The key tasks to be completed at this stage are;
Meet with the CFO to assess the potential benefits and scope the project (i.e. the size of the team and skill base required to identify and quantify the potential benefits). This discussion should allow the project leader to develop an understanding of:
- The scope of the project; for example, will it cover all of the business or will some areas be excluded?
- The performance improvement targets and the basis on which these targets have been set.
- The basis on which the business will measure the success of the project. Generally success will be measured in financial terms such as costs reduced, revenue increased etc, however you might also be interested in measuring the success of the project using non-financial measures. If so, these should be identified now to help ensure the team collects the necessary information/statistics that will allow performance to be measured on an on-going basis as part of the business case.
- Any activity based costing exercises, Business Process Re-engineering exercises or any other similar exercises that the business has undertaken which could provide the project with useful information on activities, activity costs and process maps. This type of information can provide both the analysis team and the business case team with information that can make identification of opportunities easier.
- Understand strategic business plans/ projections that the company is working towards. It may be that a review of these forms part of the project in which case they must be used with care.
- Understand the cost base of the business using information such as – financial statements/ management accounts/ budgets/ activity based costing data/ key performance indicators/ discussions with operational and finance staff to understand/ the drivers of cost and revenue, as used in any activity based costing analysis/ the split between variable and fixed costs.
- Understand any current initiatives that could be underway and the extent to which these initiatives will impact on this project. This should include – identifying and quantifying planned potential benefits and costs to the company if the projects are successfully implemented/ timescales for the project and planned timing of potential benefits and costs.
- Document of any preliminary conclusions reached on nature of savings available. These will form the basis for building the business case when the project commences.