1. Sustaining Growth Improving ROI through Resource Allocation & Project Prioritization Presented by Try L. Muller Program Manager Piedmont Housing Alliance
2. AGENDA What will the presentation cover? Organizational performance evaluation Where do we need to make improvements? Possible solutions to problem area(s) Potential biases in choosing a solution to the problem(s) Evidence and recommended solution Implications of the recommended solution
14. Choosing a Focus Area Using a Payoff Table to Reprioritize Projects Note: 12/30 (.4) investment projects had significant ROI Probability of ROI > 16% = .4 and ROI ≤ 16% = .6
15. Choosing a Focus Area Finding A Focus Area with the most Significant ROI
16. Recommendation Type C: Multi-Family Projects The multi-family projects seem to be the logical way to go Focusing resources to this primary project area should render more significant returns These projects still serve a wide variety of people Only if resources are available should they be allocated to alternative opportunities (providing a thorough assessment)
17. Implications Type C: Multi-Family Projects We have an explicit system to follow Everyone is aligned with the organizational endeavors Maximizing the value of our resources Easier to judge opportunity cost of alternatives Taking steps to sustaining growth Being flexible while still creating value
Hinweis der Redaktion
Hello: This presentation will address certain interrelated aspects of the organization that affect PHA’s proficiency in performing projects that generate significant levels of return. By the end of the presentation, I hope to have presented a solution that will help sustain growth through consistent ROI and also provide a protocol by which we will allocate resources.
This will be the schedule for the agenda: I will begin with a brief performance evaluation of the organization and subsequently highlight our problem areas. By the end I will have presented you with some decision alternatives and my recommendation on how to move forward.
[Reading from the slide]We are always finding new FHIP’s to incorporate into our scope of services which makes us that more proficient at reaching our target clients and using creative methods to do so. [Reading from the slide] All of our employees participate in multiple professional development workshops, clinics, etc… throughout the year. This is clearly something that management emphasizes. [Reading from the slide] It is imperative that employees know about all organizational endeavor. Employees need to be able to accurately inform people of what PHA is involved in.
[Reading from the slide]Over the past few years we have gotten ourselves into positions that could have been avoided if we decided to take a more cautious approach to all of our endeavors. [Reading from the slide] We have to be very efficient in our use of money. The allocation of our funds has to be done with the mindset of “how are these funds going to come back to me?” [Reading from the slide] Our system for evaluation is succinct and clear. This is something we do with consistency.
[Reading from the slide] We must always strive to be more efficient; for both the customer and for our own work process. [Reading slide] Most of our customer information comes from the ample surveys we send out. [Reading Slide]
[Reading from the slide] The costs we incur as an organization are fairly simple except for projects. We do a good job of minimizing costs overall. [Reading slide] We can have a greater segment margin if we can put together the right strategy. This obviously does not apply to the housing counseling services we provide.[Reading Slide] ROI is key to our operations and it is how we find more opportunities. We will address in the next few minutes.
Ultimately, ROI should be our main concern right now. Risk assessment and resource allocation are vital to understanding what projects are going to provide the greatest benefit for the organization. Let’s see why ROI should be a major concern for us.
This is why ROI should be our number one concern. Since the end of the 1999 -2000 calendar year we have lost 50% on our investment projects. If the numbers do not seem that bad, then consider that our average ROI right now, according to these numbers, is 16.2%.
Looking at the avg. project cost vs. the ROI provides a very raw look at how much money PHA has not been capitalizing on over the past decade.
Since ROI has diminished down to 16%, the contribution of each type of housing project is very insignificant. We need to rethink how we approach our investment projects.
Let’s look at the process of project prioritization. By giving our focus areas priority (Type A, Type B, Type C) we can devote the necessary time and resources to that focus area and increase our ROI. All other opportunities outside of this focus area will be addressed if the resources are available and everything has been thoroughly assessed.
There are a couple of issues that could sway the decision process and I would ask you to please omit these from the process as they may not result in choosing the right focus area.TYPE A: these projects serve single families. Not easily done in batches. Type B: Could get preference because properties are scattered so they serve a wide variety of people. Type C: same applies as in Type B properties.
TYPE A: we have had some bad history with single family homes. Especially in the closing process. People may be wary of making this the top priority. Type B: The process is often controlled by PHA— less headache because internal managers handle everything. Type C: Groundbreaking projects can take time, and often we are relying on other people— it could be held up by donations.
I used the highest ROI for each project which estimates how significant returns could be if resources are allocated primarily to that project area. I chose the lowest ROI for each project to represent the worst case scenario. I chose 16% as my significance because this is where the current ROI has diminished to. Using the probability of a significant and insignificant ROI, I want to see which project area should generate the most significant returns.
As the calculations show, the multi-family partnership projects should generate the most significant ROI. The other two projects are fairly close to each other and are still right around our current average.
My recommendation is pretty clear: we should focus our resources on Type C projects. This should increase our proficiency level in generating ROI. It is also has other implications.
Having an explicit protocol for taking on projects will make it easier on everyone and all employees will be clear about organizational endeavors; we have a clear method to sustaining growth. We will be maximizing the value of our time and money. Since there is a chain of priority, it will be easier to see the opportunity cost of various alternatives. We are limiting ourselves to one project area, we are simply being more efficient in how we take on projects.
