Chapter IV

Value Management as an OPM Governance Process

As explained in the previous chapters, value management (VM) is not a “new fad,” but a proven methodology that has evolved from a method formally developed in the late 1940s. In all those years, it has grown from “a problem-solving system to deliver products with appropriate performance and cost” (Miles, 1972) to “a style of management […] with the aim of maximizing the overall performance of an organization” (BSI, 2000). As VM is becoming more and more associated with governance and decision management, it is evolving from a finite methodology to an agile process in which both decision makers and those who will execute the decisions actively participate. In this context, the participants in the VM process have authority over the resources required to implement the decision.

This chapter illustrates the use of VM as a strategy formulation and mastering process in the context of organizational project management (OPM), which is described as:

“a strategy execution framework that utilizes project, program, and portfolio management as well as organizational-enabling practices to consistently and predictably deliver organizational strategy to produce better performance, better results, and a sustainable competitive advantage.” (PMI, 2013 c)

The Business Context of VM

“[Innovation] is among the essential processes for success, survival, and renewal of organisations, particularly for firms in either fast-paced or competitive markets”

(Brown and Eisenhardt 1998, p. 344)

As complexity and turbulence are increasing exponentially in our business environment, there is a need to adopt new ways to formulate and execute strategies. Strategy execution is the area with which traditional organizations experience the most difficulty because the final outcome can be unpredictable. It is characterized by both high uncertainty and high ambiguity, or as Siggelkow and Rivkin (2005) have labeled it: combined turbulence and complexity, where firms must balance speed of decision with search for alternate solutions. In these high-uncertainty situations, traditional organizations often waste time and effort on the collection of information, which may render the decision irrelevant and, in so doing, increase confusion for an already complex issue.

Figure IV-1 displays the usual business context and process of making and implementing strategic decisions. In this context, strategic objectives are usually defined on the basis of both a corporate strategy and pressures that regularly affect organizations. These pressures can be internal, like new work practices, union contract negotiations, restructuring of departments, or the hiring of a new CEO; or external, like the introduction of new technologies, opening of new markets, new competitors, or natural disasters. Strategic objectives are typically aligned with corporate strategy at the portfolio level.

Strategic objectives usually aim to provide new capabilities to the organization to enable it to compete in its chosen market or in new markets. This is why I have labeled this area the “capability cycle.”


Once strategic objectives are agreed, programs and projects will be launched. The initial step is to formulate the program by agreeing the expected benefits that it will deliver (sensemaking) and preparing to deliver these benefits through projects (ideation and elaboration). Projects and other program components are then launched (decision) in order to deliver benefits; typical steps include definition of objectives and parameters (initiation), planning and execution, and delivery of results and outputs (monitoring, control and closure). During the project, process value analysis and value engineering are used to optimize performance. These results and outputs are transitioned into the business to generate outcomes and benefits, which are assessed at the operational and business level. Corrective or realignment actions are taken if necessary to achieve the ultimate objectives (mastering).

Strategic Value Management

In complex situations and environments, standard problem-solving or decision making techniques are not applicable. A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Fifth Edition (PMI, 2013a, 30) states that: “Project Governance—the alignment of the project with stakeholders’ needs or objectives—is critical to the successful management of stakeholder engagement and the achievement of strategic objectives.” (p. 30). VM is the method of choice to deal with the ambiguity of stakeholders’ needs and expectations and the complexity of changing business environment at program level and project initiation. It brings structure and objectivity to what has often been a highly subjective and intuitive process and provides a framework for decision making throughout the delivery process. The VM process comprises the following sub-processes, which are typically carried out as facilitated workshops or meetings where the key stakeholders (at least) participate actively.

  • Sensemaking, which includes function(al) analysis and can use a variety of techniques like scenario planning, soft systems analysis, gap analysis, and others, is used to understand the situation and come to a shared agreement about the critical success factors (qualitative statement of expected benefits) and key performance indicators (quantitative measures).
  • Ideation is the creative generation of alternatives that enables the process to be truly innovative.
  • Elaboration involves the creation of viable options. Viable options are alternatives that have been combined and/or developed enough to enable a decision based on their contribution to expected benefits and achievability.
  • Decision is the action of selecting/prioritizing the best options, in regards of the critical success factors.
  • Mastery is a constructive evaluation and control process based on improvement rather than on a baseline.

