toolbox - society of decision professionals · toolbox enables easy analysis of alternatives •...
TRANSCRIPT
Nova Chemicals Business CaseDevelopment Financial Model
TOOLBOX:
Toolbox enables easy analysis ofalternatives
• Foster creative thinking to develop uniquealternatives
• Provide consistent analysis between projectalternatives as well as for projects across thecompany
• Provide a better understanding of thebenefits, risks, and strategic fit
IdeaFraming
Analysis ofAlternatives
Selection ofBest Option
Toolbox:A Complete Business Case Package
Cover Input (for Financial Model)
CB (Crystal Ball Uncertainties) Calcs (Cash Flow Spreadsheet)
Scratch Pad (benefit calculations) Strategy (Questionnaire)
Risk (Summary of Risk Factors) Plan (Implementation)
Toolbox Outputs
• Calculates median case NPV, PI, and IRR
• Calculates the expected NPV and PI through amonte carlo simulation with Crystal Ball and10-50-90 data
• Generates tornado diagram and cumulativeprobability curves
• Provides graphs for each section (revenues,variable and fixed cost, cash flow, capital,etc)
Cover SheetGeneral projectinformation
Expected quarterlycapital spending
Financial analysisand crystal ballsummary
Project descriptionand benefits
Input Page - Cash Flow
Set project timeline sliders Select 1 of 4 model:• Cash flow• Price volume• Flexible price volume• Product replacement
Enter 10-50-90 data
Enter peak revenuedata (or margin)Enter final revenuedata (or margin)Enter variable costsavingsEnter fixed costsavings
Input Page (cont’d)
Capital cost and timeline(timeline start date from above)
R&D capital cost and timeline
R&D expenses and timeline
Commercialization expensesand timeline
Probability of technical success
Probability of commercial success
Input Page (cont’d)
Facts and GlobalParameters
Strategic value
Risk reduction
Working Capital
50 case values
Run Crystal BallInput Crystal BallResults
Simulation resultsPrint Sheets
Tornado Diagram
3551.3
3567.1
3524.0
3663.2
3691.7
2651.1
1692.6
(600.0
)
3546.4
3539.8
3578.6
3364.9
3340.7
4130.0
4541.6
3551.3
-20
00
02
00
04
00
06
00
0
Sta
rtu
pC
om
merc
ializa
tio
nC
osts
Infl
ati
on
Rate
Fix
ed
Co
st
R&
D E
xp
en
ses
Cap
ital C
ost
Fin
al R
even
ue
Peak R
even
ue
Tech
nic
al
Failu
re/S
uccess
10%
90%
OK
Create / Recalculate
k$ U
S
$3,551.3
Net Cash Flow
-600-718 -735
397
813
990
1307
14261496
15671611 1656
1725
-1000
-500
0
500
1000
1500
2000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
K$ U
S
All Variables Are at Their 50% Points and All Figures Include Inflation
Net Cash FlowPrintOK
Input Page - Flexible Price-Volume
Select flexible price-volume model
Input Page - Flexible Price VolumeEnter Price (ormargin) data
Enter volume data
Graph depicts data
Adjust rate slidersfor each year
Select 10 and 90case relationship
Select 10 and 90case relationship
Graph depicts data
Adjust rate slidersfor each year
Enter variable andfixed cost savings
Input Page - Flexible Volume
Business Case Training
• Provide two day Business Case Developmenttraining course across the company
• Stress Framing/Alternatives Generation
• Work through examples of each of the fourfinancial models within Toolbox
• Discuss uncertainty and expert interviews
• Provide ongoing support throughout theorganization
Toolbox provides many benefits forNova Chemicals:
• A wide range of alternatives can easily beexplored and evaluated for all projects at theproject team level (without a DRA facilitator)
• Consistency of project evaluation across thecompany
• Decision makers have the correct informationto make a good decision
• Allows trained DRA facilitators to focus onlarge and complex decision analysis projects