1. CHOICE AND
PRESENTING THE
BUSINESS CASE
A conclusion is sometimes the
place where you got tired of
thinking
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2. Figure 9.1, the problem-solving model
PROBLEM STATEMENT
PROBLEM STATEMENT
CRITERIA
CRITERIA
ALTERNATIVES
ALTERNATIVES
NON-FINANCIAL ANALYSIS
NON-FINANCIAL ANALYSIS FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
MAKE A CHOICE
MAKE A CHOICE
IMPLEMENTATION PLAN &
IMPLEMENTATION PLAN &
FOLLOW UP
FOLLOW UP
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3. MAKE A CHOICE
 Other things being equal, the best
alternative to choose will be the
one having these characteristics:
 an acceptable level of risk,
 the largest benefits (financial and/or non-financial),
 the lowest costs,

the best benefit/cost ratio.
 The choice of best alternative should be
immediate and unanimous. If not, go back to the
beginning of the model.
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4. Figure 9.2, Make a choice checklist
Yes/No
Do we share an understanding of the strategic plan?
Do we mutually understand the problem we are facing?
Do we agree on the type and relevance of decision criteria?
Are we all satisfied that the range of alternatives was broad
enough?
Do we agree that the qualitative data was relevant and accurate?
Do we agree that the quantitative data was relevant and
accurate?
Do we agree that the evaluation system effectively dealt with the
information?
Are we free from issues involving something other than this
problem situation? (Hidden agendas?)
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5. The Evaluation Process
The evaluation of alternative courses of
action is a three‑stage process:
 1. Data Collection
 2. Analysis
 3. Evaluation
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6. The Evaluation Process
1.DATA COLLECTION
 There are three types of data:
 Quantitative data based on observations.
 Qualitative data based on observations.
 Data based on the opinions, intuition and
personal judgment of experts.
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7. The Evaluation Process
2.ANALYSIS
 Before ranking begins, the quality of the
information to be used in the evaluation
needs to be tested.
 Good information should be used in the
analysis, bad information should be
discarded..
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8. The Evaluation Process
3. Evaluation
1. Identify all major assumptions used in the
collection of data.
 Time frame:
 Physical life (Projected operating life).
 Technological life (equipment obsolescence).
 Product useful life (economic obsolescence).
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9. The Evaluation Process
 Cost data:
 Sum of dollars associated with the total project
cycle, from the business case preparation to post
implementation evaluation.
 Benefits/savings data:
 Increase in revenues and/or decrease in costs
over the life of the project.
 Increase in efficiency/productivity.
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10. The Evaluation Process
2.Identify operating and non-financial
impacts:
 employees with appropriate skill sets may be unavailable
when required
 availability of technology and support systems
 environmental impact
 compliance with legislated/regulatory requirements.

3.Risks:
 Identify any risks that could affect the expenditure
initiative.
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11. The Evaluation Process
 The evaluation system used for non-
financial impacts will be different for each
situation. (There is no standard practice for
evaluating the impact of a suggested solution on
customer perception or employee perception for
example. )
 In the case of financial evaluation, there is
a standard procedure..
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12. Financial Evaluation
 Chapter 8 dealt with the mechanics of the
financial evaluation … NPV. B/C Ratio,
Payback period and IRR.
 Financial analysis is quite narrow.
 There is more to the health of people, the
reduction of crime, and the safety of fish
than can be measured with money.
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13. Non-Financial Evaluation
 Some business cases need to be advanced
even though they do not have benefits that can
be measured in financial terms.
 Their true impact could only be measured using
some other measurement scale.
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14. Non-Financial Evaluation
 Even when alternatives have no financial
benefits of any form, they all have a
financial cost.
 One method to help rank non-financial
alternatives in order of preference is to
use financial costs to drive the rankings.
This is called “Critical Values” analysis.
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15. Non-Financial Evaluation
 Imagine that park in the neighbourhood has a
present value of financial costs of negative
$712,800 which comes from the financial
spreadsheet assuming a $500,000 construction
cost and $25,000 per year in maintenance for an
estimated 20 year life of the project.
 As there are no financial benefits, the present
value of the costs of the park must be matched
to the users of the park.
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16. Figure 9.3, Non-financial analysis input screen
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17. Figure 9.4, Critical Values
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18. Figure 9.5, The Value Of A Park Visit
This is to say that we are investing $27.91 in each park
visit per person. The financial value would then be
matched against some qualitative judgement.
Does it make sense to pay that much per park visit?
