Summary

This building block is all about planning and control. It will explain what documents to expect and summarises some key concepts and techniques. It will also show how the numbers which we have learned to calculate for individual projects come together to form the overall results for a company. It is, however, just an introduction to the topic. Furthermore, the focus is on planning and only those aspects of control that are directly related to economic value. My aim, as with the other building blocks, is simply to get my readers who started as beginners up to speed so that they can join the existing practitioners in the main sections of the book.

I must stress at the outset that when it comes to planning and control, it is up to individual companies to decide what processes they want. There are good reasons for companies to adopt different approaches in this area. In particular, the fact that although the shareholder value objective is common across companies, the nature of business can be very different. So, for example, some businesses are growing fast while others may be shrinking; some have many customers while some have only a few; some have a long time cycle while others have to respond quickly to changes.

Differences such as these do mean that when it comes to planning and control, there are several right answers and even within a company, the right answer will evolve over time. This makes it a much harder subject to get right. In this book I can prescribe with confidence a standard approach to calculating economic value.