Organizations in both the public and private sectors have been struggling with the creation of a portfolio of projects that would provide sustainable business value. All too often, companies add all project requests to the queue for delivery without proper evaluation and with little regard if the projects were aligned with business objectives or provided benefits and value upon successful completion. Projects were often submitted without any accompanying business case or alignment to business strategy. Many projects had accompanying business cases that were based on highly exaggerated expectations and unrealistic benefits. Other projects were created because of the whims of management, and the order in which the projects were completed was based on the rank or title of the requestor. Simply because an executive says “Get it done” does not mean it will happen. The result was often project failure, a waste of precious resources, and, in some cases, business value was eroded or destroyed rather than created.
It is important to understand the definitions of benefits and value.
A benefit is an outcome from actions, behaviors, products, or services that is important or advantageous to specific individuals, such as business owners, or to specific groups of individuals, such as stakeholders. Generic benefits might include:
Benefits are derived from the goals of strategic planning activities. In the past, traditional business goals were customer satisfaction, cost reduction, and profits and they focused on near-term targeted savings and deliverables rather than long-term benefits. As such, too much emphasis was placed on the outcome of projects, which on their own may not necessarily deliver long-term benefits. Today, strategic goals and objectives seem to focus on:
Benefits, whether they are strategic or nonstrategic, are normally aligned to the organizational business objectives of the sponsoring organization that will eventually receive the benefits. The benefits appear by harvesting the deliverables or outputs that are created by the project. It is the responsibility of the project manager to create the deliverables.
Benefits are identified in the project’s business case. Some benefits are tangible and can be quantified. Other benefits, such as an improvement in employee morale, may be difficult to measure and therefore may be treated as intangible benefits. Intangibles may be tough to measure, but they are not immeasurable. Some tough benefits to measure include:
There can also be dependencies between the benefits where one benefit is dependent on the outcome of another. As an example, a desired improvement in revenue generation may be dependent on an improvement in quality or better marketing is needed to attract more tourists.
When scoping out a project, we must agree on the organizational outcomes or benefits we want, and they must be able to be expressed in measurable terms. This is necessary because improvements are usually expressed in financial terms to justify the investment in the business. Typical generic benefits metrics might include:
The metrics are needed for feedback to revalidate performance, measure success, investigate anomalies, and decide if health checks are needed.
Benefits realization management (BRM) is a collection of processes, principles, and deliverables to effectively manage the organization’s investments and to make the benefits happen.1 Project management is the vehicle for producing the outcomes that create benefits delivery. Project management focuses on maintaining the established baselines whereas BRM analyzes the relationship that the project has to the business objectives by monitoring for potential waste, acceptable levels of resources, risk, cost, quality and time as it relates to the desired benefits. The ultimate goal of BRM is not merely to achieve the benefits but to sustain them over the long term.
Organizations that are reasonably mature at BRM:
Decision makers must understand that, over the life cycle of a project, circumstances can change, requiring modification of the requirements, shifting of priorities, and redefinition of the desired outcomes. It is entirely possible that the benefits can change to a point where the outcome of the project provides detrimental results and the project should be canceled or backlogged for consideration at a later time. Some of the factors that can induce changes in the benefits and resulting value include:
Project value is what the benefits are worth to someone. Project or business value can be quantified whereas benefits are usually explained qualitatively. When we say that the return on investment (ROI) should improve, we are discussing benefits. But when we say that the ROI should improve by 20 percent, we are discussing value. Progress toward value generation is easier to measure than progress toward benefits realization, especially during project execution. Benefits and value are generally inseparable; it is difficult to discuss one without the other.
For more than five decades, we have erroneously tried to define project success in terms of only the triple constraints of time, cost, and scope. We knew decades ago that other metrics should be included in the definition, such as value, safety, risk, and customer satisfaction, and that these were attributes of success. Unfortunately, our knowledge of metrics measurement techniques was just in the infancy stage at that time, and we selected only those metrics that were the easiest to measure and report: time, cost, and scope.
For decades, we defined value as:
If we wanted to increase the perceived value, we had to either increase the quality or lower the cost. This equation unfortunately implied that quality and cost are the only components of value.
