Pereira Diamond benefits mode Webinar 10th June 2015 WEBINAR100615

1. Webinar: Pereira Diamond Benefits Model
CLÁUDIA TEIXEIRA & LEANDRO PEREIRA, Ph.D PMP
#apmbmsummit
APM Benefits Summit 2015
Thursday 25th June 2015
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2. © 2015 Winning Management Consulting
Agenda
2
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

3. © 2015 Winning Management Consulting
Agenda
3
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

4. © 2015 Winning Management Consulting
Rupert Murdoch
The world is changing very fast. Big will not beat small anymore.
It will be the fast beating the slow.

5. © 2015 Winning Management Consulting 5
Statistics
Companies continue to focus on costs or qualitative benefits
54% of
respondents
indicated that cost reduction is a
primary driver of projects and
programmes in their organisation
Source: APM, 2014
Up to 70% of
change initiatives
fail to deliver on the benefits that
they set out to achieve
40.5% of
respondents
answered their organisations have
“weak benefits focus”
Source: APM, 2014Source: John Kotter, 1995
UK Survey Harvard Business School Study UK Survey

6. © 2015 Winning Management Consulting
Product Life Cycle
The Modern Management Challenges
6
Globalization
Technological
Innovation
Planned
Obsolescence
Social
Networking
3 years 5 years
Introduction Growth Maturity DeclineBusinessVolume
8 yearsTime
Source: Pereira & Teixeira, 2015

7. © 2015 Winning Management Consulting
Global Capex Expenditure
The consequence of the product life cycle decrease is the continuous investment in new projects
7
Source: World Bank. 2014

8. © 2015 Winning Management Consulting
Expectation versus Estimation
The difference between Common Sense and Scientific Management
8
Expectation Estimation
Common Sense Technique… Scientific Management

9. © 2015 Winning Management Consulting
“Two different people will reach very similar conclusions”
Scientific Management Principle
9
Common Sense Management Scientific Management
Acquired as result of ordinary business and daily living
Unreflective opinions of ordinary people
Systematic approach to management
Pursued deliberately and systematically
Is Individual
Based on personal experience
Is Universal
Looks at what is applicable across all situations
Process not tested
Each time a different process is applied
Process tested in several contexts and organizations
Results validated
Accept the obvious
“Of course”
Some discoveries are not true
Questions the obvious
“Why?”
Start the search from the common sense answer
Cannot rely on consistent results
Yields the same results or very similar results when conducted by
two different people under the same circumstances
Gained through uncontrolled experience Gained through controlled experiment
Vague Precise

10. © 2015 Winning Management Consulting
Agenda
10
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

11. © 2015 Winning Management Consulting
Peter Drucker
Efficiency is doing things right.
Effectiveness is doing the right things.

12. © 2015 Winning Management Consulting
“Value of Something”
Value Perception is higher before you get it and after you lose it
12
The value of any asset is measured by the
impact generated by having it or not having it.
Method of Measuring Value through Impact
Value
Perception
Before
getting it
When you
have it
After
losing it

13. © 2015 Winning Management Consulting
“Value of Something”
Future Wheel Method
13
The value of things is measured by the
effects generated and not by what they
“are” or “represent”
Future Wheel Method
Increase the
portfolio
margins
Increase the
“word of mouth”
Reduce costs
with advertising
Reduce
commercial
costs
Increase value
to the
shareholdersReduce Funding
Costs
Increase the
liquidity for
change
More time to
develop the
business
Reduce the
time-to-market
More time
available for the
client
Improve the
brand image
Reduce
commissions
Projeto
Increase
Nº Clients
Increase
retention
Reduce
internal
costs
Reduce
“dead”
times
Project

14. © 2015 Winning Management Consulting
TimeBudget Box
Define the budget available according to the benefits generated
14
Deadline
BenefitsBudget
50%
Source: Pereira & Teixeira, 2015

15. © 2015 Winning Management Consulting
Benefits Modelling
Benefits are turned into the “increase” of something positive or the “reduction” of something negative
15
─ Increase Invoicing
─ Increase Retention
─ Increase Productivity
─ Increase Liquidity
─ Increase Geographical areas
+
─ ─ Reduce non-compliance
─ Reduce Waiting times
─ Reduce average time of the processes
─ Reduce Rework
─ Reduce Costs with Suppliers
─ Reduce Infrastructure Costs
─ Operational Costs Reduction
AS IS TO BE

