Invest in and develop capital of planned and managed worth and return

20^th century capital development implements performance improvements

The objective of 20^th century capital investment and development for business change is to implement performance improvements. There are several problems with this:

• Implement: The objective is to get the solution into operation rather than ensuring on-going benefit
• Performance: The objective is the way things are done rather than results produced
• Improvement: The objective is to have users improve their performance, generating resistance

Many 20^th century capital development methodologies concentrate on performance, to show the cost of development, but ignore the benefit of development. 20^th century methods do not identify specific solutions being developed and gather development costs against a project or tangible fixed assets. Capital development is planned and managed in only the performance dimension. Implementation projects lay new structures over the business, rather than improving actual business performance. Structures are often resisted by users who must learn a new structure and cope with the problems of aligning various structures and the business.

20^th century capital development is separate from the business

There has never been an effective method for capital investment analysis and capital development project management to plan the costs and return on specific investments, manage development to produce capital solutions of known costs, align and implement the range of solutions needed to produce specific benefit, and to manage the utilization of capital after implementation to provide a known return on investment. Capital development project management is usually conducted separate from the business using project management structures laid over the business. Business users often have little involvement in development. There is no framework to define solutions needed to produce results. The project is managed for tasks and activities rather than to produce the specific solutions needed. Capital development costs are not captured for most specific solutions, so there is no basis for solution cost amortization. The project is finished when new structures have been laid over the business for operation by administrative staff. So, return on investment is estimated, projects are managed separate from the business, capital is not developed as solutions of known investment costs, related  solutions needed to produce results are not defined, capital solutions implemented do not produce defined results, and new results needed are not specifically planned or managed to provide the return on investment.

21^st century capital development plans and measures costs, benefits, and returns by solution

Business management enables 21^st century capital development to plan, manage, and utilize capital acquisition or development investments for planned and measured benefit. The enterprise cannot manage the benefit of capital investment, unless the specific results to be produced are defined and managed. The enterprise cannot manage costs against the benefit, unless the specific capital solutions to be acquired and developed are defined and managed. Business management manages capital development in three phases; the investment planning for new capital, project management in the business structure used to manage capital development project results and performance, and then in the utilization of invested capital to produce result value for the return on investment.

21^st century capital development produces result value-added

Business management develops the three components of the business together to improve and strengthen the business structure. This is the only correct method to acquire or develop capital for planned and measured return on investment. Investments may be new capital solutions to produce business results, or financial investments to produce value in interest, dividend, sale, or growth results. The objective of 21^st century capital development is to produce result value-added, providing three advantages:

• Produce: The objective of every investment is to implement capital solutions needed to produce output results
• Result: Users are involved in producing new or improved results that were not produced before
• Value-Added: The objective is to add value to results to provide the return on investment

The objective of development is to produce new results, which is understood and accepted by responsible users. Specifically qualified capital solutions are required to produce a value-quality result. Improving performance in the way things are done happens along the way. 21^st century capital development stresses result development in the result dimension as well as capital solution and performance development in the performance dimension. Result development starts with result symptoms (product not accepted, market not penetrated, customers dissatisfied, etc.) and studies the means and value of removing the symptom. Performance development starts with the performance problems to define new or improved capital solutions.

Result value-added provides the return on investment and future capital worth

Capital development develops both results, and the capital solutions needed to produce results, through result-performance development. Result-performance development starts in business operations to define requirements and plan the value of new results needed. Capital solutions are specified for the range of solutions needed to plan full investment costs. Development is justified by the value-added to results that covers investment costs and provides the gain on the investment over the payback period.

Capital development projects are managed as a subsidiary business structure to develop and implement solutions as project results and capture actual investment as result costs. Project result costs are capitalized as investment costs by capital solution implemented. Ongoing business operation amortizes performance costs incurred by the implemented solutions against the results produced. Result value-added and performance costs absorbed to date are attributed to solutions utilized to show return on investment. Future performance costs to be absorbed and result value-added to be produced over the remaining life and solution sale or disposal shows the current capital solution worth.

Capital development is managed as an investment management result through a project business structure

Business management manages capital development through a project business structure, the same as business operations. The completed project result is an enterprise investment result that is detailed in a project business structure. Capital solutions to be developed are set up as project results. The funds and internal and external resources planned for the project are set up as capital solutions. The project business is organized when project capital solutions are implemented to produce project results.

Within the project, bottom-up result-performance development assures result development as well capital solution and performance development. Result development brings in users, gains buy-in, gets new goals accepted, and ensures solution utilization to produce valuable results. Business management identifies the specific capital solutions that must be developed to produce new and improved results. Solutions defined and developed include intangible assets, intellectual capital, information capital, and management capital. All solutions are tangible in the investment cost required to develop the solution. Solutions are developed or acquired as project results to document full acquisition and development investment costs. The project results are then implemented as specific capital solutions to capitalize full investment costs as the beginning balance.

Capital investment costs for each solution are amortized as performance costs over the solution life

After the project, investment costs in a solution are amortized over the payback period as performance costs are incurred from solution worth decline through deterioration or obsolescence of the solution. Solution worth decline produces performance costs from solution utilization that are charged to the result value produced and reduce the unamortized investment cost balance. The solution worth is planned to reach an expected disposal worth at the end of the planned utilization by the business.

Results that utilize specific implemented solutions are managed against goals for value-added along the management dimension in operation. Result value-added is contributed back, solution by solution and to the totals of all solutions for the project value-added. The gain on the project investment can be systematically determined in the result value-added with development compared to value-added with no development.

21^st century capital development provides many new management breakthroughs

All capital development must develop both results and performance to acquire or develop capital solutions for utilization in performance to produce specific results for planned and managed return on investment. This immediately eliminates any need for new structures to lay over the business, and provides many capital investment and development breakthroughs to:

• Define all individual capital solutions that must be invested in and improved to plan the full cost of investment
• Define all the individual results that must produced from the invested capital to plan the return on investment
• Manage development projects as a business to develop the range of qualified solutions needed to produce specific results
• Capture actual investment costs by solution developed
• Implement and integrate the full set of solutions needed to produce each result
• Utilize solutions in performance to incur performance costs to amortize investments and produce result value-added
• Capture investment costs amortized for payback and result value-added gain or loss attributed to each solution to determine actual return on investment.

None of this is possible in today’s 20^th century capital development, which implements certain solutions for performance and ignores result development.

Result-performance Management (R-pM) provides the knowledge for actual business management

Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual business. Forward-looking enterprises are now using R-pM guidance to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20^th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21^st century management conventions, definitions, and standards. Management consultants who base 21^st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. R-pM and business management are supported at result-performance-management.com.

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