The VM process requires involvement of the whole program/project team, at different levels and times, but to be effective, decision makers—with authority over resources—must be involved at all stages of the process. Some tasks can be carried on individually, but research has demonstrated that facilitation is a key aspect of successful group decision processes in general and VM in particular, if only to ensure buy-in and support of the decisions.

Focus on Results

The main success factor of all value methodologies has always been their focus on tangible results. It starts with the analysis of stakeholders’ needs and expectations and their translation into measurable objectives, which are then addressed to identify the most profitable options. Following the identification of the best options, a constructive evaluation process, focused on opportunities rather than threats, enables the team to deliver results that are in line with the expected benefits. A key aspect of the success of VM is the direct link that it establishes between needs and results, through functions.

A case study follows, which will be used to demonstrate application of the VM techniques outlined in this chapter.

Case Study Exhibit 1: Situation

The Company

You are a program manager with a medium size company (Currently ±200 people). Your company develops and implements projects for external clients. The company has been in this business since 1985 and has built a good reputation with its clients.

The market is growing and in the last year your company has hired fifty new personnel, of which fifteen are project managers. About 20% of the personnel are project managers; the others are technicians, operations and support staff, and product developers. There are only 5 program managers.

The Issue

Recently, a number of clients have complained about project performance and it has come to the ears of members of the board. A significant number of projects are either running late, or over budget.

Sales and marketing are also putting pressure on the directors to do something.

The managing director calls you and asks you to deal with the problem. The mandate calls for quick results on the most significant projects and general improvement of the situation within 6 months.

The Situation

You know that among the new people who have been hired, many have good experience, but have not yet fully integrated in the company; others have little practical experience, although they show good potential.

The company has always relied on a few experienced project managers to “run the show,” but those are the ones that are also the most resistant to change; they know their business and do not accept criticism of their methods easily. “I have always delivered what I was asked, don’t come and tell me what to do.”

For a few months now, the human resources department has talked about induction courses and project management courses. The quality management department has put in a budget for the standardization of project management processes and procedures; it would involve hiring an external consultant. You may need to integrate these into the new program.

Sensemaking Phase

The first phase in the VM process is the sensemaking process that consists of understanding the situation that has created the need for change and, from that understanding, first, identifying the benefits expected by the many stakeholders, and then agreeing on the benefits that the program and its component projects will deliver. The benefits are the functions that the program and/or projects are ultimately expected to deliver at the business level. When there is no program to which a project is associated, the sponsor of the project becomes responsible for identifying and delivering the benefits.

A well-managed sensemaking process enables participants to agree on a set of benefits that satisfy the purpose of the program and to organize them into a benefits breakdown structure (BBS) that helps define the critical success factors (CSFs) that will define the successful achievement of the objectives identified at the portfolio level.

  1. The first step of the sensemaking phase is to perform a stakeholder analysis, which encompasses the identification of the stakeholders, their classification, and their ranking.
  2. The second step is to carry out a functional (benefits) analysis, which consists of determining stakeholders’ needs and expectations, translating them into expected benefits using a verb-noun semantic, identifying any additional benefits required, and organizing them into a BBS.
  3. The next step consists of defining those expected benefits that are critical success factors (CSF) of the program or project and their prioritization, which will support decision making throughout the benefits delivery process.
  4. Finally, the CSFs are characterized through their key performance indicators (KPIs). The definition of KPIs enables the stakeholders to move from qualitative to quantitative measures of success and to be able to assess benefits on clearly quantifiable terms.

Step 1: Stakeholder Analysis

To define the needs and expectations of stakeholders, the team must first identify who the stakeholders are. As a first step, they can use experience and historical data to list a number of possible stakeholders without attempting to categorize them or classify them. Following that, they can systematically map both the delivery process and expected results to complete the list.

Once stakeholders have been identified, the team can group them in functional groups and subgroups, usually represented as a Mind Map (Buzan, 1974). The purpose of this process is to complete the list, make sense of it, and clarify it for communication purposes. This stakeholder map is not a hierarchical representation of the structure of the organization, but a functional representation of all the stakeholders and their relationships.


The second step is to categorize the stakeholders to measure their potential influence on the program or project process and their outcome, in order to identify the key, or significant, stakeholders. There are many ways to do this; they can be classified by power level (preponderant to the affected party), area of interest (financial, technical, regulatory, etc.), or structural layer (regardless of direct influence). A simple, effective way to quickly map the stakeholders is to develop an influence matrix (Johnson and Scholes, 1997) (see Figure IV-2).

