A structured process for the fuzzy front-end of complex projects

Figures & data

Table 1. Project front-end steps.

Decision-making steps	Project front-end steps	Description	Key activities
1. Opportunity/problem identification	1. Project trigger identification	The identification of a problem or opportunity.	Trigger identification Trigger confirmation
	2. Project idea generation	The generation of an idea to respond to a project trigger.	Idea definition Idea assessment Idea prioritisation Project idea conceptual approval
2. Solution development	3. Business case development	The development of a project business case.	Definition Analysis Packaging
3. Selection	4. Business case appraisal	Decision-making regarding the proposed business case.	Business case presentation and assessment Project funding approval Next steps decided

Table 2. The 11 front-end steps of a Defence project.

Step and label	Step description	Fighter aircraft project illustration
Step 1: Identify Change	Assess the environment to identify changes in the environment. The environment is all of the internal and external input to Government such as new technology, changes to strategic direction and threats.	An intelligence report has identified a significant threat involving the construction of a military aircraft in another country. This aircraft will be able to exceed speeds of any aircraft owned by Defence.
Step 2: Qualify Risk	Conduct an impact assessment of the changes to evaluate the risk to Defence’s strategic objectives.	The risk posed by the foreign country’s faster fighter aircraft was assessed and categorised as ‘extremely high’.
Step 3: Prioritise Risk	Run workshops to prioritise the risks and opportunities generated in Step 2.	The risk to Defence associated with the foreign country’s fighter aircraft was prioritised as being greater than any other risk identified. A decision was made to generate new project ideas that can help mitigate this extreme risk.
Step 4: Develop Options	Perform a gap analysis to compare the current force and the future force. Obtain options from each of the Services and other groups. Select the options that best support the Joint Force. Consider costs and implications for industry.	To address the risk posed by the faster fighter aircraft, three options were proposed: Option 1 is for a new fighter aircraft that is faster than the other country’s fighter aircraft. Option 2 is for upgraded Defence missile systems, and Option 3 is for a new technology to combat the threat posed by the faster fighter aircraft.
Step 5: Test Options	Test each of the options to assess their value using war gaming and experimentation.	Option 1 was selected as it performed best during testing.
Step 6: Identify Offsets	Identify offsets within the budget that can be used to accommodate the new investment. Consider the risk to government posed by rephrasing, rescoping or divesting an existing project.	A new Defence project was identified as a candidate for restructuring and rephrasing, making funds available for the fighter aircraft project.
Step 7. Test Portfolio Options	Identify the net effect of proposed new investments offset in terms of the remaining risk resulting from the revised portfolios.	The portfolio options that included Option 1 were assessed against the remaining risk resulting from the revised portfolios.
Step 8: SMART Buyer	The Independent Assurance Review Team uses the ‘SMART buyer framework’ to identify the triggers and circumstances that led to the project. Run SMART buyer workshops with stakeholders to develop understanding of a project’s risk profile.	The SMART Buyer team provided a greater understanding of the risks and drivers involved in the fighter aircraft project and developed tailored strategies.
Step 9: Contestability	Assess whether the proposed project can be implemented as stated in the proposal and check if the risk assessments and treatment strategies are suitable, if there is evidence to support key decisions, and if costing and scheduling estimates are appropriate.	The fighter aircraft project proposal was reviewed by the Contestability Division against set criteria.
Gate 0: The various options are presented to the Defence Investment Committee. If successful, the selected portfolio receives pre-Gate 1 funding.
Step 10: Risk Mitigation and Requirements Setting	Conduct risk reduction steps which include modelling and simulation, risk reduction studies, commercial risk assessments and trade-off studies. Articulate exactly what will be acquired to provide a basis for public expense, contract requirements and confirming that what has been delivered is acceptable.	Risks include a lack of trained pilots and space for storing the fighter aircrafts. Requirements include the number of aircrafts and pilots needed to fly them, and storage and maintenance requirements. Using the risk reduction steps, the risk level was reduced.
Gate 1: The project is presented to Government. If successful, the project will receive pre-Gate 2 funding.
Step 11: Additional Risk Mitigation and Requirements Setting	Subject the proposal to additional risk mitigation and requirement setting, such as trade-off studies and commercial risk assessments.	The fighter aircraft project underwent additional requirements setting, commercial risk assessments and trade-off studies.
Gate 2: Government considers project approval. If the project receives approval, funding is provided for acquisition. Responsibility for the project is then passed to the Capability Acquisition and Sustainment Group to deliver the approved project.

