1. PART 2- DECISION-MAKING
TO REALIZE GOALS
 S creening A dded V alue
I nitiatives
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2. Where we are on the
management cycle.
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3. The Realities We Face
 Resources are Limited
 There is a Competition for Funds
 Sometimes the Winner is the Best
Sales Person
 Financial Decision Rules Don’t Always
Match Operating Decision Rules
 Financial Returns And Efficiency Will
Continue To Be Powerful.
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4. SAVI model
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5. Introduction to Chapter 6
 Two
of the difficult issues facing today’s
manager are:
 Finding
the optimal solution to a problem
 Communicating the findings to a decision-maker.
 The framework for an integrated analysis in
decision making is called
 Total Impact™ Business Case
Analysis
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6. LINKING BUSINESS CASES
TO STRATEGIC PLANS
 As stated previously in the context of
Total Impact the broad objectives are
to improve performance in the areas of:
Financial efficiency and effectiveness,
Sustainability of the economic
environment,
Stewardship of the natural
environment,
Safety of employees and the public and
Service to the customer.
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7. LINKING BUSINESS CASES
TO STRATEGIC PLANS
 The “Total Impact Business Case”
follows the decision making path that
has been created by the strategic
phase of the management cycle.
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8. Business Case and the
Management Cycle
 Figure 6.1
Operating plans
and budgets
Project
management
“Total Impact”
Business case
Needs
Assessment
Performance
Management
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9. What is a Business Case?
A completed business case is a report
(a document or an oral presentation)
that a decision has been reached
regarding a particular problem or
opportunity being faced by the
organization.
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10. Figure 6.2, The Five C’s of business
casing
Complete Tell the whole story.
Everyone in your organization should use the same
Consistent
format
Concise Don’t offer too much information.
Not Be careful that relationships between costs and
Contrived benefits are logical.
Use If you can convince yourself that the solution
Common proposed is the best possible solution, then you
Sense will also be able to convince others 10

11. What is a Business Case
Analysis?
A business case analysis is;
a systematic process of
 evaluating a cross section of alternatives
 against criteria that match strategic goals
 to arrive at the best solution to a problem.
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12. Two Related Steps
 Step 1 is to find the best solution to a
problem by preparing a complete
business case analysis using a
decision model.
 Step 2 is to put the findings of the
analysis into a report that will be
convincing for a decision-maker.
 We begin with the first step.
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13. COMPONENTS OF A
BUSINESS CASE
A structured approach:
 Identifies all aspects of a proposal in enough
detail to give a decision-maker confidence that
the analysis is complete.
 Provides justification for the recommended
solution by evaluating and choosing from
alternative courses of action.
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14. Convince those with the
authority to approve that:
 the problem or opportunity is real
 the alternative chosen is the best
available
 The investment makes the best use of
limited resources.
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15. consider some or all of the
following factors:
 The possibility of multiple goals that conflict
with each other.
 The fact that projects have life cycles.
 The range of alternatives is getting wider as
technology improves.
 Impact of the expenditure decision across
organizational boundaries.
 Dynamics of the change process, and the
need to address risks and uncertainty in a
rapidly changing world.
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16. PROBLEM SOLVING
PROCESS
 In practice, poorly defined problems are
subjected to faulty analysis and people
sit around arguing about which option
to choose!
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17. PROBLEM STATEMENT
PROBLEM STATEMENT
CRITERIA
CRITERIA
Figure 6.3
PROBLEM
ALTERNATIVES
ALTERNATIVES
SOLVING
MODEL FINANCIAL ANALYSIS
NON-FINANCIAL
NON-FINANCIAL FINANCIAL ANALYSIS
ANALYSIS
ANALYSIS
MAKE A CHOICE
MAKE A CHOICE
IMPLEMENTATION PLAN
IMPLEMENTATION PLAN
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& FOLLOW UP
& FOLLOW UP

18. DEFINING THE PROBLEM/
OPPORTUNITY
 Proper problem definition or
identification of an opportunity is the
most important, and often one of the
most neglected elements of a business
case preparation.
 The problem statement should guide a
decision-maker to a full analysis of all
logical alternative solutions.
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19. Problem definition involves
the following steps:
1. Identify your present position
2. Identify why the present position is undesirable
3. Identify the position you would like to be in, (set
an objective)
4. Identify why the new position is desirable
 A problem statement identifies, in future
terms, the impact on the organization if the
problem is solved.
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20. Four Levels of Problems and
Opportunities, (Fig. 6.4)
Level Analysis
Strategic How does a new division fit with the Mission and
strategic goals?
Project How will the division be defined in terms of the types
of products and services it carries?
Component The names of the specific brands and the
descriptions of specific services?
Operational Where do we get materials and labour?
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21. problem-solving activities
are valuable
 They challenge thought processes and force
creative thinking.
 They encourage us to examine situations
from different perspectives, frequently
causing new and better methods to be
employed.
 They usually act as a catalyst for personal
learning by the people involved.
 They quite often carry the seeds for new
opportunities.
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22. IDENTIFYING PROJECT
GOALS
 Thegoals should address both the
immediate short‑term purpose and the
long‑range goals of the expenditure. In
general, goals should pass the SMART test.
 Specific
 Measurable
 Achievable
 Result Oriented
 Time limited
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23. 7 types of projects
1. Expand to meet an increase in customer demand.
2. Introduce a new division or revenue stream.
3. Maintain current technical performance.
4. Decrease in future capital and/or operating costs.
5. Change for technical improvement.
6. Introduction of a new process to improve quality of
customer service.
7. Change in processes to satisfy non-financial factors
such as public perception, environmental issues,
employee morale etc.
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24. Strategies for defining goals
 Seek:
 Avoid:
 Build:
 Restore:
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25. Summary
 Theproblem/opportunity statement is
the most important element of the
decision model.
 Perhaps the best way to summarize the
findings of his chapter is to use a
“Problem Statement Checklist”, (figure 6.7).
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26. Closing Remarks
 This chapter begins a four part
discussion of problem solving.
 Chapters 7, 8 & 9 will walk you through
the remainder of the decision making
model.
 Remember that the primary purpose of
this model is to S creen A dded V alue
I nitiatives.
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