The influence diagram is divided into four major areas. Another alternative is to grade each axis from 1 to 10 to create a more detailed picture of stakeholders’ influence. In the diagram shown in Figure IV-2, interest can be either positive or negative, for example a stakeholder who is negative could want the project to fail; if they have power, they should be considered a key player. Some practitioners prefer to create a mirror diagram where the level of interest is shown as either negative or positive, and each can also be graded.



Step 2: Functional (Benefits) Analysis

The PMBOK® Guide—Fifth Edition (PMI, 2013a) states that “Different stakeholders may have competing expectations that might create conflicts within the project.” (p. 30) and that: “Identifying stakeholders, understanding their relative degree of influence on a project, and balancing their demands, needs, and expectations are critical to the success of a project.” (p. 31). The VM Standard (BSI 2000) claims that “stakeholders […] may all hold differing views of what represents value. The aim of VM is to reconcile these differences […]”. In order to reconcile the stakeholders’ differences, the first step is to identify stakeholders’ needs and expectations.

VM standards have defined needs as “what is necessary for, or desired by the user. A need can be declared or undeclared; it can be an existing or potential one” (BSI, 1997). In VM, needs and expectations are considered as one and the same. Traditional VA/VE distinguishes needs and wants in order to distinguish what is absolutely necessary from what is not; in an OPM environment, this distinction is not appropriate because of the sensemaking process that aligns the benefits to the strategic objectives. Traditionally, project management has associated needs with requirements and has considered expectations as undefined requirements; recently, expectations have been recognized as a key element that needs to be addressed and clarified by project managers (PMI, 2013a). In program management, it has always been part of the program manager’s role.

Functional or benefits analysis is the process through which needs and expectations are identified, prioritized, and aligned.

Identification of Needs and Expected Benefits

Although identification of needs is technically part of functional analysis, stakeholders’ analysis and functional analysis are run as a seamless process during a workshop during which key players and other main stakeholders are involved. Before the workshop, the team will gather information about the subject to be addressed by consulting subject matter experts and retrieving historical data on similar situations. The value team may also decide to carry out interviews of stakeholders who have been identified as key and cannot, or will not, attend.

Functional analysis requires clarifying expectations, making these explicit by probing stakeholders, and agreeing assumptions on elements and issues that are not clear. Once expectations are explicit, their achievability is examined and gaps are discussed, negotiated and resolved. This can be achieved only by communicating openly and early in the program or project. Finally, measurable criteria will be identified to ensure that these expectations can be followed through and the expected results measured.

Generally, needs identification is carried out using intuitive techniques like brainstorming or simple discussion. The European VM Standard (BSI, 2000) defines a more thorough method called Method of Interaction with the External Environment, or more simply, Interactors’ Analysis. It consists of identifying the different interactive agents that are part of the environment of the program or project (stakeholders as well as physical parameters and constraints), and identifying both direct expectations and interactions regarding the product or process, as well as functions created between interactors through the product or process. Although most functions can be identified using intuitive methods, it is worthwhile, if resources are available, to complete the study with an interactors’ analysis. The use of the stakeholders list to identify needs and expectations is a form of interactors’ analysis.

Case Study Exhibit 4: Interactors’ Analysis

In our case study, a direct expectation for the PMO may be to standardize project management processes; an interaction function between the PMO and the human resources department could be the need to align training with standards to make sure any training considers the newly chosen standards.

When identifying stakeholders’ needs, value practitioners should consider both direct, or tangible, needs—usually translated into hard benefits (economic, technical, operational)—and indirect, or intangible, needs—usually translated into soft benefits (power, politics, communications). It may not always be possible to identify intangible or indirect needs openly in a workshop; in some cases the value practitioner will interview key players individually to elicit those needs. In addition, the team will start identifying contradictions and assess their consequences, prioritize values, and manage trade-offs. This process will be completed during elaboration and iterated during implementation.

The case study example displays the use of the mind map to identify the needs of the different stakeholders.


Organization of Functions and Expected Benefits: The Benefits Breakdown Structure (BBS)

Once benefits have been identified, the team will organize them into a hierarchical structure, based on the rules for the construction of a function diagram discussed in Chapter II. The benefits breakdown structure (BBS) is similar to a work breakdown structure (WBS). The development of the BBS, like the development of the WBS for projects, is an iterative process, and the BBS must be reviewed regularly to make sure it continues to represent the stakeholders’ views. In fact the BBS is very similar to a task-oriented WBS.

