Gb519.unit5.presentation

Sustaining GrowthImproving ROI through Resource Allocation &

Project Prioritization

Presented by

Try L. MullerProgram ManagerPiedmont Housing Alliance

AGENDA What will the presentation cover?

Organizational performance evaluation

Where do we need to make improvements?

Possible solutions to problem area(s)

Potential biases in choosing a solution to the problem(s)

Evidence and recommended solution

Implications of the recommended solution

Performance Evaluation

Product Innovation: the organization does an excellent job creating new ways to reach our clientele.

Skill Development: we also do this very well. All employees are encouraged to develop their professional skills and job-specific skills.

Communication: we could use some improvement in this area because employees are not aware of the macro-outlook of the organization.

How does PHA perform from a Learning & Growth perspective?

Risk Assessment: this can use some improvement. Sometimes project performance falters due to improper analysis.

Fund Allocation: money is the most valuable resource in our organization because it is so scarce. We have to be more aware of how we are allocating funds.

Segment Evaluation: we are very proficient in this area. The system for evaluation is explicit and we adhere to the protocol for this.

Performance Evaluation

How does PHA perform from a Internal Business perspective?

Response Time: overall, organizational response time is good. Some projects have taken too long to complete, so we still have some efficiency problems.

Satisfaction: surveys show that customers are very satisfied with the services we provide.

Product Quality: we boast high quality products and services and community and client response on survey gives us affirmation

Performance Evaluation

How does PHA perform from a Customer perspective?

Costs: the organization manages costs pretty well and often avoids unnecessary costs

Segment Margin: the segment margin needs to be addressed as we are not experiencing the proper growth from some of our projects

ROI: this is an area that must be improved if we are to move forward and allow ourselves to seek more dynamic endeavors

Performance Evaluation

How does PHA perform from a Financial perspective?

Where Do We Need Improvement?

Return On Investment (ROI)

Prioritization Cost/Benefit

Resource Allocation

Time Money Risk Assessment

SWOT analysis Economic Benefit

PHA and Diminishing ROI

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0%

5%

10%

15%

20%

25%

30%

35%

33%

25%

20% 20%

12% 13%10%

8%7%

15% 16%

PHA’s ROI has Diminished 50% (10 Years)

PHA and Diminishing ROI

Avg. Project Cost, $3.2M

ROI $512,000

Cost vs. Returns for PHA

The Contribution of Each Project

• Neighborhoods• Avg. 14% ROIType A: Single

Family Homes

• Scattered property• Avg. 16% ROI

Type B: Prop. Purchase & Renovation

• Groundbreaking• Avg. 18% ROI

Type C: Multi-family Projecs (partnership)

Project Prioritization

Step 1• Analyze each of our focus

projects, assess risk while taking into consideration economic factors.

Step 2• Decide what focus project will

generate the most significant returns.

Step 3

• Move forward with that focus projects (TYPE A, B, or C) and allocate resources to that primary project. All other projects will be addressed if and only if resources are available.

How do we reprioritize Type A, B, and C Projects?

Biases in the Decision Process?

1. Concerns with trying to serve the largest amount of people

TYPE A: Single-Family

Only serving single families. Could sway the decision process to other alternatives.

TYBE B: Prop. Purchase & Renovation

Various properties. Could get preference

without proper assessment.

TYBE C: Multi-Family (partnership)

Brand new development. Could

get preference without proper assessment.

Biases in the Decision Process?

2. The amount of time required to initiate and close a project

TYPE A: Single-Family

Could sway the decision process to other alternatives. Selling and closing process lengthy.

TYBE B: Prop. Purchase & Renovation

Usually easy initiation and close.

Could get preference without proper assessment.

TYBE C: Multi-Family (partnership)

Could sway the decision process to other alternatives.

Choosing a Focus Area

Using a Payoff Table to Reprioritize Projects

States of Nature

Decision Alternative Significant: ROI > 16% Insignificant: ROI ≤ 16%

Single-Family .28 .08

Prop. Purchase & Renovation

.29 .09

Multi-family (Partnership)

.36 .1

Note: 12/30 (.4) investment projects had significant ROI Probability of ROI > 16% = .4 and ROI ≤ 16% = .6

Choosing a Focus AreaFinding A Focus Area with the most

Significant ROI

Calculating ROI

Decision Alternative Calculation ROI

Single-Family .28 (.4) + .08(.6) = 16%

Prop. Purchase & Renovation

.29(.4) + .09(.6) = 17.3%

Multi-family (Partnership)

.36(.4) + .1(.6) = 20.4%

Recommendation

Type C: Multi-Family Projects

The multi-family projects seem to be the logical way to go

Focusing resources to this primary project area should render more significant returns

These projects still serve a wide variety of people

Only if resources are available should they be allocated to alternative opportunities (providing a thorough assessment)

Implications

Type C: Multi-Family Projects

We have an explicit system to follow

Everyone is aligned with the organizational endeavors

Maximizing the value of our resources

Easier to judge opportunity cost of alternatives

Taking steps to sustaining growth

Being flexible while still creating value