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Value for Money: How to Show the Value for Money for All Types of Projects and Programs in Governments, Non-Governmental Organizations, Nonprofits, and Businesses

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Value for Money: How to Show the Value for Money for All Types of Projects and Programs in Governments, Non-Governmental Organizations, Nonprofits, and Businesses

E-Book
£85.99
Hardcover
£94.95
O-Book

Description

Written by two of the world’s most well-known ROI (Return on Investment) gurus, this guide is indispensable for anyone involved in showing the value of money for projects and programs in governments, non-governmental organizations, nonprofits, and businesses.  These range from human capital programs to marketing initiatives, technology implementations, systems integrations, quality and lean processes, public health initiatives, procurement procedures, public relations events, risk management policies, economic development programs, corporate social responsibility projects, public policy programs, branding activities, innovation programs, customer satisfaction projects, and everything in between.

In a step-by-step process, the book shows how to measure the success of projects and programs, including measuring impact and ROI (Return on Investment). This book also shows how to forecast the value of the project in advance and how to collect data during and after project implementation. It addresses improvements throughout the process so that the project delivers optimum value. In addition to businesses, this book is appropriate for governments, NGOs, nonprofits, universities and healthcare organizations. 

As a reference for those who are seeking ways to assign value to what they have measured, the book will clarify and resolve much of the mystery surrounding the conversion of data to monetary values. Building on a tremendous amount of experience, application, practice, and research, the book will be based on the work of many individuals and organizations, particularly those who have been reaching the ultimate levels of accountability using the ROI Methodology. Developed in an easy-to-read format and fortified with examples, tips, and checklists, this will be an indispensable guide for those who seek to understand accountability issues.