Today, metric measurement techniques are maturing to the point where we believe that we can measure just about anything.2 Perhaps the greatest level of research has been in measuring and reporting business value. During the past two decades, research has been conducted in the following areas:
The output of the research has created value measurement models and metrics:
Value could very well become the most important word in the project manager’s vocabulary, especially in the way that we define project success. In the glossary to the fifth edition of the PMBOK®Guide3, a project is defined as a temporary endeavor undertaken to create a unique product, service, or result. The problem with this definition is that the unique product, service, or result might not create any business value after the project is completed. Perhaps a better definition of a project might be:
The definition of project success has almost always been the completion of a project within the triple constraints of time, cost, and scope. This definition likewise must change because it lacks the word “value,” and it does not account for the fact that today we have significantly more than three constraints, which refer to as competing constraints. Therefore, the future definition of success might be:
A definition of project success that includes reference to value becomes extremely important when reporting on the success of benefit realization and value management activities. With traditional project management, we create forecast reports that include the time at completion and cost at completion. Using the new definition for success, we can now include in the forecast report benefits at completion and value at completion. This reporting of benefits and value now elevates project performance reporting to the corporate boardroom.
There is another inherent advantage to using value as part of the project’s success criteria. We can now establish termination or pull-the-plug criteria defined in terms of value or benefits that tells us when we should consider canceling a project before additions funds and resources are squandered. All too often, projects are allowed to linger on and continue wasting valuable resources because no one has the heart to cancel the failing project. Establishing cancellation criteria in the business case or benefits realization plan may resolve this issue.
With the recognition of the importance of value, we are now focusing on value-driven project management activities. Value-driven project management focuses on the delivery of business value outcomes rather than simply deliverables that come from traditional project management practices. Value-driven project management requires an easily understood business case that includes the specific benefits desired.
Project management is now the vehicle for delivering benefits and value. Companies that are mature in BRM also appear to be reasonably mature in project management. In these companies, both the project management approach and the corporate culture are value-driven.
However, some risks need to be considered in value-driven project management:
Benefits desired must be defined at project initiation. But how do we define value in the early life-cycle phases of a project when value may be just a perception? We would like to define value as well, but value is what the benefits are worth. The hardest part of value determination is defining the metrics so that measurements can be made. Table 19–1 shows some of the easy and hard metrics that are often used to measure value (and possibly benefits as well), and Table 19–2 shows several of the problems that can be encountered with the measurements. The metrics are needed to validate or revalidate not only benefits and value creation but also the business case, assumptions, and constraints. Decision makers must understand that, over the life cycle of the project, circumstances can change, requiring modification of the requirements, shifting of priorities, and redefinition of the desired outcomes.
TABLE 19–1 HARD AND SOFT VALUE METRICS
Easy (Soft/Tangible) Values | Hard (Intangible) Values |
Return on investment (ROI) calculators | Stockholder satisfaction |
Net present value (NPV) | Stakeholder satisfaction |
Internal rate of return (IRR) | Customer satisfaction |
Opportunity cost | Employee retention |
Cash flow | Brand loyalty |
Payback period | Time-to-market |
Profitability | Business relationships |
Market share | Safety |
Reliability | |
Reputation | |
Goodwill | |
Image |
TABLE 19–2 PROBLEMS WITH VALUE METRICS MEASUREMENTS
Easy (Soft/Tangible) Values | Hard (Intangible) Values |
Assumptions are often not disclosed and can affect decision making | Value is almost always based on subjective-type attributes of the person doing the measurement |
Measurement is very generic | Measurement is more of an art than a science |
Measurement never meaningfully captures the correct data | Limited models are available to perform the measurement |
Without proper metrics, we tend to wait until the project is way off track before taking action. By that time, it may be too late to rescue it, and the only solution is to pull the plug and cancel a project that possibly could have been saved.
Benefits harvesting is the most difficult part of BRM. The problem is not with identifying the benefits or managing the projects to create the benefits. The real issue is harvesting the benefits and managing the transition once the projects are over. The project team produces the deliverables but may have no control over how the business uses those deliverables to create benefits and value.
