Project Statement of Work vs Business Case for PMP Exam

Both Project Statement of Work and Business Case are key inputs for the development of Project Charter and they contains vital information to assist the senior management, project sponsor and project manager to determine whether the project is feasible in terms of expected results yet the exact information contained in these two documents are not identical.

Project Statement of Work and Business Case

• Project Statement of Work (SOW): The Project Statement of Work is a document providing the business need and the overview of the qualities/characteristics of intended deliverables/products the project would deliver. It will also include what are included / NOT included in the project.
  • The Project SOW is provided:
    • (for external projects) customer as the basis for writing the bid document;
    • (for internal projects) project sponsor
• Business Case: The Business Case includes the business needs of the project with respect to high-level strategic goals of the performing organization, reasons and grounds (including information on cost benefit analysis) for identifying and selecting the project.
  • Cost benefit analysis information is often presented as:
    • net present value (NPV)
    • internal rate of return (IRR)
    • return on investment (ROI)
  • The PMP Exam does not test on how to create a business case or how to calculate IRR, NPV or ROI but would assume each project is backed up with a comprehensive business case.

Illustrated Example

Let’s again take the project of PMP Exam preparation as an example. Imagine you are the senior management of your exam prep project and you are to write the Project Statement of Work and Business Case for your project manager (who, incidentally, is also you).

The Project Statement of Work would likely to include:

• Be qualified for the exam (e.g. 35 Contact Hours of project management education; working experience; etc.);
• Be well prepared for the exam through studying and mock exam taking;
• Sit and pass the exam in first try to get certified.

The Business Case would likely to include:

• A comparison of the exam and other professional qualifications (e.g. CAPM®, PMI-ACP®, ITIL®, etc.) ;
• How PMP will benefit your professional growth in the long run?
• What are the expected inputs (in terms of money and time) and what is the ROI from getting certified?
• Why is it justifiable to get certified?

Summary

Project Statement of Work and Business Case are two different documents provided by the organization/management to the project manager for creation of Project Charter:

• Project Statement of Work (SOW) includes the business need and the overview of the qualities/characteristics of deliverables;
• Business Case includes the justifications (usually in financial feasibility) for the existence of the project and how the project is aligned to strategic goals of the organization.

Additional FREE PMP resources: 47+ Commonly Confused Term Pairs with detailed explanations. If you found this article useful, you may wish to reference other Commonly Confused Term articles.