Praise for Value for Money v

Foreword xxv

Preface xxvii

Value is Changing… xxvii

Need for a New Approach xxviii

The ROI Methodology: The Enhanced Logic Model xxix

We Can’t Measure Our Way to Success xxx

Flow of the Book xxxi

Acknowledgements xxxv

Authors xxxviii

1 The Value Evolution 1

The Value Shift 4

Types of Values 5

The Importance of Monetary Values 6

The “Show Me” Generation 6

The New Definition of Value 7

Why Now? 8

Program Failures 8

Budget Constraints 9

Project and Program Costs 9

Donors are More Demanding 10

Measurement at the Impact Level Is No Longer Optional 11

Process Improvements Use 12

Managers’ New Business Focus 12

Case Study 12

Globalization 13

The Growth of Project Management 14

Evidence-Based or Fact-Based Management 14

Mistrust of Institutions 15

Benchmarking Limitations 15

The Executive Appetite for Monetary Value 16

Challenges Along the Way 16

Preparation and Skills 17

Fear of ROI 17

Time Commitment 17

Power and Politics 18

Misleading Hype 18

Sustainability 19

Final Thoughts 19

2 Six Ways to Show Value for Money 21

Six Ways to Show Value for Money 25

#1 - Actual ROI Calculation 27

#2 - Focus on Impacts and Intangibles 28

#3 - Meeting Expectations 29

#4 - The Payoff of Improved Behaviors 29

#5 - Cost-Effective Approach 30

#6 - Cost of Not Implementing the Program 31

Conclusion 32

Barriers to Showing Value for Money 32

We Don’t Make Widgets 32

Because there are No Profits, ROI is Not Possible 33

ROI is Just Not Appropriate for the Public Sector 34

We Don’t Have the Resources 35

This is too Complicated 36

No One is Asking for this 37

Final Thoughts 38

3 Needed: An Enhanced Logic Model 39

A Review of Models 42

Definition 42

Logic Model Elements 44

Other Models 45

Concerns about Current Models 47

Lack of Focus on Benefit-Cost Analysis 47

Lack of Emphasis on Attribution 49

Confusion on Outcomes and Impact 49

Little Focus on the Chain of Value of a

Particular Program or Project 50

Unclear Timing of Data Collection 51

Needs Assessments versus Activities 52

Lack of Focus on Results 52

Inability to “Show the Money” 54

Not CEO- and CFO-Friendly 56

Managing Resources for Evaluation 57

Lack of Focus on Process Improvement 58

The Inability to Influence Investment 59

How Does Your Current Model Stack Up? 60

Focus of Use 61

Standards 61

Types of Data 61

Dynamic Adjustments 62

Connectivity 62

Approach 63

Conservative Nature 63

Simplicity 63

Theoretical Foundation 63

Acceptance 64

Requirements for the Value for Money: A Measurement Process 64

ROI Methodology 65

Terminology: Projects, Solutions, Participants 66

Final Thoughts 67

4 Introducing the ROI Methodology 69

Types of Data 70

Input 70

Reaction and Planned Action 72

Learning 73

Application and Implementation 73

Impact 74

Return on Investment 74

The Initial Analysis 75

Using Design Thinking to Deliver and Measure Results 77

The ROI Process Model 78

Plan the Evaluation 78

#1 - Start with Why: Align Programs with the

Business 78

#2 - Make it Feasible: Select the Right Solution 81

#3 - Expect Success: Design for Results 81

Collect Data 82

#4 - Make it Matter: Design for Input,

Reaction, and Learning 82

#5 - Make it Stick: Design for Application

and Impact 83

Analyze Data 83

#6 - Make it Credible: Isolate the Effects of

the Program 83

#7 - Make it Credible: Convert Data to

Monetary Value 84

#8 - Make it Credible: Identify Intangible Benefits 84

#9 - Make it Credible: Capture Costs of Projects 85

#10 - Make it Credible: Calculate the Return

on Investment 85

Optimize Results 86

#11 - Tell the Story: Communicate Results to

Key Stakeholders 86

#12 - Optimize the Results: Use Black Box

Thinking to Increase Funding 86

Operating Standards and Philosophy 87

Implementing and Sustaining the Process 87

Benefits of this Approach 88

Aligning with Business 89

Validating the Value Proposition 89

Improving Processes 89

Enhancing the Image and Building Respect 90

Improving Support 90

Justifying or Enhancing Budgets 90

Building Productive Partnerships 91

Final Thoughts 91

5 Start with Why: Align Programs with the Business 93

Impact Measures are Critical 96

The Challenge 97

Begin with the End in Mind 97

It’s a Change 97

It Requires Discipline 98

Avoid Paralysis by Analysis 98

The Alignment Model 98

Payoff Needs 99

Key Questions to Ask 102

Obvious versus Not-So-Obvious Payoffs 102

Reasons for New Programs 104

The Costs of the Problem 105