The benefits of a project are typically realized over time—sometimes years after the project has been completed and the project team has been disbanded. Some benefits will be near term, midterm, and long term. Someone must take ownership for the harvesting process.
Figure 19–1 shows how benefits and value are created over time. The unknown in the figure is the amount of time needed to harvest the benefits and the amount of time necessary to sustain the benefits. There must be long-term adoption consideration to maintain benefits sustainment. Organizational change may be needed, and people may have to be moved out of their comfort zones. This is accomplished by people experienced in organizational change management.
Benefits realization and value management begin with the preparation of the business case. There are six major players in benefits realization and value management projects:
The business owner is responsible for the preparation of the business case and for contributing to the benefits realization plan. Typical steps that are included as part of business case development are:
Templates can be established for most of the items in the business case. A template for a benefits realization plan might include the following:
Well-written benefit realization plans, usually prepared by the business owner, tell what is included and excluded from the scope. Poorly written benefit realization plans imply that everything must be done and can lead to numerous and often unnecessary scope changes. Benefit realization plans are not statements of work. Therefore, there will always be some ambiguity in how the expected benefits from a strategic initiative are defined. Types of ambiguity appear in Table 19–3.
TABLE 19–3 TYPES OF AMBIGUITY
Ambiguity | Description |
Expectations | Based on the number of stakeholders and the business owner’s previous experience, the benefit realization plan may have vague wording open to an interpretation of the expected outcome. |
Priority | Each stakeholder and business owner can have a different interpretation of the priority of the project. The project team may not know the real priority. |
Processes | There are numerous processes to select from as part of execution. Process flexibility will be necessary. There are also several forms, guidelines, checklists and templates that can be used. |
Metrics/Key Performance Indicators | There are numerous things that can be measured based on the expectations. |
The growth in metric measurement techniques has made it possible to measure just about anything, including benefits and value. But currently, since many of the measurement techniques for newer metrics are in their infancy, there is still difficulty in obtaining accurate results. Performance results will be reported both quantitatively and qualitatively. There is also difficulty in deciding when to perform the measurements: incrementally as the project progresses or at completion. Measurements on benefits and value are more difficult to determine incrementally as the project progresses than at the end.
Value is generally quantifiable and easier to measure than benefits. On some projects, the value of the project’s benefits cannot be quantified until several months after the project has been completed. As an example, a government agency enlarges a road with the aim of reducing traffic congestion. The value of the project may not be known until several months after the construction project has been completed and traffic flow measurements have been made. Value measurements at the end of the project, or shortly thereafter, are generally more accurate than ongoing value measurements as the project progresses.
Benefits realization and business value do not come from simply having talented resources or superior capabilities. Rather, they come from how the organization uses the resources. Sometimes even projects with well-thought-out plans and superior talent do not end up creating business value; they may even destroy existing value. An example might be a technical prima donna who views this project as his or her chance for glory and tries to exceed the requirements to a point where the schedule slips and business opportunities are missed. This occurs when team members believe that personal objectives are more important than business objectives.
For years, academia taught that traditional project life-cycle phases begin once the project is approved and a project manager is assigned and end after the deliverables have been created. However, when benefits realization and value management become important, additional life-cycle phases must be included, as shown in Figure 19–2. Project managers are now being brought on board earlier than before and remaining after the deliverables have been produced to measure the business value created. Figure 19–2 is more representative of an investment life cycle than a traditional project life cycle. If value is to be created, then the benefits must be managed over the complete investment life cycle. The traditional project life cycle falls within the investment life cycle. More than six life-cycle phases could have been identified in the investment life cycle, but only these six will be considered here for simplicity.
The first phase, the Idea Generation (IG) Phase, which often includes a feasibility study and a cost–benefit analysis, is where the idea for the project originates. The idea can originate in the client’s or business owner’s organization, within the senior levels or lower levels of management in the parent company or the client’s firm, or within the organization funding the project. The output of the IG Phase is usually the creation of a business case.
