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Use of Business Cases in Projects

Use of Business Cases in Projects. Presentation Contents. Who am 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. Who Am I?.

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Use of Business Cases in Projects

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  1. Use of Business Cases in Projects

  2. Presentation Contents • Who am 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 a Business Case? • What is the issue 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? X 

  5. What Happens if We Don’t? • Bad projects keep going • Reactive chopping and changing priorities • No context to assess risks and issues • Team lack common aim • Poor project morale • Any others?

  6. Worked Example New back 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

  7. Points for Consideration • Are the estimated benefits 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?

  8. Worked Example New back 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%. Poor Business Case • Simple ‘payback’ period of 5 years • Break-even point in 8 years

  9. When do we ‘do’ a Business Case? • Before • During • After Opportunity for Innovation

  10. Objectives & Benefits • Facilitate business: make more money • Reduce operational risks • Reduce costs • External costs • Freeing resources

  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. x 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

  14. Canning Projects Early • Starting projects too early • Project momentum • Spending money on pre-project analysis • Building in a checkpoint • Canning = Success

  15. Phasing Projects • What is 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 Benefits • Project is not over at Go-Live • Demonstrate we met the Business Case • Measure and compare to prior Before After

  17. Summary & Questions • Business Case is key project control • Making benefits measurable • Estimating costs is hard • Re-assessed periodically • Used to demonstrate success • Questions?

  18. What are we going 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?

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