Case Study 107

The Value of Opportunity 107

To Forecast or Not to Forecast 108

Case Study 108

Business Needs 109

Determining the Opportunity 109

Identifying the Business Measure—Hard Data 110

Output 110

Quality 110

Cost 110

Time 112

Case Study 112

Defining the Business Need—Soft Data 113

Leadership 114

Work Climate/Satisfaction 114

Client Service 114

Employee Development/Advancement 114

Initiative/Innovation 114

Image/Reputation 115

Using Tangible versus Intangible—A Better Approach 115

Finding Sources of Impact Data 115

Identifying All the Measures 116

What Happens if You do Nothing? 117

Case Study 117

Final Thoughts 118

6 Make It Feasible: Select the Right Solution 119

Performance Needs 122

The Performance Dialogue 122

Examine the Data and Records 123

Initiate the Discussion 123

Case Study 123

Use Benchmarking from Similar Solutions 124

Use Evaluation as the Hook 124

Involve Others 125

Discuss Disasters in Other Places 125

Use Analysis Techniques 125

Keep it Sensible 126

Case Study 127

Learning Needs 131

Subject-Matter Experts (SMEs) 131

Job and Task Analysis 131

Observations 132

Demonstrations 132

Tests 132

Management Assessment 133

Case Study 133

Preference Needs 134

Key Issues 134

Case Study 135

Matching Solutions to Needs 135

Some Solutions are Obvious 135

Solutions Can Come in Different Sizes 136

Some Solutions Take a Long Time 136

Solutions Should be Tackled with the Highest Priority

Items First 136

The Matrix Diagram 136

Selecting Solutions for Maximum Payoff 138

Short-Term versus Long-Term Costs 138

Consider Forecasting ROI 138

Time Needed for Implementation 138

Avoid Mismatches 139

Verifying the Match 139

Tackling Multiple Solutions 140

Final Thoughts 140

7 Expect Success: Design for Results 141

The Power of Expectations 144

Case Study 144

Keep it Sensible 146

Defining the Success of Programs 147

Designing for Results at Each Level 149

Level 0, Input 149

Level 1, Reaction 150

Level 2, Learning 150

Level 3, Application 150

Level 4, Impact 150

Case Study 151

Level 5, ROI 151

Use Empathy 151

Developing Objectives at Multiple Levels 152

Case Study 152

Reaction Objectives 153

Learning Objectives 154

Application Objectives 155

Impact Objectives 157

Return on Investment (ROI) Objectives 158

Case Study 158

The Power of Objectives 160

Application/Impact Objectives Drive Programs 160

Application/Impact Objectives Enhance

Design and Development 160

Application/Impact Objectives Improve

Facilitation 160

Application/Impact Objectives Help Participants

Understand What Is Expected 161

Impact Objectives Excite Sponsors and Donors 161

Application/Impact Objectives Simplify Evaluation 161

All Levels of Objectives Inform the Stakeholders 162

Defining Roles and Responsibilities 162

Analysts 163

Designer 163

Developer 163

Program Owner 164

Facilitator 164

Participants 164

Sponsor or Donor 165

Managers of Participants/Significant Others 165

Evaluator 165

Other Stakeholders 165

Planning the Evaluation 166

Evaluation Purpose 166

Feasibility of Outcome Evaluations 167

Data Collection Plan 167

ROI Analysis Plan 167

Project Plan 171

Final Thoughts 172

8 Make It Matter: Design for Input, Reaction, and Learning 173

Communicating with Results in Mind 174

Announcements 175

Brochures 175

Case Study 175

Correspondence 176

Workbooks and Participant Guides 176

Changing the Role of Participants 177

The Necessity 177

Defining Roles 177

Documenting the Roles 178

Creating Expectations 178

Identifying Impact Measures Before Participating in

the Program 179

Case Study 179

Involving Managers or Significant Others 181

Think ROI 181

ROI Review 182

Case Study 182

Actions to Take 183

Design Input for Results 183

Target Audience 183

Case Study 184

The Need 184

Case Study 185

Timing and Duration 185

Motivation 186

Readiness 186

Conclusion 187

Design Reaction for Results 187

Topics to Measure 188

Case Study 189

Measuring Reaction 191

Case Study 192

Using Reaction Data 192

Forecasting ROI at this Level 192

Design Learning for Results 193

The Learning Style 194

Sequencing and Time 194

Activities 194

Data Collection for Input, Reaction, and Learning 194

Questionnaires and Surveys 194

Measuring with Tests 196

Measuring with Simulation 196

Timing of Data Collection 197

Early, Detailed Feedback 198

Pre-Program 198

Collecting at Periodic Intervals 198

For Long Programs with Multiple Parts 199

Final Thoughts 199

