Measurement and Analytics

Make a Better Business Case for Your Projects: 10 Steps to Secure Approval When There Is No Budget

3 min read

As a result of the COVID-19 crisis, many leaders, including at the U.S. Congressional Budget Office (CBO), predict that the global economy will be in a recession for the remainder of 2020 and into 2021. Consequently, organizations have and will cut budgets, and it will be difficult for departmental leaders to secure their approval for projects in the future.

The Need

What happens if you need a program, but there is no budget set aside for new projects? Perhaps the only opportunity you have is to show the value for the project compared to the cost. A return on investment (ROI) forecast will compare the monetary value that your project will deliver with the anticipated cost of the project. If there is a significant positive difference, it may convince executives to move forward with the project. The challenge is to make a compelling business case, one that will convince even the most conservative chief financial officer to allocate funds for your project.

Let’s examine how to create a forecast for an unexpected new program. This type of forecast connects the proposed program to business measures that will improve if the program is implemented. When you calculate the monetary value of this improvement and compare it to the projected cost of the program, you can forecast a financial ROI. The challenge is to be conservative with your analysis and credible with your conclusions.

The Approach

The approach to preparing an ROI forecast for your program involves 10 straightforward steps:

1. Start With “Why,” and Connect It to the Business Measure

The program should begin with defining a problem or opportunity with a business measure. The key is to understand why the program is necessary. Which business measure will improve if you implement the program? This step is necessary when forecasting your financial ROI.

2. Make Sure You Have Selected the Right Solution

If you are implementing a learning program, make sure that it will drive the business measure. This determination may involve questions, discussions, analysis or benchmarking. The key is to make a connection to business needs.

3. Expect Success for the Project

This step involves developing objectives at four levels for evaluating program success:

    • Expected reaction to the program.
    • Expected learning.
    • Expected application (what participants should do with what they learn).
    • Expected impact on the business measure identified at the beginning of the project.

4. Estimate the Impact of The Program on the Business Measure

Ask the experts — the people who understand the program (content) and where the learners are working (context) — to estimate the impact the program will have on the business measure. The experts may be the person who requested the program, the person who understands the need, the supplier or someone with a benchmarking study.

5. Adjust for Error

Use a simple question: “On a scale of 0% to 100%, what is your level of confidence in your estimate?” Multiplying that percentage by the estimate will effectively reduce the number by the error in the estimate.

6. Convert to Dollars

For measures that matter to the organization, there are probably already monetary values available. If not, there should be experts who can help you with this step.

7. Estimate the Cost of the Program

Typically, this step is easy. To be credible, the costs of the program should include all costs, both direct and indirect.

8. Identify the Intangibles

Intangibles are measures that you cannot credibly convert to money without significant effort but that are still important metrics. They include teamwork, collaboration, image and stress, which are not included in the ROI calculation but may be impacted by the program.

9. Calculate ROI

The two most common calculations are the benefit-cost ration (BCR) and return on investment, which is expressed as a percentage:

BCR = (Monetary Benefits) / (Program Costs)

ROI = [(Benefits – Costs) / (Costs)] * 100

Also, perform a sensitivity analysis by showing how the ROI changes with different estimates and assumptions.

10. Present the Results

When you present your ROI forecast to the management team to secure approval, use six types of data: reaction, learning, application, impact, ROI and intangibles. The key is to use storytelling with data to make the case.

If the leadership team approves your project, be prepared to conduct a follow-up evaluation. Ideally, the forecast ROI will be lower than the actual ROI. This discrepancy will show that you are conservative in your analysis and on target with the process.

Good forecasting doesn’t require powerful computers or arcane methods. It involves gathering evidence from a variety of sources, thinking probabilistically, working collaboratively and being willing to make the necessary adjustments to deliver success.

Related Content

Share