Although the idea originator may have a clear picture of the ultimate value of the project, the business case is defined in terms of expected benefits rather than value. Value is determined near the end of the project based on the benefits that actually are achieved and can be quantified. The benefits actually achieved may be significantly different from the expected benefits defined at project initiation because of the many of the reasons discussed earlier that can lead to changes.
Not all projects require the creation of a business case. Examples might include projects that are mandatory for regulatory agency compliance and are well understood or simply to allow the business or part of the business to continue more efficiently.
Once the business case is prepared, a request is sent to the portfolio project management office (PPMO) for project approval. Companies today are establishing a PPMOs to control the second phase, the Project Approval (PA) Phase, and to monitor the performance of the portfolio of projects during delivery.
The PPMO must make decisions for what is in the best interest of the entire company. A project that is considered extremely important to one business unit may be a low priority when compared to all of the other corporate projects in the queue. The PPMO must maximize the business value of the portfolio through proper balancing of critical resources and proper prioritization of projects. The PPMO must address three critical questions, as shown in Table 19–4.
TABLE 19–4 TYPICAL ROLE FOR A PORTFOLIO PMO
Critical Questions | Areas of Consideration | Portfolio Tools and Processes |
1. Are we doing the right things? | Alignment to strategic goals and objectives, such as shareholder value, customer satisfaction, or profitability Evaluation of internal strengths and weaknesses Evaluation of available and qualified resources |
Templates to evaluate rigor of business case Strategic fit analysis and linkage to strategic objectives Matrix showing relationships between projects Resources skills matrices Capacity planning templates Prioritization templates |
2. Are we doing the right things right? | Ability to meet expectations Ability to make progress toward benefits Ability to manage technology Ability to maximize resource utilization |
Benefit realization plans Formalized, detailed project plans Establishing tracking metrics and key performance indicators Risk analysis Issues management Resource tracking Benefits/value tracking |
3. Are we doing enough of the right things? | Comparison to strategic goals and objectives Ability to meet all customers’ expectations Ability to capture all business opportunities that are within capacity and capability of company’s resources |
Overall benefits tracking Accurate reporting usingproject management information system |
The activities identified with the third question in Table 19–4 are usually part of the PPMO’s responsibility for determining if all of the benefits were captured or if additional projects need to be added to the queue.
Most companies tend to believe that project managers should be brought on board after the project has been approved and added to the queue. The argument is that project managers are not businesspeople, have limited information that could help in the approval process, and are paid to make project-based decisions only. This is certainly not true today. In today’s world, project managers view themselves as managing part of a business rather than just managing a project. Thus, project managers are paid to make both project-based and business-related decisions on their projects.
When project managers are brought on board after project approval, they are at the mercy of the information in the business case and benefits realization plan. Unfortunately, these two documents do not always contain all of the assumptions and constraints, nor do they discuss the thought process that went into creating the project.
Perhaps the most important reason for bringing the project manager on board early is for resource management. Projects are often approved, added to the queue, and prioritized with little regard for the availability of qualified resources. Then, when the benefits are not delivered as planned, the project manager is blamed for not staffing the project correctly.
Some of the critical staffing issues that need to be overcome include:
Project managers may very well be the best people qualified to critically identify the number of resources needed and the skill levels of the assigned staff. The ability to bring a project manager on board early makes it easier for the portfolio governance personnel to perform effective resource management practices, according to Figure 19–3.
Even when assigning project managers early in the investment life cycle, resource management shortcomings can occur. These shortcomings include:
If the shortcomings are not identified and properly managed, the results can be:
The benefits of effective resource management are well known:
The third life-cycle phase is the Project Planning (PP) Phase. This phase includes preliminary planning, detailed planning, and updates to benefits realization planning. Although the business case may include assumptions and constraints, the PPMO may provide additional assumptions and constraints related to overall business objectives and the impact that enterprise environment factors may have on the project. The benefits realization plan that may have been created as part of the business case may undergo significant changes in this phase.
The benefits realization plan is not the same as the project plan but must be integrated with the project plan. The benefits realization plan and the accompanying project plan may undergo continuous changes as the project progresses based on changing business conditions.