9 Make It Stick: Design for Application and Impact 201

Data Collection for Application and Impact 204

Questionnaires and Surveys 204

Improving the Response Rate for

Questionnaires and Surveys 204

Interviews 209

Focus Groups 210

Observations 210

Action Plans 211

Set Goals and Targets 212

Define the Unit of Measure 212

Place a Monetary Value on Each Improvement 214

Implement the Action Plan 214

Isolate the Effects of the Program 214

Provide a Confidence Level for Estimates 215

Collect Action Plans 215

Summarize the Data and Calculate the ROI 215

Performance Contract 217

Monitoring Business Performance Data 219

Existing Measures 219

Case Study 220

Developing New Measures 221

Selecting the Appropriate Method for Each Level 222

Type of Data 222

Participants’ Time for Data Input 222

Manager (or Significant Other) Time for Data Input 223

Cost of Method 223

Disruption of Normal Work Activities 223

Accuracy of Method 223

Utility of an Additional Method 224

Cultural Bias for Data Collection Method 224

Timing of Data Collection 224

Collecting Application Data 224

Collecting Impact Data 225

Built-In Application Tools 226

Improvement Plans and Guides 227

Application Tools/Templates 227

Job Aids 227

Case Study 228

Involving the Participants’ Manager or Significant Other 230

The Most Influential Group 230

Pre-Program Activities 231

During the Program Activities 232

Post-Program Activities 232

Reinforcement Tools 232

Case Study 233

Final Thoughts 235

10 Make It Credible: Isolate the Effects of the Program 237

The Importance of Pinpointing the Contribution 240

Reality 240

Myths 240

Preliminary Issues 242

Review Chain of Impact 242

Identify Other Factors 243

Quantitative and Research Isolation Methods 244

Case Study 244

Experimental Design 246

Trend Line Analysis 249

Mathematical Modeling 252

Calculating the Impact of Other Factors 253

Qualitative Isolation Methods 254

Participants’ Estimate of Impact 255

Steps to Measure Attribution Using Estimates 258

Manager’s Estimate of Impact 259

Customer Estimates of Program Impact 260

Internal or External Expert Estimates 260

Estimate Credibility: The Wisdom of Crowds 261

Case Study 261

Select the Method 263

Final Thoughts 264

11 Make It Credible: Convert Data to Monetary Value 265

The Importance of Monetary Value 267

Value Equals Money 267

Money Makes Impact More Impressive 268

Converting to Monetary Values is Similar to Budgeting 268

Monetary Value is Vital to Organizational Operations 269

Monetary Values Are Necessary to Understand

Problems and Cost Data 269

Key Steps in Converting Data to Money 270

Standard Monetary Values 272

Converting Output Data to Money 273

Case Study 274

Calculating the Cost of Inadequate Quality 276

Case Study 278

Converting Employee Time Savings Using Compensation 279

Case Study 280

Finding Standard Values 281

When Standard Values are Not Available 281

Using Historical Costs from Records 282

Time 282

Availability 282

Access 282

Accuracy 283

Using Input from Experts 284

Using Values from External Databases 285

Linking with Other Measures 286

Using Estimates from Participants 288

Using Estimates from the Management Team 289

Using Program Staff Estimates 289

Selecting the Technique 290

Choose a Technique Appropriate for the Type of Data 290

Move from Most Accurate to Least Accurate 290

Consider Source Availability 291

Use the Source with the Broadest Perspective on the Issue 291

Use Multiple Techniques When Feasible 291

Apply the Credibility Test 292

Consider the Short-Term/Long-Term Issue 292

Consider an Adjustment for the Time Value of Money 294

Final Thoughts 295

12 Make It Credible: Identify the Intangibles 297

Why Intangibles are Important 299

Intangibles are the Invisible Advantage 300

We are in the Intangible Economy 301

More Intangibles are Converted to Tangibles 302

Case Study 302

Intangibles Drive Programs and Investments 303

Measuring and Analyzing Intangibles 304

Measuring the Intangibles 304

Converting to Money 307

Case Study 307

Case Study 310

Identifying and Collecting Intangibles 311

Analyzing Intangibles 312

Final Thoughts 313

13 Make It Credible: Capture Costs of the Program and Calculate ROI 315

The Importance of Costs and ROI 319

Fundamental Cost Issues 320

Fully Loaded Costs 320

Case Study 321

Costs Reported without Benefits 322

Develop and Use Cost Guidelines 323

Sources of Costs 323

Prorated versus Direct Costs 324

