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Managing the Portfolio, Realising the Benefits 1

Managing the Portfolio,Realising the Benefits

The CJS IT Approach to Investment Appraisal,Portfolio Prioritisation & Value Management

Stephen Jenner

Version 1.0


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Contents Pages

Context 5 13

Portfolio Prioritisation 46 68

Value Management 1 Ensuring benefits are robust and reliable 69 86

Conclusions 131 137

Investment Appraisal 14 45

Contact Details 140

References 138 139

Foreword & Introduction 3 4

Value Management 2 Capturing all aspects of value 87 130


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Investment in e-Government and ICT initiatives has the potential to save tax payers money, releaseresources for the front line and transform the citizens experience. This however requires reliable

project delivery based on robust and repeatable processes. The CIO Council have therefore agreed

to introduce portfolio management of the governments overall investment in IT to:

match supply with demand;

anticipate generic challenges;

identify duplication and other opportunities for standardisation and sharing;

challenge relatively low value projects; and

set priorities when competing for scarce capacity.

The processes developed in CJIT to manage the CJS IT portfolio are an example of these principles

being applied in practice in a highly complex cross-departmental setting. They have been

recognised by a number of independent bodies and reflect best practice derived from experienceboth in the UK and in other jurisdictions. I commend them to you.

Foreword by John Suffolk, UK Government CIOF

oreword&

Introduction


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Project Portfolio and Benefits Management are relatively immature disciplines but they offer hugepotential in ensuring investments in major projects and programmes are aligned with businessstrategy, are effectively managed and ultimately deliver their full potential benefits. Whilst softwaretools can help, the answer lies in integrated, active, repeatable processes that:

scrutinise benefits to ensure they are robust and realisable including regular benefits integritychecks and Gates with teeth;

manage investments at an enterprise level from strategic intent through to benefits realisation;

and capture all forms of value increased income and cost savings; more efficient services; more

effective systems in terms of outcomes; and in the public sector, wider social value.

Central to all of this is a professional Value Management Office undertaking the above actions andfulfilling an intelligent customer function. The approaches developed to manage the CJS IT portfoliohave borrowed heavily from best practice both in the UK and abroad. It is our fervent hope that thesolutions developed will be of use to others as we progress this agenda. We are delighted to share

our learnings, tools and techniques please feel free to contact me or my team at the addressshown on the contacts page at the end of this document.

Introduction by Stephen Jenner, Director CJITForeword&

Introduction


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The context...

The fundamental reason for beginning a programme is torealise the benefits through change.

Source: Office for Government Commerce (OGC), Managing Successful Programmes (MSP)

It is only possible to be sure that change has worked if we canmeasure the delivery of the benefitsit is supposed to bring.

Source: UK Cabinet Office, Successful IT: Modernising Government in Action

Con

text


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But

for more than two decades, implementing ITsystems successfully has proved difficult

implementation of IT systems has resulted in delay,confusion and inconvenience to the citizen and, in

many cases, poor value for money to the taxpayer.

Source: Public Accounts Committee of the House of Commons, Improving the Delivery of Government ITProjects

Con

text


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And its not a UK specific issue

A recent assessment in the PresidentsManagement Agenda contends that the $45 billion

federal investment in IT during FY01 has not

produced measurable gains.

Source: Booz Allen Hamilton, Building a Methodology for Measuring the Value of E-Services

Con

text


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And its not just IT projects and programmes

Deficiencies in benefits capture bedevils nearly50% of government projects.

Source: OGC, Gateway News

30-40% of systems to support business changedeliver no benefits whatsoever.

Source: OGC, Successful Delivery Toolkit

Con

text


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Nor is it just a public sector issue

You can see computers everywhere but in the productivity

statistics.Source: Robert Solow (Nobel prize winning economist)

78% of Information Systems projects failed to realise even 50%of the originally identified benefits

Source: Management Today

project success appears to equate to achieving an acceptablelevel of failure or minimizing lost benefits

Source: KPMG Global IT Project Management Survey

Con

text


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And the tale of woe continues

According to a 2005 CFO Magazine survey, only 40 percent of CFOs findthat their IT investments are producing the returns they expected

Source: Gartner, How to Optimize IT Investment Decisions

If you ask senior executives and managers as I do in my executiveprograms at IMD whether their companies are extracting the expected

business value of their investments in IT, the overwhelming answer by a

large margin is no!Source: Donald A Marchand, Extracting the business value of IT: It is usage, not just deployment that counts!

Business cases are also generally viewed only as documents for gainingfunding. Once approved they are put away.few track the business

benefits the projects actually achieveSource: Gartner, Building Brilliant Business Cases

Con

text


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The answer an integrated, active, repeatable process

Building Confidence

in Delivery

Portfolio Management

Selection Criteria

Investment Appraisal

Portfolio Prioritisation

Doing Things Right MakingEvidence Based Decisions that:

Are determined by projectsAttractiveness and Achievability

Align IT investment with businesspriorities

Adjust the composition of theportfolio when appropriate

Active BenefitsManagement

Benefits Realisation Planning

Data Validation

Transparent Reporting

Doing Things Right EnsuringInvestment Success Through:

Validating the scale and quality ofbenefits

Benefits realisation managementat project and recipient agency

level

Capturing cross-system benefitsand wider social value

Performance Management

Delivery Plan

Portfolio Dashboard

Performance Review

Doing Things Right ManagingDelivery By:

Transparent / clear line of sightreporting

Continued funding linked toperformance including realisation

of forecast benefits

Con

text


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Encompassing multi-variate analysis & transparentreporting


Value Management

Investment AppraisalFinancial & Economic

Analysis

Strategic

Alignment

Transparent Reporting- Clear Line of Sight

Con

text


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And specificallythe independent role of the CJS IT Portfolio Unit

Value Management Office ensuring that:

Benefits forecasts are robust andrealisable with double countingremoved

All aspects of value are captured:driving up forecasts; undertaking

Portfolio-level research into cross-system benefits, social, politicaland foundation value

The processes, tools andtechniques adopted remain aligned

with best practice including thoseused in other jurisdictions

Con

text

Intelligent Customer Functionensuring that:

Investment decisions aresupported by robust evidence -based analysis of economic andstrategic impact

The requirements set by thegoverning bodies and HMTreasury are addressed

Funding allocations remain

aligned with strategic priorities


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Investment Appraisal

Deciding Whether to Invest

Booz Allen Hamilton International e-Gov Benchmarking Study 2005sound

investment practices...CJIT has adopted many best-practice investmenttoolsrecognised by the EC as a leader in this field in Europe

InvestmentAppraisal


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Contents

Gates

Investment Criteria

Financial Analysis

Benefits Validation

Proving Model

Investment Appraisal Report

Gates InvestmentCriteria

FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport

InvestmentAppraisal


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Implementing Gates with Teeth

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport

InitialA

pproval

Gate1

Concept Case/Feasibility Study

or

OutlineBusiness Case

Full BusinessCase

Funding to

progress to FBC

Project joins PortfolioFunding confirmed for current yearIndicative allocations for remainingyears of planning period

