| Why Scoreboard Benefits? | | | | true! |
| Setting targets and score-boarding benefits is a key | | | | We have defined a cost avoidance benefit as an |
| project management tool to ensure that the teams are | | | | amount that the company has not spent in the past |
| motivated and focused on delivering hard benefits | | | | but has planned to spend in the future, but will now not |
| throughout the development of recommendations and | | | | have to spend because of a change in work practice, |
| implementation. | | | | reduction in volume, etc. |
| The primary purpose of Score-boarding is to put a | | | | Baselines |
| "stake in the ground" before extensive roll out of the | | | | Setting appropriate baselines requires good judgement, |
| recommendation has begun. Having clearly identified | | | | common sense and accurate historical data and |
| the definition of the benefit, key measures to calculate | | | | measures. It would be nice to say that there is one |
| the benefit, the time frame in which the benefits are | | | | standard baseline period that every team should use |
| expected to be delivered and who is responsible for | | | | on a project. Unfortunately due to different clients' |
| delivering the benefits, the scoreboard will facilitate the | | | | issues, initiatives and industries, this may lead to |
| measurement and tracking of actual benefits. | | | | confusing results. |
| Each of the project teams are encouraged to set | | | | You should also adjust the baselines for known future |
| 'stretch targets' with the team responsible for the | | | | events. For example, in a HR redeployment |
| implementation of the recommendation. We believe | | | | opportunity assessment, the team may have to |
| that stretch targets are important for several reasons: | | | | develop a different type of baseline because using F |
| 1. Experience shows that when people are challenged | | | | Y 2011 as a baseline may have overstated the benefit |
| by significant expectations, they deliver. Even if the | | | | based on specific known facts about the environment |
| teams under deliver, the company is better off if a | | | | facing the implementation team in F/Y 2012. |
| team hits 90% of a stretch target of $1000, than 100% | | | | Baselines are generally developed in two ways: |
| of a conservative target of $400. | | | | 1. based on past performance rates and current work |
| 2. Stretch targets help to ensure that the new process | | | | practices assuming that the volumes remain the same |
| is actually implemented. If a team is targeted with a | | | | 2. based on past performance rates and current work |
| 15% improvement expectation, it can in many cases | | | | practices assuming planned future volumes. |
| be achieved by becoming more efficient or simply | | | | It is important that the project team reviews the two |
| working harder. If a team is targeted with a 70% | | | | approaches to determine which provides the "fairest" |
| improvement expectation, the team will find it | | | | baseline against which to measure progress. |
| necessary to implement the new solution because | | | | Predicting the future is obviously inherently more |
| working harder with the old work practices could | | | | difficult than analysing the past. However, the limited |
| never achieve improvements of that magnitude. | | | | time frame in which you allow the score-boarding of |
| 3. Remember to agree with the client how success will | | | | benefits helps to reduce the risk in predicting the |
| be measured. The client must accept that hitting 70% | | | | future. |
| of a major stretch target is success and reward the | | | | Two Levels of Score-boarding |
| team so. On the other hand you need to communicate | | | | Many projects will require two levels of |
| to the team that they must hit 100% of the stretch | | | | Score-boarding: |
| target. If they know 70% is acceptable they will | | | | Overall |
| naturally lower their target. If you do this, you have a | | | | These cases document the recommendation and the |
| team going all out for 100% of the stretch target, but | | | | benefit which will accrue to the company when |
| when they hit 70% of this target, they are rewarded, | | | | national implementation is completed. The benefits will |
| they do not feel demoralized and the client thinks | | | | have been calculated based on national averages and |
| everything went according to plan. You have to keep | | | | global targets. The timing of the implementation may |
| two separate stories for two sides. A like bit like | | | | have been estimated. Before implementation of the |
| James Bond; it is what a good consulting leader would | | | | changes begins, a more detailed scoreboard calculation |
| do. | | | | must be performed. |
| Key Features and Definitions | | | | Detail |
| A benefit is defined as the incremental improvement in | | | | These scoreboard cases are for those |
| the results as a result of making a change. Benefits | | | | recommendations where implementation is about to |
| can be financial or non-financial (e.g. a 15% | | | | begin. Detailed baselines and targets have been |
| improvement in customer satisfaction). Financial | | | | determined by geography (if appropriate) or pilot area. |
