs, benefits and risks associated with addressing an identified problem. The emphasis on “identified problems” is deliberate. The diagnosis comes first.

Mistake two: conducting a superficial options analysis

A genuine options analysis evaluates at least three alternatives: a base case (do nothing or maintain current arrangements), one or more intervention options and a preferred option. Each must be assessed on a consistent basis. A superficial options analysis presents the preferred option in detail while describing the alternatives in a sentence or two. The analysis was clearly designed to confirm a predetermined conclusion rather than genuinely test alternatives.

The APMG analysis of the Five Case Model makes this point directly: a business case is a decision support tool, not a sales pitch. It should be used to test, challenge and refine ideas, not just justify them. An options analysis that presents only one viable option is not an analysis. It is an argument dressed as rigour.

Mistake three: inflating benefits

Optimism bias is well documented in business case development. Project sponsors want the business case to succeed because they believe in the project. This creates pressure to overstate benefits, whether through aggressive revenue forecasts, unrealistic productivity assumptions or benefit categories that are difficult to measure and therefore difficult to challenge. The result is a business case that looks compelling on paper but delivers disappointment in practice.

The antidote is independent assurance. The Chase Consulting analysis of failed business cases identifies overly optimistic cost and revenue projections as one of the most common causes of project failure, noting that poorly analysed financial aspects can give a misleading picture of value and viability. Sensitivity testing, where key assumptions are varied to see how the NPV changes, is the minimum standard for any credible business case.

Mistake four: underestimating costs

Cost underestimation is the mirror image of benefit inflation. It takes several forms: excluding implementation costs, ignoring the internal resources required to manage the project, assuming that contingency will not be needed and failing to account for the lifecycle costs that continue after the project is delivered. In government, it also includes underestimating the time and cost of procurement, legislative change or stakeholder engagement.

The Inform Economics business case development guide notes that the Five Case Model’s financial case specifically requires that all costs are identified and that the proposal is affordable within the entity’s budget and funding arrangements. A business case that demonstrates economic value but is not affordable within the available funding is not a viable proposal regardless of its benefit cost ratio.

Mistake five: writing the business case after the decision

The most damaging mistake is treating the business case as a retrospective justification for a decision that has already been made. The NSW Audit Office’s evidence found that projects announced before developing a business case had less or no opportunity to consider a range of options. The processes used for eliminating other options were not transparent. When the decision precedes the analysis, the business case becomes a compliance document rather than a decision support tool. It satisfies the governance requirement without informing the investment decision.

This pattern is especially corrosive because it undermines confidence in the business case process itself. Decision makers who encounter retrospective business cases learn to treat all business cases with scepticism, even the genuine ones. The discipline required is simple but difficult: the business case must be completed and assessed before the investment decision is made, not after.

How can professionals build business case capability?

AcademyGlobal (AG), the Chartered Institute of Procurement & Supply (CIPS) Centre of Excellence for Australia, New Zealand and Southeast Asia, delivers programs that develop business case capability for professionals working in government and corporate settings. AG’s Business Case Fundamentals workshop provides the practical skills to build a financial case for change using the Five Case Model, including options analysis, cost benefit analysis, NPV calculation and sensitivity testing. For professionals who need deeper analytical capability, AG’s Cost Benefit Analysis Fundamentals program builds the quantitative skills that support credible economic appraisal.

The organisations that make the best investment decisions are those whose professionals can build a business case that genuinely informs the decision rather than justifying it after the fact.

Frequently asked questions

What is the most common business case mistake?

Writing the business case after the decision has already been made. When the analysis follows the commitment rather than preceding it, the business case becomes a retrospective justification that cannot perform its intended function of testing whether the investment should proceed.

What is the Five Case Model?

The Five Case Model structures a business case around five dimensions: strategic (why), economic (which option), commercial (how it will be procured), financial (affordability) and management (deliverability). It is the standard methodology for government business cases in Australia, the United Kingdom and New Zealand.

How do you avoid optimism bias in a business case?

Use independent assurance, apply sensitivity testing to key assumptions, benchmark cost and benefit estimates against comparable projects and ensure that the business case is reviewed by someone who is not the project sponsor.

Are business cases mandatory in Australian government?

Yes. Business cases are mandatory for investment proposals above defined cost and risk thresholds at Commonwealth, state and territory level. The Commonwealth Investment Framework (RMG 308) sets out the requirements for Commonwealth entities.

Where can I learn to build better business cases?

AcademyGlobal’s Business Case Fundamentals workshop covers options analysis, cost benefit analysis and the Five Case Model using a realistic case study.