How to Incorporate a Project Rationale

How to Incorporate a Project Rationale

Insights | 19 July 2010

Learn how to justify your projects according to a rationale. Choose the appropriate valuation scheme for your project when presenting your case to stakeholders.

Just like when you write a thesis or have to hand in a business case study, a case defending your choices for your project management model is essential to demonstrate the value of your work to the company, clients and all other stakeholders involved. When backed by a suitable rationale, the project plan acquires weight and evidence, demonstrating that the plan has been well-considered and ensuring that all company requirements have been taken into regard.

1. Show how the project increases/improves intangibles with Applied Information Economics:
Give details of how the project will improve or has already achieved:

  • customer satisfaction
  • strategic alignment
  • flexibility
  • improved communication
  • improved infrastructure
  • other intangibles

2. Show expected improvements using a Balanced Scorecard:

  • traditional lag indicators of standard financial performance
  • customer relationships
  • operational excellence
  • learning and growth infrastructure

3. Show how the project will affect the customer base using a Customer Index

4. Be specific on all costs, including the cost of capital. Include information on how the project can add to shareholder value including Economic Value Added (EVA)

5. Show how your project will source Economic Value (EVS)
Demonstrate: Increases in revenue, Improvements in productivity, Decreases in cycle time, and Decreases in risk.

6. Assume your project will be evaluated like a stock in a portfolio using Portfolio Management
Show that the project:

  • Decreases unit cost of commodity services (i.e. processing transactions, Internet sales)
  • Increases the asset base’s performance

7. Emphasize how the project provides Real Option Value (ROV):
Show examples of how it will add to the flexibility of the company to adapt to new demands and dynamic environments, especially in the face of market changes. Describe a variety of changes.

Learn how to add a quantifiable project rationale to your plans. Enrol in project management course.

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