If you have ever put together a business case for anything more complex than replacing worn brake-shoes on a car, then you have most probably been faced with very detailed investment evaluation guidelines. It can be really confronting. How do you make it less so?
Investment evaluation guidelines generally provide guidance on such things as the:
■ cost base to use
■ price escalation indices
■ discount rate(s)
■ cost of capital
■ template model you must use
■ distinction between real and notional benefits
■ regression analysis
■ ‘Monte Carlo’ simulations
■ scenario analysis
■ treatment of fixed and variable costs
■ terminal values
■ study periods
■ confidence levels
■ net present values
■ internal rates of return
■ labour on-costs and overhead loadings
■ endorsements and approvals required
■ re-submit criteria
■ funds release schedules
■ benefits capture plans
■ various factors to consider in different circumstances … and
■ the list goes on … and on.
It’s all terrific stuff, pulled together from years of experience, generally accessible via intranet. However, if you felt the need to print it, the paper mountain would be intimidating in itself, let alone coming to grips with the contents.
So, how do you climb a mountain that looks too tall to conquer?
If you are not an experienced mountaineer, you would not wake up one day and say, I’m climbing Mt Everest today. You would start to train for the assault. Seek out the experience of those who will be reviewing your case. Speak to them about what you will be trying to put together and what they believe you should consider or be wary of. Get their advice on those aspects you should not need to consider. Involve them along the way. By the time the business case is put forward for review, they should be familiar with what’s in it. This also assists in smoothing out potential problems ahead of time.
Similarly, you would never say to yourself I’m going to climb the mountain with the garden tools from the back shed. No, with your training, you would seek out tools that were suitable for the climb. One size never fits all. Smart template systems enable selection of something appropriate to your case. Ideally, there should be templates for a simple proposal; for something not totally simple; and one for the really complex. It is always preferable, if not mandatory, to use the purpose built templates maintained by the business case reviewers. That way they have confidence that key background calculations are as they should be. It reduces the potential for error.
Importantly, you would prepare your body for high-altitude exertion using the right tools and equipment you selected previously. Practising on small and middle-sized mountains, and spending time in thin atmosphere, will test you on what you will encounter. The more you do it, the less confronting it becomes.
Training, tools and testing all combine to make the climb that much more successful.