16. © 2015 Winning Management Consulting
Business Requirement
A Business Requirement comes from the need and the related business impact
16
NEED:
Optimize a process with
computer support
BENEFITS:
 Reduce time (hours) of employees
 Reduce rework
 Reduce non-compliance
BUSINESS
REQUIREMENT
BUSINESS
IMPACT
PROJECT
SCOPE= +
Benefit 1
Benefit 2
Benefit 3

17. © 2015 Winning Management Consulting
Benefits Stages
Each benefit requires a “picture” of the current situation, estimate of potential and track of the results
17
AS IS TO BE
REDUCE
MATERIAL
WASTE
REDUCE
REWORK
INCREASE
UP-SELLING
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
-----------------
-----------------
-----------------
-----------------
-----------------
---------------
Example:
DATA
COLLECTION
EVALUATION
TECHNIQUES
TRACKING
TECHNIQUES

18. © 2015 Winning Management Consulting
Benefits Parameters
Metrics identification to quantify costs and benefits
18
How MUCH is a Work Unit? How MUCH is a client worth?
− Employee cost/hour
(per role)
− Process nº hours
− Wasting hours
− Space Cost per m2
− …
− Client Value per month
(or yearly) of a client (per
segment)
− N.º Complaints
− Portfolio per client
− Churn Rate
− Average time of a client
life cycle
Metrics for the
Intervention:
− Observation
− Simulation
− Gap Analysis
− Risk Assessment
− Performance
Analysis
− Finance Reports
− Compliance
Reports
Techniques for the
Intervention Evaluation:
− Market Studies
− Surveys
− Interviews
− Benchmarking
− Satisfaction
Evaluation
− Corporate Reports
− Prototyping
− …
Techniques for the
Intervention Evaluation:
Metrics for the
Intervention:
WHAT?HOW? HOW?WHAT?
COST
DECREASE
BUSINESS
GROWTH

19. © 2015 Winning Management Consulting
Pareto Principle
Identify the three benefits with the most impact
19
Source: The Chaos Report. The 10 Laws of CHAOS. 2013
Small projects with high organization impact
Techniques to validate the Scope “frontier”:
─ In/Out Scope (contradictory technique)
− Which of the three benefits is affected and by how much, in this case scope
component is not included?
− In case there is no cause-effect relationship with one of three benefits, the
component is out of scope
− Avoid: “by the way”, “it would be useful to..”, “it would be interesting if…”
25%
40%
35%
15%
5%
3%
1%
Benefits
Tangibles Intangibles

20. © 2015 Winning Management Consulting
Poll Question 1:
Is there anyone accountable for the
benefits management process in your company?
a) Yes
b) No

21. © 2015 Winning Management Consulting
Benefits Life Cycle
We need to have a benefits perspective from strategic planning through to the project results
21
Benefits Estimation
[Step 2]
Benefits Tracking
[Step 4]
Strategic Planning
[Step 1]
Benefits Leverage
[Step 3]

22. © 2015 Winning Management Consulting
Agenda
22
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

23. © 2015 Winning Management Consulting
Benefits Dimensions
The four dimensions of value generation: Pereira Diamond (1st Level)
23
Source: Pereira Diamond (Pereira & Teixeira, 2015)
Business
Growth
Legal
Compliance
Costs
Reduction
Efficiency
Increase
Stock
Price

24. © 2015 Winning Management Consulting
Business Growth
Leverage business withing four alternatives
24
New Clients
Retention
Cross-sellingUp-selling
Sell more of the same product
to current clients
Increase the price of the
same products
Sell new products to the same
clients
Sell the same product to
different clients within the
current clients portfolio
Increase the lifecycle time of the
current clients
(work with the current clients)
Reduction of churn rates
(work with the clients who leave the
company)
New productsNew geographies
Win-backNew segments

25. © 2015 Winning Management Consulting
Costs Reduction and Efficiency Increase
Reduce the current impact and avoid a future impact
25
€
Period N Period N+1
Period
Project
Period
€
Period N Period N+1
Project
Reduce costs
Avoid Cost Increase
Nºhours
Period N Period N+1
Period
Projet
Nºhours
Period
Period N Period N+1
Project
Reduce Time
Avoid Time Increase

