microsoft powerpoint - (3)julie brignac

Achieving Realistic Business Goalsby Defining Project Benefits

Julie BrignacVice President – Quality and Six SigmaBrambles Industries Limited

October 2006

Copyrighted Material – Brambles 2006

Discussion Items

Who is Brambles?

Who is Julie?

How does she know about project benefits?

What can she share with me to help me better capture benefits in my organization?


Who is Brambles?

1875 Walter Brambles began his career in Newcastle, north of Sydney, Australia

1925 Private company WE Bramble and Sons Ltd first formed

1954 Brambles Industries Limited first listed in Australia

1958 Commonwealth Handling Equipment Pool (CHEP) purchased by Brambles from the Australian Government

1975 CHEP’s international expansion began in the UK by means of a joint venture between Brambles and GKN plc

1999 Records management established as an international business under a global brand, Recall.

2005 Unify its dual-listed companies structure by the creation of a new single holding company focused on its premium growth businesses, CHEP and Recall. All other businesses divested.


Company Statistics

Headquartered in Sydney, AustraliaMajor offices in Orlando, Florida; Atlanta, Georgia and London

Dual Listed on Australian and London stock exchanges

Approximately 13,000 employees in over 45 countries

FY06 Revenues = US $3.5B


Who is Julie?

Read the biography, BUT………….

15 years experience between

• DuPont• Honeywell (AlliedSignal)• Newell Rubbermaid (Sanford Brands)

Supply Chain Management, Sourcing, Operations & Manufacturing, Six Sigma


How does she know about Project Benefits?

Early career in DuPont with Malcolm Baldrige focus on process improvement

– Engineering Finance & Project Management

AlliedSignal Honeywell– Learned Six Sigma and Lean

Supply Chain Operations career until……….

– Director, Six Sigma – Integrated Supply Chain (Honeywell)– Six Sigma Deployment Leader (CHEP) – VP Purchasing/Material Productivity (Newell/Sanford)– VP Quality & Six Sigma (Brambles)


How does she know about Project Benefits?

Process excellence experience from DuPont

Early learnings supporting capital and maintenance projects in Finance

Manufacturing and Operations based experience driving Six Sigma and Lean excellence

Started driving (re)deployments to revitalize or institutionalize in organizations

Had to define each organization’s success around project benefits

– Depending on the unique key metrics


IMPACTing Business Improvement

Equipment Pooling Document Management

Quality and Business Improvement


What is IMPACT?

Give Brambles a single identity to describe our business improvement efforts and commitment to world class excellence

Involve ALL projects for all functions that drive improvement in the business

Include a new consolidated focus on project management skills

Standard methodology with varying toolsets, such as Six Sigma and Lean, depending on the area, activity and need in the business

Total Quality and Project Management Expertise – not just Six Sigma or LeanSigma


IMPACTing Project Benefits

First………..UNDERSTAND your businesses main drivers and metrics

Develop a path and link your projects ultimately to those metrics

Second…………Encase your project benefits definitions around your organizational structure

– e.g., IMPACT involves all projects (6 sigma, Lean, IS, Just-Do-It) so validation and guidelines must address all of those items


How can this help me?

Key elements to developing a good project benefit infrastructure

Develop a global council to define definitions and models

Develop company wide project benefit guidelines that link to your business’ KPIs

Develop a matrixed network of financial representatives ACCOUNTABLE for projects in their respective areas

Designate a global focal point for the network to drive the efforts and hold the businesses accountable

– Who has the final word!!!!!


How can this help me?

More key elements to developing a good project benefit infrastructure

Define what a project is

Have a consistent Project Governance Process

Support an electronic central project repository that mirrors your governance process

Build a process that defines a reconciliation process of project benefits to the business’ bottom line (or not)


Key Definitions

Benefits Assessment – the process of ensuring that benefits are included on project requests, that they are correctly and consistently calculated, and that the requestor understands the financial impact in the validation process.

Benefits Validation (tangible) – the process of reconciling project benefits from a completed project to the financials or metrics to ensure project benefit delivery.

