Case Study Delivering Major Public Sector Change Managing The Portfolio Realising The Benefits 2 Stephen Jenner Version 2

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    Case Study Delivering Major Public Sector Change Managing The Portfolio Realising The Benefits 2 Stephen Jenner Version 2 - Presentation Transcript

    1. Managing the Portfolio, Realising the Benefits BPUG Congress, 10th February 2009 Stephen Jenner Stephen.jenner@cjit.gsi.gov.uk OR stephen.jenner@cabinet- office.x.gsi.gov.uk
    2. Framing statement “I love money. I love money more than the things it can buy. There’s only one thing I love more than money. You know what that is?”
    3. Framing statement “OTHER PEOPLE’S MONEY” Danny DeVito as ‘Larry the Liquidator’ 1991, Warner Bros Films
    4. Change programmes - the rationale “The fundamental reason for beginning a programme is to realise the benefits through change.” Office for Government Commerce (OGC), ‘Managing Successful Programmes’ “It is only possible to be sure that change has worked if we can measure the delivery of the benefits it is supposed to bring.” UK Cabinet Office, ‘Successful IT: Modernising Government in Action’
    5. But the track record is not good… “Implementation of IT systems has resulted in delay, confusion and inconvenience to the citizen and, in many cases poor value for money to the taxpayer.” Public Accounts Committee, 2000 “30-40% of systems to support business change delivery no benefits whatsoever.” Office of Government Commerce, 2005 “the committee has no confidence that the amounts being assessed have any relationship to the benefits anticipated to be returned.” US Senate Appropriations Committee, 2007
    6. And ‘horror’ stories abound… Cost overruns • Concorde (1100%) • Channel Tunnel (80% for construction and 140% for financing costs) • Scottish Parliament – 10 times over budget and late • Jubilee line extension costs underestimated by £1.4bn Benefits shortfalls • The Dome visitors down by 5-6 million • Eurostar passenger forecast in yr1 of full operations = 15.9m, actual = 2.9m • Bangkok skytrain – demand 2.5 times over-estimated • Humber Bridge – traffic 25% overestimated in yr1 of full operation.
    7. And empirical research concludes… “There is a demonstrated, systemic tendency for project appraisers to be overly optimistic. This is a worldwide phenomenon that affects both the private and public sectors…appraisers tend to overstate benefits, and underestimate timings and costs.” HM Treasury “it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading.” Flyvbjerg “Delusional optimism: we overemphasise projects’ potential benefits and underestimate likely costs, spinning success scenarios while ignoring the possibility of mistakes.” Lovallo and Kahneman
    8. Four explanations… 1. The technical explanation - our tools are inadequate. 2. The psychological explanation – Optimism bias, derived from cognitive biases. 3. The economic explanation – continuing with a project creates work for project managers, suppliers etc. 4. The political explanation – “Strategic misrepresentation”?
    9. Delusion or Deception? “the planned, systematic, deliberate misstatement of costs and benefits to get projects approved.” In short, “that is lying”. And that’s because, “Lying pays off, or at least economic agents believe it does.” Flyvbjerg et al “Figures don’t lie, but liars can figure” Sharpe and Keelin 38% of respondents in one survey openly admitted to overstating benefits to get funding with the traditional investment appraisal process being, “seen as a ritual that must be overcome before any project can begin” Ward
    10. The Result - Business Cases contain ‘assumptions masquerading as facts’
    11. The Solutions 1. Be clear about the benefits you are buying. 2. Spend more time doing your homework. 3. Triangulate and Validate project proposals. 4. Appraise ‘Attractiveness’ in the context of ‘Achievability’. 5. ‘Gates with teeth’. 6. Independent review. 7. A ‘Clear line of Sight’ from Strategic Intent through to Benefits Realisation.
    12. The Solutions: 1. Be clear about the benefits you are buying Beware staff time savings – they are vouchers, they only have a value when they are cashed or the time is re-deployed to other value adding activity.
