Investment logic mapping

Overview

Background

ILM was developed by the State Government of Victoria, Department of Treasury and Finance (DTF) in Australia in 2003, to screen budget bids. It was formally introduced to New Zealand by the State Services Commission (SSC) in July 2008, following successful pilots by the Ministry of Health. It is being increasingly used by New Zealand Government agencies and is included in the New Zealand Treasury's guidelines for Public Sector Business Cases. Although its origins are in the public sector it has proved an equally valuable technique when used in the private sector.

Further information is available from the Treasury site(external link).

What is an ILM?

Investment logic mapping (ILM) is a series of structured workshops that bring together key stakeholders to ensure that there is early agreement on problems, outcomes and benefits before any investment decisions are made or a specific solution is identified. 'ILM' can refer to the workshop (investment logic mapping) or the output of the workshop (investment logic map).

What is it for?

ILM workshops put the emphasis on gaining a clear understanding of the problem (or opportunity), the consequence of the problem and the desired benefits – before looking at possible solutions. The output of an ILM is usually a one-page investment story that sets out the problems and benefits in straightforward language that all stakeholders can understand.

When is it used?

Within NZ Transport Agency's business case approach, ILM workshops are normally carried out at the beginning of the development of the strategic case, and less formally, at the beginning of the development of the indicative business case as a scoping exercise to inform the IBC funding application. There may also be other points during the project development lifecycle when the facilitated workshop techniques of the ILM process may be of use.

What are the outputs?

The main outputs from the investment logic mapping process are the investment logic map and benefits map. Both are simple single-page flowcharts that tell the story of an investment and exposes its underpinning logic. They are both in plain English and designed to answer many of the key questions required to make an investment decision.

Key steps

Planning ILM/benefits workshops – who should be there?

There are a number of key roles common to all ILM/benefits workshop sessions, these being:

• The problem owner
• The investor
• The facilitator
• The stakeholders
• The observers

The problem owner

The 'problem owner' is the person who has the identified business problem (or opportunity) and will be responsible for advocating a decision to invest and who will be responsible for delivering the expected benefits.

To ensure continuity, it is desirable for the investor to attend both the ILM and benefits workshops, but if this is not possible then a nominated deputy who has been a participant in the previous ILM workshop may be the lead for the benefits workshop. This should be agreed in advance between the problem owner and the facilitator. It is critical that the problem owner/nominated deputy is present for the full 2 hours as the key participant at the workshops. If the problem owner/nominated deputy is not able to attend for the full 2 hours, the workshop will need to be re-scheduled.

The investor

It is critical that the investor is present for the full session, as a key participant at the ILM workshops, this is usually a member of the Planning and Investment Group who has authority to make likely subsequent investment decisions associated with the investment. The investor should be prepared to provide the context for the investment at the workshop.

To ensure continuity, it is desirable for the investor to attend both the ILM and benefits workshops, but if this is not possible then a nominated deputy who has been a participant in the previous ILM workshop may be the lead for benefits workshop. This should be agreed in advance between the problem owner and the investor. It is critical that the investor/nominated deputy is present for the full 2 hours as a key participant at the workshops. If the investor/nominated deputy is not able to attend for the full 2 hours, the workshop will need to be re-scheduled.

The facilitator

The facilitator is responsible for:

• extracting and telling the investment story in a way that will maximise its value to the organisation
• expressing the investment story in plain language and concepts
• obtaining the agreement of all participants to the outcome of the discussions
• ensuring that each statement can be supported by evidence

As such they have a dual role to extract the best ‘investment story’ from the participants and to challenge the logic behind what the participants say, particularly around the problems. For the benefits workshop the facilitator’s role is to support the clarification of benefits and key performance indicators that provide the best evidence that the benefits sought have been delivered.

In general, it is expected that accredited ILM Facilitators should be used for all but the simplest state highway investments. The Transport Agency has a small number of trained facilitators which may be used for simpler state highway investments however further advice should be sought from businesscaseprocess@nzta.govt.nz.

The Transport Agency has arrangements with accredited facilitators(external link) in New Zealand to provide facilitator services to the agency.

The stakeholders

Key stakeholders are critical to making the potential investment successful (usually determined by the problem owner). Key stakeholders help define the business need, challenge the investor and/or contribute supporting evidence. They will be senior level, strategic thinkers who understand the wider problem and its context. Stakeholders are not expected to bring anything to the workshop, but they are expected to have thought about the problems leading to, and expected benefits of, the proposed investment.

