Evaluating Project Investment Proposals

How Rigorous Can You Be?

Hand in hand with economic recovery, business leaders will be looking to create new sources of value in their organisation through business change projects and programmes. But delivering change and a healthy return on investment is a notoriously difficult trick to pull off. Like a recovery, change can be choked off by poor decision making at the outset. In this article we look at one way of taking these investment decisions with greater rigour, and getting business projects off to the best possible start.

The Story So Far

There is always much talk of project success rates, or more accurately failures to deliver the required business outcomes. Much of the remedy focuses on project management disciplines and delivery methods. Important as these remedies are, they leave a critical area untouched, the transition between the appraisal of the project as a business venture and its full scale delivery.

Before being given approval, a business project typically goes through a feasibility or evaluation stage. Put simply, this looks at the value of delivering the business outcomes, what changes need to be made to the organisation to enable these outcomes, the investment required and the perceived degree of difficulty in delivering the overall programme. The result is usually some form of business case report.

Critically, there may be a high degree of subjectivity in conducting the evaluation. Those charged with preparing the report may have a vested interest. The projects necessary to create the enabling capabilities and benefits may be viewed through rose tinted glasses, making optimistic assumptions about delivery performance.

Too often the evaluation results in an incomplete assessment of what lies ahead and the venture carrying too many issues and risks into the delivery stage which may eventually, after absorbing much resource, overwhelm otherwise sound delivery methods and management disciplines. The result at best is a reduced return on investment, and at worst no return at all!

Taking a Broader View


So what can be done to bring greater rigour to the evaluation process? One answer is to measure the venture and the organisation’s readiness to deliver it across six critical characteristics: Proposition, Impact, Implementation, Transitioning, Leadership and Governance. Significant gaps between the Importance of any characteristic to the success of the venture, and the organisation’s Readiness to deliver are signs of weakness, which should be addressed before proceeding to the delivery stage.

Rigour is introduced by forcing the evaluation to measure the project proposal across all the important characteristics, not just those that have received the greatest consideration. Measurement is concentrated on what is known at the time, and not what we would like it to be at some point in the future.

We call this Change Readiness Assessment, and it is conducted over a few days at the time when the organisation believes it is ready to seek approval to begin the delivery of the enabling capabilities, be they focused on process, organisation, people, technology etc. It does not replace the traditional disciplines of planning, risk assessment, cost benefit analysis etc, but takes their findings and tests how ready the organisation is to deliver the business outcomes claimed.

Beginning with the Proposition for change the objectives and benefits of the programme are examined. From here the assessment looks at what the organisation needs to change to deliver the proposition and its Impact on the current operating model.

The Implementation plans are then tested against the proposition and impact, and the organisation’s readiness to execute the necessary programme of work is gauged. Transitioning the current operation to the new ways of working, often a planning afterthought is next to be assessed.

Last but not least, two critical executive level functions are reviewed, Leadership including communications, and the Governance necessary to steer the programme towards the objectives through inevitably changing circumstances and periods of ambiguity.

Although there are tools to help conduct the assessment, its application is no cookery recipe. At this stage of a programme you need the support of people who have both business acumen and are well grounded in programme and benefit delivery.

Armed with a readiness assessment, business leaders are able to bring rigour to their judgement on whether a project proposal is worthy of investment, and if it is time to commit funding to the delivery phase, or whether there are issues to be addressed before it is prudent to continue.

About the Author:

Stephen has managed and advised on change programmes for over 23 years. He has worked with some the UK's leading businesses including NTL, HSBC, P&O, Carillion and Orange. He is experienced in Financial Services, Transport, Facilities Management and the Telecoms Sectors.