Building Accurate Credible & Compelling Business Cases

1. Building Accurate Credible& Compelling Business Cases KGW Consultants Ltd

2. Why do Business Cases Fail? • Not considered strategic • Too much weight on soft benefits • Risks / mitigations not considered • Alternative approaches not evaluated • Errors in Business Case • Wrong solution or solution-driven

3. Business Case Process

4. Business Case Process

5. Problem AnalysisCase for Action • Create clear problem / opportunity definition • Why resolve? • Is it strategically aligned? • Is it financially justified? • The “safety / regulatory” myth

6. Problem AnalysisCase for Action How much is it worth to solve? • How much of the problem needs to be solved? • Consider costs, benefits, time, risk • Model entire Risk Range • Problem: Lowest through Likely to Highest Costs • Opportunity: Lowest through Likely Benefits • Cost & benefits adjusted for time, risk / probabilities • Time-based: Payback, ROI, NPV, IRR • Risk-adjusted: PVP, ANPV • Sensitivity analysis

7. Problem AnalysisNon-Economic (soft) case • Economics leads – others support the case • Try to quantify • Keep trying • Distinguish features from benefits • Consider: • Regulatory – cost of non-compliance • Safety – historical hard costs / estimates help • Improved Business positioning – estimate $ • Customer satisfaction – estimate value • Try again – don’t be afraid to estimate

8. Case for ActionEstimation “Estimation is concerned with the prediction of uncertainties. It is more dignified than fortune-telling, though not always more accurate” ….unknown

9. Business Case Process

10. Identify Alternatives • Brainstorm multiple alternatives • “Do-nothing” • “Shut down” • Partial solutions • Full solutions

11. Business Case Process

12. Evaluate the Alternatives • How long is it feasible? Buy time? • Strategic implications • Consider probability of successful outcome • Good enough?

13. Evaluate the Alternatives • Differentiate the solutions: • Economics • Cost & time • Risk • How well does it align with strategy? • Opportunity costs? • Extras • Compare / Eliminate based on problem analysis constraints

14. Economics

15. Business Case Process

16. Build Case Outline • Build outline to suit purpose • Consider: • Executive Summary • Problem Definition • Alternatives • Risks • Financial Case • Soft Case • Recommendations • Post-project Audit Plan

17. Structure & PresentationKey Points • Use plain english • NEVER use corporate or industry specific acronyms • Consider future readers (shareholders, auditors, etc) • Lead with an economic case • Identify the funding source • Avoid head count benefits (use ABC) • Understand the corporate selection criteria • Show recommendation pros & cons • Know your audience / structure appropriately • Pre-position your case • Know when to fold

18. Questions?

19. Success Equation Start with: A recognized quantifiable strategic problem or opportunity + Alternative Analysis + Compelling Economics + Credible Pre-sold Supporters + Identified Funding Source All in a clear, concise, convincing case = An Approved Project!

20. Handouts Monday at www.kgw-consultants.com