Performance

subject to review ona 6 monthly basis

FullAppro

valGat

e2

ContRe

viewGate

XExchange Programme

ITSupport for Statutory Charging

Full Business Case

D oc Re f No :I T S4 S C - 0 0 7

Author: G ar y R J enk ins

Owner: RobertStevenson

Version: 1.00

Status: Final

IssueDate: F r i d a y 3 0 S e p t 2 0 06

Restricted Management

StatutoryCharging Project

Exchange Programme

ITSupport for Statutory Charging

Full Business Case

D oc Re f No :I T S4 S C - 0 0 7

Author: G ar y R J enk ins


Version: 1.00

Status: Final

IssueDate: F r i d a y 3 0 S e p t 2 0 06


StatutoryCharging Project

Exchange Programme

IT Support for Statutory Charging

FeasibilityStudy

DocRefNo: ITS4SC-005

Author: GaryRJenkins


Version: 1.00

Status: Final

IssueDate: Friday30June2006


Exchange Programme

IT Support for Statutory Charging

FeasibilityStudy




Version: 1.00

Status: Final

IssueDate: Friday30June2006


Regular

Review


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So funding allocations are

Incremental

Guaranteed only to the next Gate Review

Increased as confidence in outcome grows

Linked to performance

Enforced by Gates with Teeth

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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Investment Criteria 3 A analysis

Just as assessments of Risk and Return underpin Portfolio Management in modernfinance theory, so assessments of Attractiveness and Achievability underpininvestment appraisals in Project Portfolio Management.

Attractivenessi.e. Return on Investment (RoI) and the contribution the projectwill make to strategic priorities

Achievabilityi.e. degree of innovation and complexity; whether there is sufficientcapability and capacity to deliver the project; adequacy of risk assessment andcontingency; and stakeholder commitment.

Additionally, because funding is constrained, we also need to consider:

Affordabilityi.e. in the context of available funds, what allocation of resources toprojects will have the greatest impact in terms of strategic contribution and returnon investment.

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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Investment Selection Criteria Investment Principles

1. All projects funded by the CJS IT Budget are subject to HM Treasurys SettlementConditions and CJS IT governance arrangements

2. Projects must contribute to the CJS Vision and/or add value to multipleOrganisations

3. What has been started should be finished - funding should continue for thoseprojects that are on time and to budget, otherwise previous investment would bewasted

4. No new projects should be funded unless they can demonstrate a positive NPV

with benefits agreed in principle by all parties5. Options selected should represent: shortest implementation time, lowest cost and

deliver a reasonable amount of benefit

6. Overspends should be borne by the relevant organisation rather than the ring-fence

7. Continued funding will be contingent on project performance and will be reviewedperiodically

8. Projects will not be funded if critical issues are unresolved9. Projects should meet best-practice thresholds for Attractiveness and

Achievability.

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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But the process depends on robust data

The best project selection system in the worldis worthless unless the data is sound.

Source: Bob Cooper and Scott Edgett, Ten ways to make better project portfolio and project selection decisions

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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Unfortunately

Business cases contain untestedassumptions masquerading as facts

Source: Bob Mornan, Benefits Realisation: Government of Canada Experience.

Presentation to the OECD

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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But its hardly surprising when

In a survey of 60 companies conducted byCranfield School of Management, 47% of

respondents openly admitted to overstating thebenefits in order to gain project approval. In otherwords, they claimed benefits that could never berealised in practice because no one expected to

be held accountable for those benefits.

Source: Wentworth Research, Benefits RealisationMany Happy Returns

Investment

Appraisal


FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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And

83% of IT directors admit that the cost/

benefit analysis supporting proposals to

invest in IT are a fiction.

A conspiracy of lies

Source: Kit Grindley, Managing IT at Board Level

Investment

Appraisal


FinancialAnalysis

BenefitsValidation ProvingModelInvestment

Report


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Optimism Bias is therefore an empirical reality

There is a demonstrated, systemic, tendency forproject appraisers to be overly optimistic. This is a

worldwide phenomenon that affects both the private

and public sectorsappraisers tend to overstatebenefits, and underestimate timings and costs

Source: HM Treasury, The Green Book

Investment

Appraisal


FinancialAnalysis


Report


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So robust validation of Business Case claims are required

But

all methods are somewhat unreliable; soconsider using multiple selection methods in

combination

Source: Bob Cooper and Scott Edgett, Ten ways to make better project portfolio and project selection decisions

Investment

Appraisal


FinancialAnalysis


Report


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CJS IT Portfolio Unit Validates and Triangulates investmentdecisions

InvestmentAppraisal

1. NPV/IRR criterion as measured

against: The HMT Green Book

Spending Review hurdle rates

The Benefits Eligibility Framework

3. Assessment ofAttractiveness and

Achievability againstresearch benchmarks using

the Proving Model

2. Validation of:

Benefits claims withrecipients

Efficiency benefits withefficiency planners

Strategic alignment with

strategic planners

Investment

Appraisal


FinancialAnalysis


Report


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And adjusts the investment criteria to suit the type ofproject

Projects are justified on three grounds:

1. Mandated (regulatory or legislative) - to satisfy a requirementthat is not currently being satisfied

2. Financial - cost savings, productivity improvements or newrevenues

3. Organisational - enabling a strategic objective

Investment

Appraisal


FinancialAnalysis


Report


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SoCJS IT adopts the following classificationCategory of

Projects

BusinessApplications

NewInfrastructure

Replacement

Infrastructure

PoliticallyMandated and

Legally /Regulatory

Required Projects

Investment Decision Criteria

Cost-benefit appraisal using the direct benefits of the application underconsideration.Investments are required to meet a minimum return on investment

Cost-benefit appraisal taking into consideration the enabled benefits fromapplications that will run on that infrastructure.Investments are required to meet a minimum return on investment

Cost-effectiveness appraisal i.e. on a like-for-like basis (and subject to

confirmation that the infrastructure meets a continuing business need) does thereplacement infrastructure release funds for use in front-line services?

Such investments are not discretionary and hence are not required todemonstrate a positive return on investment although their costs and benefitsare managed using the normal CJS IT practices.To the extent that costs exceed the quantified benefits there is an implicitassumption that the deficit represents the value of legal / regulatory complianceor reduced risk of policy failure. This gap is usually implicit the CJS IT

approach is to make the gap explicit i.e. to make the governance bodies awarethat in approving the project they are accepting that the cost represents theprice (political value) they are willing to pay to receive the benefits.

Benefits validatedwith the recipients

&

Project meetsminimum

standards ofAttractiveness and

Achievability

Investment

Appraisal


FinancialAnalysis


Report


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Triangulation and Validation 1 Financial/Economic Analysis

Guidance in the HM Treasury Green Book is mandatory - The

ability to judge how effectively government resources have beenexpended is essential to their strategic long-term management.So

ALL costs and benefits of a proposal should be valued whereverfeasible this includes:

efficiency savings, and

the economic value of improved performance (effectivenessbenefits)

Programmes are expected to show a positive NPV

Adjustments should be made to costs and benefits for OptimismBias

Investment

Appraisal


FinancialAnalysis


Report


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Triangulation and Validation 1 Financial/Economic Analysis

ExchangeProgramme

ITSupportforStatutoryCharging

FeasibilityStudy




Version: 1.00

Status: Final

IssueDate: Friday30June 2006


Fordistri butionto theCJSIT PortfolioUnit ProvingServicesTeamandtheI TSupportforStatutoryChargingProjectBoard

Green Book

Optimism BiasAdjustments

BenefitsEligibility

Framework

Investment

Appraisal


FinancialAnalysis BenefitsValidation ProvingModelInvestment

Report


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Triangulation and Validation 2 Benefits Validation

A completed project represents potential businessbenefits, not bankable benefitsBut identifying andquantifying benefits are not enough. Unlessbusiness unit executives commit to achieving them

and have the tools to measure them realizingthe benefits is unlikely.

