Written by: Richard Frykberg
You’ve got a great idea that will propel your organization forward. But how do you convince your management team that your initiative is worth the investment? How will you get your project proposal prioritized above all the other competing demands for capital budget allocation? Fortunately, you are not alone. ChatGPT has scoured the internet for you and knows just what goes into a winning business case.
You can use ChatGPT to prepare a complete and compelling investment proposal that will be good for your organization, and accelerate your career. However, to get the most out of ChatGPT for capital projects you need to ask the right questions and provide relevant context.
Innovate with ChatGPT for Business Case Development
Thankfully, humans are still more creative than ChatGPT with business case development. The task of identifying opportunities and solutions remains with us. And most practical initiatives do not rely on ground-breaking invention, but rather on attentive observation and early application of new technologies and processes. Observe your competitors closely so you don’t get left behind. Be aware that today’s competitors may not be tomorrow’s, as industry disruptors are everywhere. Observe mega-tends, and don’t be fooled that you’re immune. For example, environmental considerations are not a fad.
Every organization needs to radically revaluate how to deliver its products and services more sustainably. Leveraging ChatGPT for capital projects can help you innovate. Validate your inspiration with thorough research. Ask ChatGPT what trends and innovations are impacting your industry, and you may be very surprised by how insightful the response is. ChatGPT will even provide good pointers on how to improve your concept before you develop it too far.
Often, we are blinded to the pitfalls of our ideas. On the other hand, every good idea has had its naysayers and wouldn’t have been progressed based on the ‘wisdom’ of the crowd. So, there is a fine line between seeking third-party validation and sticking with your convictions.
In practice, the benefits of ‘socialization’ and collaboration outweigh independence. Broadly engaging internal specialists will help expose further potential benefits and costs. But as the initiator, the recognition, risks, and rewards will rest with you. To ensure fair attribution of all contributions, a centralized system for logging and tracking the evolution of project concepts is highly beneficial.
In addition to human insights, ChatGPT responses should also be logged. Think of ChatGPT for capital projects as a virtual collaborator – helping you define and evaluate your ideas, leveraging all the knowledge on the internet.
Contextualize your ChatGPT Business Case
When using ChatGPT for capital projects, it is well established that the language model responds best when it is provided more context. Before you say, “help me build a business case for my excellent idea”, provide deep context. In this way ChatGPT will provide more reliable responses and provide more realistic cost and impact assessments.
- Describe your organization and industry.
- Describe your department and location.
- Describe the problem or opportunity.
- Describe your objective.
- Start describing your idea.
Strategize your ChatGPT Business Case
The most important input to the assessment of your investment initiative will be alignment to strategy. Ensure that ChatGPT is aware of your corporate strategy. Your website is likely to include both investor and broad stakeholder objectives.
- Environmental, Social and Governance (ESG) objectives are often expressed.
- Diversity, Equity and Inclusion (DEI) policies and goals may be identified.
These high-level strategic objectives are important, but your departmental strategy is even more important.
Understand your project manager’s KPI’s and objectives. Try to get specific: what is the real weighting of priorities – cost, growth, safety, are all important, but may be naturally conflicting. Your initiative is most likely to be sponsored if you can clearly demonstrate how it moves a key lever. Make sure you provide this strategy to ChatGPT when building your business case, as you will be amazed at how effectively it tries to align your investment proposal accordingly.
It is important to effectively evaluate the urgency of your investment proposal. If your idea relates to the replacement of operative equipment, urgency will be based on a risk assessment. What is the likelihood and consequence of component failure without replacement? If your idea relates to cost saving, the urgency may be based on the opportunity cost of inaction. If your idea relates to new product or market growth, urgency will reflect the probability and impact of your competitors getting there first.
Prompted correctly, leveraging ChatGPT for capital projects will significantly help you articulate the importance of your investment initiative. In doing so, prioritizing your investment initiative for business case becomes much more probable.
Identify Investment Initiative Benefits with ChatGPT
Use ChatGPT to help extol the benefits of your initiative. Frequently a good idea has both quantitative benefits as well as qualitative benefits. Try and translate expected returns into financial measures as executives always prefer ‘hard’ numbers. Qualitative benefits are important, but may be harder to measure.
At an early stage of innovation, most metrics will be based on assumptions. Identify all your key assumptions to a granular level. For example, labour savings will be based on number of people, hours saved, and duration assumptions. Revenue projects may be based on market size, market share, and pricing assumptions. ChatGPT can help you identify these benefit drivers and key assumptions.
Point estimate assumptions can indicate a spurious degree of accuracy. To fairly represent inherent risks of an initiative, for each key assumption, assess the worst case, best case, and most likely outcomes. Based on these ranged estimates it is possible to model a likely distribution of outcomes. The cumulative effective of variations in all assumptions can be modelled using Monte Carlo simulation techniques.
This will help generate a probability distribution of the financial return of your initiative and provide a good indication of variability and inherent uncertainty. Whilst ChatGPT will not do the Monte Carlo simulation for you, it can help you think through your assumptions and estimate ranges.