    13. The Solutions: 1. Be clear about the benefits you are buying Beware ‘Strategic alignment’ as an investment justification, “Our CEO defines ‘strategic projects’ as expensive projects without a business case.” Corporate Executive Board paper
    14. The Solutions: 1. Strategic Contribution Analysis Be clear about the benefits you are buying Service Transformation Programme – High Level Strategy Map Vision Strategies Metrics Learning from citizens and businesses Government will monitor the customer – Customer Insight, Customer Journey experience through journey mapping Mapping, Customer Satisfaction and customer satisfaction tracking To change public Measurement mechanisms at the front line (STA Oct services so they 07) more often meet the Grouping services in ways that are needs of people and meaningful to the customer e.g. Tell Us Key progress measures 1 - Reduction Once, Directgov and Businesslink.gov businesses, rather in the amount of avoidable contact. To than the needs of achieve a 50% reduction by 31.3.11. Rationalising services for efficiency and (STA Oct 07). government, and by service improvement – online doing so reduce the (Directgov and Businesslink.gov), phone (contact centre accreditation); Key progress measure 2 - Building frustration and stress face to face and helplines better online services – citizen and of accessing them. business e-services content migrated to Directgov and Businesslink.gov. More The result will be Making better use of customer than 95% of websites to have migrated information public sector already holds: by 31.3.11. (STA Oct 07) services that are a. Strategic level – Home Office lead on better for the Identity mgt and MoJ on information customer, better for sharing Efficiency savings – the value in b. Tactical level – Tell Us Once recording the level of savings achieved front line staff and by departments is recognised, and the better for the CO will track these as this STA is taxpayer (Service delivered. (STA Oct 07). Linking local and central government Transformation Agreement, October Face-to-Face – The LGDC will develop 2007). a progress measure reflecting the Engaging front line staff FOSS approach for later inclusion in this Agreement. (STA Oct 07)
    15. The Solutions: 2. Spend more time doing your homework “It’s the Business Case, stupid” Failing projects don’t have brilliant business cases
    16. The Solutions: 3. Triangulate and Validate Use more than one appraisal method, or ‘value lens’: • Combine financial metrics with multi- criteria analysis and decision conferencing. • Validate/book the benefits with the recipients – before investment. • Establish effective accountability for delivery and benefits realisation.
    17. The Solutions: 4. Appraise ‘Attractiveness’ in the context of ‘Achievability’
    18. The Solutions: 5. ‘Gates with teeth’ • Regularly requiring project teams and business sponsors to ‘sing for their supper’. • Presumption – if you exceed tolerance, funding ceases. • Concludes with a formal re-commitment to benefits realisation. • Challenge and Support.
    19. The Solutions: 6. Independent review “humans not only are prone to make biased predictions, we’re also damnably overconfident about our predictions and slow to change them in the face of new evidence. In fact, these problems of bias and overconfidence become more severe the more complicated the prediction.” Ayers
    20. The Solutions: 6. Independent review Ayers suggests an, “’Advocatus Diaboli’… whose job it is to poke holes in pet projects. These professional “No” men could be an antidote to overconfidence bias.” Davidson Frame proposes the use of “murder boards” to pull a proposal apart to, “make sure that arguments in support of project ideas do not have built into them the seeds of their own destruction.” Steve Jenner - I suggest a ‘fool’ to ask the questions others don’t dare to ask and identify those, ‘assumptions that masquerade as facts’.