Source: Gartner, Building Brilliant Business Cases

Investment

Appraisal

Gates InvestmentCriteria FinancialAnalysis BenefitsValidation ProvingModel InvestmentReport


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Triangulation and Validation 2 Benefits Validation

Investment

Appraisal


Business CaseDevelopment

Measuring &Tracking: Initial

Baselining

Project LiveService

Benefits Eligibility

Framework

1-Page SummaryBenefits Report

CPS Efficiency Plan

DCA Efficiency Plan

HO Efficiency Plan

Measuring &Tracking: Benefits

Realisation

Offences Brought ToJustice (OBTJ)

Reduced Re-offending

Confidence

Victims & Witnesses

Enforcement

Check alignment with BEFe.g. double counting, cost

avoidance

If fundingapproved

Project View of Benefits

Project Benefits Lead and BenefitsRealisation Lead agreeEfficiency

& Effectivenessbenefits

BenefitRealisation Leads

and EfficiencyPlanners agree

EfficiencyBenefits thatcontribute toDepartmental

Efficiency Plans

Strategic PlannersagreeEfficiency

& EffectivenessBenefits thatcontribute to

Strategic Targets& priorities

Benefit RealisationPlan: Police

Benefit RealisationPlan: CPS

Benefit RealisationPlan: Courts

Benefits Evidence &Revised Forecast

Benefit RealisationPlan: Corrections

BenefitsContributor

CJIT VMO

BenefitsRecipients

EfficiencyPlanners

Strategic

Planners

Benefits Validation

with Recipients

Benefits Validationwith Efficiency

Planners

Benefits Validationwith Strategic Planners


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Triangulation and Validation 3 - The Proving Model

Based on research by Cranfield University in 2001 of 178 Projects.

Since augmented by studies of a further 630 projects into thefactors underlying project and programme failure to realiseforecast benefits:

In the overwhelming majority of cases, these factors

were manifest prior to business case authorisation.

Source: Management Today

i.e. failing projects and programmes dont have brilliant businesscases and strong stakeholder commitment.

Key: Independent, research-based and OGC accredited

Investment

Appraisal

Gates InvestmentCriteria FinancialAnalysis BenefitsValidation

ProvingModel InvestmentReport


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The Proving ModelProject Assessment

Project Attractiveness factor analysis

Strategic contribution

Scale and confidence in benefitsanalysis & realisation

Clarity of investment objectives

Belief of stakeholders in Attractiveness

Project Achievability factor analysis

Complexity analysis

Processes & Capability

Ownership & Accountability

Clarity & Perception

Planning for Benefits Realisation Commitment of stakeholders

Source: Investment Analyser

Strategic Alignment & Contribution

Benefits Analysis

Objectives Definition Analysis

Stakeholders Analysis

100.0 58.2

100.0 69.0

100.0 65.0

80.0 63.2

Weighting Score

61.3Attractiveness Total

Attractiveness Summary

Complexity Analysis


Ownership & AccountabilityClarity & Perception

80.0 75.0

100.0 69.0

100.0 51.080.0 61.7

Weighting Score

64.6Achievability Total

Achievability Summary

Benefits Realisation Management


100.0 63.8

60.0 54.5

Investment

Appraisal




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Triangulation and Validation 3 - Proving Reviews:Attractiveness factor analysis

Stakeholder Attractiveness Analysis

Confirmation of stakeholder commitment

Objectives Definition Analysis Identification of objectives (technology, training, implementation,

business/process change)

Assessment of cost, resource, timescales, critical actions,business changes for each objective

Benefits Analysis

Confidence in benefits - targets and measures

Verification with benefit recipients and benefit owners

Confirmation of realistic timescales for benefits realisation

Organisations track record in realisation of benefits

Strategic Alignment & Contribution

Relative driver importance

Direct versus indirect benefits

Scale of contribution & confidence in impact

Attractiveness

Investment

Appraisal




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Triangulation and Validation 3 Proving Reviews:Achievability factor analysis

Stakeholder Achievability Analysis

Confirmation of stakeholder commitment


Common view of project objectives on the part of key stakeholders

Complexity Analysis

Scale size of proposed project

Volatility likelihood that key project elements may change

Interdependence critical dependencies both within the project andalso with other activities and projects

Diversity implications of variety or differences in expectations orrequirements

Novelty the uniqueness or originality of the proposed activities orsolution

Achievability


Evidence of ability to deliver within known constraints


For the claims and analyses made within the project documentation

Investment

Appraisal




Adequacy of planning for benefits realisation


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Triangulation and Validation 3 - The Proving Modeladvantages

Applied to new projects (Gates 1 & 2) and those inflight (Gate X)

The only OGC Gold accredited Investment Appraisal

tool

Removes many of the arguments research-based

Augments financial/economic analyses it provides a

different mirror

Investment

Appraisal




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Bringing it all together

The output a summary Investment Appraisal report for the

Governance Bodies with the salient facts covering:

1. Resource & CapitalRequirements

2. Resource & CapitalGaps

3. Any Funding Issuesand recycling of CostSavings

1. Proving Model Score

2. SRO Assessment based

on the PMDU* PSAappraisal framework

3. Cost / BenefitReliability andCompleteness

* Prime Ministers Delivery Unit

1. Financial & EconomicAnalysis

2. Benefits Validation withthe recipients andassessment of StrategicAlignment

3. Proving Model Score

AffordabilityAchievabilityAttractiveness

Investment

Appraisal



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Investment Appraisal Report Achievability Analysis

ResearchBased

SROsSelf

Assess-Ment

Cost/

BenefitsComplete

ness

Cost/Benefits

Reliability

ACHIEVABILITYANALYSIS

PROVINGSERVICESACHIEVABILITYSCOREBREAKDOWN

CONCEPTCASE(COMPLETE AS APPROPRIATE)

Stakeholder Analysis (Achievability)

Indication Achievability

Complexity Analysis

Score

Achievability Total

BUSINESSCASE(COMPLETE AS APPROPRIATE)

Complexity Analysis




Score

Achievability Total



ASSESSMENT OF DEGREE OFBUSINESSCHANGE REQUIRED TO REALISE BENEFITSRECIPIENT BRLASSESSMENT COMMENTS

HIGH

MEDIUM

LOW

N/A

Police

CPSDCANOMSYJBOthers [specify]

PROVINGMODEL ASSESSMENT

DATE OFCURRENTASSESSMENT:

ACHIEVABILITYSCORE:

PROGRESS SINCE LASTACHIEVABILITY ASSESSMENT:

COSTSSUFFICIENT CONTINGENCIES INCLUDED?