For ILM workshops the number of stakeholders should be limited to 5-8 (with an absolute maximum of 12). Stakeholders should be identified who:

• have a vested interest in the problem
• have specific knowledge which allows them to challenge and provide evidence
• have authority to make decisions at the workshop to ensure progress is made on substantive problems
• are able to advise on the alignment of the proposal with their organisation's strategic direction in terms of policy and business strategy

In selecting stakeholder participants it is important to be mindful of the context to the problem. More strategic issues could lend itself to a different set of participants than, perhaps, more activity/operational problems.

The observers

Observers, such as project managers or business analysts may be invited to the workshops to listen to the group discussion but they play a silent observer role. Observers do not sit at the table, as they are not participants. Observers are silent at the workshop as the discussion is around the business need for a change whilst the role of the observer (PM/BA) is to develop and deliver the solution.

PMs may capture any additional problems, interventions and benefits that are discussed but not considered to be the key issues to be captured in the map. These can be used as supporting information within the strategic case or more detailed business case scope if the proposal proceeds.

Planning ILM/benefits workshops - logistics

Get the right people to the workshop

• An ILM facilitator
• The problem owner AND the investor
• Key stakeholders – those with the most information on the topic
• 5-8 (maximum 12) participants is ideal for the investment logic mapping workshop
• 4-5 participants (excluding the facilitator and observers) is ideal for the benefits workshop. There should be some continuity from the previous workshops but changes to participants is usual
• Ensure a 2 hour time slot for each workshop
• Problem owner to send out an email invite outlining the purpose of the workshop (set the scene)
• Each workshop should be one week apart

At the ILM workshop – defining the problem(s)

The problem(s) are the reason(s) that action needs to be considered at this time. It is couched in negative terms.

• Each problem statement should capture the essence of what is broken and the consequence
• Must be supported by evidence that the problem exists and that there is a correlation between ‘what’s broken’ and the ‘consequence’
• Is compelling and something we care about

At the ILM/benefits workshop – determining benefits

It is important that the potential benefits of successfully investing are able to be assessed and measured in order to demonstrate optimum programme development and activity/option selection. It is important to evaluate the success of addressing the issues or opportunities once an investment has been implemented.

When considering performance attributes and measures the author of the strategic case should start with the framework for performance measurement adopted by Planning & Investment for use in the Transport Investment Online (TIO) funding portal. The transport benefits and performance measures have been through a review process and are directly attributable to investment in transport outcomes.

The framework is divided into five outcome classes:

The outcome classes are further divided into attributes to make it easier to select measures. At present the Knowledge Base has a list of performance measures available for network performance and capability, and safety. The other three are under development.

For more information the author should refer to the Planning & Investment Knowledge Base - Framework for performance measures.

The benefits are the value that the investment will provide to the organisation or its customers.

• Each claimed benefit must be supported by key performance indicators (KPIs), 1 or 2, that demonstrate the investment’s specific contribution to the identified benefit
• They should provide an obvious connection to the outcomes but be contextualised to indicate their local impact
• They answer the question 'what value is derived from...?' and the consequences of the investment
• KPIs must be meaningful, measurable and attributable to the investment

Post ILM workshop

On conclusion of the ILM and benefits workshops the ILM facilitator will, within 24 hours:

• Create a plain English story that encapsulates the workshop discussion
• Prepare version 0.1 and/or 0.2 of the ILM/benefits map
• Email version(s) directly to participants seeking feedback within 24 hours
• Include observations of strengths and weaknesses in the email and, if possible, also include the list of issues

On receipt of participant feedback the ILM facilitator will:

• Finalise the ILM and establish next steps (eg benefit definition workshop)
• Finalise the discussion and the ILM in 48 hours following the workshop

The ILM and benefits maps form a key input into the strategic case development which should progress promptly after the benefits workshop and be completed within one month of the benefits workshop.

Planning ILM/benefits workshops – rules for participants

Because the ILM and benefits workshops are 2 hour sessions it is important to maximise the value of the conversations. Therefore, when organising the workshops, it is important to reiterate with participants some key workshop rules to be adopted during the session:

1. Participants should be on time. Be ready to start the workshop at the scheduled time.
2. Participants must be able to attend for the full 2 hours. If a participant is not able to attend you may wish to consider rescheduling the event.
3. No mobile phones. Phones can be a distraction but it is understandable that sometimes participants need to be contactable during the workshop. If this is the case participants should let the facilitator know, otherwise, participants should be politely asked to either turn their phone off or turn it on to silent.
4. No laptops, paper work, etc. Participants are not expected to bring any documents or supporting information to the workshop.
5. No anecdotes or examples. These take up valuable time in a short workshop. The facilitator will stop anecdotes and examples. Please do not be offended.
6. One speaker at a time and please listen to others.

Tools

Forms and templates

Guidelines and tools

For further information contact businesscaseprocess@nzta.govt.nz.