| improvements are score-boarded as gross revenue, | | | | Before implementation begins in a pilot area, detailed |
| cost saving, capital reduction or cost avoidance. | | | | baselines would have to be set, as the local results |
| The Scoreboard amount is calculated as the amount | | | | would likely vary from the national averages used in |
| of benefit that is projected to be implemented by the | | | | the overall scoreboard calculation. The target may |
| third quarter of the fiscal. This provides incentive to | | | | have to be re-considered at the local level but should |
| teams to look for benefits that provide for high | | | | hopefully stay the same as the percentage target |
| annualised savings or turnover increases as well as for | | | | used in the overall case. |
| benefits that can be implemented in the near term - | | | | Critical Success Factors |
| ensuring a bias for action amongst the project teams. | | | | 1. Keep the process simple. Focus on the major |
| Revenue Enhancements | | | | benefits. Use measures that the implementation |
| Revenue enhancement targets must be developed | | | | team will find helpful. |
| and tracked at the gross level - not at the profit or | | | | 2. Go for stretch targets but make sure the focus is |
| operating margin level. That is not to indicate that | | | | on teams learning from the process of tracking |
| margin is not an important consideration as margin | | | | benefits; not beating them up if they come close to |
| impact is a crucial factor in decision making and | | | | achieving the stretch target. |
| analysis. | | | | 3. Do not worry if the benefit is already a part of the F |
| Once a decision has been made to go forward with a | | | | Y budget or something that will go above and beyond |
| recommendation, you will, however, track revenue | | | | the budget. The team should focus on identifying |
| benefits at the gross revenue level. There are two | | | | the operational measures that will be critical to |
| primary reasons for this: | | | | understanding whether change is happening or not |
| 1. A critical success factor to effective benefits | | | | during implementation. Reviewing whether or not |
| tracking during implementation is to keep it simple so | | | | these benefits have been included in the budget or not |
| that the implementation teams can own the process | | | | is an important step but will be performed separately. |
| and analyse the findings. Tracking at the margin level | | | | Benefits of Score-boarding |
| makes the process more complex. Which margin | | | | Using score-boarding as a tool on the project has the |
| should you track at? Should you use the corporate | | | | potential to deliver benefits beyond those related to |
| margins? It is cleaner to track at the gross level and | | | | setting up benefits tracking: |
| analyse the results at certain points looking at both | | | | 1. Provides an overall view of financial and operational |
| revenue and margin. The teams generally will not | | | | benefits which will be delivered by the programme. |
| have the ability to control product margin. Targeting | | | | Having this type of information developed in a |
| teams with what they can control is more effective. | | | | consistent format (and included in one database) |
| 2. The second reason for focusing the teams on | | | | improves the ability for the company to incorporate the |
| tracking revenues is the fact that the margins will be | | | | results of the project into the five year plans and |
| changing at the same time due to the efforts of the | | | | budgets. |
| rest of implementation (and other initiatives). For | | | | 2. The multiple sign-offs required by the |
| example, network services may currently be | | | | Score-boarding process ensures that appropriate |
| unprofitable according to the project data, but part of a | | | | cross-divisional issues are addressed and agreed |
| To Be solution may include actions to lower the cost | | | | before significant implementation begins. |
| of activities that contribute to the cost of the product, | | | | 3. Requiring those who will be accountable for |
| so that it ultimately becomes a profitable product. | | | | implementation to sign the business case which |
| Cost Savings | | | | supports the score-boarded benefits facilitates the |
| Cost Savings includes two primary categories; capital | | | | identification of concerns and issues that the signatory |
| reduction (both working capital and fixed) and expense | | | | may have with the To-Be recommendations. Asking |
| reduction (income statement type expenses). You | | | | for their signature will drive home the point that the |
| must track the capital reduction scoreboard benefits | | | | project (and you) are serious about making these |
| on a cash basis. As these benefits are typically only | | | | changes happen. |
| a once off benefit, capital reductions do not have as | | | | 4. The deadlines and milestones set by the process |
| much impact on the total scoreboard amounts as | | | | provide a means for the process to push earlier |
| compared to an expense reduction that accrues | | | | decision-making and consensus building. |
| annually to the company. This may surprise you but is | | | | |