GAPBETWEENOPTIMISMBIASADJUSTEDCOSTS ANDREQUESTEDFUNDING:[XM]

CONFIRM WHETHER COSTINGS INCLUDE THE COSTS OFOPTIMISMBIAS MITIGATION:

YesNo

PROVIDEEXPLANATORYCOMMENTS IFMITIGATIONCOSTS NOTINCLUDED:

MITIGATION OFOPTIMISMBIAS ISREASONABLE

YesNon/a

Reviewed by: Comments

SROSSELFASSESSMENTSROSNAME: DATE:

ASSESSMENT RATING SUMMARYRATIONALEFORASSESSMENT

DEGREE OFCOMPLEXITY

QUALITY OFPLANNING,PERFORMANCE&BENEFITSMANAGEMENTCAPACITY TO DRIVEPROGRESS

LIKELIHOOD OFBENEFITSREALISATION:

STAGE OFDELIVERY: PROJECT SCOPINGDESIGN &DEVELOPMENTIMPLEMENTATION &DEPLOYMENTBENEFITS REALISATION

CONFIDENCE OFDELIVERYLOW LOW/MEDIUM MEDIUM MEDIUM/HIGH HIGHRED RED/AMBER AMBER AMBER/GREEN GREEN

HIGHLY PROBLEMATICREQUIRES URGENT AND

DECISIVE ACTION

PROBLEMATICREQUIRESSUBSTANTIAL ATTENTION,

SOME ASPECTS NEED

URGENT ACTION

MIXEDSOME ASPECT(S)REQUIRE SUBSTANTIAL

ATTENTION, OTHERS GOOD

GOODREQUIRES SOMEREFINEMENT AND

SYSTEMATIC

IMPLEMENTATION

GOODNO ATTENTIONNEEDED

InvestmentAppraisal



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Investment Appraisal Report Affordability Analysis

(1)TOTAL PROJECTCOSTS

YEAR RESOURCE(M)

CAPITAL(M)

TOTAL(M)

TOTAL

(2)RESOURCE/CAPITAL CURRENTLYALLOCATEDFROMTHERINGFENCE

(3)OTHERFUNDINGSOURCES

YEAR RESOURCE(M)

CAPITAL(M)

TOTAL(M)

RESOURCE(M)

CAPITAL(M)

TOTAL(M)

TOTAL

RESOURCE/CAPITAL GAP(1-(2+3)) RESOURCE/CAPITAL REQUIRED FROMTHE RING FENCE

YEAR RESOURCE(M)

CAPITAL(M)

TOTAL(M)

RESOURCE(M)

CAPITAL(M)

TOTAL(M)

TOTAL

FUNDINGOTHER ISSUES AVAILABILITYCONFIRMED?FUNDINGAVAILABLE TOREALISE BUSINESSCHANGE? Yes

NoBY: DATE

CONFIRMATION THAT OVERSPENDS WILL BE MET BYDEPARTMENTAL BASELINES

YesNo

BY: DATE

RECYCLINGOFCOSTSAVINGSYEAR LEGACYSYSTEM

SAVINGS

SAVINGS

RECYCLED?

AMOUNT BY WHICH THERINGFENCE

REQUEST CAN BE REDUCED

TOTAL

InvestmentAppraisal

GatesInvestment

Criteria

FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


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The Result

An assessment of a project or programmes:

Economic case

Strategic contribution

Attractiveness and Achievability against research-based criteria and industrybenchmarks

An Action Plan to be addressed by the time of the next Gate review

A Recommendation to governance bodies regarding funding

If approved:

Initial appraisal funding is provided to complete the business case

Full appraisal the project is formally brought within scope of the Portfolio andfunding for the current year is agreed with indicative allocations for future years(confirmation subject to project performance and periodic Portfolio Reviews)

InvestmentAppraisal

GatesInvestment

Criteria

FinancialAnalysis

BenefitsValidation

ProvingModel

InvestmentReport


46/140



Periodic re-evaluation of Delivery, Benefits Realisation and ensuringthe Portfolio remains aligned to Strategic Priorities

Gartner 2005the facilitating role of the IT portfolio unit represent goodpractices. Government organizations that are seeking successful approaches to

program and project portfolio management should study CJIT's actions.

PortfolioPrioritisation


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Contents

Objectives and Requirements

Portfolio Segmentation

Portfolio Reviews

Portfolio Analysis

Performance Reporting

Lessons Learnt

Objectives /Requirements

PortfolioSegmentation

PortfolioReviews

PortfolioAnalysis

PerformanceReporting

LessonsLearnt



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A definition

Portfolio Management is a corporate,strategic level process for co-ordinating

successful delivery across an organisationsentire set of programmes and projects.

Source: OGC, Portfolio Management



PortfolioReviews

PortfolioAnalysis


LessonsLearnt



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Portfolio Management Objectives

1. To obtain the highest return (in financial and/or performance terms) foryour available resources given an acceptable level of risk

2. To ensure balance in terms of investment types and organisationalstrategies

3. To ensure funding allocations reflect business priorities

4. To reallocate funds when performance deteriorates and/or priorities

change5. To manage dependencies, constraints and minimise double counting of

benefits

6. To manage Portfolio-level risk and uncertainty

7. To provide transparent reporting on performance from strategic intent to

benefits realisation




PortfolioReviews

PortfolioAnalysis


LessonsLearnt


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Requirements

1. A cost/benefit framework to enable comparisons between

projects and tracking of performance over time (the BenefitsEligibility Framework)

2. A method for assessing Strategic Alignment to enablecomparisons between projects

3. Standardised reporting to provide a clear line of sight and

transparent reporting

4. A consistent framework for categorising projects andprogrammes - all IT investments are not the same, and theinvestment justification criteria and the overall allocation of

Portfolio funds needs to reflect this




PortfolioReviews

PortfolioAnalysis


LessonsLearnt


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Portfolio Segmentation models

OGC Portfolio Management

Guide

Mandatory

Strategic

Business Support Experimental

Infrastructure

Maintenance

Cross organisational

Gartner Segmentation Model

(Setting Accurate IT Investment LevelsDemands an Appropriate Framework)

Infrastructure

Mandated by law

Mandated by IT principles Non-strategic

Strategic




PortfolioReviews

PortfolioAnalysis


LessonsLearnt


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The Cranfield Information Systems Investment Portfolio

Strategic

Investments in IS/IT applications whichare critical to sustaining future

business strategy

High Potential

Investments in IS/IT applications whichmay be important in achieving future

success

Key Operational

Investments in IS/IT applications onwhich the organisation currently

depends for success

Support

Investments in IS/IT applications whichare valuable but not critical to success




PortfolioReviews

PortfolioAnalysis


LessonsLearnt


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The Portfolio Segmentation used by CJS IT

Business Applications

Justified on Cost-Benefit terms i.e. doesthe economic value of the benefits

exceed the costs

Politically Mandated or

Legal/Regulatory InvestmentsJustified on Cost-Benefit terms - any

shortfall in benefits represents theimplied Political Value of avoiding non-compliance with the law, regulation or

policy (see pages 113-115)

Replacement Infrastructure

Justified on Cost-Effectiveness terms i.e.

does the replacement enableresources to be re-directed to other

value-adding activities

New Infrastructure

Justified on Cost-Benefit terms by taking

into consideration both theinfrastructure and the applications

(both planned and potential) that will

run on that infrastructure (see pages116-130)




PortfolioReviews

PortfolioAnalysis


LessonsLearnt


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Periodic Review of the CJS IT Portfolio2003/042003/04 2004/052004/05 2005/062005/06 2006/072006/07 2007/082007/08

