How Much Project Investment Value Do You (Inadvertently) Waste?

HOW FULL IS YOUR BOWL?

Imagine a bowl that contains the optimum net value of your strategy or project—the maximum practical business and strategic value that can be delivered for the least practical cost.

At the end of your strategic initiative or project investment, how full is your bowl?

You may be surprised to hear that most bowls are more than half empty. At least half of the available value has been wasted by being allowed to seep, drip or flow away throughout the delivery cycle and beyond.

How does more than 50% of the value disappear?

Your existing strategy execution and value delivery beliefs, processes and practices (the bowl) may look fine, but they can contain gaps, cracks and even holes that allow business value to be lost.

‘Holes’ can exist in the form of false beliefs, poor or missing processes and practices that unnecessarily increase the costs of delivery or increase the ongoing costs of your operations thereby reducing the net business value available, targeted, delivered or sustained.

Depending where they are on the bowl these delivery ‘bowl deficiencies’ can cause a little or a lot of value to be wasted. Most organization’s delivery deficiencies cause at least half of value to be wasted.

For example, common deficiencies are:

• Poor business cases that miss 25% or more of the available value—never to be delivered.

• Poor governance teams that make decisions that progressively destroy the project’s benefits and value.

• Poor change process that increase the time and costs of making the changes while reducing the effectiveness of the changes made.

• Poor project managers who misuse their resources and increase the delivery costs while reducing the delivered value.

• Poor investment processes that approve projects that are set up to fail and continue projects that should be closed down.

• Missing simplification processes that can reduce operational processes by 40% or more making both the project’s delivery costs and the ongoing operational costs substantially lower.

• Missing business case validation processes that establish whether or not a project is set up for success before it is approved—saving millions in wasteful project avoidance.

• Missing prioritization processes that allow ‘pet’ projects to be approved when critical business projects are rejected.

• Missing strategic contribution processes that accurately measure in detail how each project contributes to the strategy so that each project’s relative strategic relevance can be scored and assessed. Too commonly the true strategic relevance of most projects is essentially unknown.

• And so on.

Whole or hole bowl?

Whatever the actual level of loss it is still unnecessary waste: a waste of time, effort, money, opportunities and value.

Yet, just as when you look at the bowl it can look whole, many of the value-wasting deficiencies are invisible. They are not seen and, therefore, are not measured, managed or avoided.

To deliver a full bowl of value you need to:

1. Make visible all of the gaps, cracks and holes – the gaps and deficiencies in your delivery beliefs, processes and practices that are wasting significant time, money and opportunities. The presence of these deficiencies can be identified and and their value impacts measured.
2. Take action to eliminate, avoid or manage each deficiency – and many can be eliminated or avoided completely to immediately reduce the level of waste and increase the net value retained/delivered on every project.
3. So as to increase the actual business and strategic value delivered and sustained – on a consistent basis.

Why bother to repair your ‘bowl’?

Repairing your ‘bowl’

• Reduces the cost of your strategic and project investments
• Reduces the time to deliver these investments
• Reduces your ongoing operational costs (you implement simpler, lower cost to operate solutions)
• Ensures you can effectively deliver your strategy (and measure it’s delivery and results)
• Increases the business value delivered and sustained from your capital investments
• Increases your capability to respond to the market (you can execute faster)
• Increases your competitiveness (as you can deliver greater results than your competitors while spending less).

Only 30% visibility

If you were driving down a street with only 30% visibility you’d be afraid and cursing the lack of visibility. Yet, with projects, you accept only 30% visibility and then wonder where the value went.

There are 22 major causes of strategy and project delivery waste of which only 5 to 7[1] are usually visible and ‘managed’[2]. The other 15 to 17 are not visible, measured or managed. But they can and need to be made visible and managed so as to eliminate the high levels of unnecessary waste — levels of waste that would never be tolerated in business-as-usual operations.

Imagine telling management it was ‘okay’ that the business operations cost too much and delivered only a percentage of what they could deliver—and expecting that to be ‘okay’. In business operations efficiency and effectiveness is expected and measured. In projects, waste and ineffectiveness is accepted but not measured.

The difference between the top 5% of organizations, that consistently successfully deliver all of their strategies, projects and the optimum value, and the other 95% of organizations, that can consistently lose more value than they deliver, is that the top 5% make visible and actively eliminate, avoid or manage each and every delivery deficiency.

Read how they do it in our ebook:

Where does the value go?

When the scale of waste is quantified to the degree possible (remembering that some deficiencies are not commonly visible or measured and, therefore, cannot be readily quantified) the average level of waste across a portfolio over time is

• an increase in costs over the optimum delivery cost of 60%
• with a simultaneous loss of value from the total optimum available value also of another 60%.[3]

Where value is lost based on BCG and TOP research:

So currently your portfolio can be costing 160% of what it needs to and delivering 40% of the available value. Not a very full bowl at all.

When you fix your delivery processes you can eliminate this waste and immediately fill up your bowl.

Open to all

There is no reason why any organization in the world cannot consistently deliver full bowls, successfully delivering their strategy and confidently commissioning projects knowing they will deliver all of the available business benefits.

It just requires

• A change in perspective – to approach strategy execution and project delivery from a business strategy, value and success perspective. This may sound strange as a requirement but most organizations non-consciously approach projects from a project, cost-control and failure-avoidance perspective and this leaves many deficiencies in the bowl and leads directly to massive waste and a loss of value.
• A change in processes and practices – to incorporate the business strategy and value delivery processes that are frequently missing and to realign the project management practices to become value-delivery driven. Again this may sound strange but most project management practices are project-delivery driven and expect the business benefits to (somehow) be delivered subsequently. This approach allows 50% or more of the value to be lost. The primary measure of success of any project needs to be the full delivery of the available business outcomes, benefits and value, not just the efficient completion of the project.
• An uplift in organizational capability – what we call a ‘TOP-up’ in the organization’s capability to define, design, develop and deliver the optimum business value from each and every strategic initiative, project and program. The tools are now available it just takes the desired and will to adopt and use them.

This change has to be led from the top.

Your choice

So the questions you need to answer can be phrased as,

1. “Do you want to optimize your strategic and project delivered value, or continue to compromise it? (Do you want a full or half empty bowl?)
2. or “What level of waste can you afford on an ongoing basis?” (Do you know how much value seeps away now?)
3. or “How full do you want your bowl to be?” (In most organizations across the portfolio it is more than half empty.) Is that acceptable?

They are all essentially the same question. You can choose your answer. When you are ready to choose to maximize your results and value and resultant level of success—you are ready to adopt TOP.

It really is that simple.

To thoroughly understand this choice, read our ebook of the same name:

[1]    Some organizations measure their benefits’ realization and their strategy’s delivery while others do not – hence the 5 to 7 figure.

[2]    We put ‘manage’ in quotes as some of the visible deficiencies are often tolerated and accepted as ‘the norm’ rather than actively managed out of existence.

[3]    Source: Research by the author when at BCG and subsequently at TOP.