Employee Benefits Factor 325

Specific Costs to Include 325

Initial Analysis and Assessment 326

Development of Program Solutions 326

Acquisition Costs 326

Implementation Costs 326

Case Study 327

Maintenance and Monitoring 327

Support and Overhead 328

Evaluation and Reporting 328

Cost Tabulation in Action 328

Problem and Solution 328

Program Description 329

Selection Criteria 330

Program Administration 331

The Drivers of Evaluation 331

Program Costs 332

The ROI Calculation 333

Benefit/Cost Ratio 334

ROI Formula 335

Case Study 336

Monetary Benefits 337

Misuse of ROI 338

Social Return on Investment 339

ROI Objectives 340

Whose ROI? 340

Other ROI Measures 342

Payback Period (Breakeven Analysis) 342

Discounted Cash Flow 342

Internal Rate of Return 343

Final Thoughts 343

14 Tell the Story: Communicate Results to Key Stakeholders 345

The Presentation 346

Reaction and Learning 347

Application 348

Business Impact 348

ROI 350

Intangibles 351

Conclusion and Recommendations 351

Reflection 352

The Importance of Communicating Results 352

Communication is Necessary to Make Improvements 352

Communication is Necessary to Explain the Contribution 353

Communication is a Politically Sensitive Issue 353

Different Audiences Need Different Information 353

Case Study 354

Principles of Communicating Results 355

Communication Must be Timely 355

Communications Should be Targeted to

Specific Audiences 355

Media Should be Carefully Selected 356

Communication Should be Unbiased and Modest in Tone 356

Communication Must Be Consistent 356

Make the Message Clear 356

Testimonials Must Come from Respected Individuals 357

The Audience’s Bias of the Program Will Influence the

Communication Strategy 357

The Process for Communicating Results 357

Step 1: Analyze Reason for Communication 359

Step 2: Plan for Communication 359

Step 3: Select Audience 360

Step 4: Develop Reports 363

Step 5: Select Media 363

Meetings 363

Interim and Progress Reports 366

Routine Communication Tools 366

Case Study 367

Email and Electronic Media 369

Program Brochures and Pamphlets 369

Case Studies 370

Step 6: Present Information 370

Routine Feedback on Program Progress 371

Storytelling 373

Presentation of Results to Senior Management 374

Case Study 376

Step 7: Analyze Reaction 378

Final Thoughts 379

15 Optimize Results: Use Black Box Thinking to Increase Funding 381

Process Improvement is the Key: Black Box Thinking 383

The Aviation Industry 384

The Healthcare Industry 384

Failures in Programs 386

Making Adjustments in Programs 387

The Fear of Results 387

You Can Always Make it Better 388

When Do You Discontinue the Program? 388

The Timing of Changes 390

Level 0, Input 390

Level 1, Reaction Measures 390

Level 2, Learning Measures 391

Level 3, Application Measures 391

Level 4, Impact Measures 392

Making the Adjustments 392

Increasing ROI 393

Addressing Costs 393

Addressing the Monetary Benefits 395

Timing of Assessments 395

Influencing Allocation 396

Investment versus Cost 396

Competition for Funding 398

Anxiety and Downturns Translate into Cost Reduction 399

Final Thoughts 400

16 Forecast the ROI 401

The Importance of Forecasting ROI 407

Expensive Programs 407

High Risks and Uncertainty 407

Case Study 408

Post-Program Comparison 409

Compliance 410

The Trade-Offs of Forecasting 411

Pre-Program ROI Forecasting 413

Basic Model 413

Basic Steps to Forecast ROI 414

Sources of Expert Input 417

Securing Input 418

Conversion to Money 419

Estimate Program Costs 419

Case Study 420

Forecasting with a Pilot Program 422

ROI Forecasting with Reaction Data 423

Case Study 424

Use of the Data 426

Forecasting Guidelines 427

Final Thoughts 429

17 Make It Work: Sustaining the Change to a Results-Based Process 431

Overcoming Resistance 433

Assess the Climate 434

Develop Roles and Responsibilities 434

Identifying a Champion 434

Developing the Champion 435

Establishing a Task Force 435

Assigning Responsibilities 436

Establish Goals and Plans 436

Setting Evaluation Targets 437

Developing a Plan for Implementation 438

Revise Guidelines and Procedures 438

Prepare the Team 440

Involving the Team 440

Teaching the Team 440

Initiate ROI Studies 441

Prepare the Management Team 442

Remove Obstacles 443

Dispelling Myths 443

Delivering Bad News 444

Using the Data 444

Monitor Progress 445

Final Thoughts 446

References 447

Appendix A 459

Appendix B 467

Appendix C 471

Index 473