Your investment committee will interrogate the cost, the schedule and the risks of the proposal in front of it. Nobody in the room will ask what happens if you do none of it, because that option arrived with no numbers attached.
A set of teaching notes on the project lifecycle lists eight questions a project proposal must address. Six are the ones you would expect: objectives, the problem being solved, alignment to strategy, business benefits, a best-guess estimate of time and cost, and the project's risks.
Two are not.
"Is it a new initiative or can the business need be fulfilled by operational means?"
"What are the risks in not doing the project?"
The first is a test of whether the work warrants a project at all. The second is a question I have almost never seen answered in a real business case — and its absence quietly distorts every portfolio decision an enterprise makes.
Both questions sit inside a document that the same teaching material later drops from the phase, without saying where the questions went [FACT CHECK REQUIRED]. That is worth knowing and it changes nothing here. The questions are good because of what they do to an appraisal, not because a syllabus carried them.
The Strategic Context
Investment appraisal runs on comparison. A proposal is assessed against alternatives, and the alternative is what makes the assessment meaningful. Take away the comparator and you are not appraising anything; you are reading an argument.
Every appraisal contains one comparator by default: doing nothing. It appears in the paper as the baseline, the counterfactual, the do-minimum case — and in most organisations it appears with no costs, no risks and no forecast. The proposal is examined in detail. The alternative it is being compared against is assumed.
That asymmetry has a specific consequence, and it is not the one usually imagined. It does not make organisations reckless. It makes them slow, and then abrupt. A do-nothing option that carries no stated risk always looks safe, so marginal proposals are deferred. The underlying condition continues to deteriorate, unrecorded, until it produces a failure — at which point the same organisation approves a much larger and more expensive intervention under pressure, and calls the result a crisis response.
The pattern is visible in almost every enterprise that has ever replaced a core system three years after it should have.
What Leaders Commonly Misread
The first misreading is that doing nothing is a null option. It is not. It is a forecast — a prediction that the present state continues. That prediction is frequently false, and it is the only forecast in the paper that nobody is required to defend.
Systems age and their support windows close. The people who understand an undocumented process retire. Competitors move. Regulatory expectations ratchet. An asset that performs adequately today performs adequately today; whether it does so in four years is a claim, and treating it as the absence of a claim is an analytical error, not a conservative choice.
The second misreading is that the risk of inaction is captured by the benefits foregone. It is not the same quantity. Benefits foregone are the upside you decline. The risk of inaction is the downside you accept — degradation, exposure, obsolescence, the loss of an option that will not be available later. A business case that lists benefits and calls that the cost of delay has counted one side of a two-sided ledger.
The third misreading is that this is pessimism. It is symmetry. An appraisal that examines the risks of acting and not the risks of not acting is not being careful; it is applying scrutiny to one option and faith to the other. Careful would be examining both.
A fourth misreading concerns who benefits from the omission. It is tempting to assume the gap favours proposers, who would rather their case were not compared to a well-specified alternative. In practice it favours whoever prefers deferral — which in most organisations is whoever holds the budget in the current year. The unstated do-nothing case is the strongest argument in the room precisely because it has never had to survive an argument.
Reframing the Issue
The reframing is to require that the do-nothing option be written up to the same standard as the proposal, and to treat any appraisal that does not do so as incomplete.
Same standard means the same components. A forecast of the operating position in three and five years if nothing is done. The costs that accrue in that scenario — rising maintenance, workarounds, manual effort, compliance exposure. The risks, stated as risks, with likelihood and consequence. And an explicit statement of which options close over that period, because some do.
Two consequences follow immediately.
The comparison becomes a comparison. Most proposals look different when set against a properly specified baseline. Some become obviously urgent. Others become obviously optional, because the do-nothing case turns out to be genuinely stable — which is a legitimate and useful finding that current practice makes impossible to reach.
Deferral acquires a price. A committee that defers a proposal is choosing the do-nothing case for another year. Where that case is written down, the choice is visible and someone owns it. Where it is not, deferral is costless and therefore the default.
This is a question asked of a single candidate before it becomes one. It is not the question of how to choose between candidates already in front of you, which is a portfolio function with its own logic examined in [Related article: Is Your Portfolio Function Selecting, or Supervising?]. Selection compares proposals. This compares one proposal to the world without it.
Strategic Analysis
The other unusual question, and why it belongs beside this one
The companion test in those teaching notes — whether the business need can be fulfilled by operational means — is doing related work. Both questions are attempts to prevent the appraisal starting too late.
By the time a proposal reaches a committee, two decisions have usually already been made without being examined: that something must be done, and that a project is the vehicle. The counterfactual tests the first. The operational-means question tests the second.
Whether the temporary project form is the right container for a piece of work — what it costs to create a structure designed to dissolve, and who owns the result afterwards — is a substantial argument in its own right, made in [Related article: The Hidden Cost of Putting Work Into Project Form]. This article does not re-argue it. It simply notes that the two questions belong on the same page, because an organisation that asks neither has delegated both decisions to whoever wrote the proposal.
What a properly specified do-nothing case looks like
A public health department is considering replacing a patient administration system that works. The proposal is substantial, invasive and easy to defer, and it has been deferred twice.
The do-nothing case, written to the same standard, would state: the vendor's mainstream support ends in a defined year, after which extended support is available at a stated premium and then not at all. Four of the six people who understand the configuration are within five years of retirement. Each year of deferral adds a measurable volume of manual workaround, which can be counted from current practice. Integration with two adjacent systems already requires custom middleware that no one currently maintains. And the option to migrate incrementally closes once support lapses, leaving only a full replacement under time pressure.
