So, let's start by understanding 'value' and where it comes from. Value is delivered via 'The Value Equation':
- Project and business activities (A) deliver the desired business outcomes (O).
- One or more outcomes deliver the benefits (B).
- Some benefits have a quantifiable value (V).
- This benefit value is determined by the value of each value-driver (D) and assumption at the time of realization,
- and by how well the business outcomes have been delivered (by the project).
Importantly, value delivery requires a full and accurate definition of the 'desired business outcomes' — the targeted, measurable business end states to be achieved. These outcomes in turn deliver, enable, and support the delivery of the benefits and value.
Using traditional methods, these critical 'desired business outcomes' are not known or planned for. It is basically 'hoped' that these outcomes will be delivered and the benefits will somehow be realized.
To deliver value, focus on delivering, enabling, and supporting agreed measurable business end states.
However, in addition, you'll also need plans to move forward from the project delivered outcomes to realize the benefits of the full business outcomes.
After that, monitor the (planned) post-project activities until all of the desired business outcomes have been delivered and at least the majority of the benefits and value are realized.
Now, you're focused on value.
The Value Equation provides a simple framework for understanding the bases of value delivery management.
NOTE: The Value Equation is a trademark of Prestige Ideas Pty Ltd and is used under licence.
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Click here for the second article in this the series "Refocusing Projects onto Business Value, Part 2: Thinking 'Value Delivery Management'".
Click here for the first article in this the series "Refocusing Projects onto Business Value, Part I: The Need".
Jed Simms is CIO magazine's weekly project management columnist. Simms, founder of projects and benefits delivery research firm Capability Management, is also the developer of specialized project management and project governance Web site www.project-sponsor.com
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