BUSINESS CASE

1. BUSINESS CASE Episode 3 - CAATS II Final Dissemination Event Ignacio Zozaya Boeing Research & Technology Europe CAATS II Brussels, 13 & 14 Oct 2009

2. Contents • Introduction • Business Case Definition • Business Case Pillars • Business Case Developments • Good Practices • Guidelines • Business Case (definition, guiding principles, why doing it?) • Business Case within SESAR • Business Case within E-OCVM • Business Case Overview of the R&D Lifecycle Phases • CAATS II Business Case Interaction Model • What are the 4 Key Phases of the Business Case? • Transition Criteria Episode 3 - CAATS II Final Dissemination Event

3. Introduction • R&D projects are not easily amenable for performance measurement.  • R&D managers challenges: • how to select the most appropriate projects from several competing proposals; • how best to evaluate a project during its execution; • When to stop a project that is not performing as expected Episode 3 - CAATS II Final Dissemination Event

4. Business Case General definition • A business case is a collaborative process involving a multi-disciplinary team. It is targeted to the decision makers in order to make strategic decisions (Eg. investments) through their ownership and buy-in of the business case outputs at each phase. • The purpose of business case is to facilitate and support a better informed decision-making for key investment decisions. • A Business Case is a structured proposal for business improvement. It is also a material package for decision-makers. Episode 3 - CAATS II Final Dissemination Event

5. Business Case CAATS II Definition • The CAATS II Business Case describes in a structured way (Process) the business impact of an ATM/R&D operational concepts. • In order for the definition to be operational, it is necessary to clarify the following: • "structured" implies a step-by-step approach through the lifecycle • business impacts should be identified along with ways of measuring them and the stages of the project lifecycle should be clearly identified. Episode 3 - CAATS II Final Dissemination Event

6. Business Case CAATSII Pillars Alignment with SESAR Business Good Practices E-OCVM Interaction with Other Cases Episode 3 - CAATS II Final Dissemination Event

7. Work Plan • Our Approach • Identify and analyze the Business Good Practices to assess operational concepts and projects for ATM R&D industry in Europe. • Make a “Business Case Guidance document” based on expertise (selection of criteria and parameters). • Integrate with E-OCVM and SESAR. Episode 3 - CAATS II Final Dissemination Event

8. What to expect to get from a Business Case ? • Presentation of possible options by assessing their potential impacts from a multi-criteria perspective (incl. synergies and trade-offs). It is an evidence-based instrument to support planning and reporting. • It Provides a substantiated argument for a project or programme requiring a resource allocation of an investment and therefore a financial commitment. • The business case goes beyond a “cost benefit analysis” • The Information provides criteria for the decision Episode 3 - CAATS II Final Dissemination Event

9. Good Practices • Clarify the Business Case definition • Develop Business Case collaboratively from the start “Transmit credibility to Stakeholders and Decision Makers” • Fully integration of the BC within the E-OCVM Validation “Get things in Proportion” • Use step-by-step improvement process through the lifecycle that provides transparent and traceable results • Base the Business Case on Benefit and Cost Mechanisms • Use Decision Analysis Techniques • Probabilities as the language for uncertainty • Sensitivity Analysis / Risk Analysis Episode 3 - CAATS II Final Dissemination Event

10. Guiding Principles • Transparency and Partnership with a Collaborative Development Process • Involve stakeholders and multi-disciplinary experts is the best way to ensure process ownership and final buy-in. • Risk Management • A Progressive and Iterative process to manage and reduce risk and uncertainty. • Consistency by following a Common Framework for Business Cases • Follow a Standard Approach assessment contributing to a consistent Decision Making. • Proportionality of the Business Case Analysis • Balanced approach between the cost of the Business Case analysis and expected benefits “Value for Money”. Episode 3 - CAATS II Final Dissemination Event

11. Why doing a business case? What are the benefits? • Understand the economic and financial implications (quantitative and qualitative) of an investment • Ensure stakeholders involvement and buy-in • Enable R&D to be focused on significant issues • Ensure that different options are identified and properly assessed • Promote consistency between business case and other assessments Episode 3 - CAATS II Final Dissemination Event

12. Who’s involved ? • Who is involved in preparing/developing the Business Case? • Business Case Group: People who are responsible for the production of the Business Case and those that contribute to it with their expert knowledge • Stakeholder: Individuals and/or organizations impacted directly or indirectly by the project • Who eventually decides? • Decision Makers: The individual, or group of individuals, that ultimately makes the Go / No-Go decision for the project Episode 3 - CAATS II Final Dissemination Event

13. The Business Case within E-OCVM • The Business Case supports key decisions at each life-cycle phase. • The decisions range from the selection among different potential concepts to Go / No Go for deployment of a preferred alternative. Episode 3 - CAATS II Final Dissemination Event

