ROI Value Modeling™ for Decision Making


Determining and communicating project value in the language of business
1-Day Intensive Seminar Workshop


Companies are demanding reliable financial measures of proposed projects’ value. Yet, project managers often don’t know how to identify, calculate, or communicate a project’s REAL ROI™ (Return on Investment). Traditional ROI calculations increasingly are being criticized for telling only part of the necessary story. The difficulty afflicts all types of projects but often is greatest in areas like IT, where benefits may seem intangible and frequent overruns impact estimates’ credibility. This interactive workshop shows how to identify full-story key effects on revenue and expense variables, reliably quantify tangible and intangible costs and benefits, and convincingly communicate the business value of project investments. Exercises enhance learning by allowing participants to practice applying practical techniques to a real case.


Participants will learn:


  * The financial information that business decision makers need and demand.
  * ROI and related calculations, strengths and weaknesses.
  * Using ROI Value Modeling™ and the Problem Pyramid™ to fully identify relevant costs and benefits.
  * Quantifying intangibles, risk, flexibility, and opportunity.
  * Professionally presenting credible business value measurements so people pay attention.


WHO SHOULD ATTEND: This course has been designed for business, systems, and project managers as well as analysts, implementers, users, and others who must know the return on project investments.


 

WHAT MONEY HAS TO DO WITH IT

  • Project Manager role with regard to ROI
  • Situations demanding ROI, their issues
  • Difficulty of making convincing arguments
  • Linking ROI to the business case
  • Value Modeling™ Relationship Diagram
  • Investment vs. expense
  • Justification vs. objective analysis
  • Meanings of “It costs too much”
  • Total Cost of Ownership (TCO)
  • Factors other than cost to be considered
  • Costs and benefits, revenues vs. expenses
  • Return on Investment (ROI) calculations
  • Net present value, discounted cash flow
  • Payback period, annualized return
  • Internal rate of return (IRR), hurdle rate
  • Issues with typical ROI usage
  • Scenario approach to showing benefits
  • Economic Value Added (EVA)
  • Other “Designer ROI” calculations
 

ESTIMATING CREDIBLE COSTS

  • Problem Pyramid™ ties costs to value
  • Basing costs on implementation of design
  • Business case framework
  • Basic formula for estimating costs
  • Main causes of poor estimates
  • Top-down vs. bottom-up techniques
  • Risks that afflict ROI calculations
  • Three measurable ways to address risks
  • Best-, worst-, most-likely-case scenarios
  • Sources of parameter sizing assumptions
  • Defining a reasonable scenario for success
  • Getting reliable cost and revenue amounts
 

DETERMINING MEANINGFUL BENEFITS

  • Why it’s important to find the benefits first
  • Treacy’s model of 5 revenue categories
  • Problem Pyramid™ to find requirements
  • Decision variable clarification chain
  • Putting a dollar value on intangibles
  • Opportunity, innovation, and flexibility
  • Mandates, project with no apparent benefits
 

REPORTING AND MONITORING

  • Single vs. multiple scenario presentation
  • Applying apples vs. apples, when you can’t
  • Scenario assumptions and parameters
  • No change vs. proposed scenarios’ ROIs
  • Measuring intangibles’ monetary effects
  • Continual, step-wise, and one-time changes
  • Percentage-likelihood impact adjustments
  • Presenting with spreadsheets
  • ROI Value Dashboard™ modeling tool
  • Caution about commercial ROI calculators
  • Using value modeling to improve decisions
  • Dashboard and scorecard-type notification
  • Capturing, calibrating with project actuals
  • Adjusting appropriately during project


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