During stage 3, project costs are increasing but there will still be a positive return on investment, as documented in the business case. However, corporate management has recently revised its targets for return on investment and has decided to stop the project as it will not meet the new targets.
Is this an appropriate application of the 'continued business justification' principle?
Changes in corporate strategy may impact a project's justification. The 'continued business justification' principle in PRINCE2 requires that a project must remain justifiable throughout its lifecycle. If the revised corporate return on investment targets mean that the project no longer meets the updated justification, it is appropriate to stop the project. This aligns with the necessity for a project to make business sense at all times.
Correct Answer : A
Technically Both A & B is correct but A is more relevant for the question. Because of change in corporate strategy, project's justification is impacted. And because of change in the project justification, premature closure is triggered.
The answer is A. Yes, because changes in corporate strategy may impact a project’s justification. The ‘continued business justification’ principle in PRINCE2 states that a project must make business sense at all times, with a clear return on investment. If at any point the project’s justification is no longer valid, it should be stopped. In this case, even though the project still has a positive return on investment as per the original business case, corporate management has revised its targets for return on investment. If the project is not expected to meet these new targets, it may no longer provide sufficient value to justify its costs. Therefore, deciding to stop the project is an appropriate application of the ‘continued business justification’ principle. However, it’s important to note that such decisions should be made carefully, considering all relevant factors and potential impacts. It’s also crucial to communicate clearly with all stakeholders about the reasons for the decision.
A for me because of the third bullet below. PRINCE2 requires that for all projects: •there is a justifiable reason for starting the project •that justification is recorded and approved •the justification remains valid, and is revalidated, throughout the life of the project.