SR02 SR04 SR07

Comprehensive Portfolio Prioritisation Linked to the Spending Review Delivery Plan approved by Ministers

Benefit claims validated by the BenefitsRealisation Leads (BRLs), StrategicPlanners, & Efficiency Planners

Comprehensive Portfolio Prioritisation Linked to the Spending Review Delivery Plan approved by Ministers

Benefit claims validated by the BenefitsRealisation Leads (BRLs), StrategicPlanners, & Efficiency Planners

Annual & Mid Year Portfolio Reviews Delivery Plan approved by Ministers Benefit claims validated by BRLs,

Strategic Planners & Efficiency Planners

Annual & Mid Year Portfolio Reviews Delivery Plan approved by Ministers Benefit claims validated by BRLs,


New Project Appraisals

Undertaken as required Individual project appraisals approved by

OCJR Ops Board Benefits claims validated by BRLs,


New Project Appraisals Undertaken as required Individual project appraisals approved by

OCJR Ops Board Benefits claims validated by BRLs,


Monthly Performance Report Clear line of sight - performance against

Delivery Plan

Monthly Performance Report Clear line of sight - performance against

Delivery Plan

ActivityActivity


Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt



55/140


Bi-annual Comprehensive Portfolio Prioritisation

Portfolio Prioritisation linked to the Governments spending review

cycle 3 year planning horizon, repeated every 2 years

Appraisal of existing and proposed projects to:

assess past progress and forecasts

ensure continued Strategic Alignment

ensure the Portfolio meets the minimum required rates of return

ensure emerging risks and issues are addressed

PortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


56/140


Annual and Mid Year Portfolio Reviews

Mid year review

Purpose - to ensure performance is on track and funding allocationsremain aligned to strategic priorities

Timing - mid-point of the financial year

Output - an updated CJS IT Delivery Plan

Result - approval by Ministers to continue

Annual review Purpose - to ensure performance is on track and funding allocations

remain aligned to strategic priorities

Timing - quarters 3 and 4 of the financial year

Output - an updated Delivery Plan for the remainder of the SpendingReview period

Result - approval by Ministers releases funding for the forthcoming year

PortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


57/140


New Project Appraisals

New projects can be appraised throughout the year. Funding cancome from:

Any unallocated funds

Funds returned to the ring fence budget via the Change

Request process Re-sequencing existing projects

De-prioritising existing projects

Appraisals follow the process outlined in the Investment Appraisalsection

PortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


58/140


Portfolio Analysis Attractiveness & Achievability Matrix

PortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


59/140


Other considerations

Besides absolute and relative Attractiveness and Achievability

scores, we also need to consider:

1. Whether each project individually, or as part of a widerprogramme, meets the required rates of return

2. Politically mandated or legal/regulatory required projects

3. Dependencies infrastructure projects in particular maystruggle to demonstrate a positive direct return on investment.The returns of other projects that are dependent on suchinfrastructure therefore also need to be taken into account

4. Balance between investment types (using both the CJS ITand Cranfield segmentations) and strategic contribution

PortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


60/140


Portfolio Balance - Considering Infrastructure Dependencies

Attractiveness

A

chievability

Commit

ProveDrop

Distraction

Project A

Project B

Project C

Project D

Project F

Project E

Filte

rThre

shold

Bubble Size = CostSource: Portfolio Analyser

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt

Project E is inthe Dropcategory butenablesProjects B, Cand D that arepositive


61/140


Portfolio Balance Considering Strategic Contribution

Source: Portfolio Analyser

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt

StrategicDrivers Projects


62/140


Portfolio Balance Considering Investment Types

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt

High Potential

5

10

15

20

25

30

35

Strategic

Key OperationalSupport 0

Classical PortfolioAnalysis: Cost ByProject Type


63/140


Portfolio Analysis - making the hard decisions

cancelling a project unlikely to deliver expected benefits should

not be seen as a failure - failing to cancel such a project shouldbe.

Source: KPMG Global IT Project Management Survey

a correct kill is a successSource: Bob Cooper and Scott Edgett Ten ways to make better portfolio selection decisions

But kill early - dont shoot the dogs, neuter the bitches! - cut offthe supply line of poor projects at source.

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


64/140


Comprehensive Portfolio Prioritisation the Result

Prioritisation of projects based on:

Return on Investment Proving Model scores

Portfolio balance - type of projects and strategic contribution

Available funds

Categorisation of projects into the following groupings:

Commit/Invest

Hold/Re-sequence - invest when funds become available

Cull or Reject- projects not meeting minimum standards for

Attractiveness & Achievability including the minimum hurdlerates of return

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


65/140


66/140


67/140


Portfolio Prioritisation - Lessons Learnt

1. Agree your Investment Principles before reviewing projects

2. In Prioritisation exercises - everything is out until its in!3. Investment Principles do not remove the need for informed judgement

4. Triangulate appraisals - consider the appraisal from more than oneperspective

5. Agreed processes do not remove the need for hard decision making

6. Take charge - if you dont someone else will!

7. Play by the rules - individual agendas must be left behind

8. One-off Portfolio Reviews and Investment Appraisals need to be backedup by repeatable processes of on-going review and appraisal

9. Establish an independent Portfolio Unit to act as an Intelligent Customer

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


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Benefits of the Portfolio Management Process

1. Evidence-based funding allocations

2. Poor projects are withdrawn or rejected

3. Transparent reporting of performance against a consistentbaseline the Delivery Plan

4. Significantly improved business cases of those projects in thePortfolio

5. Material increases in the Portfolio level benefits forecasts

6. Improved Stakeholder confidence

P

ortfolioPrio

ritisation

Objectives /

Requirements

Portfolio

Segmentation

Portfolio

Reviews

Portfolio

Analysis

Performance

Reporting

Lessons

Learnt


69/140


Value Management 1Ensuring benefits are robust and realisable

Cabinet Office Report to the OECD on the UK Approach to BenefitsRealisation 2006 -CJS ITconsidered a best practice case in the UK

ValueManagem

entRole1

Benefits Benefits


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Value Management Role 1 - Ensuring benefits are Robust &Realisable

Overview

Benefits Eligibility Framework (BEF)

Benefits Integrity Check

Strategic Alignment

Quarterly Benefits Reporting

Benefits Risk Management

BenefitsEligibility

Framework

Benefits

IntegrityCheck

Strategic

Alignment

Quarterly

Reporting

Risk

Management

ValueManagem

entRole1

Overview

Benefits Benefits


71/140


The need for a Benefits Management Framework

In accounting for costs we are guided by:

Financial Reporting Standards

International Accounting Standards

Generally Accepted Accounting Practice Government Accounting

Internal Costing Manuals

ValueManagem

entRole1

BenefitsEligibility

Framework

BenefitsIntegrityCheck

Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview

Benefits BenefitsS i Q l Ri k


72/140


In accounting for benefits we are guided by:

Note This page has been deliberately left blank

ValueManagem

entRole1

BenefitsEligibility

Framework


Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview

Benefits BenefitsSt t i Q t l Ri k


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The consequence anything goes and business cases thatinclude

Double counting of benefits (whats yours is mine)

Youre the beneficiary (whether you know it or not) i.e. benefits are notvalidated with the recipient

Opportunity value or non-cashable efficiency benefits with no indication

of how they will be realised or what the time saved will be used for

Pay now, benefit later (a long, long time later)

No consideration of disbenefits

Valu

eManagementRole1

BenefitsEligibility

Framework


Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview

Benefits BenefitsStrategic Quarterly Risk


74/140


Tricks of the trade continued

Notional costs avoided that should only apply at the options

appraisal stage are claimed in the cost/benefit appraisal

Fully loaded benefits i.e. that include overheads where there willbe no consequent saving in overhead costs

Funny money benefits claims without substance or logicalanalysis

The centre of the universe syndrome projects that claim toenable everything you couldnt use the PC without the table so

the table gets the benefits of the PC.

