Lesson 11: Including Non-Financial Costs or Benefits in the Business Case

Question 1

What are the four ways business value is generated?

Answer 1

Increase revenue, decrease cost, decrease risk, increase intangibles

Question 2

What is the book value of an asset?

Answer 2

The original cost of the asset minus the accumulated depreciation of the asset

Question 3

What is the book value of a company?

Answer 3

The value of the company’s assets minus all the company’s liabilities. The total amount a company is worth if all its assets are sold and all its liabilities paid back

Question 4

What is the market value of an asset?

Answer 4

The price a seller of an asset can expect to receive from a buyer in the marketplace

Question 5

What is the three step approach to making intangibles tangible?

Answer 5

1) Decomposition is breaking intangibles into constituent parts to identify business value creation opportunities
2) Quantification is calculating the quantity or amount of business value derived from an intangible asset
3) Monetization is converting the business value in monetary value

Question 6

What if your case is rejected?

Answer 6

Use feedback to improve it, and recognize that guiding the company away from a poor investment is still a success

Question 7

What should the executive summary include?

Answer 7

Problem, proposed solution, benefits, and key ROI or performance metrics