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2. Bob Samborski
Executive Director, GITA
Aurora, Colorado, USA
—
Mary Ann Stewart
Strategic Analysis Lead for ROI Project
3. Who is GITA?
4. Who is GITA?
5. ROI Project Co-Sponsors
6. Project Phases Project Conception
Literature Review
Workbook and Template Development
Case Study Development
Business Case Development and Return on Investment Methodology
7. Project Genesis Highly positive response to 2003 GITA Conference Seminar, “Using Business Case and ROI to Justify GIT Spending”
Lack of relevant information on determining ROI for GIT
Request from FGDC to extend methodology and templates for multi-agency projects
8. Project Principals Principal Investigators (PI’s)
Susan Ancel, EPCOR
Dave DiSera, FICOH
Nancy Lerner, EMA, Inc.
Mary Ann Stewart, MAStewart Engineering LLC
Project Advisory Committee
9. Project Objective To develop and document a formal methodology for preparing a business case, including ROI, within utilities and government agencies
To extend this methodology to multi-agency projects
To develop a multi-agency case study
10. Project Benefits Standardized and documented methodology for developing GIT business cases
Workbook with templates to assist multi-agency projects in applying the standards
Resource for supporting better GIT investment decisions by agencies engaged in complex projects
11. Project Rationale Justification for investments comes from business applications
12. Workbook Contents Chapter 1. Introduction
Why read this book?
Why read about agencies outside my sector?
Who should use this workbook?
How to use the workbook and accompanying CD
Why build shared data and services business case?
Chapter 2. Overview of Business Case
Business Uses of GIS
Taking a multiple agency approach
Project Definition
Financial Analysis
Strategic Analysis
13. Workbook Contents Chapter 3. GIT Benefits
Tangible and Intangible Benefits
Capturing Productivity Benefits
Calculating Other Tangible Benefits
Internal and External Benefits
Dealing with Uncertainty
Examples of Benefits for GIT Business Uses
Chapter 4. GIT Costs
Start-up and Operating Costs
Sunk Costs
Internal Labor Costs
Examples of GIT Costs
14. Workbook Contents Chapter 5. Financial Analysis
Project Life and Cash Flow Schedule
Time Value of Money (Opportunity Costs)
Dealing with Inflation
Common Financial Metrics
Impact of Recasting Internal Labor Costs
Sensitivity Analysis
Chapter 6. Strategic Analysis and the Business Case
Interpreting a Business Case
Strategic Benefits as Intangibles
Chapter 7. Research Findings
Literature Review Findings
Case Study Findings
15. Template Components Project Set-up Sheet
Current Labor Rates Sheet
Labor Cost Multiplier Sheet
Internal Labor Usage Sheet
Internal Labor Cost Sheet
Contract and Procurement Cost Sheet
Productivity Benefits Sheet
Other Benefits Sheet
Financial Analysis Sheet
Productivity Benefit Detail Sheets
16. GIT is a Critical Investment
17. Why ROI? Large amounts of money involved
Competition with other investment opportunities
Ensure full validation of project prior to initiation
Identification of opportunities to structure project to achieve interim benefits quicker
Detailed documentation to improve milestone and post implementation reviews
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20. Shifting ROI Landscape Traditional models were based on labor savings by implementing technology
Organizations are much leaner now and often have existing systems, resulting in less incremental benefits available
ROI should now focus on the financial statement drivers and corporate strategies
Current “hot buttons”
Lean Operations (eliminate waste/shorten cycle times)
Compliance Tracking
Reliability Centered maintenance
Asset Management
Optimization of Material
21. When Should You Do ROI? Strategy Development
Project Initiation
Project Detailed Design completion
Project completion
When in operation for some time
When assessing replacement of the tool
22.
23. Each Measure Has a Best Use NPV
Best overall measure of financial value
Higher NPV always identifies better investment
ROI
Shows whether benefits outweigh costs
Inappropriate for comparing investments (can have high ROI with low NPV, etc.)
Breakeven Point and Payback Period
Shows whether benefits outweigh costs
Important political measure
Inappropriate for comparing investments
24.
25. Describe & Quantify All Costs
26. Typical GIS Costs Hardware integration with pre-existing computing infrastructure
Evaluation, selection, acquisition and installation of software
Undertaking requirements/needs analysis
Contractual aspects
systems customization
Applications portfolio development
Interfacing to other ‘data servers’ and operational systems Business case analysis
Project management
Delivery and installation
Business process re-engineering
Transitional costs (i.e. parallel running of old and new systems)
On-going cost implications (i.e. staff costs and consumables)
Data purchase
Data capture, data conversion
Data re-survey and validation
Training, human resources planning, skills development and re-skilling
27. Applications Drive Benefits Increase productivity
Add revenue source/enhance collection
Reduce fee/fine
Eliminate a service, building, or process
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29. Focused on FGDC sources
Qualitative information more common than quantitative
Clarified the need for common methodology for financial analysis of multi-agency projects
Clarified the need for common approach to strategic analysis for multi-agency project
30. Case Study Development Case study selected from pool of original studies
WA-Trans chosen to cover a range of applications, benefits and costs
Refined templates and approach
In-depth interviews with participating agencies
Financial analysis based on individual and combined business cases
31. WA-Trans Washington Transportation Framework for GIS (WA-Trans)
Project evaluates a proposed future investment
Complex case study involving 19 participants
WSDOT in cooperation with Puget Sound Regional Council, Sound Transit, King County Metro, Lincoln County, Spokane County, Walla Walla County, Yakima Valley Conference of Governments, U.S. Bureau of Census Seattle Regional Office, Washington State Department of Fish and Wildlife, Washington Department of Natural Resources, and Washington Utilities and Transportation Commission
32. WA-Trans Project Description
WA-Trans will provide a seamless, statewide transportation location-based data set that includes the best information available about roads, railroads, airports, ferry terminals and routes, port facilities, and non-motorized transportation routes such as bike paths and horse trails.