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19. Non-Financial Evaluation
 Sometimes a business case has more
than one social impact. For example, if our
project will also create five new jobs in the
region we split the investment between the
two “Social” accounts.
 The investment made per job is $8,366.20
and the investment per park visit is
$13.95.
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20. Figure 9.6, Shared benefits
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21. THE “EVALUATION MATRIX”
SPREADSHEET
 The third tab on the spreadsheet presents
a tool that might be useful in the ranking
and selection of alternative solutions to a
problem.
 The tool enables the decision-maker to
rank alternatives against the criteria that
meet the requirements of the strategic
plan.
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22. THE “EVALUATION MATRIX”
SPREADSHEET
 Step 1, Establish Decision Criteria
 Step 2, Apply Weighting Factors.
 Step 3, Rank the Alternatives Against
Each Criteria.
 Step 4, Calculate the Weighted Scores.
 The result of this analysis is that the
alternative that best meets the most
important criteria will be given the highest
numerical value.
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23. Figure 9.7, evaluation matrix
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24. INTEGRATING THE EVALUATION
WITH YOUR BUSINESS CASE
 The spreadsheets are only tools to
support the business case.
 The case itself will be a combination of
quantitative analysis provided by the
spreadsheets, and qualitative analysis
provided by the text of the case.
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25. Implementation plan and
Control Systems
 Controlling projects and initiatives is an
absolutely critical element of being
effective in a management situation.
 There are two focus areas in developing
control systems to manage expenditures.
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26. Implementation plan and Control
Systems
 The first is to control the scope, time and
money spent while a project is being
constructed, and
 the second is to control the operation of
the project while costs are incurred and
benefits are earned.
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27. IMPLEMENTATION PLAN
 A project can only be called a success
when the implementation has proceeded,
the project has created the anticipated
benefits, and there is a measure of the
benefits received.
 The implementation plan deals with two elements:
 What has to happen to be successful?
 How will you know if you have achieved the
benefits?
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28. IMPLEMENTATION PLAN
 Step 1, Build the project
 The construction phase should identify
project management responsibilities
 Assign individual(s) to:
 be in charge of the overall project
 plan the project schedule
 determine resource requirements
 ensure that the project is completed on time/within
budget
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29. IMPLEMENTATION PLAN
 Timetable
 Develop a timetable to cover all phases of the
project that includes:
 project duration
 area of responsibilities
 key project events
 deliverables and due dates
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30. IMPLEMENTATION PLAN
 Resource impacts
1) CAPITAL BUDGETS
2) OPERATING BUDGETS
3) NON-FINANCIAL BUDGET
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31. IMPLEMENTATION PLAN
 Step 2, Control the Results
 The difference between a budgeted amount
and an actual amount is called a variance. It
is the variance that causes a management
reaction. Variances are a powerful
management tool to use to control a process.
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32. VARIANCES AS A
MANAGEMENT TOOL
 To be useful as a tool, we must consider
the following:
 The variance fairly reflects a manager's control
area.
 The variance isolates relevant deviations from the
plan.
 Management reaction is appropriate to the
magnitude and severity of the variance.
 The act of isolating variances and taking corrective
action causes desired changes in behavior.
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33. VARIANCE ANALYSES,
MANAGEMENT BY EXCEPTION
 When performance is evaluated, two
factors are considered:
 Has there been a deviation from the plan? If
so how large?
 Was the deviation controllable, and by whom?
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34. VARIANCE THEORY
 A variance analysis will generate
observations like.
 Spending on materials and labour is $50,000 higher than
expected.
 Customer demand is 15% less than expected
 Customer satisfaction is 15% greater than expected
 The emission if solid particulates into the airborne
environment is 5% more than expected
 The impact on the economic system in terms of job
creation is 7% more than expected
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35. Variances:
 Variances
 identify the presence of a deviation from the plan
 attach a value to the deviation from the plan
 identify possible cause areas.
 Variances do not
 Fix blame
 Suggest remedies
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36. Remedial action may involve
the following activities:
 Directing the process into an "in control state", by
forcing the process to meet the budget.
 Changing the budget if the variance was caused
by a permanent change in operating conditions
which causes the budget to be wrong
 Ignoring the variance and taking no corrective
action on the assumption that the variance was a
temporary aberration that will not repeat itself
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37. WHEN TO INVESTIGATE
VARIANCES
 Variances should be investigated when the cost of
investigating and correcting the process is less
than the cost of allowing the process to continue in
its out of control state.
 A process appears to be heading for an out of
control state.
 The variance is minimal but repeats itself constantly.
