Help decision makers understand the Return on Investment (ROI) for large, complex projects using cash flow projections
Determining project ROI is difficult because:
Trying to develop ROI for projects without input and guidance from your leadership team and finance department is a sure-fire way to fail.
Financial analysis is not the business case, but it makes your business case defensible. The outputs of various calculations are critical to standardizing a business case process. However, finance is part science and part art. The business case should transparently represent the assumptions built into the analysis and should overtly explain what those numbers mean, and what the implications of the numbers are, to the audience reviewing the documentation.
Build a Comprehensive Business Case Storyboard
A step-by-step document that walks you through how to properly develop a defensible business case. This research can help you understand financial basics, determine business case governance and when a business case is necessary, complete business case analysis, and build a comprehensive executive business case presentation.
Business Case Classification Matrix
Organizations can consider building a Business Case Classification Matrix. An Excel tool to help you determine the right criteria to evaluate the rigor necessary around the business case process. Tools like these classify your projects to help determine the appropriate queue for business case development.
Comprehensive Business Case Analysis Tool
Another tool to consider is a Comprehensive Business Case Analysis Tool – an Excel tool to help develop steering-committee-ready deliverables for your projects with business case needs.
These kinds of tools feature a configurable calendar and cost/benefit allocation cadence (e.g., months, quarters, or years), the ability to develop a cost-benefit analysis from one-to-four options, and a robust set of graphs and reports that can go into a presentation template.
According to Research Director Teodora Siman of the Info-Tech Research Group, ROI is overused and ill-defined business jargon.
“The number of organizations claiming to use ROI as criteria in their project portfolio prioritization structure is high. However, the number of organizations calculating ROI for the projects in their portfolio is very low”
“I’m not surprised by the discrepancy between this aspiration and actuality, but allowing ROI to be a heavily weighted criteria, to steer the direction of the portfolio, without having any defensible business cases, is detrimental to organizational effectiveness,” she explained.
Siman went on to further explain:
“The lack of standardization, documentation, and financial analysis facilitates an environment where business leaders make decisions blindly and by gut feel. And for every underperforming, poorly defined, and disappointing project that gets approved, the opportunity cost grows. The objections to a formal business case process typically involve responses like: I don’t know how to create a business case, or I don’t have the right data, or it takes too much time.
So how do we solve this conundrum? Well to address the first concern, it’s time to create a template. It’s both inefficient and ineffective to start from scratch every time. A template allows decision makers to understand what they’re looking at and helps requestors understand what information they should be looking for when building their business case.
To find the right data, you may need guidance from outside your department, specifically from finance or procurement. Collaboration is key to creating a thoughtful and defensible document.
To avoid taking too much time, use the business case process sparingly. Not every project needs a business case. There is a cost to building the case itself. Use proper project classification to build business cases for requests that have enough risk, complexity, and magnitude to warrant the additional cost.”
We believe in listening to our clients and facilitating robust dialogue to learn the full picture of the project from multiple perspectives. We craft solutions that are tailored to our client’s needs, emphasizing a robust process that engages the correct stakeholders throughout the project so that once it’s complete, our clients can continue to manage it successfully.
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