The data will be used to improve transportation planning, analysis and design capabilities not only for WSDOT but also for local and regional organizations across the state. Better transportation planning will ultimately lead to better transportation infrastructure and more effectively utilize existing resources.
33. WA-Trans Total Project Summary Net Present Value: $17.87 M
Annualized Return on Investment: 10.9%
Breakeven Point: 2011
Payback Period: 4 years
Inflation Rate: 2.50%
Opportunity Cost of Capital: 5.0%
Project Life: 20 Years
34. WA-Trans Total Project Summary Method for Determining Future Years Cost of Labor, Derived by Applying Average Annual Cost of Living Adjustment to Current Costs: 1.50%
Total Costs (internal and external): $8.2M for life of project, ranging from $203K to $1.6M per year
Benefits: $26M for life of project, ranging from $67K to $1.6M per year
35. WA-Trans Total Project vs. DOT Standalone Project DOT alone
NPV: $255K
ROI: 0.17%
Breakeven point: 2025
Payback period: 18 years
All agencies
NPV: $17.87M
ROI: 10.9%
Breakeven point: 2011
Payback period: 4 years
36. What Happened to WA DOT? DOT assumed majority of cost
2007: $582K of $593K
2008: $1.2M of $1.51M
2009: $1.37 M of $1.64M
2010: $1.02M of $1.02M
DOT received modest benefits
2007: $35K of $57K
2008: $59K of $1.5M
2009: $114K of $1.6M
2010: $454K of $1.2M
37. WA DOT Breakeven Point
38. Multi-Agency Breakeven Point
39. WA-Trans Tangible Benefits Examples of DOT Benefits
Reduce amount of time to gather data to scope a project in Planning Department = 1260 hours/yr
Eliminate need for Collision Data and Analysis Branch of TDO to review each accident report to determine jurisdiction = 5240 hours/yr
Eliminate research/data acquisition time for Highway Usage Branch of Transportation Data Office to acquire usage data on non-state routes = 80 hours/yr
Cost avoidance on purchase of commercial centerline data = $30K/yr
40. WA-Trans Tangible Benefits Examples of other agency benefits
Utility and Transportation Commission: eliminate time resolving address and geocoding errors = 240 hours/yr
Sound Transit: reduce customer service rep responses = 208 hours/yr
Dept. of Natural Resources: reduce time compiling trail and forest data for public lands quad map series = 1000 hours/yr
Five largest counties: eliminate edge matching efforts = 1700 hours/yr
41. GIS Strategic Benefits Typical strategic benefits from GIS projects include:
Shared data and services
Improved accuracy, consistency, timeliness of data
Better access to data
Improved services to citizens
Ability to integrate data among other systems
Information for improved decision making
Ability to generate new meaning from the data
42. WA-TRANS Strategic Benefits Data sharing across county boundaries
Eliminates need for edge matching
One source for data eliminates searches and redundant data collection
Provides means for tracking and communicating progress of projects
Venue for counties and local government to maintain data
Reduced liability due to improved accuracy
43. WA-Trans Strategic Benefits to Large Counties Have a well-established GIS
No significant change to data maintenance program
Improved data sharing with other counties
Conflation of disparate data for use in analysis and decision making
Streamlined process for planners, replacing manual data review
44. WA-Trans Strategic Benefits to Small Counties New to GIS, may have nothing in place
Benefit from common data standards
Benefit from geodatabase design available for their use
Use of better control points from counties for other agency flyovers improves accuracy
45. Functional Class Strategic Benefits WA-TRANS sponsors development of accurate functional class network
Provides accurate tracking of functional class change process
Relates to lost opportunities for Federal funding
Helps resolve disagreements regarding existing classification
Assists in correct determination of urban vs. rural miles
46. Economic Development Strategic Benefits FAST Corridor and international freight development
Need consolidated intermodal data access
Port development dollars not being spent for WA ($10B for LA)
Provide regional context for decision making for huge freight projects
47. Homeland Security/Disaster Recovery Strategic Benefits WA experiences significant flooding and wildfires
Constrained transportation corridors
Faster and better recovery efforts with seamless road network
WA-TRANS makes difference between data and missing/outdated data for E911
FEMA Region 9 address range issues for rural counties
48. Census Bureau Strategic Benefits Census does not have mandate to be a data provider
Does not plan to continue to update road network
Access to maintained data essential
WA-TRANS means counties won’t have to interface with Census as supplier or consumer of data
49. Comparison of GITA and FGDC Business Case Initiatives
50. Comparison of GITA and FGDC Business Case Initiatives
51. Comparison of GITA and FGDC Business Case Initiatives
52. Project Status
AWWARF publication in process
GITA publication released at GITA Conference March 2007
FGDC publication released at NSGIC March 2007
Planning next phase of ROI research with current and new partners
53. Questions?