Traditionally, business case development is a time consuming and costly exercise, often taking several months to complete. Apart from the time and cost, our experience is that the resulting analyses are often very superficial, relying on vague and optimistic assumptions, and against which it is difficult to track the realisation of programme value.
The approach to Value Management described in the book, Value Management: Translating Aspirations into Performance, seeks to reverse this pattern by providing the means to build Baseline Business Cases very quickly, supported by precise, simple and transparent quantification, thereby being fully auditable for subsequent Value Realisation. The Value Management Toolset™ (Toolset) is a PC-based application, built in Microsoft Excel and Project, designed to fulfil this imperative, and is particularly suited to building Proof of Concept (PoC) solutions, as a low cost and risk means to get results quickly and with certainty.
The Toolset provides a dynamic linkage between the programme plan and the Discounted Cash Flow (DCF) analysis, allowing 'what-if' modelling of any number of scenarios, involving both magnitude and timing changes of programme Benefits and Costs.
The Toolset comprises five modules as shown in the Figure 1 below.
Components Module: The central repository containing elements used to build the Benefits in the Business Case including: Deliverables, Drivers and Benefits, together with Stakeholders and Beneficiaries. This module is linked to the Balanced Scorecard, another toolset within the Value Suite for PoC Fast Starts, in order to ensure consistency in developing the Baseline Business Case and subsequent Value Realisation. For example, the Drivers defined in the Balanced Scorecard are used for deriving the causal connection between Phases and Net Present Value in the Toolset.
Programme Module: (Top window) Contains the high level plan comprising key Phases of the programme.
Programme Benefits Module: Attributes changes in Drivers and Benefits to programme Phases through the Cause and Effect Linkage process.
Programme Costs Module: Attributes Development and Support Costs to programme phases.
Results Module: Combines programme Benefits and Costs to derive the Net Present Value. This module includes a Certainty Analysis screen in which any number or variables can be flexed, either individually or in combination, to facilitate 'what-if' modelling and destruction testing.
The programme Phases are linked dynamically to both programme Benefits and Costs so that the effects on value of changes are calculated automatically. For example, in figure 2 below, we can see that if the first Phase of the JANET(UK) Transformation Programme is extended by 1 year then the result is a 29% reduction in the Net Present Value against the Baseline, shown in the graph. Numerous magnitude and timing changes can be modelled using the Certainty Analysis screen. (Values in the figure have been modified for confidentiality purposes)
Figure 1 (click to enlarge)
Figure 2 (click here to enlarge)
The Toolset provides support throughout the IMPACT Value Management framework described in the book, Value Management: Translating Aspirations into Performance. Due to its simplicity of use, the Toolset can be populated and applied interactively in Value Breakthrough workshops, during which the potential value of prospective strategies and delivery programmes can be modelled immediately. Keys to success in the workshops are business knowledge, high energy and speed. For example, the initial Business Case and Implementation Strategy for the JANET(UK) Business Transformation Programme were both completed in four hours of intensive workshop with the Operations Director.
The Toolset is used in parallel and interactively with the Balanced Scorecard, first to derive the Baseline Business Case, and then through the subsequent Value Realisation stage, during which actual Outcomes are tracked, compared and corrected against the Baseline. The impact of changes can be assessed and corrective action targeted, timed and aligned most effectively. The Toolset has been used successfully at all levels, spanning tactical projects and business as usual improvement initiatives, strategic programmes and enterprise portfolios.
Click here for a video demonstration of the Value Management Toolset™ in action