Benefits Validation (intangible) – the process of reconciling project benefits from a completed project to business metrics wherever possible to ensure project benefit delivery.

Tangible Benefits – benefits that impact the financials, improve productivity, or change cash flow. All are measurable and can be validated and reconciled.

Intangible Benefits – benefits that may or may not be measurable or validated after project completion.


Key Definitions

Baseline – prior year data that is used as a basis to compare data resulting from a completed project to determine the benefit delivered. In some cases, it may be applicable to use budget data as a baseline to forecast anticipated benefits.

EVA – the value generated by a business / project over and above the total cost of all capital it uses to generate that value. EVA = EBITA – Capital Charge

Completed Project – Project Sponsor has agreed that the project is complete and hasformally signed off.

Savings (Productivity) – Baseline data from previous year versus current year data

Example: if $10 is spent in 2003 and $9 is spent in 2004, there is a $1 cost savings, excluding any capital costs and/or charges. If there are capital costs and charges, then the productivity is defined as the net savings calculated.


Benefit Categories – Tangible

Tangible Benefits – benefits that impact the financials, improve productivity, or change cash flow. All are measurable and can be validated.

Revenue Growth – Projects that improve operating margin due to incremental revenue from volume or price increases

Cost Savings / Reductions – Projects that result in year-over-year savings or cost reduction

Asset Productivity – Projects that improve the utilization of current assts (i.e., process or productivity enhanced so that capital expenditures for new assets are avoided)

Capital Expense Reduction or Working Capital – Projects that improve working capital (inventory, receivables, payables)


Benefit Categories – Intangible Benefits

Intangible Benefits – benefits that may or may not be measurable or validated after project completion.

Risk Mitigation – Projects that reduce a business risk or threat and may or may not have a direct financial impact (can impact all benefit categories)

Cost Avoidance – Improvements are made that avoid additional costs to the current process, but do not take cost out of the process or have a direct financial impact (can impact all benefit categories)

Customer Satisfaction – Projects that improve customer satisfaction, but often have no measurable impact on financials or metrics

Controllership – Projects that deliver process improvements or other improvements that have no measurable benefits


Project Benefit Guidelines

Purpose

The intent of this document is to give Quality Project Leaders and Financial Approvers in all Brambles business units guidelines to understand project benefit categories, the process for assessing benefits in a project, and the calculation of project benefits.

These guidelines apply to all Brambles Quality projects worldwide.


Sample Guideline Contents

Definitions

Project Benefits Process & Roles

General Rules

Benefit Categories & Calculations

Tools & Templates


Project Benefit Network

To provide project resources specific contacts who are responsible for validating their project benefits per the guidelines

Roles and ResponsibilitiesProject Governance Process should dictate a project benefit assessment at:

– Charter stage Build initial benefits model– Periodic auditing throughout project to clarify benefits– Final signoff by Finance of validated benefits

• Reconciliation to P&L, if applicable


Sample Project Benefit Network

Region Person Position Assists With: Final ApproverUS Mickey Mouse CFO

Minnie Mouse Dir, F&P HR, Legal, Mktg, Finance XDaisy Duck Dir, Sales Finance Sales, Customer Svc

Donald Duck Dir, Ops Finance Ops, Log, Asset MgtGoofy Dir, Finance IS

EU Pluto CFOChip Dir, Finance All Functional Areas X

AME Dale Dir, Finance XCinderella Financial Analyst All Functional Areas

AP Snow White Dir, Finance XGrumpy Com'l Mgr All Functional Areas

CA Sneezy Dir, Finance All Functional Areas XLATAM Bashful Dir, Finance All Functional Areas X

PROJECT BENEFITS NETWORK


Global Focal Point

In Brambles, there is a Director – Project Benefit Controller that reports to corporate Quality organization

If your organization is not corporately centralized, then suggest building a global council with rotating leadership every 18-24 months to keep the network accountable

ACCOUNTABILITY, ACCOUNTABILITY, ACCOUNTABILITY


Define what a project is

If you have 30,000 employees in your company, you have 30,000 different definitions of what a project is

Important to clarify because…….