26. © 2015 Winning Management Consulting 26
Benefits Classification
The four dimensions of value generation: Pereira Diamond (2nd Level)
Source: Pereira Diamond (Pereira & Teixeira, 2015)

27. © 2015 Winning Management Consulting
Poll Question 2:
How often do you estimate your initiative’s benefits
in a quantitative way?
a) Never
b) Rarely
c) Very Often
d) Always

28. © 2015 Winning Management Consulting
Primitive Benefits and Instantiated Benefits
The difference between the cause and the effect
28
Primitive Benefit Instantiated Benefit
Increase the process quality Reduce the process rework due to the n.º of errors
Reduce clients dissatisfaction Increase the client lifecycle through a better relationship
Increase employees motivation
Reduce the processes time through employees’ s motivation
increase
Cause Effect
Business
Increase
Legal
Compliance
Costs
Reduction
Efficiency
Increase

29. © 2015 Winning Management Consulting 29
Benefits Parametric Equations
The benefits are measured by the impact generated
UPSELLING
CROSS-
SELLING
INCREASE Nº
NEW CLIENTS
= 5.000 * 30% * (120€ - 80€) * 3 years = 180.000€
= 5.000 * 15% * 100€ * 3 years = 225.000€
+
+
=TOTAL = 1.020.000€
CLIENTS
RETENTION
= 1.000 * (8% - 4%) * 250€ * 3 anos = 300.000€
= 10.000 * 15% * 70€ * 3 years = 315.000€
Market Share * % Costumer Entry * Product Price * 3 years
Nº Current Clients * % Costumer Entry * (New Price- Current Price) * 3 years
Nº Current Clients * % Costumer Entry * Price of the New Product* 3 years
Nº Clientss * (Current Churn Rate– Future Churn Rate) * Client Value/year* 3 years
+
BUSINESS
REQUIREMENT
BUSINESS
IMPACT
PROJECT
SCOPE
= +
Benefit 1
Benefit 2
Benefit 3

30. © 2015 Winning Management Consulting 30
Benefits Parametric Equations
The benefits are measured by the impact generated
REDUCE
HOURS
REDUZIR
REWORK
REDUCE
MATERIAL
WASTE
+
+
=
Nº Units Produced * (% current waste – % new waste) * Product Cost* Nº years
= 100h * 40% * 35€/h * 12 months * 3 years = 50.400€
Nº Hours of the process* % Time Reduction* Cost €/h * Nº anos
= 40h * (20% - 5%) * 35€/h * 12 months * 3 years = 7.560€
Nº Hours of a process* (% Hours in Rework – New %of Rework) * Cost €/h * Nº years
= 500 uni * (10% - 5%) * 100€ * 12 months * 3 years = 90.000€
TOTAL = 147.960€
BUSINESS
REQUIREMENT
BUSINESS
IMPACT
PROJECT
SCOPE
= +
Benefit 1
Benefit 2
Benefit 3

31. © 2015 Winning Management Consulting 31
Benefits Estimation
Estimated benefits must be presented with variance analysis

32. © 2015 Winning Management Consulting 32
Cost Estimation
Estimated costs must be presented with variance analysis
Total
cost
Source: COCOMO 2, 1995

33. © 2015 Winning Management Consulting
ROI Sensitivity
Sensitivity analysis to economic indicators according to a confidence level
33
ROI %
0%
100%
-50% -25% 25% 50%
Confidence%
Confidence: 99% 95% 80% 50% 25% 1%
Net Present Value 20k€ 45k€ 80k€ 150k€ 220k€ 300k€
Internal Rate of Return 2.6% 5.4% 8.2% 12.6% 19.3% 27.5%
Benefit Cost Ratio 1.08 1.13 1.23 1.34 1.62 1.75
Return on Investment 8% 13% 23% 34% 62% 75%
Payback Period 30 m 28 m 26 m 22 m 18 m 12 m

34. © 2015 Winning Management Consulting
Poll Question 3:
Are you aware of your initiative benefits confidence level
when presenting the benefits plan?
a) Yes
b) No

35. © 2015 Winning Management Consulting
Balancing to decide
Benefits vs Investment
35
Business
Growth
Legal
Compliance
Costs
Reduction
Efficiency
Increase