None of that requires new analysis. All of it is knowable today. Written down, it converts a proposal that looked optional into a decision about when, not whether — and it makes the third deferral a choice somebody has to defend.
The same discipline applies in the private sector to an ageing production line, an unreplaced treasury platform, or a distribution agreement nobody has renegotiated. In each case the do-nothing forecast is available and nobody has been asked for it.
Where this connects to definition and to exposure
Two further connections are worth making explicit, because they change how the answer is used.
The counterfactual is most valuable early, before the shape of the intervention is fixed — which is the same window in which decisions are cheapest to change and least resourced, examined in [Related article: The Front End Owns the Outcome]. A well-specified do-nothing case produced late becomes a justification for a decision already taken.
And where the do-nothing case includes exposure that would eventually be borne by a counterparty — a supplier, an insurer, a contractor under an existing agreement — the question of who actually carries that exposure is a separate and frequently misjudged one, treated in [Related article: Risk You Transfer Is Risk You Still Own]. An organisation that assumes an exposure sits elsewhere may be understating its own do-nothing case considerably.
Decision Framework
Five steps, applicable to any proposal above a material threshold.
1. Require the do-nothing case as a section of the paper, not a sentence. Forecast, costs, risks, closing options. If a proposal arrives without it, return it — this is the only step that matters, and the others follow from it.
2. Date the closing options. Which alternatives cease to be available, and when. This is the part of the analysis that most changes committee behaviour, because it converts an open-ended deferral into a decision with an expiry.
3. State the deterioration rate. How much worse does the baseline get per year of delay, in whatever unit fits — maintenance cost, manual effort, exposure, market position. An order of magnitude is sufficient. Precision is not the point; direction and rate are.
4. Name who owns the do-nothing case. Somebody must be accountable for the accuracy of that forecast, exactly as the proposer is accountable for theirs. Where nobody owns it, it will be written by the proposer, and it will be written to lose.
5. Record deferral as a decision. When a committee defers, minute it as a decision to accept the do-nothing case for a stated period, with the accepting party named. This single change makes the cumulative cost of repeated deferral visible for the first time in most organisations.
A supporting convention: review the do-nothing cases of everything deferred in the last three years. The exercise takes a day and reliably identifies two or three positions that have deteriorated further than anyone realised.
From Strategy to Execution
Immediate. At the next investment committee, ask for the do-nothing case on the largest paper. Not as a criticism of the proposer — the omission is systemic and nobody's fault — but as a standing requirement from that meeting forward. The first few will be poor. They improve quickly, because the information is usually available and has simply never been requested.
Medium term. Add the section to the template. A business case template that requires a forecast, costs, risks and closing options for the baseline changes what proposers investigate before they write, which is where most of the value is created. This is a one-page amendment and it is the highest-return governance change described anywhere in this collection.
Long term. Build the habit of maintaining do-nothing cases for the enterprise's major standing exposures — the core systems, the ageing assets, the single-source dependencies — independently of whether a proposal exists. An organisation that knows the deterioration rate of its own position can choose when to act. One that only learns it when someone writes a proposal is choosing between an argument and an assumption.
Signals to Monitor
- Papers with no baseline section. The direct measure. Count them; the proportion should fall to zero within two cycles of the template change.
- Repeat deferrals of the same proposal. Three deferrals of one initiative is not caution. It is an organisation that has never priced the alternative it keeps selecting.
- Crisis approvals. An urgent, large, unplanned approval is usually the terminal form of an unexamined do-nothing case. When one occurs, look back for the deferrals that preceded it.
- Extended support and end-of-life notices. These are closing options arriving in the post. Where they are handled by procurement without reaching an investment committee, the enterprise is learning about its own deadlines through a renewal invoice.
- Deterioration measured only after intervention is approved. If the manual workaround volume is first counted in the business case that proposes removing it, nobody was watching the baseline.
- Proposers writing their own counterfactual. Not improper, and not reliable. Where it persists, the do-nothing case has no owner.
Questions for the Leadership Team
- On the last three papers this committee approved, what did the do-nothing case say — and did any of them contain one?
- Which of our major standing exposures has a maintained forecast of what happens if we do nothing, and who owns it?
- What options have closed on us in the last two years because we deferred past a date nobody had recorded?
- When we defer, do we minute it as a decision to accept a specified alternative, or as a decision to think about it again?
- Of our current large approvals, how many are the delayed consequence of an earlier deferral we never priced?
- Who in this organisation is accountable for telling us that the present is getting worse?
Closing Perspective
Investment appraisal is built to scrutinise action. It applies discipline to the option that requires money, effort and someone's reputation, and it applies none at all to the option that requires nothing — which is why the option requiring nothing wins so often, and why the eventual bill is so much larger than it needed to be.
The correction is not more analysis. It is symmetry: writing up the alternative to the same standard as the proposal, dating the options that close, and recording deferral as the choice it actually is.
Two questions from a set of teaching notes are worth more than most appraisal frameworks. Can this be done by ordinary means? And what happens if we do not do it? Neither is difficult. Both are almost always missing, and the organisations that ask them consistently are not braver than their competitors — they are simply the ones that noticed the present was also a forecast.
About EraNorth Insights
EraNorth Insights publishes practical analysis on strategy, projects, operations, transformation and decision intelligence for professional and organisational use. About EraNorth.