    21. The Solutions: 7. A Clear line of sight from strategic intent to benefits realisation • Contributor project benefits • Recipient Organisation Benefits • Benefits Scorecard report Realisation Report CJS IT BENEFITS SCORECARD June 2006 This table shows the full CJS IT Programme benefits picture, including ring fence benefits and benefits enabled by the ring fence infrastructure (£m) CJS IT Benefits Realisation Plans Forecast Benefit Values Self assessment of RAG status Strand Board Alignment1 Police Benefits Realisation Plan Relative CJS IT Projects Quality of Scale of Quality of Victims and Contribution to SR2004 CSR07 10 Year Total Benefit Benefits Realisation Likelihood of Confidence OBTJ Enforcement Re-offending Strategic Q1 03/04 - Q4 Witnesses Forecast Forecast Planning Realisation Drivers2 05/06 2006/07 Q1 2006/07 2007/08 NSPIS Custody & Case Prep 79.08 199.82 348.06 AMBER AMBER AMBER AMBER Realised Plan Actual Forecast PentiP - 5.08 14.06 GREEN GREEN AMBER AMBER Efficiency Cashable - - 0.39 0.71 CJS IT BENEFITS PROGRESS REPORT - QUARTER 4 2004-05 FOR CJS EXCHANGE XHIBIT PORTAL COMPASS CMS (50%) 10.95 20.79 52.74 GREEN AMBER GREEN AMBER HD=1 Efficiency Opportunity 4.95 2.69 26.136 50.59 10 Year Analysis NWNJ IT tool (WMS) 5.70 9.66 25.02 GREEN GREEN GREEN AMBER D=2 HD=1 NK=1 HD=1 Effectiveness 0.26 0.24 0.94 1.12 Cumulative Cost and Benefit Forecast 2003-2013 Recipient Efficiency £M Effectiveness Cost Avoidance Total SOCA 0.61 1.21 3.43 GREEN GREEN GREEN GREEN M=1 Total 5.21 2.93 - 27.473 52.42 Cumulative Benefits Cumulative Costs Self Assessment Cashable Opportunity Cashable Opportunity £ % Libra application (includes benefits jointly delivered with 3a) 18.15 81.70 154.31 GREEN RED AMBER AMBER M=1 NK=1 CPS Benefits Realisation Plan A p p lic a tio ns Q3 Q3 Forecast Q4 Q4 forecast Crown Assessment for Q4 Assessment for Q1 Courts 12.700 35.620 0.000 25.920 0.000 74.240 6.7% 1,200 Q1 03/04 - Q4 Quality of Benefits Forecast Other CJOs 0.000 117.820 0.000 52.760 0.000 170.580 15.3% 1,000 OASys 79.52 93.18 239.12 GREEN GREEN GREEN GREEN MC=2 05/06 2006/07 Q1 2006/07 2007/08 Scale of Benefits Forecast Cross CJS 0.000 0.000 0.000 173.710 0.000 173.710 15.6% 800 NOMIS (70%) 5.06 50.00 162.33 GREEN GREEN GREEN GREEN MC=1 HD=1 Realised Plan Actual Forecast £'m Quality of Realisation Planning Outside CJS 0.000 0.000 0.000 694.860 0.000 694.860 62.4% ViSOR 0.93 2.21 6.08 600 Likelihood of Realisation Total £ 12.700 153.440 0.000 947.250 0.000 1113.390 100.0% GREEN GREEN GREEN GREEN Efficiency Cashable - - - - 400 200 CJSE Release 1a (NSPIS-CMS) 1.63 9.76 17.88 GREEN GREEN GREEN AMBER Efficiency Opportunity 31.40 8.88 35.50 39.04 Benefits Realised this financial year £m Last report Now Monetary Value of Benefits Realised YTD 0.01 NPV £m* 154.301 - - CJSE Release 1b (NSPIS - Libra) 0.87 19.08 37.29 AMBER GREEN AMBER AMBER Effectiveness 0.13 0.39 1.56 2.83 4 5 6 7 8 9 0 1 2 3 Forecast in latest published Delivery Plan 4.1 200 3-0 200 4-0 200 5-0 200 6-0 200 7-0 200 8-0 200 9-1 201 0-1 201 1-1 201 2-1 XHIBIT/CJSE Release 2a&b (XHIBIT Portal) 9.29 7.11 21.15 AMBER RED GREEN AMBER M=1 D=1 M=1 Total 31.53 9.27 - 37.06 41.87 YTD IRR % 94.2 0.0% Year Variance -4.09 *NPV discounted at 3.5% PROGRESS 1.88 12.02 26.04 GREEN GREEN GREEN GREEN M=4 HD=1 D=2 HMCS Benefits Realisation Plan Q1 03/04 - Q4 Secure Email/Emailing Securely 1.49 