The foundation rule of any function diagram is to create a hierarchy of functions that goes from the more abstract needs (the purpose) to concrete actions or tasks and activities using a How-Why logic. The objective of the BBS is to represent a view of the expected benefits shared by the main stakeholders. At the higher levels, functions and benefits will be labeled vision, mission, strategic objectives, and critical success factors; at the lower levels, they will be called functions, capabilities, tasks, and activities.

A well-defined BBS produces a seamless continuum from the strategic objectives to the actions (tasks and activities) required to satisfy the purpose. At the lower levels, it becomes a task-oriented WBS and therefore clearly links project definitions to the stakeholders’ expected benefits in terms of their contributions. Like a WBS, it helps define the scope of the program by verifying completeness through identification of gaps and elimination of unnecessary repetitions. It also shows specific relationships between the main purpose and critical success factors, and enables prioritization of benefits to be delivered. It is an effective way to model complex situations objectively, when ambiguity is high and agreement low.

To build the BBS, the team methodically relates stated needs and expected benefits to each other using a how-why logic as shown in the case study example: Benefits Breakdown Structure (see Case Study Exhibit 6). Some statements may need to be reviewed to consolidate the structure. More functions/expected benefits will then be added in relationship with those already in place to complete the BBS and make sure it is robust. Eventually, the completeness of the FBS will be verified by confirming that the sum and sequence of actions will accomplish the desired objectives and purpose.

Step 3: Identification of Critical Success Factors (CSFs)

Once the team is satisfied that the BBS represents their shared view of the situation and their expected benefits, it must identify the CSFs. CSFs are generally qualitative; they must be of a high enough level to be really significant and of a low enough level to be specific and manageable. Ideally, critical success factors should be achievable within the level of authority of the program manager or sponsor for stand-alone projects; there should also be a clear cause-effect relationship between the actions taken as part of the program or project and the benefits it will produce. For example, in our case study, “Improve project management performance” is too generic and long-term to be a good CSF, as project management performance can be influenced by a number of factors outside the control of the program manager and can falter after the program is completed. On the other hand “Standardize project management processes” or “Deliver to parameters in the short-term” are benefits for which the program manager could be held accountable.

Purist value practitioners may argue that some of the statements used in the case study example are not really functional statements, but rather actions and deliverables. Although the idea of VM is to promote innovativeness and creative solutions that are triggered by functional and abstract statements, in organizations, business stakeholders are often challenged by innovative ideas and relate better to actionable statements. It is the value practitioner responsibility to judge what the right balance is in each specific situation and to balance between the need to be innovative and the acceptance of the process.

There are a few rules to select CSFs, and the BBS helps to make it a formalized and logical process.

Like in a WBS, the sum of the lower-level elements ensures the successful completion of the whole; therefore, CSFs should cover the whole range of benefits and should not be picked randomly.
Five to eight CSFs is generally a good manageable number for most programs and projects, although large programs may require more, but ideally not be more than twelve.
The recommendation is to start with the second level of the BBS and select all the expected benefits of that level. If the team does not select all the benefits of one level, it may create a performance gap.
If a second-level benefit is too generic, the rule is to select all the sub-benefits on the next level down of that specific benefit, and so on.
Two CSFs cannot be on the same branch at two different levels because they would then be redundant, as each level is a sub-level of the previous one.
CSFs should be on no more than two levels, but three is acceptable, as shown in the case study example.

Once the CSFs have been identified and agreed by the team, they become the baseline value criteria for the evaluation of all options in decision making and change management in the program or project. To increase the effectiveness of this process, CSFs need to be prioritized. Paired comparison, where each factor is compared to each other in turn, is a fast and objective way to achieve this. One effective method of performing a paired comparison is to distribute five points between each pair of CSFs. Combinations can therefore be 5-0, 4-1, 3-2, and vice versa, as shown in the case study example: Paired Comparison. Once this is done, the scores are brought back on a percentage scale. Prioritization should be reviewed regularly to confirm ongoing validity, mostly in programs that are longer term and can therefore be more susceptible to changes in priorities.


