What Do You Need To Deliver?
Well - now in our journey through the mysteries of Business Cases, we can finally talk about the costs.
If you have taken our advice in the previous posts, the conversation will change.
Costs are now defined as ‘the costs of delivering the benefits and value’. This is change from the way most business cases are defined - where "enough" benefits and value are discovered to offset of costs and get the project over the line.
This is a very different perspective!
Cost Optimization
When you find all of the possible value, and have a clear sense of the cost of delivery, you are then in a position to optimize the costs. In TOP we use the 90-60 rule of thumb. We actively look for options that can realize 90% of the value for only 60% of the cost.
We compute the (additional) cost of delivering each outcome and its associated benefits to asssess which outcomes/benefits are not worth the additional costs of delivery.
These low worth outcomes/benefits can be eliminated 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 poorer or harder to justify.
Resources
In addition to funds, projects also need people, skill sets and other resources. These have to be made available from within the the organization or acquired externally from the market.
You need to justify why you need these resources. You will also need to justify why you can’t do with - say - 40% less.
As we know from the famed book, “The Mythical Man Month”[1] the bigger the project team, the lesser the productivity and the slower the speed of delivery. Big project teams are usually slower project teams.
For larger projects and programs, facilities, premises, technology, computing capacity and other resources will be needed. These need to be outlined as they form part of the evaluation as to whether this project is doable in terms of the resources required. If your organization will not or cannot make the necessary resources available, the project cannot be authorised to go-ahead.
In Summary
At the end of this section of the business case you should have established:
- the funding required, and demontrated that this is the optimized cost
- what other resources are required (and their availability if known).
These are the resources you are asking the organization to commit in order to receive the value defined in the Business Case
