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Better Business Cases - APMG
The document discusses the importance of effective business cases in project management, outlining the high failure rates of projects in various countries and sectors, with many losing significant funds. It presents the 'Five Case Model' from HM Treasury, which guides organizations through evaluating the need for change, exploring solutions, and ensuring proper management for successful project delivery. The document advocates for better business practices to improve decision-making, reduce waste, and achieve desired outcomes.
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Better Business Cases - APMG
- 1. Better Business Cases Richard Pharro CEO
- 2. IP Acknowledgements •APMG™ and APM Group™ are trade marks of the APM Group Ltd. • The APMG, APM Group and Swirl Device logos are a trade marks of The APM Group Limited. • Any third party copyright or other intellectual property rights subsisting in this presentation, including without limitation any text, images, graphics, trade marks, etc. are owned by the third-party providers concerned and any use of said third party intellectual property rights is intended for reference purposes only. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 3. About APM Group • Established in 1993 • Accredited by UKAS in 2000 • 2012 Queen’s Award for Enterprise for our international activities • Awarded IIP Gold in 2010 and again in 2013 • Administer Certification and Accreditation Schemes “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 4. Our Partners NHSHealth Informatics World Bank Group IPMA “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 5. Project Outcomes “© The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 6. Why can’t allprojects succeed? “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 7. German Projects •Inpol-neu: a system for the federal and state police failed causing 75 Mio € damage. Secretary of the Interior (BMI) • Fiscus: an application for the tax authorities failed causing 125 Mio € damage Secretary of Finance (BMF) • Maut: a road charge application for federal highways (“Autobahnen”). A loss of billions of revenue in the first years of operation Secretary of Traffic (BMVBS) Source: PRINCE2® In the Public Service and The Government of the Federal Republic of Germany. Status Report. April 2012. By Wolfgang Ksoll. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ” PRINCE2® is a Registered Trade Mark of Axelos
- 8. “KPMG survey ofProject Management practices in New Zealand finds some truly startling results; Survey shows an incredible 70% of organizations have suffered at least one project failure in the prior 12 months! 50% of respondents also indicated that their project failed to consistently achieve what they set out to achieve!” Source : KPMG (New Zealand) Type of survey : Survey of 100 businesses across a broad cross section of industries Date : Dec 2010 New Zealand Projects “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 9. US Projects “Only30% of our projects and programs are successful”1 1. United States Government Accountability Office. Report to congressional committees. Defence Acquisitions – Assessments of Selected Weapon Programs. March 2008. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 10. UK Projects “Studyof government projects reveals $4billion in wasted efforts as a result of failed projects. ‘Only 30% of our projects and programs are successful’ - Joe Harley, programme and systems delivery officer at the Department for Work and Pensions.” Source : Guardian Newspaper (UK) Scope : Investigation into government waste in the UK since year 2000 Date : 5 Jan 2008 “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 11. Cyber Space Projects “A study of 5,400 large scale IT projects (projects with initial budgets greater than $15M) finds that the well known problems with IT Project Management are persisting. Among the key findings quoted from the report: – 17 percent of large IT projects go so badly that they can threaten the very existence of the company – On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted” Source : McKinsey & Company in conjunction with the University of Oxford Type of survey : Study on large scale IT Projects Date : 2012 “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 12. ‘Troubled projects’ =disappointing outcomes Research suggests that commercial issues are the primary cause in ~70% of ‘troubled projects’… ….and the likelihood of significant innovation or incremental value reduced by ≥ 60% © IACCM 2013
- 13. Major causes andfrequency of losses © IACCM 2013
- 14. An urgent needfor improvement Only 11% feel that their organization is well equipped for the future; 89% believe that their contract management processes and management © IACCM 2013 must improve. Observed disadvantages from lack of process ownership • Longer lead times • Less flexible • Lower level of automation • Poor management visibility into contract performance • Increased risk of unauthorised commitments • Delayed take up of contract models / terms • High personnel turnover • Poor decision making • Perception of being difficult in the market • Reduced customer / vendor loyalty