Case Study Exhibit 7: Prioritization of CSFs using Paired Comparison

Weighting of CSFs using paired comparison

A - Increase credibility with customers

B - Deliver to parameters (Short term)

C - Standardize project management processes

D - Improve knowledge and skills of new project managers

E - Normalize practice of experienced project managers

F - Maintain/improve efficiency

G - Demonstrate control


Ranking of CSFs Score Weight (%)
1. Increase credibility with customers 23 22
2. Deliver to parameters (short term) 20 19
3. Demonstrate control 16 15
4. Maintain/improve efficiency 15 14
5. Improve knowledge and skills of new PMs 13 12
6. Normalize practice of experienced PMs 10 10
7. Standardize PM processes 8 8
Total 105 100

Step 4: Characterization of Critical Success Factors

Although traditional VM calls for characterization of all functions of lower level, experience has shown that it is more resource-effective in programs and projects to focus characterization on the CSFs. Characterization, as explained in Chapter III, requires first identification of one or more key performance indicators (usually two-to-three) for each CSF. The method described in this section was standardized by the French Value Analysis Association and is now included in the European VM Standard (AFNOR, 1991; Thiry, 1997). It works very well for programs and projects and consists of three steps:

  1. For each KPI, identify a measurable criterion.
  2. Set the target level of performance.
  3. Identify an acceptable range or tolerance.

This process is repeated for each CSF in order to create a baseline related to the needs of the stakeholders.


The sensemaking process is a team process in which the key players should be actively involved to guarantee their support. If stakeholders cannot commit the necessary time, it is possible to perform some of the tasks in smaller groups as long as the results of these small group sessions are presented back to the whole team for discussion and final approval.


VM practitioners use creativity techniques in a number of VM processes, but if there is one area where creativity becomes essential, it is the generation of alternatives. Although the functional analysis has already generated a number of actions (how?), ideation will broaden the scope of possibilities from which to develop options and therefore increase the quality of those options from which the team will choose solutions. It will also generate a bank of possible solutions that could be exploited and developed further if circumstances or stakeholders’ expectations changed, therefore saving important redevelopment time and resources. Ideation is the traditional creativity phase of VA/VE; it consists of identifying as many alternatives as possible for the fulfillment of one or more benefits. It is an area where lateral thinking cannot be mixed with vertical thinking. The team will start with CSFs, or alternatively, low-level functions, and creatively identify possible ways of achieving them.

A number of creativity techniques were discussed in Chapter II. The Osborn brainstorming technique, with an experienced facilitator, is an easily applicable and valuable technique for small groups (five to eight), and stepladder would be the best choice with larger groups or when no experienced facilitator is available. As there is an evolution toward wider stakeholder involvement, VM is slowly moving from the traditional brainstorm toward techniques akin to stepladder.

In the Osborn brainstorm technique, the group must first agree on a clear statement of the problem; this is usually achieved through the functional analysis. The group, under the guidance of a facilitator, then identifies as many alternatives as possible to resolve the problem; in this case, the team brainstorms on the CSFs to define potential actions or deliverables that will help achieve them.

The stepladder technique directly addresses some of the problems identified for brainstorming. The principle of stepladder is that each individual works independently on the problem before joining the group. Ideas are then shared with the group in turn as each new individual joins (to avoid being influenced), and discussion can start only when all ideas have been expressed. This sequential process fosters transformational learning through critical reflection. Since the objective is to develop group alternatives, the first part of the discussion should follow brainstorming rules, typically: focus on quantity; withhold criticism; welcome unusual ideas; combine ideas and build on previous ideas. Only when the group is satisfied that they have explored all possible alternatives will they switch into vertical thinking mode and elaboration.

A short form of the stepladder technique consists of having individuals work first independently and then discuss their ideas in pairs and in fours before sharing all ideas with the group. In this case there is a series of short, lateral–vertical thinking processes, with the first part of every discussion lateral, before the final evaluation and development of options.

In Australia, Roy Barton (2000) uses a variation of stepladder for large VM workshops (20 to 30 or more participants) at the strategic planning level for the public sector. He divides the group into smaller working units of five to seven people, who work independently from each other before sharing findings with the whole group. A survey of 200 participants in more than 20 of his workshops showed that 90 people felt their views were adequately considered, and in more general terms, and 76% felt that VM was very important to their project.