Qualitative benefits should not be ignored. Some strategic benefits such as achieving ESG or DEI outcomes are very important to long-term organizational success but may not be readily translated into financial measures. Using ChatGPT for capital projects is effective towards producing high quality text explaining the alignment of your proposal to these strategic objectives. To ensure that initiatives can be compared, many organizations provide rating scales or non-financial metrics to assist the relative evaluation.
Cost Estimation with ChatGPT for Capital Projects
ChatGPT will not provide confident costing information. But it performs surprisingly well at identifying cost drivers and even making informed assumptions assimilating the knowledge of the web to identify the key drivers of cost.
As with benefit estimates, cost assumptions should be range based. The more confident the cost input, the narrower the required estimating range. For example, costs based on firm quotations may have a 5% variation. However, at an early stage, prior to detailed design, only order of magnitude estimates may be available, and the estimating range can be as large as 100%.
Identify activity inter-dependencies and ideally represent these on a Gantt chart to assist executives understanding the timing of future cashflows.
Calculating Net Present Value in ChatGPT
For larger initiatives involving multiple activities and composite assets, costs may be incurred over several periods. It is essential for comparative purposes that future costs and associated revenues are discounted at the cost of capital to show the net present value of these flows. In higher interest rate environments, long-term returns are more heavily discounted and accordingly less attractive than projects that generate short-term benefits.
ChatGPT can be prompted to calculate net present value of a series of cash flows. However, most organizations prefer to leverage a spreadsheet or online financial analysis template for this purpose.
Scoring Investment Initiatives in ChatGPT
To facilitate equitable project prioritization and ranking, many organizations employ scoring algorithms. The various dimensions of a project (i.e. urgency, benefit, strategic alignment, and implementation risk) are standardized based on the nature of the project. For example, replacement projects would emphasize urgency and cost considerations, where as growth initiatives, will focus more on financial returns, strategic alignment and implementation risk.
ChatGPT can be prompted to help score your investment initiative. In addition to proposing answers to any checklist or rating questions, ChatGPT can provide high quality explanatory comments.
Creating Charts with ChatGPT
Executives love charts as they are effective at communicating ‘the big picture’. ChatGPT can be prompted to produce cash flow, probability distribution and sensitivity analyses for your business case.
Most organizations prefer a more standardized representation of individual submissions for consistency of executive presentation. However, if your current demand management system does not provide effective charts and analytics, it may be worth seeing what ChatGPT produces for you.
Summarize your Investment Initiative
When using ChatGPT for capital projects, the final prompt aims to obtain an effective executive summary. ChatGPT often does a remarkably good job in summarizing an initiative into a short executive summary when having provided necessary context, objectives, and capital project details. This should be presented clearly in an executive overview slide, together with key scores and financial analysis metrics.
Business Case Submission
Many great ideas never get submitted for approval as the process of preparation becomes too onerous or deadlines are missed. By utilizing ChatGPT effectively, hopefully some of your effort required to produce a high-quality submission can be reduced. Even if your business case is not 100% complete, it is worth submitting to allow managers and executives to provide early feedback.
Your idea may be rejected outright anyway due to factors beyond your control. Or, if it is deemed worthy enough, you may be given a further opportunity to complete the missing details.
Ideally, initiative submissions are managed in an integrated system. This will help monitor the prevalence of draft submissions and ensure that incomplete requests can be edited and enhanced by various stakeholders in a secure and controlled way.
Tracking Investment Initiative Approval
Don’t give up on a worthy initiative. Post-submission, continue to actively track the status of approval. Many organizations require initiatives to be approved by a range of executives dependent on investment reason (eg replacement or growth), asset type (eg vehicles or software), value and budget status. Automated workflow systems provide a better method for tracking these approvals than manual email-based alternatives and should be employed wherever possible.
Review and Reiterate
Conduct a post-implementation review of your submission. See where your assumptions may have been inaccurate or incomplete and learn from them. Ideally, capture the actual cost and benefit outcomes. And importantly, help ChatGPT learn. Make ChatGPT smarter by confidentially exposing your internal project portfolio history so that ChatGPT has more relevant and accurate data from which to learn and improve future guidance.
The Integration of ChatGPT for Capital Projects
Using ChatGPT for capital projects is effective at helping you generate winning investment proposals and business cases. The key to successful usage of ChatGPT is to provide sufficient context, including your strategic objectives, and to prompt ChatGPT effectively. Adopting a consistent structure and evaluation criteria for all submissions will help executives evaluate your initiatives more efficiently, and more fairly, so that your brilliance can shine.
Investigate tools such as Stratex Online that have built-in ChatGPT integration to convert your thought bubbles into complete and high-quality business case submissions. Stratex standardizes contextual information, aligns strategy, scores initiatives consistently and automates prompting. Prepare more innovative and high value initiatives to help your organization achieve its strategic objectives sooner, at lowest cost and least risk.
Use Stratex Online to prepare more innovative and high value initiatives to help your organization achieve its strategic objectives sooner, at lowest cost and least risk and see your career flourish.