Effective Business Case Development Strategies

Refining Your Business Case September 24, 2018

Overview Why a business case How presentation fits into work to date and upcoming work Key attributes of a successful business case Elements of a business case Real world application Next steps 2

Why Focus on a Business Case Provides real world skills benefits for your agency Provides return on investment for your participation in EnoMAX Assists you in solving on-going problems Expands your professional skills 3

Work Progression Post-Class Presentations Building Your Business Case Info Gathering & Outline Project Statement After EnoMAX Ends Before and During Eno Week Before EnoMAX (Complete) Before Eno Week (Complete) 4

Key Attributes of a Successful Business Case

Definition & Purpose Document containing all necessary evaluation information Includes recommendation and reasoning Identifies why, what, how, who Level of detail is a function of size of the initiative NOT JUST THE ANSWER! 6

When Is It Needed? Solve a problem Promote an idea or opportunity Evaluate a task, project, or idea When a decision must be made 7

Senior Management Perspective Necessary to make sound decisions Needed to explain decision to CEO Needed for CEO to explain a decision to the Board or an external party 8

MAX Business Case Examples TransitWatch App for Reporting (RTD) Customer Center Remapping (MARTA) Abridged Long Range Planning Document (DART) Rail Yard Management System (DART) Drone Use in Asset Management (LA Metro) 9

Elements of a Business Case

Considerations Know audience Speak their language Accurate info All elements Gauge support ID risks including do- nothing option 11

Document Sections 12

Opportunity Statement Opportunity Statement Clear problem or opportunity Key issues 13

Situational Analysis Opportunity Statement Background & history Current state Projections Completed work Situational Analysis 14

Solution Options Opportunity Statement All potential solutions Include do-nothing option Critical assumptions Situational Analysis Solution Options 15

Evaluation of Options Opportunity Statement For each option Key decision criteria Operational impacts Departmental impacts Customer impacts Benefits Required resources Organizational capability Key interdependencies Situational Analysis Solution Options Evaluation of Options 16

Financial Analysis Opportunity Statement Cost vs benefits Affordability Budget & cash flow implications ROI Degree of confidence Situational Analysis Solution Options Evaluation of Options Financial Analysis 17

Recommendations Opportunity Statement Your preferred recommendation Reasoning Next steps Who does what Major milestones Situational Analysis Solution Options Evaluation of Options Financial Analysis Recommendations 18

Executive Summary Opportunity Statement Concise Desired outcome Major Factors ROI Timeline Written last Situational Analysis Solution Options Executive Summary Evaluation of Options Financial Analysis Recommendations 19

Completed Business Case Opportunity Statement May add additional sections Table of Contents Supporting documentation Situational Analysis Solution Options Executive Summary Evaluation of Options Financial Analysis Recommendations 20

Dont have enough information? Difficulty finding information Proprietary information Time and resources limitations Consider 40-70 Rule 21

Colin Powells 40 70 Rule Have at least 40% of information needed Don t wait for 100% When you have between 40% and 70% - Go with your gut 18 Lessons in Leadership Gen. Colin L. Powell, USA-Ret, Former United States Secretary of State 22

Perspectives Howard Permut

Real Life Example

Opportunity Statement Metro North RR is faced with the need to increase its ridership and fare revenues as well as reduce its public subsidy. Competitive publicly funded bus services operating out of train stations are being started by the State of New York Politicians are criticizing the size of Metro North s operating subsidy and questioning the continuation of service at its current levels. 25

Situational Analysis Over the past 10 years, ridership has declined by about 15% and absent some action this trend is expected to continue in the future Ridership is falling in all markets (peak, off- peak) and all lines Population in the service area has increased by about 5% over the past 10 years but has been constant in the past year The primary cause for this ridership decline is poor service. 26

Situational Analysis (2) The primary problems are late trains, dirty trains, surly train crews, and inadequate schedules These are a result of very poor infra- structure (primarily track and signals and power systems), cars and locomotives beyond their useful life and lack of front- line staff training These in turn have been caused by a lack of funding for the past decades 27

Situational Analysis (3) On the positive side, there is an opportunity to increase ridership and revenue by both increasing market share and reaching new markets Previous market studies have shown that this is especially true for the off-peak markets 28

Solution Options 1. Do-nothing and let the political environment resolve the problems 2. Raise fares focusing on the least elastic market (peak commutation fares) and reduce service 3. Request additional monies to bring the system into a state of good repair 4. Request further additional monies to expand service 29

Evaluation of Options (1) 1. Do-Nothing Lose control of organization and its future Likely to have unfavorable outcome 30

Evaluation of Options (2) 2. Raise Fares and reduce service Continued ridership decline Raise $20,000,000 Negative customer reaction Alienate key political leaders 31

Evaluation of Options (3) 3. Request Additional Monies for State of Good Repair Likelihood of success is unknown Crisis environment may help Lack of repairs may jeopardize future safe operation of the railroad Pre-requisite for railroad to improve service and grow Will need major organizational expansion to plan and implement program Does not provide immediate solution 32

Evaluation of Options (4) 4. Request Further Additional Monies for Service Expansion Similar pros and cons as above Will need further expansion of organizational capabilities Service expansion may impede progress to bring system into a state of good repair Few people may ride as service will remain of a poor quality Political risk if ridership does not increase and subsidies increase 33

Recommended Option Recommend Option 3 while suggesting Option 4 for the future Operational safety Necessary to control organizational future Phased approach which is easier for political leaders and customers to accept Does not over promise nor jeopardize monies for state of good repair work Suggest that MNR President get approval from MTA Chairman and then have Government Affairs department develop a detailed plan for requesting the funding 34

Summary Know your audience and what is needed to make a good decision Clear, well organized, impactful with supporting data Proposed project scope influences size and detail of document Executive summary includes essential points in same order as full document 35

Next Steps Eno Week: Business skills presentation Facilitator assistance on your project Business Case Simulation Workshop 36

Next Steps (2) After Eno Week Continue to develop your business case Deliver your business case to senior executives as requested Implement as directed 37

Questions