36. © 2015 Winning Management Consulting
Portfolio Prioritization
Sequential analysis for decision-making
36
Quit Go Ahead
1. Qualitative
Analysis
2. Quantitative
Analysis
3. ROI Analysis
Portfolio Prioritization
Projeto
3
Project
2
Project
1
4. Decision-Making
Legal Compliance
Increase Revenue Reduce costs
Increase efficiency

37. © 2015 Winning Management Consulting 37
Traditional Budgeting vs Zero-Based Budgeting
The relevance of justifying each monetary unit for budgeting approval
Sources:
Wetherbe, James C “ A general purpose strategic planning methodology for the computing effort in higher education: development, implementation and evaluation “, unpublishded
Ph.Dissertation Texas Tech. University 1976.
Wetherbe, J; Montanari, J: “ Zero Based Budgeting in the planning process” - Strategic Management Journal , Vol. 2. 1-14 (1981)
Traditional Incremental Budgeting Zero-based Budgeting
Budget changes only occur to increase the current
amount (positive variations)
Justification is based on the amount incremented
The entire budget is thoroughly reviewed with a clear
justification of the costs estimated for each project
[zero-budget principle]
It does not consider the historic records.
Every cost unit is subject to approval

38. © 2015 Winning Management Consulting 38

39. © 2015 Winning Management Consulting
Business Life Cycle
From strategic plan to operational results
39
HIGH PERFORMANCE TEAMS
GOVERNANCE, RISK & COMPLIANCE
STRUCTURE &
PROCESSES
PEOPLE &
CULTURE
Business Cases Requirements & Project Management Benefits tracking
Grow the Business Run the BusinessChange the Business
Strategic Plan
Vision, Mission
Goals
Benefits &
Performance
Projects
Portfolio
Source: Pereira & Teixeira, 2015

40. © 2015 Winning Management Consulting
Agenda
40
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

41. © 2015 Winning Management Consulting 41
Scientific Business Case
Hypothesis Validation through the appropriate Business Research Methods
THENIF
Two different teams will reach the same conclusions about ROI of a specific project.
Effect
Business
Growth
Legal
Compliance
Costs
Reduction
Efficiency
Increase
Stock
price
Benefit 1
Benefit 2
Benefit 3
Initiative
“What is intended to do”
Cause
Hypothesis
Yes? / No? How Much?
Business Research Methods
(…)
- Regression
Analysis
- …
Historical Experience Interrogative
- Control
Group
- …
- Survey
- …

42. © 2015 Winning Management Consulting 42
Business Case Canvas
Template Example: critical information for the decision-making GO/NO-GO
Cost € [95% confidence level] Benefits € [95% confidence level]
Solution Economics
Problem
Business
Drivers
Strategic Align
Customers’
loyalty
increase
Business Increase:
3,208,013
Cost Reduction:
3,609,015
Campaign from our
competitors with
high price reduction
(50%)
New offer: Service
package with more
functionalities at a
slightly higher price
OPEX:
415,104
CAPEX:
799,720
Leader in the
quadruple play
market
NPV (k €): 7,633
ROI (%): 870.7
ERR (%): 135.2
Payback w/ interest
(months): 3.7
Increase of
presence of
our services in
the client
Decrease
operational
costs
Strengths Weaknesses
Opportunities Threats
High Return on
Investment
Expertise of our
commercials
Failures in
our Internet
Services
High demand on
Internet + Mobile
Phone services
A downturn in
economy and
less spending
budget of
people
1st place in
customers
satisfaction rank

43. © 2015 Winning Management Consulting
Agenda
43
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

44. © 2015 Winning Management Consulting 44
Conclusions
Pereira Diamond within the Business Case Process
Based on the business case good practice, the overall business case steps and benefits mindset may be synthesized on the following steps:
1. Listen to the
market
2. Listen to your
company
3. Start the process with a
benefit in mind
4. Budget is only a means to
achieve the benefit
5. Uncertainty is a fact and
needs to be estimated
6. Two different people must
achieve the same results

45. © 2015 Winning Management Consulting
Leandro Pereira
The biggest problem for an organization is …
its assumptions!

