The reason a new Edition is required

Edition 4 of the standard was released in November 2010. Since that time the practices have been used much more expansively, especially by the governments of Victoria and New Zealand. In Victoria the practices of the standard have been incorporated as the primary building blocks for business cases in the annual budget process. The New Zealand Treasury has mandated the use of Investment Logic Maps in business cases of their major investments.

These decisions have resulted in rapid uptake of the practices and, as a consequence, new knowledge.

16Questions - Investment Decision-Makers' Checklist

The 16Questions was developed several years ago based on the experiences of applying the practices of the Standard to thousands of potential investments. The business case guidelines of the Victorian Government have now been re-structured to align their content to the 16Questions. This allows the content of business cases to be more robust and enables decision-makers to better assess the merit of investments. The 16Questions have recently been revised and the revised version is available via this link.

The practices of the Standard are a primary means of extracting the information required to address the 16Questions for new investments.

Strategic Response

Deciding which strategic response to take to a problem provides an opportunity to drive new thinking and avoid investments that respond to problems in the same old way when there may now be more innovative and effective approaches. An analysis of business cases over many years has demonstrated ongoing weakness in this area. Since the release of Edition 4, a concerted effort has been made to improve the rigor with which we explore strategic options and decide on the preferred strategic response. The working draft of a  Strategic Options Analysis guideline was released in June 2011 and since then has been used many times.

Alignment with outcome measurement

While the above issues relate to shaping and decision-making for new individual investments, the practices of the Standard cover much more. With a greater emphasis on outcome measurement by the Victorian Government the Standard needs to be revised so it can better support this intent.

Formats and guidance needing upgrading

A number of existing formats and guidance materials do not reflect the current thinking and practices. Of particular note is the 'Facilitator Tips and Traps' document.

Improvements in facilitation

The need for skilled facilitators to lead the discussions of the Standard is now more important than ever. Governments (and businesses) are increasingly dependent upon the proper application of the practices to their most complex and important investments.

The success of the Standard to this point has been due to some simple principles. These must continue to be applied if it is to remain effective in driving better outcomes for governments and businesses:

Relevance

• Identify and address the things that really matter to making better investments

Simplicity

• Use of simple language and concepts
• Only include what is absolutely necessary to tell the story (avoid over-engineering)
• Package practices so they can be acquired as simple low cost commodities

Accessibility

• Make material easy to understand and readily available to broad audiences.

Positioning of the Investment Management Standard

The practices of the standard started life trying to make sense of individual investments. Recognising the ability of the approach to bring together key people to articulate the logic of a potential investment, their use evolved to programs of new investment and to the effectiveness of entire organisations.   

To help position the standard in the context of the way organisations operate, a Logical Data Model has now been developed. This shows the data the practices of the Standard can provide to support an organisation's ongoing effectiveness.

Shaping a new investment - the 'line of enquiry'

Irrespective of the nature, complexity or size of an investment, there are a number of discrete issues that must be addressed to establish its logic. It is necessary to address these issues in sequence (steps) as each one provides the basis for addressing the next.

The discussions of the standard are structured to address each of these issues in sequence. The 3rd, 4th and 5th steps were only handled lightly in previous editions of the standard.

Changes to the core discussions

The discussions used to establish the logic for a potential investment are at the core of the investment management standard. In previous editions of the Standard these have been defined as:

In Edition 5, it is intended that these discussions are re-structured to better accommodate steps 3, 4 and 5 in the 'Line of Enquiry' above. The way this could be done is demonstrated in this presentation.

Your feedback is now sought by COB Friday 20th April 2012,

Plaese use this link to the online survey to provide your feedback.