- 15. Conclusion We probablyhave a problem that current practices haven't solved in the last 50 years? Can Agile and Better Business Cases help? “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 16. Why are BusinessCases important? A business case provides decision makers and the public as well as the private sector with a management tool for transparent, evidence-based decision making. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 17. The Five CaseModel (from HM Treasury) A framework for ‘thinking’ to help answer three basic questions ‘where are we now?’, ‘where do we want to be?’ and ‘how are we going to get there?’ A step by step guide to developing a business case by: The process is about thinking not writing •Establishing a clear need for intervention - the case for change. •Setting clear objectives – desired outcome •Considering a wide range of potential solutions - an optimal balance of benefits, cost and risk. •Putting the arrangements in place to successfully deliver the proposal. Successful execution “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ” The process is about thinking not writing
- 18. The Five CaseModel The 5 key elements of good practice business cases Management Economic Strategic Financial Commercial Applicable - strategic fit & business needs Appropriate – optimises public value Attractive – to supply side and feasible Achievable – can be successfully delivered Affordable – within budget “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 19. Three Types ofBusiness Case 1. The key purpose of Strategic Outline Case is to: – establish the strategic context for the spending proposal; – evidence the case for change; – establish the preferred way forward 2. The key purpose of the Outline Business Case is to: – revisit the SOC assumptions and main findings – establish the preferred option – put in place the arrangements for the procurement of the scheme 3. The key purpose of the Full Business Case is to: – revisit OBC assumptions and main finding; – evidence that the most economically advantageous tender (MEAT) for the scheme has been accepted; – establish that the management arrangements for successful delivery are in place. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 20. The suggested process(use with care) Workshop Objectives Key participants Outputs Workshop 1: • To define and agree business needs, potential scope and • Senior Responsible Owner; • SMART spending objectives; Determining the spending objectives; • Board members; • Business needs and case for change and • To define and agree desired • Programme director; potential scope; options for service outcomes and service outputs; • Project manager; • CSFs and benefits delivery • To define and agree the CSFs and • External stakeholders or criteria; benefit criteria for assessing the commissioners; • Long list of options; (SOC Stage) options; • Customer and/or user • Fundamentals of the • To identify the potential options for service delivery. • representatives; Technical adviser; SOC. • Financial adviser; • Facilitator. Workshop 2: • To sift the long list and generate the short list; • External stakeholders or commissioners; • Short-listed options with preliminary assessment; Assessing the • To identify and assess the • Director of finance; • Outline benefits options potential costs, benefits and risks • Economic adviser; realisation plan; associated with the short-listed • Customer and/or user • Inputs for economic (SOC/OBC stage) options. representatives; appraisal. • Project manager; • Facilitator. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 21. The suggested process(cont…) Workshop Objectives Key participants Outputs Workshop 3: • To develop the PSC; • External stakeholders or • Preliminary PSC with Developing the • To address all relevant issues, including risks, affordability and • commissioners; Director of finance; • indicative costs; Fundamentals of the reference project/ implementation. • Economic adviser; economic and financial outline PSC • Customer and/or user representatives; cases. (OBC stage) • Project manager; • Facilitator. specification; • External stakeholders or commissioners; • Preliminary risk allocation matrix (RAM); Workshop 4: • To develop the service Developing the deal • To develop the apportionment of • Director of finance; • Potential deal; risk and underpinning payment • Economic adviser; • Fundamentals of the (OBC stage) • mechanisms; To develop the proposed contract. • Customer and/or user representatives; commercial case. • Project manager; • Facilitator. Workshop 5: • To develop the procurement • External stakeholders or • Procurement strategy; strategy; commissioners; • Management and Successful delivery • To develop the project plan; • Director of finance; delivery arrangements; arrangements • To develop supporting strategies • Economic adviser; • Post project evaluation (OBC stage) (for change management and contract management etc). • Customer and/or user. arrangements. