Business Case Presentation V0.9

Business Case Presentation V0.9

• 1.
  Use of BusinessCases in Projects uatro Solutions
• 2.
  Presentation Contents Whoam I? What is a Business Case? When do we ‘do’ a Business Case? Objectives & Benefits Estimating Costs Canning Projects Early Phasing Projects Measuring the Benefits Summary & Questions
• 3.
  Who Am I?Business analyst and project manager 15 years of project-based experience Some fixed-price work for clients Not an expert – there are no experts
• 4.
  What is theissue or opportunity? What is the proposed solution or change? What will we achieve? Benefits? How much will it cost? Is it worth doing? NPV/ROI Calculation Break-Even Point or Payback Period Is it worth doing now? What is a Business Case?  X
• 5.
  Bad projects keepgoing Re-active chopping and changing priorities No context to assess risks and issues Team lack common aim Poor project morale Any others? What Happens if We Don’t?
• 6.
  Worked Example Newback office system will cost £2.5m and is expected to reduce operating costs by £0.5m p.a. Expected internal rate of return is 10%. Simple ‘payback’ period of 5 years Break-even point in 8 years 22.89% ROI 0.57 NPV 0.19 /(1+IRR)^10 0.5 10 0.21 /(1+IRR)^9 0.5 9 0.23 /(1+IRR)^8 0.5 8 0.26 /(1+IRR)^7 0.5 7 0.28 /(1+IRR)^6 0.5 6 0.31 /(1+IRR)^5 0.5 5 0.34 /(1+IRR)^4 0.5 4 0.38 /(1+IRR)^3 0.5 3 0.41 /(1+IRR)^2 0.5 2 0.45 /(1+IRR)^1 0.5 1 -2.5 -2.5 0 PV Return Year 10% IRR
• 7.
  Are the estimatedbenefits realisable? Have we fully costed project [Migration, UAT, Training …]? Most large projects over-run by 80-100% of original estimated time & cost Payback period helps focus on the future … What will happen in the next 5-8 years? What has happened in the last 5-8 years? Is it really worth doing? Points for Consideration
• 8.
  Worked Example Newback office system will cost £2.5m and is expected to reduce operating costs by £0.5m p.a. Expected internal rate of return is 10%. Simple ‘payback’ period of 5 years Break-even point in 8 years Poor Business Case 22.89% ROI 0.57 NPV 0.19 /(1+IRR)^10 0.5 10 0.21 /(1+IRR)^9 0.5 9 0.23 /(1+IRR)^8 0.5 8 0.26 /(1+IRR)^7 0.5 7 0.28 /(1+IRR)^6 0.5 6 0.31 /(1+IRR)^5 0.5 5 0.34 /(1+IRR)^4 0.5 4 0.38 /(1+IRR)^3 0.5 3 0.41 /(1+IRR)^2 0.5 2 0.45 /(1+IRR)^1 0.5 1 -2.5 -2.5 0 PV Return Year 10% IRR
• 9.
  When do we‘do’ a Business Case? Before During After Opportunity for Innovation
• 10.
  Facilitate business: makemore money Reduce operational risks Reduce costs External costs Freeing resources Objectives & Benefits
• 11.
  NOT Objectives &Benefits New thing will be better [quicker, easier] Head of trading desk says so New technology will look good on my CV It must be better than what we have now We used this at my last place We have spare budget Big project will make me look important
• 12.
  Estimating Costs &Timescales “ If we fully costed our projects, we would never start most of them.” 90% of projects fail* Requires experience Requires effort Needs refined later UAT & implementation overlooked *Research firm Standish Group contends that 90 percent of software projects are completed late, 66 percent are deemed failures and 30 percent are scrapped.
• 13.
  Estimating Costs &Timescales Comparison to previous similar project External Costs Hardware & Software Customistation, Configuration & Consulting Internal Costs Specifications, Configuration, Test Data, Pilot, Interfaces, Management, Issue Tracking, Change Management, UAT, Training, Data Migration … Contingency x
• 14.
  Canning Projects EarlyStarting projects too early Project momentum Spending money on pre-project analysis Building in a checkpoint Canning = Success
• 15.
  Phasing Projects Whatis a Phase? Is Phase I worth doing? What benefit do we get from Phase I? Beware‘Negative’ benefits! Is the next Phase worth doing?
• 16.
  Measuring the BenefitsProject is not over at Go-Live Demonstrate we met the Business Case Measure and compare to prior Before After
• 17.
  Summary & QuestionsBusiness Case is key project control Making benefits measurable Estimating costs is hard Re-assessed periodically Used to demonstrate success Questions?
• 18.
  What are wegoing to do, how much will it really cost, what will it actually achieve? Is it worth doing now? If benefits will not be realised, or costs start spiralling - stop! Did we achieve the benefits we hoped for?