Topic 3.7: Business case: valuing other impacts
(A cynic is) a man who knows the price of everything and the value of nothing
Oscar Wilde, Lady Windemere’s Fan, 1892
Yet for many projects – especially those in government and the not-for-profit sectors – there are no direct financial returns.
Indeed, not every impact– nor even the vast majority of impacts for some projects – can be priced.
These impacts are the non-monetary (intangible) outcomes delivered by a project, and can include positive or negative changes to:
Knowledge and/or skills (which should lead to improvements in productivity)
The brand (reputation) of our organisation and/or client
Stakeholder networks and relationships
Advantage over competitors
Community well-being, and
The physical world.
Now it might be possible to say that as a result of this project and the new knowledge it enables we will increase our productivity by five percent.
Nonetheless, it is not always easy (or even desirable) to definitively state that this project will enhance corporate culture by three percent, which will lead to a 0.5% productivity boost and 0.18% return in profit over three years.
That said, it is still vital to quantify these impacts so that we can:
- Compare them at least indirectly to the costs of investment, and
- Ultimately evaluate whether our project is a success.
It is equally important to benchmark the impacts of our ‘do nothing’ option as a basis for comparison.
So how can we quantify intangible benefits?
By the time you reach business case development, you should have added significantly to this list.
You can now compare each option (including ‘doing nothing’) by the extent to which it will change an intangible outcome.
It is important that your statements about the impact of each option are substantiated with a detailed argument as to why you think each outcome is likely.
These statements are not only used to justify the organisation’s preference for one option over another; they become a set of expectations (or promises) that stakeholders will expect the project to deliver.
A number of other, commonly used effectiveness metrics include:
For example, the number of people trained or the number of patients treated
For example, the number of safety incidents or the number of errors in production
Avoided cost analysis
For example, reduced travel time or operational savings
For example, Likert scales, where '5' is very happy and '1' is very sad
Analysis of commentary
For example, the ratio of positive to negative feedback
Unfortunately, whereas many project business cases are quick to state the intended benefits of each option, they quite often fail to describe how these impacts will be measured beyond dollars and cents.
Stakeholder groups impacted by projects include:
- The performing organisation (including their staff and owners)
- The project’s client
- End users of the project’s outputs, and
- The general community (non-users).
In this instance, it may also be useful to consider the natural environment as a proxy stakeholder (if you have not already done so).
This is because the environment impact of your project has the potential to excite your stakeholders and impact (for better or worse) your social licence.
By linking impacts to stakeholders you can make more persuasive arguments for each option by directly addressing their specific, motivating needs.
Critically, the business case is the best (and often only) place in the project lifecycle to discuss and define these impacts.
Once project planning starts, the manager’s focus will shift exclusively to output realisation, without any immediate regard for these broader concerns.
The lesson here is twofold:
Firstly, if you don’t define outcomes and benefits at the initiation stage, it is not clear to stakeholders why the project is being undertaken.
Expecting the project manager to do so in planning – that is, once a high-level scope, time frame and budget have been approved – is distracting at best and more often than not invites a significant level of conflict.
Secondly, if you don’t quantify the benefits now, how will you know if your project is a success?