The Self Evident Truths of Project Management: Truth #5: “The Value Equation™ changes the focus of projects”
Why does everyone measure to time, effort, budget and specification? Because that’s about the only set of measures available to measure to. Any project benefits are usually buried in the business case and are not linked directly to project outputs and therefore don’t provide a basis for end-to-end measurement. The Value Equation™ changes all of this.
Time, effort and budget are still important, but these are measures of project delivery efficiency, not effectiveness or success.
But now, with the Value Equation we can link each project activity to the delivery of a ‘desired business outcome’ and its associated benefits. We can also track the current value of each and every financial benefit. This gives us the opportunity to focus on and manage projects by measuring their value proposition.
We can measure the achievement of project outputs as progress towards each outcome.
We can measure each outcome’s delivery as progress towards each benefit.
We can track each benefit’s value so we know what value exists to be realized when the benefit is delivered and the causes of any variances.
We can identify and quantify the value impact of scope, time and other project changes putting a whole new perspective on project-related decisions.
The Governance Team now has a quite clear role — to ‘own’, protect and deliver the value proposition, and they can now manage each element of the project from that perspective (and not try to be super-project managers). The Value Equation™ is the missing link between projects and the business value expected. Simple really.
The Value Equation™ is discussed in more detail in “The search for the ‘holy grail’ of projects” —available from valuedeliverymanagement.com
The Value Equation™ is a trademark of Project Sponsor Pty Ltd
© Jed Simms, Australia 2009. Jed@valuedeliverymanagement.com
Further support and useful tools to help you manage your investments, projects and portfolio are available from valuedeliverymanagement.com .
For the previous article in this series visit The Self Evident Truths of Project Management: Truth #4 - “We don’t do business cases to justify projects; we do projects to deliver business cases!”.
For other series of project management articles by Jed Simms visit How Do You Know if Your PMO is Successful and "PMO: What’s In A Name?".
Jed Simms is CIO magazine's project management columnist. Simms, founder of projects and benefits delivery research firm Capability Management, is also the developer of specialised project management and project governance Web site valuedeliverymanagement.com
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