1.90 4.78 AMBER RED AMBER AMBER D=2 05/06 2006/07 Q1 2006/07 2007/08 Project Life Cycle Benefits Profile (Top 5-10 benefits over 10 years) Impact Benefits CJSE Release 3a 0.00 0.01 0.02 AMBER AMBER AMBER Realised Plan Actual Forecast Main Name(s) of recipient Realisation CJSE Release 3b 1.10 2.13 6.07 GREEN AMBER AMBER Efficiency Cashable - 0.70 17.45 Benefit Description Performance £M Benefit Category Strategic Alignment Recipient agreed with Realisation Ramp Up Key Measures/Indicators of Benefit Status Time from CC result to PNC update COMPASS infrastructure (50%) 85.95 95.79 252.74 see COMPASS CMS Efficiency Opportunity 2.59 0.53 2.67 1.70 PNC update PSA Target 5 Benefit Libra enabled 30.17 34.26 95.54 see LIBRA application Effectiveness - 0.34 2.54 4.42 realisation down to 3 To start 6 months after completion in a behind Plan NOMIS infrastructure (30%) 2.17 21.43 69.57 see NOMIS application Total 2.59 0.87 - 5.91 23.57 1 Reduction in the cost of crime days 173.71 Effectiveness opportunity CJS CJ Area OMNI infrastructure 1.03 3.11 6.48 Infra stru ctu re Time from CC result to PNC update PSA Targets 1 and 3 Benefit not OMNI cost effectiveness - 9.36 36.37 NOMS Benefits Realisation Plan PNC update down to 3 To start 6 months after completion in a yet due for Q1 03/04 - Q4 2 Reduction in the cost of crime days 694.86 Effectiveness opportunity UK economy CJ Area realisation No. of adjournments as a result of no PSR LINK enabled 8.68 11.79 28.49 05/06 2006/07 Q1 2006/07 2007/08 PSA Targets 2, 3 and 5 Benefit ahead Improvement from 15% to of or in line Shared Access 5.85 7.80 24.05 D=2 Realised Plan Actual Forecast 3 Court time saving (PSR adjournments) 3.4% 4.06 Effectiveness opportunity Crown Court From Go-live at each court centre with plan Percentage of ineffective hearings Equip direct 16.50 16.50 55.00 Efficiency Cashable - - - - Assumption of PSA Targets 1, 2, 3 and 5 Crown Court, Benefit not Equip enabled 41.41 149.10 311.00 Efficiency Opportunity 26.77 5.68 22.70 24.36 improvement Police, CPS, From 6 months after Go-live at each yet due for P ro g 4 Court time saving ( Ineffective Hearings) of 1-10% 31.78 Effectiveness opportunity Probation court centre realisation CEI 9.78 21.43 45.54 D=9 M=1 HD=3 D=5 M=1 HD=11 D=3 M=1 D=5 M=1 NK=1 D=1 M=1 Effectiveness 12.40 5.26 21.06 21.21 Number of disposals Economic/Social Value Benefits 15.61 113.53 291.21 NOTE: Benefits shown only include quantified, validated Total 39.17 10.94 - 43.76 45.57 PSA Targets 2, 3 and 5 Benefit ahead 1. From 3 months after Go-live at each of or in line benefits but other enabled benefits have been identified Based on BRP submissions & agreed with Strand Board leads, this shows the number of benefits to the 5 Court time saving (Same day delays) - 5.98 Effectiveness opportunity Crown Court court centre with plan TOTAL BENEFITS 433.41 999.74 2,334.36 and will be included as further work is undertaken Strands in terms of value (ie. mission critical, highly desirable etc) Backlog count MC = Mission Critical, HD = Highly Desirable, D = Desirable, PSA Targets 2, 3 and 5 Number of disposals Benefit ahead of or in line Total 10 year CJS IT Application benefits Ring Fence only 1274.65 KEY M = Minimal, NK = Not Known YJB Benefits Realisation Plan From 1 month after Go-live at each court 6 Crown Court Efficiency benefits - 35.61 Efficiency opportunity Crown