The Meridian Business Case

The Document

What follows is the Meridian Advisory Group business case for office relocation, submitted to the executive committee by Elena Vasquez, COO, six weeks before Sam Torres was named project manager. Read it as a decision document, not a project plan.

Meridian Advisory Group — Business Case for Office Relocation

Executive Summary

Meridian's current downtown office was designed for forty people; the firm now employs sixty, and the lease expires in nine months. The recommendation is Option C: a controlled relocation to a purpose-sized office in the Westfield District at a one-time investment of $185,000. The move produces $78,000 in annual benefit through productivity recovery and lease cost avoidance. Payback is reached in under three years.

Problem Statement

Meridian Advisory Group has sixty employees operating in an office built for forty. Twenty desks have been repurposed from common areas and storage, leaving the firm with two bookable meeting rooms against a stated need of six, and no capacity to add staff without worsening conditions that are already driving attrition. The lease expiry in nine months creates a decision point that cannot be deferred: the firm must act on its space situation now, or commit to another term in conditions that are already untenable.

Options Considered

Three options were evaluated against the same criteria.

Options Analysis

Option A does nothing about the capacity constraint. It commits Meridian to three more years of overcrowding at a lease premium, forfeits any ability to add headcount, and accepts that productivity loss and attrition risk continue unaddressed.

Option B depends on a negotiation with no guaranteed outcome. The adjacent unit is currently occupied, and landlord cooperation is not assured. Even if that negotiation succeeds, the result adds approximately fifteen seats and leaves the firm near capacity within two hiring cycles.

Option C carries the highest one-time cost but is the only option that resolves the actual problem. It fits the nine-month lease window, gives Meridian 30% additional growth capacity, and is the only choice that does not require revisiting the space question within the next planning cycle. The Westfield lease is larger but outside the downtown premium district, so its annual lease cost is lower than renewing the current downtown lease at the proposed premium. The eight-month timeline is tight but feasible if lease execution begins within two weeks of this approval.

Recommended Option

The recommendation is Option C: relocation to the Westfield District. It is not recommended because it is the largest investment. It is recommended because it is the only option that solves the capacity constraint, fits the lease expiry window, and produces a measurable financial return. The relocation generates $78,000 in annual benefit from productivity recovery ($60,000) and lease cost avoidance relative to Option A ($18,000). At that rate, the $185,000 investment is recovered in approximately 2.4 years, and the five-year net return reaches $205,000.

Financial Case

The one-time investment of $185,000 is built from the following cost categories and includes a risk-based contingency reserve, an amount set aside to cover identified risks if they materialize, sized here based on the risk assessment.

The Financial Calculation

Three calculations build the financial case for Option C. Each number in the 5-year return table comes directly from them.

The productivity recovery figure is an estimate; the lease cost avoidance is contractual. If productivity recovery comes in at $40,000 instead of $60,000, annual benefit drops to $58,000, payback extends to 3.2 years, and the 5-year net return falls to $105,000. Option C still outperforms Option A at the pessimistic estimate, because Option A produces no return at all.

The $78,000 annual benefit is composed of $60,000 in estimated productivity recovery from eliminating space friction, meeting room shortages, and associated attrition cost, and $18,000 in lease cost avoidance relative to the renewal premium in Option A. Payback is reached at approximately 2.4 years, and the five-year net return is $205,000 against a $185,000 investment.

Net Present Value (NPV)

The simple return figures above treat all cash flows as equal regardless of when they occur. NPV corrects for that by discounting future cash flows to their present value. The table below applies an 8% discount rate as the minimum return threshold, showing what each year's $78,000 benefit is worth in today's terms.

An NPV of $126,433 means this investment creates $126,433 of value beyond what you would earn by deploying that $185,000 at the 8% hurdle rate. Positive NPV is the threshold for approval; the higher the number, the stronger the case. A negative NPV means the investment does not clear the return threshold.

Internal Rate of Return (IRR)

IRR answers a simpler question: what annual return does this project actually deliver? IRR is the discount rate that makes NPV equal to zero. For the Meridian relocation, that rate is approximately 31%. The investment generates a 31% annual return on capital deployed. That sits well above the 8% hurdle rate and above the typical cost of capital for projects of this type.

To verify: at a 31% discount rate, five years of $78,000 annual benefits total approximately $186,400, just enough to recover the $185,000 investment. The further the IRR sits above the hurdle rate, the more tolerance the project has if benefit assumptions prove optimistic. At 31% against an 8% hurdle, annual benefits would need to fall by more than half before this investment stopped making financial sense.

Decision-Level Risks

Three risks could change this recommendation if they materialize.

The planning estimate range of $175,000–$205,000 means the approved ceiling of $185,000 could be breached as detailed planning proceeds. If that happens, the PM must return to the executive committee with options rather than absorb the gap silently. That is the governance commitment this approval carries.

Recommendation

The executive committee is asked to approve Option C: relocation of Meridian Advisory Group to the Westfield District office, at an authorized investment of $185,000, with a target move-in date of Month 8 from project approval. This approval authorizes a project manager to be named, the project charter to be drafted, and lease negotiations to begin within two weeks of executive sign-off. No vendor contracts, procurement decisions, or individual expenditures are authorized until the charter is signed and the project management plan is in place.

What's Next

The charter is the next document. Where the business case asks the executive committee to decide, the charter converts that decision into a named project manager with formal authority, a defined scope boundary, and a signed commitment from the sponsor. It is the instrument that turns approval into a project.

Reflect

• The recommendation was Option C despite being the highest one-time cost. What would a decision-maker need to believe about Meridian's growth plans for Option A to be the right call instead? What assumption does Option C rest on that the business case cannot fully prove?
• The financial case shows annual benefits of $78,000, split between productivity recovery and lease savings. The productivity figure is an estimate. If productivity recovery came in at $40,000 per year instead of $60,000, how does that change the payback period calculation?
• The business case names three decision-level risks. The IT migration risk is not among them. It becomes a project risk, not a decision risk. Why is that distinction useful for how the executive committee reads this document?