46. © 2015 Winning Management Consulting
Agenda
46
Beginning
The End
12h30
13h15
(45min)
— Context
— Benefits Management
— Pereira Diamond
— Scientific Business Case
— Conclusions
— Questions
(10min)
13h25

47. Thank you!
Any questions?
Contacts:
claudia.teixeira@winning.pt
leandro.pereira@winning.pt
#apmbmsummit
APM Benefits Summit 2015
Save the date! Thursday 25th June 2015

48.  APM Benefits Summit
Thursday 25th June, Hatton Garden, London http://bit.ly/bmsummit
 Projects and programmes: a sure-fire way to create business value?
Wednesday 24th June – breakfast briefing, London SW1
 Visualising the relationship between projects and benefits
Wednesday 24th June –workshop [pm]
[Note: Also at Milton Keynes on 23 June]
#apmbmsummit
Leandro.Pereira@winning.pt
Claudia.teixeira@winning.pt
@apmbmsig I #apmbmsummit

49. © 2015 Winning Management Consulting
Leandro Pereira Ph.D, PMP, ROI
49
CEO of Winning Management Consulting
Associate Professor at ISCTE Business School
Director of Executive Master in Program and Project Management at INDEG
President and Founder of PMI Portugal Chapter
PhD in Project Management
Certified by DEA in Knowledge Management
PMP Certification of PMI
Certified in ROI Professional
Mobile: +351 91 599 10 20
email: Leandro.Pereira@winning.pt
Background
Leandro Pereira is the CEO and founder of Winning Management Consulting. With over 14 years of working experience in functions of executive management in management
consultancy organizations. Having a degree in Information Management from Escola de Engenharia da Universidade do Minho, with a GPA of 18/20, he obtained the distinction of
Best Student of Universidade do Minho. Later, he took a PhD in Project Management at the prestigious Universidade Pontifícia de Salamanca, where conducted a pioneering
project in the project recue area. Regarding the PhD program, he has received from the faculty an award for developing the investigation with highest final grade. At ISCTE,
Leandro Pereira is the Director of Executive Master in Program and Project Management as well as Guest Associate Professor in the Strategic Management, Business Project
and Project Management, being the advisor of several PhD and Master’s theses in the same areas. He detains the Project Management Professional (PMP®) Certification from
PMI® and ROI Professional Certification from ROI Institute. Throughout his professional experience, he was responsible for the conceptualization, design and implementation of
management solutions not only at organizational level but also at technical level, including conceptualization and design of organizational units – PMO’s in several companies
within Banking, Pharmaceutical, Utilities, Services, Infrastructures and Civil Engineering sectors. As instructor, he detains the CAP and has wide experience in this area which
goes from the conceptualization of advanced courses in Business Cases, Business Analysis, Project Management and Cost Management to the preparation of numerous
applicants for PMP® and CBAP® in Portugal. Moreover, Leandro Pereira is the Director and Founder of PMI Portugal Chapter. Author of several articles in management
magazines (RH Magazine, Pessoal, Dirigir), he recently published a book called “Gestão de Conhecimento em Projetos” from FCA. During his professional and academic path,
he received many distinctions, being The Best Professor of Executive Master in Project Management at ISCTE and 8 Merit Awards with highlight on Prémio Senado Universitário,
for being the best student at Universidade do Minho and Prémio Governo Civil de Braga, for being the student with highest final GPA in the entire university. Besides, he was
awarded with the diploma supplement to the degree developed by UNESCO. Before the admission in the higher education, in 1994, he received the Prémio de Distinção
Nacional: "Juventude e Defesa Nacional", awarded by Ministério da Defesa.

50. © 2015 Winning Management Consulting
Cláudia Teixeira
50
Manager at Winning Management Consulting
Degree on Business Management & Administration (Catholic University)
Master Student at ISCTE Business School (Thesis on Benefits Management)
Mobile: +351 91 474 05 58
email: Claudia.teixeira@winning.pt
Background
Cláudia Teixeira is a business case consultant specialist at Winning Management Consulting responsible for projects from different sectors such as banking,
insurance, IT and telecommunications.
Cláudia trains others in benefits management and business case topics and is currently undertaking a Master degree at ISCTE-IUL Business School specializing
in benefits management. Her dissertation thesis aims to identify business case gaps in organisations and make recommendations based on worldwide good
practice.
She has also a foreign professional experience in UK (London) for two years and a half where she worked in the hotel management sector in several roles such
as Guest Relations, Revenue Management & Pricing Strategies and Sales & Events.
Cláudia is also an author of several articles in business magazines and international journals such as the Executive Digest Magazine and the International
Journal of Business & Management