more payments to process for both the client and us, which amounts to more time and more transaction fees from the credit card company. New expense: Increased labor and fees per class-over $500.
Cancellations require participants to interact with the client registration system and with our company to process credit card refunds. New expense: thirty person-minutes of client time per class, if we assume two cancellations per class.
The new model increased administrative burden for class participants, the training department, and my company. New expense: about 300 work-minutes, if we assume twenty minutes per participant. This also adds burden to the client's administrative accounting department-about fifteen expense reports. New expense: about seventy-five person-minutes, if we assume five minutes per participant expense report.
Because work is never transferred to someone else for free in our economy, the cost of increased labor will be counterbalanced by a forthcoming increase in class fees. Next year's tuition costs will increase to defray the new administrative costs described above.
While there may be some hidden cost savings or other benefits, the cure seems worse than the original disease. Somehow, the project met the narrowly defined goal of solving the identified problem, but created new problems. The project may have finished on time and on budget, but a senior manager looking at the total effect of the project might be shocked to hear it called a success. Certainly the participants-the training department, my company, and even the accounting department-will all experience the increased costs of unexpected administrative overhead.
How can we avoid this problematic "success"? Careful consideration of any business case helps assure that the problem being solved is worth the energy, risk, and opportunity cost. Doing so also uncovers potential unintended consequences and allows sponsors to make conscious decisions about the costs they will incur. It is never a waste of time to fully understand the business case-the underlying need-behind a project.
When building or reviewing a project business case, consider the following questions:
- hat work does the project eliminate or transfer elsewhere (either to other parts of the organization, its suppliers, or customers)?
- What new work will be required to support the new system?
- What are the costs of implementing, operating, and maintaining the new system?
- How much does it cost to run the current system?
- What risks are eliminated by the new system? What risks are created?
- How much do errors cost in the current system, and where are they detected in the process? What will they cost and where will they be detected in the proposed process?
- Does the project improve the quality of information? What is the value of the improvement?
- Does the project improve the timeliness of information? What is the value of improved timeliness?
- Who benefits from the new system and who is harmed by it?
- Who/what is changed by the new system?
While it can be difficult to assign monetary values to these effects, crude back-of-the-envelope calculations can help confirm or question a project's value. If the business case doesn't add up, some diplomatic questions are in order for the project's sponsors.
In complex situations, it is difficult to anticipate the costs and consequences of changes or new ways of doing business. For our projects to be valuable to our organizations, we must do our best to imagine the effects our projects can have on users, the organization, our business partners, and the customers. Figuring out the costs of a business case provides one way of describing these effects. Let's work together to minimize the hidden costs of unintended consequences by ensuring that they are