Table 3. The proposed front-end process for complex projects.

Literature front-end steps (See Table 1)	Defence front-end steps	Operations management front-end steps
Step 1 - Project trigger identification	1. Identify change	Identify changes in the environment. Identify changes in the operations environment and determine the impact of these changes.
	2. Qualify risk	Assess risks to the organisation. Conduct risk assessments. Develop risk and issues statements for each of the relevant identified changes.
	3. Prioritise risk	Prioritise threats and opportunities. Confirm and prioritise risks (and gains) to the operations environment.
Step 2 - Project idea generation	4. Develop options	Generate project ideas. Build options sets by adding new projects, substituting existing projects, or amending projects.
	5. Test options	Test project ideas and select a project. Confirm how project options can address risk and identify best value for money.
Step 3 - Business case development	6. Identify offsets	Identify offsets (existing projects). Identify counterbalanced strategies for new investments.
	7. Test portfolio options	Test portfolio options. Test project options in the organisational portfolio to enhance net positive impact.
	8. SMART buyer	Develop a risk mitigation plan. Conduct an independent, formal assessment of the proposed investments with key capability stakeholders and subject matter experts within an analysis and risk based decision-making framework. Identify and cost risk mitigation and requirements definition activities that are required to be conducted.
	9. Contestability	Develop the initial business case. Independently confirm the proposal aligns with strategic and resource guidance. Confirm the project will provide value for money and analyse the spend spread to make sure it is achievable and realistic.
	Defence Investment Committee Decision (Gate 0)	An assessment (e.g. internal, independent, quality assurance or an audit) before the business case is submitted for approval
	10. Risk mitigation and requirements setting	Refine the initial business case. Risk mitigation and requirements refinement are conducted to ensure the investment is fit-for-purpose and will deliver the endorsed benefits. This will ensure investments are defensible and pricing estimates are contract ready.
	Government Decision (Gate 1)	Gate 0 - Board Initial Consideration for Conceptual Approval of the Project
	11. Additional risk mitigation and requirements setting	Develop the detailed business case. Additional risk mitigation and requirement refinement steps.
Step 4 - Business case appraisal	Government Decision (Gate 2)	Gate 1 - Board Consideration for Final Approval of the Project

Table 4. Practical implications for operations managers.

Project front-end step	Limitation in practice	Implication operations managers could consider…
1. Project trigger identification	A formal framework is not commonly used to assess the impact posed by changes in the wider environment.	…developing a framework to assess the potential impact to operations of each project trigger found in the operation’s ecosystem.
	When identifying project triggers, the focus of threats and problems often outweighs the focus on opportunities.	…giving greater consideration to opportunities in the environment as potential project triggers.
	There is limited understanding of the implications posed by a project that is misaligned with the operations strategy.	…placing projects in the operation’s ecosystem so that its implications can be better understood.
2. Project idea generation	Focusing heavily on new projects during project idea generation.	…all of the project options.
	An effective project idea generation process has not been made clear.	…following the proposed process outlined in this paper when generating and testing project ideas.
	Limited project idea testing prior to business case development.	…testing the project idea and waiting for conceptual approval from the funder of the project before proceeding with the development of the business case.
3. Business case development	Evaluating a proposed project without taking the full portfolio into consideration.	…testing the effect that the proposed project may have on the current portfolio.
	Internally evaluating a proposed project without any independent assessment.	…having the proposed project independently assessed.
	Developing a business case without considering all of the necessary project inputs required for the project to run.	…the resources and inputs required for operations once the project has been completed. For example, implementing a Life Cycle Cost approach.
4. Business case appraisal	Including only one business case in the front-end stage.	…submitting multiple initial (short) business cases that can address the same problem. A conceptual approval will be given only for the best idea that will proceed to develop a more detailed business case.
	Limited quality assurance assessment of the project proposal before it is appraised.	…an independent review of the project proposal before it is submitted so the quality of the proposal can be assessed.