Capstone: building the business case, team and plans for a project

This capstone brings the three practices together on a new case. Instead of Ridgeline Water, it uses Harbour City Libraries, an invented public library system with six branches. You will work through the same sequence a PRINCE2 project follows during starting up and initiating: outline the business case and options, appraise them, define benefits, design the project management team, build the product breakdown, sequence the products and schedule the first delivery stage, and set stages and tolerances. Each section shows a worked answer; try each step yourself before reading it. All names and figures are invented and illustrative.

The mandate

Harbour City Libraries' chief librarian has received a mandate from the library board. Branches are busy, staff spend much of their day on routine checkouts and returns, and community room bookings are handled by phone and paper diaries, causing double bookings. The board wants a project to free staff time for programs and to make room bookings easy. It has set aside up to 1.2 million for the project and wants a decision within three months.

Step 1: outline business case and options

The reasons are clear: free staff time and remove booking errors. The options are: do nothing; do minimum, an online room booking system only; and do something, online booking plus self-service checkout and returns using radio-frequency identification (RFID) tags on the collection. The project manager drafts an outline business case with these options for the chief librarian, who will be the executive.

Step 2: investment appraisal

The library board uses a 5 % discount rate and asks for sensitivity at 7 %. The appraisal period is eight years, matching the expected life of the kiosks and software. The code below appraises both change options and tests the most important assumption: how much staff time the self-service option really frees.

def npv(rate, flows):
    return sum(cf / (1 + rate) ** t for t, cf in enumerate(flows))

years = 8
dmin = [-450] + [130 - 20] * years            # booking only, $000
dsom = [-900, -200] + [310 - 60] * (years - 1) # booking plus self-service
for name, f in [("do minimum", dmin), ("do something", dsom)]:
    print(f"{name:13} NPV@5% {npv(0.05, f):5.0f}  NPV@7% {npv(0.07, f):5.0f}")
# the self-service saving (180 of the 310 gross) depends on customer uptake
for uptake in (1.0, 0.8, 0.6):
    gross = 130 + 180 * uptake
    f = [-900, -200] + [gross - 60] * (years - 1)
    print(f"self-service uptake {uptake:.0%}: NPV@5% {npv(0.05, f):5.0f}")

do minimum    NPV@5%   261  NPV@7%   207
do something  NPV@5%   287  NPV@7%   172
self-service uptake 100%: NPV@5%   287
self-service uptake 80%: NPV@5%    89
self-service uptake 60%: NPV@5%  -110

The two options are close. At 5 % the self-service option has a slightly higher NPV, about 287 thousand against 261; at 7 % the booking-only option is slightly ahead. The self-service option's value depends heavily on uptake: if only 60 % of the expected self-service saving appears, its NPV turns negative. A sound recommendation would note that financially the options are similar, that self-service offers a large non-financial benefit in staff time for community programs, and that its risk lies in customer uptake. The board might choose self-service with a pilot branch, just as Ridgeline Water chose a pilot to test its riskiest benefit.

Step 3: benefits

The senior user, the manager of branch services, defines the benefits with the project manager. Each has an owner, measure, baseline and target, and the benefits management approach sets out reviews at each stage boundary and at 6 and 12 months after closure.

Step 4: the project management team

Applying lessons 5 and 6, the team must represent business, user and supplier interests, keep assurance independent and define change authority.

Step 5: products and the product flow

The project product description defines the final product as self-service lending and online room booking operating in all six branches, with acceptance criteria such as at least 70 % of checkouts by self-service within six months at each branch and fewer than two double bookings a month. The product breakdown and flow for the pilot branch stage are summarized below.

products = {
    "Kiosk contract":       (0, []),
    "System upgraded":      (6, []),
    "Kiosks delivered":     (8, ["Kiosk contract"]),
    "Collection tagged":    (6, ["System upgraded"]),
    "Booking configured":   (5, ["System upgraded"]),
    "Kiosks installed":     (2, ["Kiosks delivered", "Collection tagged"]),
    "Staff trained":        (3, ["Kiosks installed", "Booking configured"]),
    "Pilot live, measured": (8, ["Staff trained"]),
}
order, done = [], set()
while len(order) < len(products):
    for p, (_, preds) in products.items():
        if p not in done and all(q in done for q in preds):
            order.append(p); done.add(p)
es, ef = {}, {}
for p in order:
    es[p] = max((ef[q] for q in products[p][1]), default=0)
    ef[p] = es[p] + products[p][0]
end = max(ef.values())
lf, ls = {}, {}
for p in reversed(order):
    succ = [s for s in products if p in products[s][1]]
    lf[p] = min((ls[s] for s in succ), default=end)
    ls[p] = lf[p] - products[p][0]
for p in order:
    fl = ls[p] - es[p]
    print(f"{p:22} start {es[p]:2}  finish {ef[p]:2}  float {fl:2}{'  critical' if fl == 0 else ''}")
print(f"pilot stage: {end} weeks")
budget = {"planned work": 520, "risk budget": 30, "change budget": 40}
print("stage budget ($000):", budget, "total", sum(budget.values()))

Kiosk contract         start  0  finish  0  float  4
System upgraded        start  0  finish  6  float  0  critical
Kiosks delivered       start  0  finish  8  float  4
Collection tagged      start  6  finish 12  float  0  critical
Booking configured     start  6  finish 11  float  3
Kiosks installed       start 12  finish 14  float  0  critical
Staff trained          start 14  finish 17  float  0  critical
Pilot live, measured   start 17  finish 25  float  0  critical
pilot stage: 25 weeks
stage budget ($000): {'planned work': 520, 'risk budget': 30, 'change budget': 40} total 590

The pilot branch stage takes 25 weeks. The critical path runs through the library system upgrade, collection tagging, kiosk installation, training and the measured pilot. Kiosk delivery has float, so a short delay from the vendor would not affect the end date, but tagging the collection, which is labour-intensive and often underestimated, is critical. That tells the project manager to estimate tagging carefully, perhaps with a three-point estimate based on items per staff-hour, and tells the board where time tolerance is most likely to be consumed.

Step 6: stages and tolerances

Applying lesson 10, the stages follow the decisions the library board needs: initiation; a pilot branch, ending with measured self-service uptake, which is the key uncertainty; and rollout to the remaining five branches in two groups. Tolerances reflect the uncertainty in each stage.

Because Harbour City Libraries is a public body, the project should also follow the city's own capital approval rules and its accessibility obligations. Self-service kiosks and the booking website must be accessible; in Ontario, for example, the Accessibility for Ontarians with Disabilities Act and its standards apply, and other provinces have their own accessibility laws. These requirements become quality criteria in the product descriptions.

Bringing it together

The table below shows how each practice's main products connect in the capstone. Observe how a finding in one practice changes the others: the uptake risk from the business case creates a pilot stage in the plans, a benefits owner in the organizing practice and a key quality criterion in the project product description.

Self-assessment

Before finishing the course, check your own capstone work against these questions. Does the business case compare genuine options, show sensitivity and include non-financial benefits and dis-benefits? Does every benefit have an owner, measure, baseline and target? Does the project board represent business, user and supplier interests, with a single executive and independent assurance? Is change authority defined with limits? Does the plan start from a project product description and a product breakdown that includes external and management products? Do product descriptions have measurable quality criteria? Are stages placed at decision points, with tolerances that reflect the uncertainty in the estimates? If you can answer yes to each, you have applied the three practices as PRINCE2 intends.