Valu

eManagementRole1

EligibilityFramework

IntegrityCheck

Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview


75/140

Benefits BenefitsStrategic Quarterly Risk

O


76/140


And bi-dimensional Benefits Categorisation by Type andby Recipient

Beyond the CJS

Cross CJS

Other Parts of the CJS

Other CJOs

Sponsoring CJO

Opportunity ValueCashableOpportunity ValueCashableBenefit Recipient

EffectivenessEfficiency

Benefit Type

Valu

eManagementRole1


IntegrityCheck

Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview

BenefitsEli ibilit

BenefitsI t it

Strategic Quarterly RiskO i


77/140


The Benefits Integrity Check

A quarterly check by the Value Management Office that project benefits

reports:

Are consistent with the Benefits Eligibility Framework

Are agreed with the recipients

Efficiency Benefits - are consistent with the Departmental EfficiencyPlans

Effectiveness or Performance Benefits - are agreed by the StrategicPlanners

Other benefits are agreed by appropriate professionals (see sections on

Social and Political Value)

Valu

eManagementRole1


IntegrityCheck

Strategic

Alignment

Quarterly

Reporting

Risk

ManagementOverview

BenefitsEligibility

BenefitsIntegrity

Strategic Quarterly RiskOverview


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Validating BenefitsValu

eManagementRole1


IntegrityCheck

g

Alignment

y

Reporting ManagementOverview

Business CaseDevelopment

Measuring &

Tracking: InitialBaselining

Project LiveService

Benefits EligibilityFramework

1-Page SummaryBenefits Report

CPS Efficiency Plan

DCA Efficiency Plan

HO Efficiency Plan

Measuring &Tracking: Benefits

Realisation

Offences Brought ToJustice (OBTJ)

Reduced Re-offending

Confidence

Victims & Witnesses

Enforcement

Check alignment with BEFe.g. double counting, cost

avoidance

If fundingapproved

Project View of Benefits

Project Benefits Lead and BenefitsRealisation Lead agreeEfficiency

& Effectivenessbenefits

BenefitRealisation Leads

and EfficiencyPlanners agree

EfficiencyBenefits thatcontribute toDepartmental

Efficiency Plans

Strategic PlannersagreeEfficiency& Effectiveness

Benefits thatcontribute toStrategic Targets

& priorities

Benefit RealisationPlan: Police

Benefit RealisationPlan: CPS

Benefit RealisationPlan: Courts

Benefits Evidence &Revised Forecast

Benefit Realisation

Plan: Corrections

BenefitsContributor

CJIT VMO

BenefitsRecipients

EfficiencyPlanners

StrategicPlanners

Benefits Validation

with Recipients

Benefits Validationwith Efficiency

Planners

Benefits Validationwith Strategic Planners

BenefitsEligibility

BenefitsIntegrity



79/140


Strategic Alignment

Number 1 in the National Audit Office/Office of GovernmentCommerces list of Common Causes of Project Failure is:

Lack of a clear link between the project and theorganisations key strategic priorities

So its fundamental - but whilst many Business Cases makeclaims about strategic alignment few actually demonstrate it.

Valu

eManagementRole1

Eligibility

FrameworkIntegrityCheck Alignment Reporting Management

Overview

BenefitsEligibility

BenefitsIntegrity



80/140


Strategic alignment the CJS IT approach

Project Level

Alignment to Strategic targets andBusiness priorities is assessed by:

1. The Proving Model scores forStrategic Contribution (SeeInvestment Appraisal section)

2. Strategic planners are asked to rate

each projects contribution, using theOGC definitions, as:

Mission Critical

Highly Desirable

Desirable

(See Investment Appraisal section)

Portfolio Level

Alignment to Strategic targets and

Business priorities is assessed by:

1. Strategy Benefits Realisation Plans allcontributions to a strategic target orbusiness priority are extracted from thecontributor project and recipientorganisation Benefits Realisation Plans and

are re-cut to present a Benefits RealisationPlan for each Strategic target and this isvalidated with the target owner/planners.(See next page)

2. The Root Cause Model maps projectcontributions against the root causes of key

problems to strategic targets. (See sectionon cross system benefits)

Valu

eManagementRole1

Eligibility

FrameworkIntegrityCheck Alignment Reporting Management

Overview


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82/140

BenefitsEligibility

BenefitsIntegrity



83/140


AccountabilityNamed benefit owner for each benefit

Progress by Quarter

Current RAG StatusOn top 10 benefits

AccountabilityAgency Benefits Realisation Lead

Quarterly Reporting Recipient Organisation BenefitsRealisation Report V

alu

eManagementRole1

g y

Framework

g y

Check Alignment Reporting Management


84/140

BenefitsEligibility

BenefitsIntegrity



85/140


Benefits Risk ManagementValu

eManagementRole1

Mitigation StrategiesBenefits Risk

Project Benefits Realisation Plans agreed by Benefits Working Group

Organisation/Agency Benefits Realisation Plans prepared for the year aheadfor all benefits to be realised

Quarterly benefits reporting against plan

Benefits realisation

falls behind forecast

Benefits Eligibility Framework

Independent review of Business Cases against the Benefits EligibilityFramework

Benefits agreed with recipients

Efficiency Benefits validated with departmental efficiency plans

Effectiveness/Performance benefits validated with strategic planners

Benefits forecasts arenot robust

Root Cause Modelling to capture cross system benefits

Portfolio-level research into social value benefits

Potential Opportunity Value benefits managed on an active basis

Process modelling and computer simulation to identify scope for increasedbenefits particularly at the points of intersection between agencies

Scale of benefits is

insufficient to justifyinvestment

Framework Check Alignment Reporting Management

BenefitsEligibility

BenefitsIntegrity



86/140


Benefits Risk Management

BenefitsRisk

Management

Risk register

on scorecard

Application ofOptimism Bias

adjustments to theBusiness Case

Risk assessed aspart of Proving

Model assessment

Benefits risks are assessed and managed in three ways:

Valu

eManagementRole1

Framework Check Alignment Reporting Management


87/140


Value Management 2Capturing all aspects of value

Valu

eManagementRole2

CISCO Report on behalf of the New York Housing Authority to the US

NECCC 2005 -your CJIT Portfolio Management initiative is considered a

strong and proven approach to measuring the benefits of IT investments.