 The investigation may have a desired behavioral
side effect.
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38. Making Effective Presentations
 Effective business communication uses objective
language. We must persuade the reader that the
information we are providing is accurate, deserving
of consideration, relevant and important.
 What we say and how we say it should be driven
by the needs of our reader.
 It is important to align your written and oral
submissions with the information needs of the
reader in a convincing manner.
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39. Effective business presentations
 Planning
 Clearly establish the objectives and style of the report to
meet the reader's needs.
 Using a Logic Model
 Overcome resistance to change by presenting a
conclusion that is supported by objective facts and sound
business rationale.
 Proving the Conclusions
 Provide evidence as to the source of information used in
the analysis and evidence of the costs and benefits
associated with the solution to a problem.
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40. PLANNING YOUR CASE
PRESENTATION
 Set your objective.
 What do you wish to accomplish as a result of your
submission?
 What must you convince the audience of to
achieve your objective?
 What conclusions will you guide your audience to
reach?
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41. PLANNING YOUR CASE
PRESENTATION
 Identify the concerns you have of the audience and their:
 Perspective, (Financial? Performance? Image?)
 Prior knowledge
 - What do they know of your submission?
 - What do they not know?
 Attitude
 - Indifference?
 - Acceptance?
 - Objection?
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42. PLANNING YOUR CASE
PRESENTATION
 Identify additional conclusions the audience must reach
based on the audience analysis.
 Identify the proof that can be provided to support each
conclusion the audience is required to reach.
 Order your conclusions and proofs in descending order of
importance to your audience. What will they want to hear
first?
 Identify the appropriate language to use with the given
audience.
 Is your language personal?
 Are you communicating in the active voice?
 Are you using language that is simple and easy to understand?
 A business case presentation must stand alone.
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43. BUSINESS CASE REPORT
FORMAT
 A perfect business case will leave no questions in a
reader's mind, and will allow a logical and informed
decision to be made.
 A) PREAMBLE
 Describe the "big" picture.
 B) PROBLEM DEFINITION
 Clearly identify the problem being solved.
 C) RECOMMENDED SOLUTION
 Identify the alternative chosen early in the report.
 D) SELECTION CRITERIA
 Offer a description of the criteria used to make the choice
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44. BUSINESS CASE REPORT
FORMAT

E) ALTERNATIVES
 Demonstrate to the reader that a sufficient number of good quality
alternatives were considered.
 F) ANALYSIS OF ALTERNATIVES
 Non-financial issues and Financial Issues
 G) IMPLEMENTATION PLAN & FOLLOW UP
 Offer a detailed implementation plan including project timelines and
management responsibilities, as well as a description of the measurement
tools that will be used to track progress and identify project benefits and
costs.
 H) RISK ASSESSMENT
 A detailed description of all risk elements, including project specific risk and
environmental risks should be included.
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45. PROVING YOUR
CONCLUSIONS
 It is not sufficient evidence to simply say, "I believe this
to be true" or "It is common knowledge that..."
 Credible evidence will be presented as:
 Example
 Expert testimony
 Analogies
 Statistics
 Personal experiences
 The emphasis should be on quality over
quantity. Too much evidence can be as
confusing as too little.
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46. CONCLUSIONS REGARDING
PRESENTATIONS
 Business communications are concise, factual and to the
point.
 An illogical or unsupported approach to communicating
solutions to problems may result in deferred action, even
though the chosen action best solves the problem.
 The most efficient communicators will tailor the
presentation to the needs and perceptions of the
audience.
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47. CONCLUSIONS REGARDING
PRESENTATIONS
 Good communications will actually improve the decision
making process.
 It may be advisable to have your document reviewed by
a colleague prior to final submission. The author is often
too close to the document to notice deficiencies in
presentation style.
 Make a point of learning from every proposal you submit,
the good ones and the bad ones.
 Make a point of using the financial analyst for your
business unit or department. This person can make your
job easier.
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48. Chapter summary
 Making a choice is easy if the analysis is complete and logical,
 controlling the project is easy if expectations re reasonable and
variances are reviewed frequently, and
 making a presentation is easy if a model is used that satisfies
the logic of the listener.
 Its all easy if you follow a model. It becomes difficult,
confusing and frustrating when you depart from logic and
start being random or relying on gut feel or personal
opinion.
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49. Closing Remarks
 There is one last aspect of business casing that
needs to be covered. It deals with performance
measurement, or showing evidence that the
results we are looking for are actually occurring.
 The concept of performance measurement and
performance management are cover in section
3, chapters 10-12.
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