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 22. Sources of help “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 23. Publications • Getyour copy. The five case model is freely available via: http://wales.gov.uk/funding/wiipindex/5cmodel/?status=close.d&lang=en • Currently no plans to make the model available in hard copy format • Guidance consolidates other reference sources and is consistent with HM Treasury’s “Green Book Guidance on Appraisal of Policies, Programmes and Projects” – UK Government’s central guidance for appraisal and evaluation of all policies, programmes and projects (available at http://www.hm-treasury.gov.uk/data_greenbook_index.htm). “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 24. BBC Training Companies Approved •Cupe Projects Ltd •Demos •Eleisha Training Ltd •Explosive Learning Solutions •Harry Baker Professionals Ltd •Inspiring projects •PA Consulting •PearceMayfield •QRP Management Methods •The Knowledge Academy For more information go to:- http://www.apmg-international.com/en/qualifications/better-business-cases/ better-business-cases.aspx “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ” Pending Accreditation •Bizness Academie SAS •CC Learning •Deloitte MCS Limited •E-quality Italia •Pink Elephant UK •Raj Khanna Associates Ltd •Snap Tech (Pty) Ltd •Training ByteSize Ltd
- 25. Courses and Qualifications • Foundation Course and Exam – Classroom course 2 days followed by closed book exam – Closed book, multiple choice, 50 questions – 50% pass mark 40 minutes duration • Practitioner Course and Exam – Classroom course 3 days followed by an exam on day 3 – Open book exam – 4 questions per paper, with 20 marks available per question – 50% pass mark 2 ½ hours duration • Reviewer Course – Under development/discussion
- 26. Benefits For Organizations:- •Reduction in unnecessary spending and consultancy costs. •A process and guidance designed to optimize value from change initiatives. •A clear, proportionate approval process and improved, more informed decision making. •Complements existing best practice •Short courses minimize disruption to business as usual. For Individuals:- •Improved understanding of the Better Business Cases process, relevant not only to those producing business cases and spending proposals, but also those reviewing. •Understanding of an established and proven methodology which can be applied at both strategic (macro) and tactical (micro) levels. •Recognized certification for a core business competency for so many in mid and senior management roles.
- 27. Conclusion Better BusinessCases lead to: • better decisions • better investments • achievement of better outcomes. It is about the thinking not the writing “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 28. A final thought $45 billion a year spent by NGOs. “ © The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 29. Any questions “© The APM Gro up Ltd. 20 1 4. All rights re se rve d. ”
- 30. “ © TheAPM Gro up Ltd. 20 1 4. All rights re se rve d. ”
Editor's Notes
- #14 It’s very important and useful for an implementation team to understand the most frequent courses of loss. Where things go wrong, why do they go wrong? If we understand that then surely as an implementation team, we can do some good work to guard against those probabilities. Number one is disagreement over contract scope. It’s disagreement over what we agreed. We’ve talked earlier about the importance of understanding and prioritizing requirements, of ensuring open dialogue between the parties about requirements and capabilities – a degree of openness and honesty. As an implementation team, we can make things significantly worse if we don’t have proper diligence and rigor in the way that we manage contract changes. Weaknesses in contract change management mean that even if we agreed at the outset about what we were trying to achieve we’re no longer in agreement by the time delivery occurs. There’s also the potential for performance failures due to over-commitment. It’s not unusual for selling organizations to overstate some of their capabilities or to commit resources without adequate internal discussion. The list continues with disagreement over things like price and charge: is this a chargeable change or a non-chargeable change? Is a price change or escalation something that’s permitted or not permitted? Pricing remains inevitably a very sensitive issue because it’s an economic deal. An inappropriate contract structure or an agreement is another common cause of failure. If the negotiating teams didn’t understand the structure of the agreement and relationship that’s needed, this can undermine the eventual performance. Finally, there are issues with subcontractors: failure to get good back-to-back agreements, failure to manage subcontractors through techniques that reflect the prime contract – these will often cause delays, pricing issues or other performance problems.
- #19 The five key components of this methodology are; The Strategic Case: It demonstrates that the spending proposal provides business synergy and strategic fit and is predicated upon as a robust and evidence based case for change. The Economic Case: It demonstrates that the spending proposal optimises public value. The Commercial Case: It demonstrates that the ‘preferred option’ will result in a viable procurement and well-structured deal. The Financial Case: It demonstrates that the ‘preferred option’ will result in a fundable and affordable deal. The Management Case: It demonstrates that the ‘preferred option’ is capable of being delivered successfully, in accordance with recognised best practise.