Case Study Exhibit 9: Ideation Results for Top Three CSFs

Increase Credibility with Customers

  • Assign key projects to known/best project managers (A)
  • Improve customer communications (C)
  • Assess feasibility of commitments (A)
  • Communicate success (C)
  • Deliver within parameters (A)
  • Acknowledge past failures (A-B-C)
  • Involve customers in problem identification and solving (A)
  • Create focus groups (C)
  • Review customer account history to ensure good fit (A-C)
  • Involve business unit managers with clients (C)
  • Realign dates and estimates to be realistic (A)
  • Validate sales commitments before commitment to customer (A-C)

Deliver to Parameters

  • Match project manager experience with significant projects (A)
  • Set realistic expectations (A)
  • Provide strong incentives to deliver (A)
  • Renegotiate expectations with customers, based on achievability (A)
  • Provide project managers with required tools (B)
  • Create team incentives to meet objectives (A)
  • Implement overtime incentives (A)
  • Re-scope deliverables in regard to resources (A)

Demonstrate Control

  • Secure marketing/reporting budget (C)
  • Prepare program marketing plan (C)
  • Make formal presentation of organization phase outputs (C)
  • Increase customer communications (C)
  • Manage customer relationship (C)
  • Give performance guaranties and metrics (B)
  • Every project/action to be signed off by senior executive (B)
  • Develop business case for each project/action (B)
  • Reallocate project managers in regards of experience (A)
  • Provide regular feedback to team and sponsors (B-C)

Letters (A-B-C) represent the options grouping that forms part of the elaboration process.

In a project or program context, it is important to keep the team focused during ideation; although creativity requires the group to accept all ideas, it is also easy to lose sight of the initial objective. While the loose-rein approach is valid for purely creative processes, the management of programs and projects require some focus because of the limited resources available. An experienced facilitator should be able to manage the process to allow enough freedom to foster creativity without losing sight of the objectives. It should also be noted that fewer ideas will be generated at higher levels (strategic or tactical) than at lower levels (technical or operational) because they are more abstract and cover more ground.


This phase of the VM process combines two traditional VA/VE phases: evaluation and development. It is the validation of the alternatives that have been generated in the previous phase and the development of viable and profitable options. It uses vertical thinking concepts like feasibility, cost-benefit analysis, weighted matrices, risk analysis, estimating, and so on.

The first step of the elaboration is to eliminate all non-viable alternatives; alternatives could be deemed non-viable because they are clearly unachievable or deliver none of the expected benefits, or more simply, because they will not be accepted by the stakeholders. Other alternatives will be clearly viable because of their intrinsic value in terms of achievability and benefits, or their wide acceptance by stakeholders. Some alternatives will fall into a gray zone where acceptance or viability will not be clearly established and rejection is not clearly an option; these alternatives will be examined more closely to establish if they can be combined or improved to make them clearly viable.

The second step is to combine, modify, or develop the alternatives further to generate options. The development of options includes the gathering of additional data and a degree of analysis that enables the team to make a well-documented decision and persuade sponsors to support them. A practical way to achieve this is to identify “champions” for each potential option and to ask these champions to develop their options up to a point where they feel comfortable to make a recommendation that outlines benefits, states advantages and disadvantages (risks), and draws contingency plans as shown in the case study example.

Case Study Exhibit 10: Elaboration of Options

Option A: Develop and implement a comprehensive staffing plan

  • Addresses both short term performance objectives and long term strategic goals
  • Cost invested brings return – Allows better use of resources
  • Addresses both achievability and benefits
  • Clients should see quick changes if supported with marketing
  • In the medium term, set up a PMO as a permanent structure to maintain staffing plan

Option B: Develop and implement a processes and procedures standardization plan

  • Would be mostly valid for inexperienced project managers in short term
  • Does not address right project manager for right project issue
  • May not increase credibility if experienced project managers resist
  • Needs to be done in conjunction with training to be effective

Option C: Develop and implement a customer communication plan

  • Could bring quick results and be easy to achieve
  • Could backfire if delivery does not follow
  • May not address overall problem if done in isolation
  • Needs to be backed by marketing, otherwise will hurt credibility

Option D: Develop and implement a project manager training plan

(Added by the head of human resources after analysis)

  • This option will produce medium-term benefits
  • It may create resistance with the senior experienced project managers
  • It is necessary to support the standardization of processes and procedures

The third step is to compare the options between them based on their relative potential to deliver CSFs, in order to prioritize resource expenditure and effort. Decision factors may consider aspects like available resources, quick wins, ease of implementation, or, simply, benefits. This process can be undertaken for three different reasons:

  1. Two or more mutually exclusive options need to be compared to make a choice between them;
  2. A list of options needs to be ranked because resources do not allow undertaking them all.
  3. A combination of both reasons.

