Course Description

Forecasting development schedules, human resource requirements, and financial outflows (investment) and inflows (returns) is a critical part of building the business case for project investments. Business case development is inherently a cost-benefit analysis. The validity of a business case is inextricably dependent on the quality of the assumptions and the rigor applied in relating the various types of project information to each other.

This skills development course characterizes the various costs and benefits typical of project investments, as well as their relative uncertainties. Following a tutorial of some key accounting principles and financial concepts, managers and analysts will learn the proper modeling techniques and mechanics for establishing robust project-level investment valuations. The use of advanced business analytics will be employed to model the uncertainties in project forecasts and option value available at various stages of a projects life cycle. Finally, portfolio effects that have major implications for project value creation will be discussed in detail.

Course Objectives

• Learn to properly characterize and model the many costs and benefits associated with human resource and capital intensive project investments

• Master the methodologies to forecast market uncertainties that affect the key assumptions used in project financial metrics and valuation techniques

• Develop skills for incorporating strategy, risk, inter-project dependencies, and portfolio considerations into project-level business cases

• Create a management culture where statistically-significant project metrics, portfolio strategy, and the option value of investments drive decision making

Course Outline

• Cost-Benefit Matrix for Projects

• Accounting Principles for Operations

• Accounting and Financial Metrics

• Meaningful Discount Rates

• Valuation Methods

• The Value of Risk and Flexibility

• Benefits Forecasting with Uncertainty

• Cost Forecasting with Uncertainty

• Statistically-significant Project Metrics

• Confidence Intervals for Decision Making

• Real-Options in the Development Process

• Real-World Schedule Forecasting

• Process-oriented HR Needs Forecasting

• Portfolio Implications for Business Cases

• Strategic Criteria at the Portfolio-level

• Presenting the Business Case