Court centre with plan Q1 03/04 - Q4 Number of enquiries made to CC CJS IT Application NPV Ring Fence only 250.18 2. Independent Scores assessed by Proving Services 05/06 2006/07 Q1 2006/07 2007/08 PSA Target 5 No of daily lists faxed/time taken. Benefit ahead Benefits as % of or in line of Cost with plan CJS IT Application IRR Ring Fence only 12.90% Cost Benefit Analysis3 2003/04 2003-05 2003-06 2003-07 2003-08 Realised Plan Actual Forecast 7 CPS Benefits - 2.3 Efficiency opportunity CPS 3 months after go live in a CJ Area No of enquiries made to CC Total Police RF Cost/Budget 57.09 90.37 142.59 183.78 202.01 Efficiency Cashable - PSA Target 5 No of daily/warned lists sent and time taken Benefit ahead Benefits to the CJS and Society Direct Benefits 0.53 1.63 5.21 32.69 85.10 Efficiency Opportunity 0.11 0.05 0.21 0.37 No of bail forms sent and time taken of or in line 8 Police Benefits - 115.52 Efficiency opportunity Police 3 months after go live in a CJ Area with plan Enabled Benefits - - - - Effectiveness - Total Police Benefits 0.53 1.63 5.21 32.69 85.10 42% Total 0.11 0.05 - 0.21 0.37 Benefit ahead x-CJS, 9% Social Value, of or in line 16% Total Corrections RF Cost/Budget 111.21 194.71 269.22 408.09 519.61 9 with plan Direct Benefits 5.50 15.38 39.29 83.26 129.20 RAG of Benefits in SR2004 Benefits Realisation Plans Benefit ahead Enabled Benefits - 8.55 10.12 19.22 49.96 Q3 05/06 Q4 05/06 of or in line Total Corrections Benefits 5.50 23.93 49.40 102.47 179.16 34% Benefits Rating No. % No. % 10 with plan Total CPS RF Cost/Budget 25.05 58.82 97.87 132.70 170.63 Benefit behind schedule 6 6% 2 2% PSA Target 5 Benefit not Direct & Enabled Benefits - 2.05 31.53 68.59 110.46 Difficulty with tracking/measure. 26 27% 35 36% yet due for Total CPS Benefits - 2.05 31.53 68.59 110.46 65% Benefit on track/ahead of schedule 13 13% 19 20% 9 NOMS Benefits - 36.9 Effectiveness opportunity NOMS Following rollout to all prisons in a CJA realisation Total HMCS RF Cost/Budget 154.55 283.61 426.40 512.40 585.28 Benefit not yet due for realisation 52 54% 41 42% Reduced waiting time claim values PSA Targets 2, 3 and 5 Benefit not Direct Benefits - 0.30 2.59 8.50 32.07 From 1 month after Go-live at each court yet due for Home CJO, Enabled Benefits 3.23 8.43 18.80 32.10 47.28 Benefits By Type 10 Reduction in solicitor waiting - 12.7 Efficiency cashable Crown Court centre realisation 76% Effectiveness Total HMCS Benefits 3.23 8.73 21.39 40.60 79.35 14% Efficiency 30% 3 Ring Fence costs from 2003-06 and Delivery Plan RF budget from 2006-08. Full benefits by recipient used. Corrections includes YJB. Cashable Approved by SRO: 9% Home CJO x-CJS Social Value Risk Register - CJS IT Benefits Management Risk Description RAG Summary of Key Mitigating Actions 1. Settlement Letter Conditions/Hurdle rates 2. Root Cause Model 3. Social Value Research 4. Analysis of benefits enabled by CJS IT funded 1 Scale of CJS IT benefits forecast infrastructure Efficiency 2 Quality of CJS IT benefits forecast 1. Quarterly Benefits Integrity Check 2. Benefits Eligibility Framework Opportunity 61% 3 CJSIT benefits realisation 1. Process Modelling 2. CJO Benefit Realisation Plans approved by OB and BWG 3. Project Benefit Realisation Plans approved by BWG Efficiency Cashable Efficiency Opportunity Effectiveness • Investment Appraisal report • Portfolio Analysis • Proving