Determine whether an effort needs to travel through the governance process

– Hence requiring benefit validation

Also helps determine which projects go into your central project repository


Consistent Project Governance Process

ProjectCharter

BenefitAssessment

ProjectApproval Project work

(controls & tollgates)Project

Complete

Generic Project Cycle

Reporting and Analysis

Trackand

ReportBenefits

Where Does Project Benefit Leadership Support?(And, what’s in it for me?)


Consistent Project Governance Process

ProjectCharter

BenefitAssessment



Complete



• Guidance withdefining benefits

• Ensure benefitsare included and calculated

• Track andreport benefits

Trackand

ReportBenefits

Assist withpotential changesin benefitsestimate


Track and Report Project Benefits

ProjectCharter

BenefitAssessment



Complete



What Does This Really Mean?

Trackand

ReportBenefits



ProjectCharter

BenefitAssessment



Complete


Trackand

ReportBenefits

Category4

Benefits Submitted

Category3

BenefitsAssessed

Category2

Benefits Cultivation

Category1

ActiveSavings

Phases Categorized ….



ProjectCharter

BenefitAssessment



Complete


Trackand

ReportBenefits

Category4

Benefits Submitted

Category3

BenefitsValidated

Category2


Category1

ActiveSavings

10 projects 5 projects 30 projects 15 projects$100 k benefits $ 500 k benefits $ 2.5 m benefits $ 3.0 m benefits

Projects Tracked Throughout the Pipeline …



ProjectCharter

BenefitAssessment



Complete


Project Reporting Delivered

Trackand

ReportBenefits

Category4

Benefits Submitted

Category3

BenefitsValidated

Category2


Category1

ActiveSavings

10 projects 5 projects 30 projects 15 projects$100 k benefits $ 500 k benefits $ 2.5 m benefits $ 3.0 m benefits

# Projects submitted X# Projects validated X# Projects WIP XX# Projects complete XX

Monthly benefit $ XXProjected benefit $ XX

CHEPRECALL

BRAMBLES


Electronic Project Repository

RequirementsWeb-based access for all business unitsLifecycle management for all projectsEstimating model, particularly for capital intensive projectsRobust reporting including project dashboard, including benefit analysis12-month forecasting of project benefits for active and pending projects

MUST have governance process in place prior to systemA system will not drive your processThe system must MIRROR your process and meet your requirementsDon’t think of the system as antidote for your lack of processes


Financial Reconciliation (or not)

Significance of building a model and process to reconcile the benefits to the bottom line

Refer back to definitionsTangible vs. IntangibleNot the same thing as Hard vs. Soft benefits

Key things to consider:Big arguments can occur regarding benefit buckets!

– Emphasizes importance of guidelines, global focal point(s) and reconciliation to P&Ls

It’s ok if everything doesn’t fall to the P&L– But you then understand better what does fall and what doesn’t


Svgs Compared to

Plan/Fcst

Non Financial

Financial (Reduce

non-value added)

Financial (Cost

Avoidance) Cost Revenue CostCash Flow

Increase Volume XIncrease Price XDecrease Direct Exp XDecrease O/H Exp XReduce Inventory X XReduce Receivables XIncrease Payables X

Risk Mitigation Mimimize Risk XReduce Planned Costs XAvoid Unplanned Costs X

Customer Satisfaction Increased Sat. Cust. X XControllership Process Improvement X X

Revenue Growth

Cost Savings / Reductions

Asset Productivity / Capital Expense / Working Capital

Cost Avoidance

Savings Not Visible in Financial Statements

Savings Compared to Prior Period Actual Reporting

Project Opportunities Expected Productivity Result

Quick Reference Guide


Summary

Define your organization that will be benefit assessed

Have a central governing council and focal point for project benefits

Important to have project benefit guidelines and a network corporate wide so everyone talks the same language and reports the same way

Let the process govern the system, not vice versa


THANK YOU!

microsoft powerpoint - (3)julie brignac

Documents