Chapter 9 - Making a Financially Sound Business Case

Abstract

The main reason why good projects that could save water sit on the shelf is that the business case fails to meet the organization's financial criteria. There is a mismatch between the reluctance to pay for the resource and the scarcity of the resource. This chapter explores how one can present a financially sound business case so that projects are implemented—and do not gather dust. To obtain funds, the project's business case needs to demonstrate how the project adds to shareholder value in addition to environmental value. To obtain funding the business case needs to demonstrate how the project: improves the bottom line, aligns with corporate strategy, increases shareholder value, decreases financial, environmental, health and safety or other regulatory risk, increases the competitive advantage of the organization by being able to command a premium price for the product or attract more sales and increases the reputation of the business unit or organization both internally and externally. This is especially so when companies are struggling to achieve a return in their core business—due to effects such as poor sales, reduced margins, global competition, reduced tariffs, business confidence in the economy decreases, high oil prices, high interest rates and recession. In such instances, costs are scrutinized more closely and only core business activities tend to get funded, especially in industries such as bulk chemicals, steel, food, oil, paper and other commodity products, where the end products cannot be easily differentiated from a competitor's products.