Business Planning Flashcards
What is a business plan?
A document used to gain funding for a business / project from investors / funders.
- Captures reasons for initiating a business / project.
- A formal statement outlining:
o Business goals and objectives.
o Reasons why they are believed to be successful and obtainable.
o Strategy of how the goals will be achieved.
- Assesses the Benefits and Value of a business compared to alternatives.
How does a business identify its ‘needs’?
- A business strategy can be produced – to understand long term goals.
- Identify stakeholders and their needs.
- Carry out SWOT analysis.
How would you go about producing a long term business strategy?
- Create a description of the business;
- Identify stakeholders and their needs;
- Carry out SWOT analysis (Strengths, Weaknesses, Opportunities, Threats): Strengths are internal characteristics that give it an advantage over others;
Weaknesses are internal characteristics that give a disadvantage relative to others; Opportunities are external elements that could be exploited to its advantage; Threats are external elements in the environment that could cause trouble. - Carry out PEST analysis (Political, Economical, Social, Technological):
Political factors include areas such as tax policy, labour law, environmental law, trade restrictions and political stability;
Economic factors include economic growth, interest , exchange and inflation rates; Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution and emphasis on safety;
Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. - Identify SMART goals (Specific, Measurable, Attainable, Relevant, Time Bound): Need for a Specific goal;
Need for solid criteria for Measuring progress attaining the goal; Importance of goals that are realistic and Attainable; Importance of choosing goals that are Relevant, they matter;
Importance of grounding goals within a Time frame, giving them a target date. - Marketing strategy – market research, promotion, identify target audience / stakeholders;
- Organise appropriate resources – funding / staff;
- Review KPIs – identify areas for development / improvement / growth;
- Monitor & review progress on a regular basis.
What is an Investment Appraisal?
Techniques used to assess whether a business / project would be a worthwhile investment:
- Payback period
Length of time required to recover the cost of an investment.
Can be calculated as: Payback Period = Cost of Project / Annual Cash Inflows
- Rate of Return
States the average accounting profit as a % of the initial capital outlay. The greater the rate of return, the better the investment.
- Discounted Cash Flows
Future cash flows are estimated and discounted to give their present values (PV’s). Takes timing into account e.g. inflation.
- Net Present Value
Sum of all future cash flows, incoming & outgoing, is the net present value (NPV).
Measures changes in shareholder wealth over a period of time, as a result of accepting the business / project.
What is AECOM?
- A global provider of professional services to a broad range of markets.
- Architecture, engineering, PM, CM, etc.
- Program Cost Consultancy, Construction services, energy, water, transport etc.
How does your business plan for the future
- Reviewing market conditions MARKET
- Understanding Clients needs EMPLOYER
- Understanding Employees needs EMPLOYEE
How is your team putting a strategy in place to achieve the AECOM 2020 Vision business plan?
AECOM’s 2020 Vision strategy focuses on 4 areas; people, innovation, excellence and growth. The project management team aims to achieve these goals using the following approaches:
1) People: The PM team is growing, it has a diverse employee base and there are graduate and leadership development programmes in place;
2) Innovation: We have developed a comprehensive computer programme that enables project leaders to manage the financial health of projects, informing directors of how much fee has been used and provides estimates to completion (launch of salesforce – uniformity in bidding / project tracking etc.);
3) Excellence: The PM team strives to provide the best in Client care by using KPIs for repeat clients and providing pro bono work for charities;
4) Growth: AECOM has purchased new PM firms in South Africa & Asia in recent years and the PM team in London has branched out geographically with projects in Europe and Egypt.
What is E2020?
E2020 strategy outlines vision for the future (long-term strategy).
Vision:
o To become a premier fully integrated business ‘one AECOM’ on projects.
o To create, enhance and sustain the world’s built, natural and social environment.
Strategy
o Plan for Europe
o Financial targets
o People (investment in training programme)
o Innovation (launch of salesforce – uniformity in bidding / project tracking etc.)
o Excellence (commitment to ISO standards , client care)
o Growth (URS acquisition – to increase resource in the sustainable environment)
Plan by regions
Plan by markets
Achieving big 4 changes
o Our AECOM
o Client Partnerships
o Market Leadership
o Entrepreneurial
KPIs (pipeline, H&S, Profit)
Would any other strategies be included with the AECOM 2020 business plan?
Yes there would be supporting strategies to help achieve the four goals such as:
- Finance, HR, IT and Sustainability & Corporate Social Responsibility.
What do you understand by an outline business case?
It is an early reporting of the reasoning for initiating a project or task.
- Information could be the background of the project, the expected business benefits, some basic options considered (with reasons for rejecting or carrying forward each option), basic estimates of the costs of the project and the expected risks.
- Consideration would also be given to the option of doing nothing including the costs and risks of inactivity.
From this information, the justification for developing the project further until a Final Business Case can be submitted is derived.
Would you expect that a business case consider one option?
No; it is best to consider multiple options in order for the Client to make the most informed decision.
How and why do you need to assess different project options?
Undertaking a Feasibility study. Conducted to:
- Assess how different options would meet the goals and aspirations of the client / business.
- Identify the most achievable / profitable / beneficial option.
How does your performance as a PM contribute to AECOMs business objectives?
Short term - Delivery of my projects on time, to budget and quality
Long term - Client satisfaction may lead to future work opportunities.
Day to day running of projects –issuing Payment Certificates in line with QA standards ensures high quality standards on projects.
What are Aecoms KPIs?
- To meet the periods financial targets – ensure financial information is uploaded onto APIC (tracked)
- To maintain a 0% H&S incident record on site – ensure CSCS cards uptodate and undertake a risk assessment
- To achieve high levels of Client satisfaction – follow QA procedure
AECOM Company Values
- Integrity
- Employees
- Clients
- Innovation
- Agility
- Excellence
- Safety
- Growth
