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

2. Episode 3 - CAATS II Final Dissemination Event 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

3. Brussels, 13 & 14 Oct 2009 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

4. Brussels, 13 & 14 Oct 2009 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.

5. Brussels, 13 & 14 Oct 2009 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.

6. Brussels, 13 & 14 Oct 2009 Episode 3 - CAATS II Final Dissemination Event 6 Business Case CAATSII Pillars Alignment with SESAR E-OCVM Interaction with Other Cases Business Good Practices

7. Brussels, 13 & 14 Oct 2009 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.

8. Brussels, 13 & 14 Oct 2009 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

9. Brussels, 13 & 14 Oct 2009 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

10. Brussels, 13 & 14 Oct 2009 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”.

11. Brussels, 13 & 14 Oct 2009 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

12. Brussels, 13 & 14 Oct 2009 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

13. Brussels, 13 & 14 Oct 2009 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.

14. Brussels, 13 & 14 Oct 2009 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

15. Brussels, 13 & 14 Oct 2009 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

16. Brussels, 13 & 14 Oct 2009 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.

17. Brussels, 13 & 14 Oct 2009 Episode 3 - CAATS II Final Dissemination Event 17 Business Case Overview of the R&D Lifecycle Phases V0-NeedsV1- ScopeV2- FeasibilityV3- Integration Input › Baseline and Forecast Data, including economic data › Performance Targets › ATM Investment Roadmap description and Interdependencies › Stakeholders Impacted › Stakeholders Needs and Issues › V0 outputs › Project Description (Scope, Interdependencies, Alternatives and Options, etc.) › Standard Inputs for Cost Benefit Analysis › Industry Inputs on Costs › Stakeholders Needs and Issues › V1 outputs › Alternatives/Options full description › Performance Influence Diagrams › Stakeholders Inputs › Standard Inputs for Cost Benefit Analysis › Validation Results › V2 outputs › Local Inputs to Cost Benefit Analysis (Representative Stakeholders and Contexts of Use) › Validation Results › Standard Inputs for Cost Benefit Analysis › Specific Inputs for Cost Benefit Analysis Business Case Input Data in the R&D Lifecycle Phase

18. Brussels, 13 & 14 Oct 2009 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 V0- NeedsV1-ScopeV2-FeasibilityV3- Integration Output Key Required Deliverables: › Framing the current and Future Contexts from a Business Perspective › Economic and Financial Performance Targets › Planning/Organisation of Business Case Development › Roles & Responsibilities Desirable Deliverables: › Baseline description › Reference scenario description › Baseline description Key Required Deliverables: › Description of Cost & Benefits Mechanisms (KPAs) › Draft Description of Baseline and Reference Scenarios › Initial Business Case Report Desirable Deliverables: › Back of Envelope CBA › Benefit and Cost Influence Diagrams › Detailed description of baseline and Reference Scenarios Key Required Deliverables: › Cost Benefit Analysis comparing different alternatives › SWOT Analysis (Initial) › Intermediate Business Case Report Desirable Deliverables: › Transition Issues Identification › First cut Recommendations for Deployment Key Required Deliverables: › Trade-Off Analysis › Detailed Cost Benefit Analysis for the selected Alternative › SWOT Analysis (Final) › Final Business Case Report for R&D Desirable Deliverables: › Transition Issues Identification › Recommendations for Deployment

19. Brussels, 13 & 14 Oct 2009 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.

20. Brussels, 13 & 14 Oct 2009 Episode 3 - CAATS II Final Dissemination Event 20 What are the 4 Key Phases of the Business Case ? Scoping and Planning 1 Defining Alternatives Options 2 Analysis 3 Follow up 4 The detailed steps and how to roll out the full process are described in the guidelines.

21. Brussels, 13 & 14 Oct 2009 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

22. Brussels, 13 & 14 Oct 2009 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

23. Brussels, 13 & 14 Oct 2009 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

24. Questions?

25. Backup Slides

26. Brussels, 13 & 14 Oct 2009 Episode 3 - CAATS II Final Dissemination Event 26 SESAR

27. Brussels, 13 & 14 Oct 2009 Episode 3 - CAATS II Final Dissemination Event 27 The Business Case and the E-OCVM Structure Planning Framework E-OCVM interactions with the Business Case ATM Needs Scope Feasibility Integration Review information from Sub Steps  CaptureData from E-OCVM Sub Steps : 0.1- 0.2  CaptureData from E- OCVM Sub Steps: 0.1- 0.2- 1.1-1.2-1.3-1.4- 2.1-2.4-2.5-3.1-4.3-5.1  CaptureDatafrom E- OCVM Sub Steps: 0.1- 0.2- 1.1-1.2-1.3-1.4-2.1- 2.4-2.5- 3.1-3.2-4.1-4.2- 4.3-5.1  CaptureData from E- OCVM Sub Steps: : 0.1- 0.2- 1.1-1.2-2.4-2.5- 3.1- 3.2-4.1-4.2-4.3-5.1 V3 V2 V0 V1