Cross System

Benefits

Social

Val e

Political

Val e

PotentialOpportunity

Val e

Overview


88/140


Overview Cross System Benefits

Social Value

Political Value

Potential Opportunity/Foundation Value

Valu

eManagementRole2

Benefits Value Value Value

Value Management Role 2 - Ensuring all forms of value arecaptured

Cross System

Benefits

Social

Value

PoliticalValue


Value

Overview


89/140


Cross-System Benefits the issue

Business cases were found to be particularly strong

on the assessment of costs and benefits related tothe lead department itselfHowever, theidentification and quantification of external benefits,

for example to users or other departments, wereless well handled resulting in business cases thatoften understated the benefits, and provided an

incomplete base for tracking future 3rd partybenefits through to realisation.

Source: Cabinet Office, UK Country Report on Benefits Realisation

Valu

eManagementRole2

Benefits Value Value

Cross SystemBenefits

SocialValue

PoliticalValue


Value

Overview


90/140


The solution

Cause and Effect analysis similar solutions include:

Fujitsus Results Chain

Cranfields Benefits Dependency Network

Root Cause Modelling

Valu

eManageme

ntRole2

Value


SocialValue

PoliticalValue


Value

Overview


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The Results Chain - Oregon Department of TransportValu

eManageme

ntRole2

1 Re-engineer

Project Selection& Development

1 Re-engineer

Project Selection

& Development

6 Improved

collaborationwith

stakeholders

6 Improvedcollaboration

withstakeholders

2 Develop

Community-based

solution

2 DevelopCommunity-based

solution

3 Deploy

maintenance

strategy

3 Deploy

maintenance

strategy

5 HumanResources

organisationdevelopment

5 Human

Resources

organisation

development

4 Oregon

TransportationInitiative

4 Oregon

Transportation

Initiative

10 Betterskilled

& equipped

people

10 Betterskilled

& equippedpeople

11 More

effective

leadership

11 More

effectiveleadership

8 Higherquality

solutions

8 Higher

qualitysolutions

8 More effective

public investment

8 More effective

public investment2 Improved total

transportationexperience

2 Improved totaltransportation

experience

1 Improved

communityliveability

1 Improved

communityliveability

3 Enhancedeconomic

opportunity

3 Enhanced

economic

opportunity

3 Transportation

balanced with

other liveabilityfactors

3 Transportation

balanced withother liveability

factors

7

8

9

6

8

2

8

9

2 Community

Prepared to

adapt behaviour

2 CommunityPrepared to

adapt behaviour

1 Balanced with

growth, revenue

base & needs

1 Balanced with

growth, revenuebase & needs

4 More integrated

state direction

4 More integrated

state direction7 Reduced time

for service delivery

7 Reduced timefor service delivery3 4

5 Established state

point of view

5 Established statepoint of view

9

1

2

6 8

43

3

4

2

4

1

0

Value

Source: Thorp J, The Information Paradox


SocialValue

PoliticalValue


Value

Overview


92/140


Cranfield Universitys Benefits Dependency Network

BENEFITS DEPENDENCY NETWORK

IS/ITEnablers

EnablingChanges

BusinessChanges

BusinessBenefits

InvestmentObjectives

D

R

I

V

E

RS

JW113

Valu

eManageme

ntRole2

Value


SocialValue

PoliticalValue


Value

Overview


93/140


CJS IT uses Root Cause Modelling because

It is particularly suited to the Central Government context andcommitment to Public Service Agreement targets

It is particularly suited to the Portfolio level - it helps capture thecross-system benefits to which projects collectively contribute i.e.what are termed the Combined Effectiveness Impact (CEI) benefits

It helps avoid double counting

The process gains stakeholder buy in and fosters cross-systemunderstanding

The process promotes discussion of how projects can impact onperformance & what business change is necessary to realise thosebenefits

Valu

eManageme

ntRole2

a


94/140


SocialValue

PoliticalValue


Value

Overview


95/140


Building the root cause model through interactiveworkshops V

alu

eManageme

ntRole2


SocialValue

PoliticalValue


Value

Overview


96/140


One Map for each consequenceInitiative Targets

Hypothesis(IT Functionality)

Root Cause(Level 2)

Root Cause(Level 1)

Cost and measurement data underpinsEach consequence

89

62,067

5,523,963

x

0.00%

0.00%

0.00%

0.00%

100.00%

0.00%

0.00%

0.00%

0.00%

0.00%

Other: Legal Aid

Oth e r : W i tn e ss P a yme n ts

Other: Defence Sols,

Other: Prosecution counsel

CPS

Probation

HMPS

YOT

Ina ppropria t e t ime in

custody

Cost of remand place per

day

Assumptions and sources:

i) Period of inappropriate custody assumed 1 day/night (Estimate CJPD Paul Henderson)

ii) Assume no. of inappropriate custody events = no. of detainees subsequently bailed next day

Source: Flows and Cost model CJPD 2001/02.

iii)

No. in of inappropriate

custody events pa

Cost of inappropriate time

in custody pa

% by recipient CJO

agency (Note a):

Police

Courts (MC)

Courts (CC)

89

62,067

5,523,963

x

0.00%

0.00%

0.00%

0.00%

100.00%

0.00%

0.00%

0.00%

0.00%

0.00%

Other: Legal Aid

Other: Witness Payments



CPS

Probation

HMP S

YOT

Ina ppropria te t ime in

custody


day

As s umpt ions a nd s ourc e s :

i) Period of inappropriate custody assumed 1 day/night (Estimate CJPD Paul Henderso n)



iii)


custody events pa


in custody pa

% by recipient CJO

agency (Note a):

Police

Co u r ts ( MC)

Co u r ts ( CC) 89

62,067

5,523,963

x

0.00%

0.00%

0.00%

0.00%

100.00%

0.00%

0.00%

0.00%

0.00%

0.00%

Other: Legal Aid

Other: Witness Payments



CPS

Probation

HMP S

YOT

Ina ppropria te t ime in

custody


day

Assumptions and sources:

i) Period of inappropriate custody assumed 1 day/night (Estimate CJPD Paul Henderso n)



iii)


custody events pa


in custody pa

% by recipient CJO

agency (Note a):

Police

Courts (MC)

Courts (CC)

Consequences Valu

eManageme

ntRole2


97/140


SocialValue

PoliticalValue


Value

Overview


98/140


The Issue - traditional financial return on investment approaches do

not capture all the benefits of investment in e-Government.

The Solution:

US Value Measuring Methodology

Australias Demand & Value Assessment Methodology

European Commissions e GEP model

CJS IT approach to Social and Political Value

ValueManageme

ntRole2

Social Value Benefits


SocialValue

PoliticalValue


Value

Overview


99/140


The United States Value Measuring Methodology (VMM)

Developed from a study in 2001-02 by Booz Allen Hamilton and Harvard

Universitys Kennedy School of Government that concluded that financialreturn on investment must be balanced by rigorous analysis of other factorsin a multi-dimensional analysis:

The full value of an e-service must be measured from multiple

perspectives represented by the 6 Essential Factors; it cannot becaptured in a single internal financial metric (i.e. ROI).

Source: Booz Allen Hamilton, Building a Methodology for Measuring the Value of E-Services

ValueManageme

ntRole2


SocialValue

PoliticalValue


Value

Overview


100/140


VMMs 6 Essential Factors: Five Value Factors + Risk

RISK

Project,

Organisational andTechnical

ValueManageme

ntRole2

DIRECT USER (CUSTOMER) VALUE

Benefits directly realized by users or multiple user groups. For example,time saved, more convenient service delivery/access etc.

