Chapter 01
The three shapes of RDI value
How operational savings, risk mitigation, and capacity behave differently in a business case, and why blending them into one number tends to weaken rather than strengthen the case.
01
Why one number is the wrong number
Most rejected business cases share a single feature: the value sits on one line. A finance partner reads a single headline figure and immediately asks what is inside it. If the answer is a blend of recurring time savings, low-frequency risk credits, and strategic capacity arguments, the case is already losing. Each of those shapes has different evidence, different uncertainty, and different defensibility. Putting them on one line forces the reader to apply the discount they would apply to the weakest of the three components, which means the strongest one carries the discount it does not deserve. The finance discipline is the opposite. Put each shape on its own line. Let the reader trust the first line on its own merits. Earn the right to be heard on the second. Treat the third as the strategic argument it is. The total is reached by addition, not by alchemy. This lesson sets out the three shapes — operational savings, risk mitigation, capacity — so every later lesson can refer back to them by name. The reader who can sort any benefit claim into one of the three is already ahead of most authors. There is a deeper reason the blended number fails. Operational savings are governed by hours and rates, both of which the team can observe directly. Risk mitigation is governed by probabilities the team can only estimate. Capacity is governed by counterfactual hires that may or may not have happened. The three live on different epistemic floors. Forcing them into one number is the analytical equivalent of averaging temperatures across three rooms with different thermometers and reporting the result to one decimal place. The reader feels the mismatch even when they cannot articulate it, and the case loses ground without the author understanding why.
02
Operational savings: the recurring line
Operational savings are recurring time and cost the workflow removes. Manual report preparation. Evidence retrieval from cluttered drives. Site visits whose only purpose is to look at something. The model is direct. Identify the recurring task, estimate the hours it consumes, multiply by loaded cost, apply over the contract life, subtract the workflow cost. As a worked feel: a senior commercial manager at a loaded rate of around 90 to 130 euro per hour spending an estimated four to six hours per month assembling progress packs, across a thirty-month contract, sits between roughly 11,000 and 23,000 euro on that single line before counting the people who supply inputs. Avoided site visits behave the same way. A two-hour return drive at a 110 euro loaded rate, twice a fortnight, is around 11,000 euro across the same contract. Do not write 21,000 euro. Write a range, footnote each input, and name the variance. Operational savings are the most defensible category in any case because the inputs are observable and the team can sense-check them. They are usually the line that opens the finance conversation and earns the rest of the case its hearing. Three sub-categories deserve named lines rather than being lumped together. Report preparation: the primary author plus the people supplying inputs, multiplied by frequency. Evidence retrieval: the unit cost per retrieval — typically 20 to 60 minutes of a manager´s time when the request is non-trivial — multiplied by an honest estimate of retrieval volume per month. Avoided site attendance: the visits whose only purpose is to verify something a remote view could verify, costed at travel time plus the loaded rate. Each sub-category has its own owner and its own benchmark. A case that lists them separately reads as the work of someone who has thought about the operating week, not someone who has reached for a round-number total.
03
Risk mitigation: the credit line
Risk mitigation is the value of avoiding low-frequency, high-cost events. Disputes. Theft. Regulatory breaches. Stand-down claims. The event has not happened, so the model takes three uncertain inputs: cost of the event if it occurs, probability across the contract life, and the proportion of risk the workflow plausibly removes. The product is the expected credit. None of the three is precise, which is the reason for ranges rather than point estimates. A worked example. A delay-related dispute on a mid-sized commercial fitout might cost 250,000 to 600,000 euro all-in once legal, expert, internal time, and settlement are counted. If the contract life carries a 20 to 35 per cent base probability of one such event, and the time-aligned record removes 30 to 50 per cent of that probability, the expected credit lands somewhere between 15,000 and 105,000 euro. That width is the honesty. Publish the band. Risk mitigation belongs in any case but should not be expected to carry one alone. Cases that lean on the mid estimate of the risk line tend to lose finance partners on first read. Probability deserves particular care. Industry-wide statistics on dispute frequency are unreliable because they conflate sectors, contract types, and claim definitions. The defensible probability is one the analyst can derive from the organisation´s own past projects, even if the sample is small. Three projects with one dispute between them gives a base rate of around 33 per cent with a wide confidence interval; saying so honestly beats borrowing a 60 per cent figure from a vendor white paper. The same logic applies to severity distributions. Tail events — the dispute that lands at 1.5 million euro rather than 300,000 — should be modelled as a separate line with its own band rather than averaged into the main estimate, because the tail behaves differently and reviewers will ask about it explicitly.
04
Capacity: the strategic line
Capacity is the additional throughput the team can carry without adding headcount. A project director who can monitor more sites because the morning view tells them where to spend their day. A portfolio leader who can take a project that would otherwise have required a new hire. Capacity is hard to attribute precisely on a single project and most powerful at portfolio level. Quantify it where you can — for example, the cost of one avoided regional hire at fully loaded 140,000 to 180,000 euro per year — and present the rest as a strategic argument with named indicators. The argument is not less valuable for being strategic; it is just a different kind of evidence. Capacity belongs in the case but should be presented for what it is. Finance partners accept strategic arguments when they are labelled as such; they reject them when they are dressed up as quantified savings. The most defensible capacity argument is the one expressed at portfolio level over a multi-year horizon. An organisation running ten concurrent projects where each project director historically managed one and a half projects on average can describe a credible capacity gain at the level of a regional management line, not at the level of any single project. The supporting indicators — number of exceptions surfaced per week, average time to first decision on a flagged event, count of meetings replaced by an asynchronous review — are leading rather than lagging. They show the mechanism by which capacity is gained even before the headcount line moves. Naming those indicators in the case lets the reader verify the mechanism, which is what makes the strategic argument earn its place rather than merely occupy space.
05
Governance: how to keep the three shapes separated
The discipline does not survive on goodwill. Build it into the template. The case has three named sections. Each section opens with a one-sentence statement of what it does and does not include. Each line cites a source. The executive summary names the total in the form low — mid — high, then breaks the mid by shape. Reviewers are asked to challenge each shape on its own terms. Capacity arguments that move into the operational section are sent back. Risk credits that creep into operational savings are sent back. The boring rule is the value. A team known for keeping the three shapes separated tends to be heard more carefully on the next case, even when the numbers are challenged. A useful governance habit is the pre-submission peer read by someone who has built a case before but not this case. The peer reader has one job: confirm that no line crosses a shape boundary. They do not check the numbers. They check the categorisation. A line in the operational section that turns out to depend on a probability of a future event is reclassified as risk mitigation. A line in the risk section that turns out to depend on time saved per occurrence is moved to operational savings. The peer read takes thirty minutes and prevents the categorisation errors that are otherwise discovered by the finance partner during review, when the cost of the error is much higher.
Practice
01. Take any benefit claim you have heard about RDI in the last month. Sort it into operational saving, risk mitigation, or capacity, and write the model that would price it. Mark the largest source of variance.
Look for: A benefit claim sorted into one shape, the model written in three to five lines (input, range, source, multiplier, contract life), and the largest variance named — typically the proportion replaced for operational savings, the probability for risk mitigation, or the attribution rate for capacity.
02. Write a one-page executive summary header for a case you are working on. Give the total as low — mid — high, then split the mid figure across the three shapes.
Look for: Three numbers on one line, then a three-line breakdown that adds back to the mid. No blending. Each line is a single shape. The widest band is usually risk mitigation.
Checkpoint
For a current case, can you separate the three shapes onto three lines without any double counting?
Recommended reading