To Focus On Value You Need To Define Your Project's Value Equation™
Why does everyone measure to time, effort, budget and specification?
Because that’s about the only set of measures currently 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.
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 every financial benefit. This allows us 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.
In Conclusion
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.
© Jed Simms, Australia 2009.