This step is an application of the benefits variance (BV) concept (see Chapter II). It uses the weighted CSFs as expected benefits (EBs) and uses a weighted matrix to score options against each CSF. The combined score of each option corresponds to their offered benefits (OBs). If a minimum score has been agreed upon, any option that is below the minimum score is rejected; others are ranked, determining an order of priority.


Capability variance (CV) is estimated, considering achievability based on the organization’s available capabilities or resources (ACs) against program or project requirements, or required capabilities (RCs), in terms of:

  • Financial factors: Capital cost, expected return delay, source of funding, etc.
  • Parameters and constraints: Resource availability, timeframe, project authority, etc.
  • People factors: Competence (skills and expertise), spread of resources, availability, etc.
  • Complexity factors: Innovativeness, interdependencies, clarity of objectives/scope, etc.

To be accepted, an option must be clearly achievable and the Capability Variance (CV) must be superior to the required minimum.

Case Study Exhibit 12: Weighted Matrix Analysis

Option A scores highest and would be easier to implement than options B or D. It could also be developed to bring short term results and therefore reduce the overall pressure and motivate sponsors to support the rest of the program.

Because Option B scores high on CSFs 1 and 3, which account for 37% of the weight, and because its achievability is high and it brings short term results, it could be implemented in the first cycle, even if it scores lower overall. It will also act as a synergist to Option A; if there is no communication, the scores of A will be lower in at least CSFs 1 and 3, but also 2 and 4.

Options B and D are highly interdependent and cannot be effectively implemented in isolation; they will bring longer-term results and therefore cannot be part of the first cycle. In the first cycle, feedback from Options A and C could be used to start planning B and D, therefore Option C should contain some form of staff and customer survey.

Options B and D could also be combined in the setup of a PMO, if the size of the company and the investment necessary can support a business case.

The capability variance score (achievability) is then combined to the benefits variance score (contribution to benefits), and the combined score is used to prioritize resources against the different options. This means that the value manager is not only concerned with balancing resources with satisfaction of needs (benefits) but also with making sure that capability is matched with intent. (See Program Management (Thiry, 2010) for a full description of the benefits/achievability methodology).

Once this is done, options that have been judged viable are offered for final decision and prioritization. To complete the process, each major option will be assessed against the KPIs and risks (threats and opportunities) will be identified and analyzed; risk responses should be included in the final option.


The decision itself is the last step of the process. Traditionally, in VA/VE this was the recommendation phase; in VM, where the sponsors and performing team are involved every step of the way, the value management team will make the actual decision, rather than recommend options. This is a major divergence from traditional value methodologies. Until recently, the value practitioner has mostly acted as an external consultant that only had recommendation power. Recent developments have seen VM become more of a group decision support process, where decision making has become an integral part of the VM process, since decision makers are on the team.

A number of studies point out that in complex situations, decision making is subjective and intuitive rather than objective and rational. These findings outline the importance of aiming for stakeholder engagement in order to foster support and commitment for the implementation of the decision. Studies show that group decision making is influenced by the significance of issues for the group, the shared understanding among group members, and participants’ representation in the process. VM, through its sensemaking, ideation, and elaboration processes, promotes stakeholder engagement. But sometimes, there is no other choice than to have a leader decision; if this is the case, the process should be made clear to the whole team as early as possible and, if possible, the team must still be given a fair opportunity to discuss and try and reach consensus before the final decision is made.

Using VM to Develop the Business Case

As part of the VM process the team has defined the best options and assessed them against the critical success factors defined by the sponsors and governance board. The development of a business case is in fact a similar process where a team of people aims to justify an investment against corporate or strategic objectives. In the following example, a business case is built around the actions taken during the value management process.

Case Study Exhibit 13: Business Case

Justification or drivers

The purpose of the justification is to state the reasons why the initiative has to be initiated. This aspect has been thoroughly discussed and clarified during the sensemaking phase of the VM process.

– Customer complaints concerning project performance

– Potential loss of revenue

Purpose or objective

The purpose states the overall objective(s) of the initiative. It typically includes high level scope and timeframes of the initiatives and of its expected benefits realization. These elements have been identified and agreed on during the sensemaking process and the development of the BBS.

