Editors: Dr. Tom Lind  and Dr. Antti Lindqvist

Business and investment planning

Everything you need to know about the common approaches and tools of business and investment planning

 

 

All companies conduct business planning with different time horizons, select the battles they want to win and, finally, make strategic decisions on investments either to maintain their current assets or develop new businesses and competences. Thus, business planning and investments link strongly together, and according to one definition, investments are in practice the main vehicle to implement the company’s strategy.

The forest industry has also certain special characteristics, which impact both strategy-making and investment planning. These characteristics are discussed in the business and investment-planning theme, and throughout the theme, the focus is on the investment projects taking place particularly in the forest industry. The narrative aims at providing good understanding and pragmatic hands-on principles for current and future professionals working with business development and smaller or larger investment projects. Thus, the ambition is not to prepare a project management or engineering guidebook, instead to focus on practices and essentials when preparing an investment project.

The theme starts by providing an overview to the investment project fundamentals and some good practices on strategic planning process and tools commonly used in the forest industry. This is followed by the main project development phases, where the key elements of each phase are highlighted. Conceptual, pre-feasibility and feasibility phase contents are covered until the final investment proposal and readiness for project implementation. The theme ends with a brief review of the organisational learning aspects and good practices in project deliveries.

Investment project fundamentals review e.g. the key definitions and concepts in projects, principles related to time and investment cost planning as well as risk management. In the overview section for the  business and investment planning in the forest industry, e.g. key characteristics of the industry, governance models and common tools in strategy planning are reviewed. Further, the connection of investments in the company strategy is covered, including capital investment projects, but also M&A and divestment cases. The basics of financial valuation of a company and due diligence processes are reviewed. Further, the special characteristics of finding finance and creating value in growth businesses are discussed.

The main part of the theme focuses on walking through the key phases of planning activities during the investment project lifecycle and opening up the main processes and topics of the main phases during project development. In each of the phases, conceptual, pre-feasibility and feasibility phases, the main topics and level of planning are described from the eight focal elements: mill concept, markets and competitiveness, economic and financial aspects, human resources, operating responsibility, risk management, time scheduling and communication.

The mill concept discusses e.g. technical aspects, mill balances, raw materials sourcing and logistical issues, which need to be addressed in the investment plan. Markets and competitiveness review the tools and practices in evaluating the existing or a new market planned to be entered, and the ways to benchmark the cost competitiveness in the business. Project personnel planning and manning after the investment project are reviewed, as well as necessary e.g. permitting processes related to the operating responsibility.

Risk management provides some fundamental thoughts and summarises some good practices and tools to identify and monitor project-related risks throughout the planning and in communication, the good practices e.g. in addressing relevant stakeholders are presented. In addition to fundamental short introduction, time scheduling and cost estimating focuses also on presenting the purpose and importance of the alignment of them with other areas mentioned above. The project development is concluded by a comprehensive summary of the key activities when the project development phase is concluded and the investment is moving to the implementation phase.

The organisational learning section sums-up the theme by reviewing once again the good practices in monitoring, documenting and learning in projects. Fundamentals for the post-completion-auditing process (PCA) are presented as one good practice.

The overall ambition is to provide the reader a pragmatic and interesting reading experience, contents touching realistic project lifecycle activities and sharing of typical success factors and improvement potential. The importance of well conducted planning and proactive thinking is one of the key messages.