Academic study of private and public sector shared services indicate that many of them stumble their way to success, frequently missing their launch dates. However you do not need to accept that will happen to your project.
Use the 'Cost Of Delay Calculation' as a way to keep your shared service delivered to deadline.
The Cost of Delay calculation can be used in many ways. For example it can be used to motivate managers who are not providing figure work, or for partners who are not releasing promised resources to support the project.
Here is a simple cost of delay calculation:
The financials in the high-level business case are predicting that you, and two partners, are going to each save £365,000 per annum (totalling £1.09m p.a.) after the service is launched.
So that is a cost saving of £1,000 per day, for each partner.
A saving of £3,000 per day across the partnership, is £21,000 per week, or an average of £90,000 per month.
How much has that manager cost your organisation and the tax payer?
The launch date is fixed for 1st June in 12 months time.
However, a service head decides that they will try to stiffle the project (on the assumption they can avoid losing their job) by delaying provision of figures for two months. As a result, the start date of the new service has to be reset to 1st August.
How much has that individual cost the three organisations by delaying the project? A councillor at one of our seminars was less circumspect and said "You mean robbed the taxpayer of that saving!"
It is a 2 month cost of delay at £90,000 per month. £180,000.
So how can you use Cost of Delay calculations to your advantage?
Firstly, ask the decision makers to publicly announce a fixed launch date. For example 12 months or 18 months following the acceptance of the high level business case.
Then, ask them to work out what it will cost the organisation and the taxpayer per month if the project over-runs. Don't tell them a figure, ask them to discuss and work it out themselves - the calculation then has greater ownership.
Finally, ask for their permission to be able to use the cost of delay figure as a 'stick or carrot', with all the people who are involved in developing the project, depending on the circumstances. They will quickly call to account anyone who is delaying the project and ask them to account for the "lost savings".