– Re-establish credibility with customers

– Deliver quick results on most significant projects

– Improve overall situation within six months

– Sustain performance in the long-term

Strategic (CSFs) contribution

The purpose of this section of the business case is to demonstrate significant contribution to the strategic objectives (CSFs). The case for the proposed initiative is much more likely to be made if clear targets and specific options for the achievement of the critical success factors can be listed. The value management process, and especially the ideation and elaboration phases, has established those targets. A list of specific contributions to the CSFs can be outlined from the lower levels of the BBS and development of KPIs to justify the scoring of the contribution to each CSF. Scoring is done using a weighted matrix.


Achievability Assessment

Achievability assessment is usually not part of the business case, but is a key element of successfully delivering value. It is therefore important to assess the achievability of any business initiative as part of a robust business case. The achievability assessment is similar to a risk analysis and similar factors can be assessed. At the level shown here, the assessment is subjective but needs to be documented. More detailed achievability assessment tables are developed for detailed business cases.

The table below is based on pre-set factors that have been developed over years of research and experience assessing achievability for business initiatives. It can be adapted to each specific industry or organization, based on specific criteria.


A1 Budget includes actual and committed (pipeline)

B1 Available resources/required resources for program/project in regards to the workload (actual and committed)

C2 Multi-tasking generally leads to a lower achievability

The combined score of the business initiative (program in the case study) is then calculated and inputted on a multi-criteria analysis (MCA) matrix, similar to the ‘probability-impact’ matrix used for risk management. As in the risk probability-impact matrix, contribution to benefits is favored over achievability by factoring the benefits variance (BV) score. As shown in the diagram below, in the case study the combined score is 0.29. It is therefore a high-priority program and should be undertaken.


Obviously, a full business case contains a number of additional elements that have not been explained here as the purpose was solely to show how value management could help consolidate the business case through its in depth analysis of the program’s benefits variance against capability variance. This analysis of value is combined with the creative aspect of the value management process to produce not only effective, but innovative ideas to achieve each of the program’s strategic objectives.

Mastery and Benefits Delivery

If VM is to be considered a style of management, gatekeeping becomes an essential part of the process to ensure that value is delivered. With the authority to prioritize resources, VM can help realize value sustainably. Value management can be used to appraise benefits delivery at “gateways,” which correspond to key deliverables’ milestones. As the program or project progresses toward its outcome, expected benefits and context may evolve, therefore, VM must be an integrated and iterative process that is an integral part of the governance system.

Change management is an essential part of the management of value; the VM process of sensemaking, ideation, and elaboration can be applied to change, especially regarding contribution to benefits, achievability, and integration with overall needs and expectations. When VM is applied to the change control process, it ensures that the “real” issues are addressed and that changes are made in line with the CSFs and other expected benefits.

This leads to the use of VM for benefits delivery, which has recently been identified as a significant aspect of the management of programs (PMI, 2013b). VM provides a clear link between identified expected benefits (functions) at different levels of the organization and results. As an iterative process, VM regularly reassesses stakeholders’ needs and expectations and alerts program and project managers early enough to identify the most innovative and resource-effective alternatives and to be able to evaluate them on a rational basis.

There are a few elements that must be put in place to support this iterative process:

  • Gateways for approval of deliverables need to be defined (typically part of program management) and a VM process (sensemaking, ideation, and elaboration) should be used to review the deliverables.
  • Regular reviews of stakeholders’ needs and expectations should be planned, specifically at project gateways and program appraisals; CSFs and other expected benefits’ priority should be reassessed.
  • Value criteria (CSFs and KPIs) are to be the basis for change requests evaluation; again the VM process (sensemaking-ideation-elaboration) should be applied to the management of change.

In order to achieve this, the value team must develop a responsive evaluation approach under which value lies in the capability to respond quickly to a changing environment, rather than evaluation strictly centered on a baseline where only reliability is a measure of success. VM, applied to portfolio selection, program appraisal, project gateways, and more generally, change management, enables the team to structure these processes around a robust framework of iterated evaluation criteria and priorities, more appropriate to complex situations.

Integrated VM

Organizations that apply the above principles often closely link the VM team with finance or portfolio management and follow programs and projects on an ongoing basis. In these organizations, program definition and project initiation are based on VM principles, and VM is part of program and project governance; reviews are carried out at gateways by the VM team in collaboration with the program or project team. Outputs of this process include resource reprioritization, contingencies, and risk response management (reallocation of unused funds or resources to other projects on an ongoing basis), revalidation of CSFs, and other success factors to improve value.

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