The workplan for Stage 2 is built around the five significant events.
For each event, this section provides information on the deliverable to be produced and the key tasks required to be completed in order to produce that deliverable.
Deliverable – Confirmation of the baseline with the FD. This will help ensure that any early identification of cost reduction or revenue enhancement opportunities (quick hits) by the project team are included as potential benefits achieved by the project.
- Ensure all information identified in the proposal stage has been collected
- Understand the hypothesis the project leader has built on where and how opportunities for cost reduction/performance improvement can be achieved.
This will provide a starting point for designing the business case model and the data collection forms.
- Confirm baseline with FD. This will involve – reviewing all initiatives currently being undertaken understanding how they fit in with this project and any budgetary objectives for cost reduction or performance improvement and the plan to achieve these budgets.
The objective is to ensure we do not include in our work any improvements that the has already identified. However, it is possible to have included cost reduction targets in the budget but have not identified how to achieve the targets. If so these targets should be discussed with the Financial Director (or similar) with the view to understanding how they intend to achieve these targets and agreement sought that if our project identifies the means to achieve these targets, they will be measured as potential benefits generated by the project.
This task is extremely important and the confirmation of the baseline is needed as early as possible in order to avoid later disputes over the extent to which performance improvements were a result of this project and how much is due to other projects already commissioned or general operational cost reduction within the organisation.
Commence building relationship with the business stakeholders who will be working on the business case.
Deliverable – The project deliverable is a presentation that updates project sponsors on the general progress of the project.
At this stage the team should have some indicative figures of where the opportunities could lie in the business.
- Understand in more detail the cost base of the organisation. This builds on the review of the cost base started in the proposal stage. This could be achieved a number of ways – Interview key managers to understand the costs within their budget with view to identifying key cost and revenue drivers within each department/ Interviews with finance team to further understand – split between variable and fixed costs/ time frame in which these costs can be altered and costs of alteration, for example, period of notification to cancel a lease on a building and costs to withdraw from the lease.
- Undertake a high level activity analysis that will allow key costs to be attributed to processes or activities This type of information can assist to – identify opportunities (i.e. non-value added activities) prior to the commencement of analysis/ quantify opportunities identified in the analysis. For example, the cost of errors in the process. For example, within a Meter Reading business, if misreading a meter results in the meter having to be re-read, the bill re-issued and the payment delayed this affecting cash flow. Activity information will help quantify the total cost of errors through the process.
The choice of method will depend upon the sophistication of the information available within the organisation and the size and type of project. For a small organisation, brief interviews with the managers could be sufficient. However in a large complex organisation where processes cross a number of departments and it is unclear what revenue and cost drivers affect the process, interviews and a high level activity analysis could be needed to provide the information required to identify opportunities.
- Agree mode and frequency of updating the data as it is acquired.
- Design the data collection form to feed back quantifiable business case opportunities. It is vital that you are focused on the need to convert all identified opportunities into substantiated potential benefits and these potential benefits must be clearly identified.
- Identify statistical information that might be required to support opportunities that is not already collected. Often it is difficult and time-consuming to collect this information, therefore the earlier the need for certain statistics are identified the easier the tasks will be.
- Agree a timetable for the return of these forms.
- Plan review sessions to help ensure data being collected is sufficient to build the business case. Need to cover – is all the data required to build the business case being collected/ is the data being collected adequate or in the format required to build the business case/ is the data collection form adequate/ is there other information that is required
- Design and commence building the business case model.
Deliverable – The project deliverable is a presentation where the results of the analysis of the business are presented.
The business case deliverable is to calculate the costs to the business of conducting business in the current manner.
The figures presented to the client will be supported by:
- Highlighting why processes in the function are inefficient etc. For example, they could use the technique of Brown paper to show that within the requisition process, there are excess approvals in the system, paperwork is constantly double handled, there are errors which cause rework. This technique will provide a visual support to illustrate why the current process costs more than best practice processes.
A detailed business model that converts cost and revenue opportunities into potential benefits . This can be illustrated using the above example: the analysis will have provided information on the number of errors generated in the process, number of activities effected by correcting these errors and the business case team will have converted this information into a potential benefit to the business if it was to be corrected.
The workload in the lead up to Communication 2 will be demanding whilst the first version of the business case is being built. Constant interaction is required to communicate any changes in data, assumptions, volumes etc to help ensure the business case being built is accurate and reflects the current status of opportunities being pursued.
Aside from the time spent aiming to ensure data required to build a robust business case is collected, the following tasks should also be undertaken:
- Document all assumptions underlying the business case and cross reference to source reports. If any information is supplied verbally, record the conversation in a file note.
- Help ensure sign-off has been obtained from departmental stakeholders that the figures supplied represent the current situation.
- Plan review session for the team to challenge all assumptions in the business case prior to presentation.
- Take FD through the business case to obtain buy-in to the results produced. The FD must understand how the business case has been developed and agree with the results produced prior to its presentation to project sponsors. This buy-in will provide the business case presentation with financial credibility.
Deliverable – The project deliverable is a presentation to the client of the proposed high level strategies
The business case deliverable is the calculation of the net potential benefit to the client of implementing the high level strategies presented in Communication 3
The workload in the lead-up to Communication 3 will be demanding as the high level approach is converted into a credible business case. This could require a complete rebuild of the business case developed for Communication 2. The business case built for Communication 3 will become the final business case presented to the Executive.
Tasks required to be completed are:
- Design data collection form that provides a means to document the proposed cost structure for the strategy being proposed. Information that could be required to build the business case could include – staff information – numbers, positions, salary ranges/ systems – software, hardware, any technology/ property – locations/ expected implementation costs – training costs, redundancies, advisors input, internal staff required to work on project – expected timing of potential benefits and costs.
- Build business case based upon high level strategies. Focus on quantifying the net potential benefits that will be realised from implementing the high level strategies. This will require – quantifying the revenue and cost opportunities that will be realised/ quantifying the cost and timing to implement the strategies/ identifying the timing of these potential benefits, year 1,2 etc.
- Review strategies to help ensure they do not contradict any business objectives or other initiatives being undertaken in the business.
- Take Financial Director (or similar position) through the business case to obtain buy-into the results produced. The FD must understand how the business case has been developed and agree with the results produced prior to its presentation to project sponsors. This will provide the business case presentation with financial credibility.
Deliverable – The project deliverables for Communication 4 are:
- A final design for high level strategy that will be implemented by the business;.
- A workplan for the undertaking detailed design in Phase 2.
The business case deliverable is the calculation of the net potential benefit of implementing the high level strategies.
The business case presented in Communication 4, provides the financial basis for the final decision to proceed into Phase 2 (detailed design) and Continued further into Phase 2 (implementation). Therefore you must be confident that:
- All of the opportunities within the scope of the assignment have been identified and accurately costed.
- It is an accurate indication of the costs of implementation.
The key tasks are:
- Finalise business case. This must include – potential benefits timing for cost and revenue opportunities/ costs timing for implementation – i.e. cost of technology, advisors, seconded client staff/ critical success on which the projects will be measured including non-financial measures i.e. such as reduction in customer complaints, improved on-time delivery.
- Review business case. This is critical to help ensure the final deliverable is robust and able to stand up to close scrutiny. Although at the end of a project, timing can be tight, you should plan for – initial review with all the team/ final review with the procurement manager prior to presentation to the Executive Team
- Take FD through the business case to obtain buy-into the results produced. The FD must understand how the business case has been developed and agree with the results produced prior to its presentation to project sponsors. Once again this lends financial credibility to the results presented.