SOCIAL (NON-DIRECT USER/PUBLIC) VALUE

Benefits not related to direct users (e.g. society as a whole). For example,improved trust in Government, participation, inclusiveness.

GOVERNMENT OPERATIONAL / FOUNDATIONAL VALUE

Order of magnitude improvements realized in current governmentoperations and processes or those that lay the groundwork for futureinitiatives. For example, enterprise architecture and improved infrastructure.

GOVERNMENT FINANCIAL VALUE

Financial benefits that have a direct impact on organizational (governmentservice provider) and other federal government budgets via increasedrevenue, reduced costs or costs avoided.

STRATEGIC / POLITICAL VALUE

Benefits that move an organization, and government as a whole, closer to

achieving its strategic goals and mission.


SocialValue

PoliticalValue


Value

Overview


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The VMM Value Structure

The 5 Value Factors are prioritisedbased on the objectives of theorganisation

Sub-criteria are identified

Quantifiable performance measuresare identified to measure each formof value

Risk tolerance boundaries aredefined

Potential investments are appraisedand ranked in accordance with theabove

VALUE FACTOR PRIORITY

Direct User (Customer) Value 24

Government Operational Value 10

Government Financial Value 15

Social Value 21

Strategic / Political Value 30

Total 100

ILLUSTRA

TIVE

ILLUST

RATIVE

VALUE FACTOR PRIORITY

Direct User (Customer) Value 24

Government Operational Value 10

Government Financial Value 15

Social Value 21

Strategic / Political Value 30

Total 100

ILLUSTRA

TIVE

ILLUST

RATIVE

ValueManageme

ntRole2

Australias Demand & Value Assessment Methodology


SocialValue

PoliticalValue


Value

Overview


102/140


Australias Demand & Value Assessment Methodology(DVAM)

Traditional ROI investment measures do not fully account forthe value from e-Government. Many benefits are non-

financial and intangible.Source: Presentation by John Rimmer, CEO to CISCO Public Services Summit, Measuring the Impact and

Benefits of E-government, Stockholm

Determining the benefit/cost ratio for e-Government is notstraightforward, as the outcomes and benefits are not justfinancial. A particular problem for agencies is in identifying

and measuring social value.Source: NOIE E-Government Benefits Study

ValueManageme

ntRole2


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PoliticalValue


Value

Overview


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The DVAM methodology includes 5 Value Categories

1. Agency benefits/value - Financial (quantitative) e.g. operating costreductions, increased revenue, improved efficiency and productivity savings,

improved effectiveness, improved service or cycle times, and increased staffretention2. Strategic value (qualitative) - how well the initiative is aligned with the most

important outcomes (and political objectives) for the organization3. Consumer/user financial value - time and cost savings, faster payments

and revenue generation opportunities to users of a service4. Social benefits/value (economic and non-economic) - encompassing both

reach and impact in areas of improved quality of life; improved decisionmaking; and more integrated delivery so increasing business opportunities

5. Governance value - i.e. contribution to broader whole-of-governmentobjectives including more open and inclusive government (citizenparticipation), accountability and improved information availability(transparency)

These are combined with assessments of Risk to programme delivery and toachievement of benefits.

ValueManageme

ntRole2

A t li DVAM A C h i A h


SocialValue

PoliticalValue


Value

Overview


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Australias DVAM A Comprehensive Approach

it is broad in coverage and

simple enough to be viable forboth business case

development and projectportfolio management [and]

the monitoring of benefitrealization over time.

Source: Gartner, Australian Measure of the PublicValue of IT is a Good Start

ValueManageme

ntRole2

The European Commissions e Government Economics


SocialValue

PoliticalValue


Value

Overview


105/140


The European Commission s e Government EconomicsProject (e GEP)

traditional ROI investment measures do not fully account for thevalue from e Government, since many of its benefits are non-

financial and qualitative/intangible and contribute to a greater socialvalue than can be measured using only financial and quantifiable

indicators.

Source: Measurement Framework for third workshop of the e GEP

Programme Value is therefore seen as encompassing financial,

organisational, social and political value..

ValueManageme

ntRole2

The ECs e GEP Measurement Framework


SocialValue

PoliticalValue


Value

Overview


106/140


The EC s e GEP Measurement FrameworkValueManageme

ntRole2

So


SocialValue

PoliticalValue


Value

Overview


107/140


So

All these methodologies reach similar conclusions to the research by Mark

Moore in the US that identifies 3 sources of Public Value:

Outcomes (Effectiveness)

Services (Efficiency) and

Public trust/legitimacy (Political & Social Value)

Assessing public value will help organizations understand how IT initiativescontribute to improved business process performance and organizationalefficiency, and still assess the equally important, if less direct, effects of

new processes on society and the economy.

Source: Gartner, Value for Money is not enough in Public Sector IT Projects

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The HM Treasury Green Book agrees


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The HM Treasury Green Book agrees

Wider social and environmental costs and benefits for whichthere is no market price also need to be brought into anyassessment. They will often be more difficult to assess but areoften important and should not be ignored simply because they

cannot easily be costed

and,

In principle, appraisals should take account of all benefits to theUKthe wider effects on other areas of the economy should also

be considered.

Source: HM Treasury, The Green Book

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But


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But

We are faced with 3 immediate issues:

1. How to measure such wider Social and Political Value?

2. How to assess this value in economic terms as required by theGreen Book?

3. How to ensure any measurement is robust?

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Its not straightforward the e GEP concludes that


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It s not straightforward the e GEP concludes thatValueManageme

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The CJS IT Value Chain Methodology & Social Value Pyramid


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The CJS IT Value Chain Methodology & Social Value Pyramid

Extends the existing Root Cause Model analysis of impact on the Criminal JusticeSystem to quantifying Social Value i.e. if the CJS is more effective in terms ofbringing offenders to justice, improving witness and victim care, enforcement,

reducing re-offending and public protection, what effects will this have on the widereconomy and society?

Research is undertaken by independent economists sponsored by the CJS ITPortfolio Unit.

Principles:

1. The model accepts that our degree of confidence in causality declines as we godown the Social Value Pyramid;

2. A range of forecasts have been developed;

3. The quality of the forecasts is assessed using a confidence scale; and

4. Forecasts are regularly updated to reflect the latest research and portfolio

delivery.

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Combining the EUs e-GEP model & RCM to assess SocialValue


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Time Savings/PerformanceImpact

PreventedVictimisation

Public Protection

EFFICIENCY:Better functioning

PA

EFFECTIVENESS:Better user services

& opportunities

OPENNESS:good governance

Tangiblefinancial gains

More efficientoperations

Betterempowered

PS employees

Reduced adm.burden costs

Increaseduser value &satisfaction

Increasedaccess toopportunities

Transparencyand

accountability

Openness andparticipation

Better co-operating PA

ProgramFinancial Value

ProgramOrganisational Value

Program Social Value

Program PoliticalValue

Project 1

Project 2

Project 3

eGovNationalProgram

ProgramOverall Value

Degree ofConfidence in

BenefitsRealisation

Value Drivers Outcomes/ Impacts Mission Results

The CJIT Benefits Approach

Value

Benefits Integrity Check

Benefits Realisation Plan processCross System Benefits

Root Cause Model Consequences

Social ValuePyramid

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Political Value The Issue


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Val

Benefits ion

Documents

Transcript of Benefits ion