CIO brings you an ongoing series on project management from Jed Simms on a vital component of any project: the business case.
Hey, now we get to the costs. But the costs are now ‘the costs of delivering the value’ (rather than the benefits being the off set of the costs — a very different perspective).
By now the costs should have been optimised using the 90-60 rule — focused on realising 90 per cent of the value for 60 per cent of the cost. This can be done by tracking the cost of delivering each outcome and its associated benefits and seeing which outcomes/benefits are not worth the additional costs of delivery. These low worth outcomes/benefits can be culled with minimal value loss but, often, with significant cost savings.
Using this approach we’ve reduced projects initially costed at, for example, $82m to $35m with minimal value loss.
If you’ve not optimised your project costs you’re potentially wasting a lot of money. This makes your business case worse or harder to justify.
In addition to funds projects also need people, skill sets and other resources. These have to be either released by the organisation to work on the project or acquired. You need to justify why you need these resources and why you can’t do with, say, 40 per cent less. As we know from “The Mythical Man Month” the bigger the project team the lesser the productivity and the slower the speed of delivery.
On larger projects and programs facilities, premises, technology, computing capacity and other resources will be needed. These all need to be spelled out as they are part of the evaluation of whether this project is doable in terms of the resources required. If the organisation will not or cannot make the necessary resources available the project cannot be go ahead.
At the end of this section you need to have established:
A) The financial funding required and that this is the optimised cost;
B) What other resources are required (and their availability if known).
This is what you’re asking the organisation to commit to deliver in order to get the value.
How does your business case process compare? Tell me Jed_Simms@capability.com.au
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To view the first article in this series, click here.
To view the last article in this series, click here.
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