The bare essentials 3 Flashcards
What is a business case?
A feasibility study for a project to see if you can should pursue
What is the measurable organizational value?
- Objective of the project and how it delviers value to the company.
- > Should include area of impact, value, metrics to measure the value, time frame
How can you compare alternatives?
- Payback period
- Return on investment
- NPV
How do you calculate the cashflow?
Benefits - Cost
Sometimes specified per year.
How do you calculate payback period?
Investment / cashflow
Investment = investment cost
How do you calculate return on investment (ROI)?
((expected benefits - expected cost) / expected cost) * 100%
How do you calculate NPV?
( SUM of (Benefits - cost) / (1 + R)^t ) - initial investment
NPV > 0 –> do the project
What are examples of benefits?
- INcrease in high value work;
- Improving accuracy (less errors)
- Improving efficiency (reducing effort)
- IMproving decision making
- Improving customer service
With any benefit you need to think about which things?
Is it tangible or intangible?
Is it easy or hard to quantify?
–> IN the end you want numerical values for benefits.
How do you compare alternative situations or solutions?
- Start with setting criteria on which to evaluate;
- Put weights to those criteria
- Score = sum of all criteria *weights
- Can be qualitative (+ and -)
- Can be quantitative (scores)
- Can be subjetive / objective
What is feasibility?
Likelihood of success
What is risk?
Likehood * impact
Likelihood = probability Impact = monetary value of not reaching objective
3 steps in risk management?
- identification
- Assessment
- Response (avoid, accept, mitigate, transfer, escalate)
What do you take into account other than NPV/ROI or criteria when you decide to invest in a project?
- Budget Constraints
- Probability of achieving benefits
- Probability of project completion
Which three areas are there often in feasibility?
- Economic
- Technical
- Organizational
