Updating the Business Case for Development

This step finalizes the decision on the alternatives for renewal and provides approval to proceed with developing and implementing guides and enablers. It is based on the re-examination of the Return on Investment or other organizational performance criteria. In this step, the organization assesses risk and undergoes a gate safety check review. Successful passage renews the executives’ and staff’s commitment.

Technique

To update the business case, the primary technique to use is cost/benefit analysis.

Lessons Learned

The team should carefully analyze and present the pros and cons of each approach as well as recommend one alternative. However, they should never defend their recommendation, only explain dispassionately. Management—not the team—should always make the final choice.

For each option, re-examine the benefits of the solution, review all costs of development and implementation, and determine the cost/benefit by budget cycle. Review assumptions, risks, and sensitivity of variables used in assumptions used to do financial and performance calculations. Sometimes a small variation will throw off the viability of the alternative. For example, would a small change in product quality lead to a huge increase in market share? What would happen if the organization couldn’t achieve that increase?

Use the standard corporate ratios and mechanisms to prove the worthiness of the project. It’s competing with other initiatives of all types for funding and management attention. It’s not too late to decide not to proceed.

Make sure that you know how decisions are really made and who really makes them before heading into working sessions and committee meetings. Do your homework and lobby in advance with key influencers.

Update the prior business case with more details, specific alternatives, well-defined advantages and disadvantages, comparisons to the evaluation criteria, and an overall ranking of alternatives.

Provide new confidence limits (+ and – percentages) for the estimates of cost and benefit. Later estimates should be significantly more reliable than the internal estimates, made before process redesign.

This is management’s last real shot at deciding “Go/No-go,” so do lots of preselling one on one before presentations and executive workshops. In the presentations and workshops, revisit scenarios to help sell emotionally and remind managers of the performance evaluation criteria they chose at the beginning of the phase to avoid inappropriate personal biases. Use the outsider stakeholders’ perspectives to show why the recommended alternatives are appropriate.

Make sure that management makes the decision, or renewal will never fly. Their commitment is required.

Anticipate objections, and be ready to deal with each. Prepare for lots of opposition, and hope you don’t get much.

Use the standard cost/benefit ratios and business case mechanisms to avoid any perception of trying to “force one through.”