Model report ATTRACTIVENESS ANALYSIS ECONOMIC ANALYSIS* NPV (£M) IRR (%) PAY BACK PERIOD (YEARS) EXCLUDING OPTIMISM BIAS INCLUDING OPTIMISM BIAS CONFIRMATION THAT THE ABOVE FIGURES ARE COMPLIANT WITH BENEFITS ELIGIBILITY FRAMEWORK (BEF) CONFIRMED BY: COMMENTS: ACHIEVABILITY ANALYSIS Yes PROVING MODEL ASSESSMENT No DATE OF CURRENT ASSESSMENT: ACHIEVABILITY SCORE: BENEFITS ANALYSIS OVER 10 YEAR PROJECT LIFE CYCLE (£M) P SPAN IF LESS THEN 10 STATE 10 YEAR PERIOD COVERED OR PROJECT LIFEROGRESS SINCE LAST YEARS: ACHIEVABILITY ASSESSMENT: RECIPIENT EFFICIENCY – EFFICIENCY – EFFECTIVENESS - EFFECTIVENESS – CASHABLE OPPORTUNITY CASHABLE OPPORTUNITY VALUE VALUE PROVING SERVICES ACHIEVABILITY SCORE BREAKDOWN CJO: Police CJO: CPS CONCEPT CASE (COMPLETE AS APPROPRIATE) CJO: DCA Score CJO: NOMS (1) TOTAL PROJECT COSTS CJO: YJB Stakeholder Analysis (Achievability) YEAR RESOURCE CAPITAL TOTAL CROSS CJS: Indication Achievability (£M) (£M) (£M ) BEYOND THE Complexity Analysis CJS(SPECIFY): Achievability Total TOTALS: TOTAL BUSINESS CASE (COMPLETEONFIRMATION OR) PROPOSED SOURCE OF C AS APPROPRIATE INC LUDE D IN ACTIONS & TIMESCALES TO ENSURE A GR EED IN P RIN CIPLE Score N OT Y ET A GR EED BENEFITS ARE INCLUDED INRESOURCE/CAPITAL CURRENTLY ALLOCATED FROM (2) BENEFITS (3) OTHER FUNDING SOURCES BRP REALISATION PLAN THE RING FENCEComplexity Analysis BENEFITS INCLUDED IN THE POLICE YEAR Processes & Capability RESOURCE CAPITAL TOTAL RESOURCE CAPITAL TOTAL BENEFITS REALISATION PLAN (BRP) Ownership & )Accountability (£M (£M) (£M ) (£M) (£M) (£M) OR AGREED IN PRINCIPLE BY THE POLICE BENEFITS REALISATION Clarity & Perception LEAD(BRL) Benefits Realisation Management BENEFITS INCLUDED IN THE CPS TOTAL Stakeholders Analysis BRP OR AGREED IN PRINCIPLE BY THE CPS BRL Achievability Total BENEFITS INCLUDED IN THE DCA RESOURCE/CAPITAL GAP (1-(2+3)) RESOURCE/CAPITAL REQUIRED FROM BRP OR AGREED IN PRINCIPLE BY THE RING FENCE THE DCA BRL YEAR RESOURCE CAPITAL TOTAL RESOURCE CAPITAL TOTAL BENEFITS INCLUDED IN THE NOMS ASSESSMENT OF DEGREE OF BUSINESS CHANGE REQUIRED )TO REALISE BENEFITS (£M ) (£M (£M) (£M) (£M) (£M) BRP OR AGREED IN PRINCIPLE BY RECIPIENT BRL ASSESSMENT COMMENTS THE NOMS BRL BENEFITS INCLUDED IN THE YJB M EDIUM BRP OR AGREED IN PRINCIPLE BY H IGH L OW N/A THE YJB BRL TOTAL Police CPS DCA FUNDING – OTHER ISSUES AVAILABILITY CONFIRMED? NOMS FUNDING AVAILABLE TO REALISE BUSINESS CHANGE? Yes BY: DATE YJB No Others [specify] CONFIRMATION THAT OVERSPENDS WILL BE MET BY Yes BY: DATE DEPARTMENTAL BASELINES No RECYCLING OF COST SAVINGS YEAR LEGACY SYSTEM SAVINGS AMOUNT BY WHICH THE RING FENCE SAVINGS RECYCLED? REQUEST CAN BE REDUCED TOTAL
    22. And remember… 1. Spend more time doing your homework. 2. Be clear about what benefits you are buying. 3. Track performance – to learn and to inform investment decision. 4. Triangulate and Validate – ‘trust everyone, but cut the deck’. 5. Use ‘Gates with teeth’. 6. Joint accountability - planning for success, with a forward looking perspective. 7. Use summary documentation – size is the enemy of understanding. 8. Ensure there is a ‘clear line of sight’ from strategic intent through to benefits realisation. 9. Manage benefits from an enterprise perspective. 10. Dare to employ a ‘fool’!
    23. Want to find out more? Available from www.academic-publishing.org

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