14. The Business Case within E-OCVM • The V0’s Business Case Key Tasks • Identify ATM needs • Identify the Stakeholders impacted • Prepare the baseline (starting/current situation) • Prepare the reference scenario as opposed to the solution scenarios • The V1’s Business Case Key Tasks • Monitor the Business Context • Identify potential benefits and describe benefits mechanism • Identify potential costs and describe costs mechanism • Identify potential double-accountings with other projects • Identify potential divergence of interest • Identify potential financial issues • Develop/Refine the baseline • Develop/Refine the Reference Scenario • Involve Key Stakeholders and Key Areas Experts in a collaborative process for developing baseline, Reference Scenario, Benefits and Costs mechanisms • Start a qualitative assessment of the impacts (benefits and negative impacts) elicited by the benefit mechanisms using • Start a Trade Off Analysis for the Alternatives/Options involving Stakeholders Episode 3 - CAATS II Final Dissemination Event

15. The Business Case within E-OCVM • The V2’s Business Case Key Tasks • Quantify benefits and costs • Analyse Affordability • Monetise benefits and costs in Economic Models • Develop influence diagrams and models for benefits and costs mechanisms • Monitor potential double-accountings analysis • Monitor potential divergence of interest. • Confirm potential financial issues. • Finalise the baseline and the reference scenario. • Produce a trade-off analysis • Involve key stakeholders and assessment experts in a collaborative development process • Produce sensitivity analyses Episode 3 - CAATS II Final Dissemination Event

16. The Business Case within E-OCVM • The V3’s Business Case Key Tasks • Analyse Decision Risks • Undertake as required local Cost Benefit Analysis • Refine as required Cost Benefit Analysis and Affordability Analysis per stakeholder. • Update data with new information. • Revisit Sensitivity Analyses and identify the most critical/sensitive uncertainties. • Evaluate the risk profile (Probabilistic Risk Analysis) • Monitor potential double-accountings analysis • Monitor potential divergence of interest • Confirm potential financial issues and propose financial solutions. • Produce a Trade-Off Analysis • Involve Key Stakeholders and Key Areas Experts in a collaborative making process for baseline, Reference Scenario, Benefits and Costs mechanisms, Trade-Off Analysis, SWOT Analysis. Episode 3 - CAATS II Final Dissemination Event

17. Business Case Overview of the R&D Lifecycle Phases Business Case Input Data in the R&D Lifecycle Phase Episode 3 - CAATS II Final Dissemination Event

18. Business Case Overview of the R&D Lifecycle Phases Business Case Output Data in the R&D Lifecycle Phase Episode 3 - CAATS II Final Dissemination Event

19. Caats II Business Case Interaction Model • The business case works in close coordination with Safety, Environment, Human Factors and other considered key performance areas and provide the umbrella for an overall case integration. • The business case is not the sum of the cases developed. • It consolidates the assessments made in these areas, analyses interdependencies and trade-offs and based on these, provides business recommendations to decision-makers. Episode 3 - CAATS II Final Dissemination Event

20. Scoping and Planning 1 Review of Options Defining Alternatives Options 2 Analysis 3 Follow up 4 What are the 4 Key Phases of the Business Case ? The detailed steps and how to roll out the full process are described in the guidelines. Episode 3 - CAATS II Final Dissemination Event

21. 4 Phases Contents • Scoping and Planning (Including needs and Problem analysis) • Scope and Boundaries • Stakeholders (expectations & constraints) • Defining Alternatives and Options (Against “Business as Usual”) • Alternatives and Dependencies (Clarify with Decision Board) • Criteria • Benefit and Cost Mechanisms • Analysis (Evaluation of Impacts and Comparison of Options recommendations) • Assessment • Consolidation • Follow up (Monitoring and learning through continuous improvement) • Business Case Deliverables review and presentation • Measurement of performance and lesson learnt Episode 3 - CAATS II Final Dissemination Event

22. Uncertainty – good practice? • Uncertainty is a consequence of our incomplete knowledge of the world • To deal with uncertainty we use ranges and probabilities • Probability is the quantitative language for communication about uncertainty Episode 3 - CAATS II Final Dissemination Event

23. Annexes • Example Of Cost Categories in ATM Project • ATM Performance And Examples Of KPA Influence Diagrams • Business Case Methods And Techniques • Business Case Metrics • Business Case Transition Criteria • Example of the Business Case Relationships with other Cases • Proposed Typical Business Case Report Episode 3 - CAATS II Final Dissemination Event

24. Questions?

25. Backup Slides

26. SESAR Episode 3 - CAATS II Final Dissemination Event

27. ATM Needs Scope Feasibility Integration V2 V3 V1 V0 · Capture Data from E - Sub · · Capture Data from Capture Data from E - · OCVM Sub Steps: 0.1 - Capture Data from E - Review information E - OCVM Sub OCVM Sub Steps: 0.1 - Steps 0 .2 - 1.1 - 1.2 - 1.3 - 1.4 - 2.1 - OCVM Sub Steps: : 0.1 - from Steps : 0.1 - 0.2 0.2 - 1.1 - 1.2 - 1.3 - 1.4 - 2.4 - 2.5 - 3.1 - 3.2 - 4.1 - 4.2 - 0.2 - 1.1 - 1.2 - 2.4 - 2.5 - 3.1 - 2.1 - 2.4 - 2.5 - 3.1 - 4.3 - 5.1 4.3 - 5.1 3.2 - 4.1 - 4.2 - 4.3 - 5.1 The Business Case and the E-OCVM Structure Planning Framework E-OCVM interactions with the Business Case Episode 3 - CAATS II Final Dissemination Event