Value loss from poor scope management comes in two forms – missed value and destroyed value. When changing, project scope can eliminate some or all of the project's value, this needs to be carefully managed by the governance team.

Your Scope Determines Your Potential Value

You can lose value by ‘adjusting’ the project’s scope to fit within the project’s timeframe or budget. As few projects can actually align their project activities to the planned benefits and value, most scope changes are done with little to no knowledge as to their value impacts.

Too frequently scope changes can unknowingly eliminate much and sometimes all of the project’s (net) value.

Value loss from poor scope management comes in two forms – missed value and destroyed value.


Missed Value

Missed value comes as a result of the drive to ‘contain the risks’ and, therefore, define your project scope too narrowly too soon – missing opportunities for even greater value. We have often increased a project’s scope by 10% and its resultant value by 200%. Initially your scope should be defined widely – we call this your ‘opportunity scope’ – where you seek to find where the real value is. You can then refine this scope into a 'solution' scope at the business case stage to focus on the areas of greatest value.

Think of prospecting land for gold. Rather than just defining where you think the gold is and going for it, you do the (prospecting) work first to determine exactly where the most gold (value) is. Then you focus your efforts on the high-value area to maximize your returns on investment.

It is the same thought when you adopt the 'opportunity' and ‘solution' scopes approach.

By adopting this two-step approach to scope definition you are more likely to identify where the most value is (and not miss it) and avoid working in areas where there is little-to-no value.


Destroyed Value

The second form of value loss is where the solution scope, once agreed, is subsequently compromised. This can be through scope surges without commensurate increases in value; or by scope cuts that lose or destroy the expected value.

Few scope change approval processes identify each change's benefit and value impacts. This is partly an omission of content but is also because few project delivery approaches can align (changes to)  their project activities to the value to be delivered. They cannot identify which business outcomes and benefits each element of the project enables, supports or delivers. This is a major failing of current project delivery approaches. TOP's Value Equation approach ensures this activity-to-value link is clear and traceable.

But there is one more dimension required here – effective governance. It is the primary role of the governance team to protect and deliver the project’s business value. All too often governance teams are not aware that this is their primary role let alone knowing how to do it. They therefore approve scope changes that directly reduce the project’s value and then wonder where the value went! I recently witnessed a Project Board agreeing to a change that would save $400k and eliminate the benefits completely.

In Conclusion

If you want to optimise your project’s value, protect it and ensure its maximized delivery, you need to review your project scope management and governance processes. In most cases you’ll find that they are not value-focused.

Explore effective project governance as a scope and value protection process.


Topics: Project Controls, Value Equation, Project Governance, Scope Management


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Revision History

First published: Simms, J. (May 2010) as "Where Does The Value Go On Projects? 5%-100% Lost From Scope Changes"

Updated: Chapman, A. (March 2020), Revisions and Corrections