The fourth life-cycle phase is the Delivery (D) Phase. This phase, as well as the PP Phase, are most commonly based on the domain areas of the PMBOK® Guide. Traditional project management methodologies are used. In this phase, the project manager works closely with the PPMO, the business owner, and the steering/governance committee to maximize the realization of the project’s benefits.
Performance reporting must be made available to the PPMO as well as to the appropriate stakeholders. If the project is no longer aligned with business objectives, which may have changed during delivery, the PPMO may recommend that the project be redirected or even canceled such that the resources will then be assigned to other projects that can provide a maximization of portfolio benefits.
The fifth and sixth life-cycle phases in Figure 19–3 are the Benefits Realization (BR) Phase and the Value Analysis (VA) Phase. The benefits realization plan, regardless of in which life-cycle phase it is prepared, must identify the metrics that will be used to track the benefits and accompanying value. Benefits and value metrics identification are the weak links in benefits realization planning. Much has been written on the components of the plan, but very little appears on the metrics to be used. However, companies are now creating value metrics that can be measured throughout the project rather than just at the end.4
These last two life-cycle phases are often called benefits harvesting phases, which refers to the actual realization of the benefits and accompanying value. Harvesting may necessitate the implementation of an organizational change management plan that may remove people from their comfort zones. People must be encouraged to make the changes permanent and not revert to their old ways when the projects end.
The people responsible for benefits harvesting need to consider:
Full benefit realization may face resistance from managers, workers, customers, suppliers, and partners. There may be an inherent fear that change will be accompanied by loss of promotion prospects, less authority and responsibility, and possible loss of respect from peers.
Benefits harvesting may also increase benefits realization costs because of:
Part of strategic planning is to create a balanced portfolio of projects. For simplicity’s sake, we use the four categories of projects shown in Figure 19–4. These same four categories can then be used to identify the categories of benefits and value. Numerous benefits, values, and accompanying metrics can be used for each category. Only a few appear here as examples.
Metrics must be established in each quadrant to serve as early warning signs of possible problems. Some examples of metrics that can identify benefit erosion problems are:
Table 19–5 shows typical benefits for each of the four categories. The metrics in the last column can be used to track the benefits.
TABLE 19–5 BENEFITS IN EACH CATEGORY
Category | Benefits | Project Tracking Metrics |
Internal Benefits | Processes for adherence to constraints Templates for identifying objectives, sign-offs, and capturing best practices Maintaining a best practices and metrics library Control of scope changes Control of action items Reduction in waste |
Time Cost Scope Quality Number of scope changes Duration of open action items Number of resources Amount of waste Efficiency |
Financial Benefits | Improvements in ROI, NPV, IRR, and payback period Cash flow Improvements in operating margins Maintaining or increasing market share |
Financial metrics ROI calculators Operating margin |
Future (Strategic) Benefits | Reducing time to market Image/reputation Technical superiority Creation of new technology or products Maintaining a knowledge repository Alignment of projects to strategic objectives |
Time Surveys on image and reputation Number of new products Number of patents Number of retained customers Number of new customers |
Customer-Related Benefits | Customer loyalty Number of customers allowing you to use their name as a reference Improvements in customer delivery Customer satisfaction ratings |
Loyalty/customer satisfaction surveys Time to market Quality |
The portfolio governance committee exists for the entire investment life cycle. Its role includes:
The portfolio governance committee must make strategic decisions and metrics assist in the process. Types of strategic decisions include the need to:
The role of the PPMO is to work with the governance committee and determine the optimal resource mix for project delivery and benefits realization while honoring the imposed constraints. The PPMO also supports metrics identification, measurement, and reporting. The PPMO supports the governance committee by addressing the following questions:
Sometimes the benefits result in best practices that can be applied to other projects. Table 19–6 illustrates benefits from several companies and in which quadrant the benefits appeared. Some benefits can be attributed to more than one quadrant.
TABLE 19–6 COMPANY-SPECIFIC BENEFITS
Company | Benefit Category | Benefit |
General Electric | Future | Improving productivity |
Motorola | Financial | Control of scope creep |
Computer Associates | Internal | Better handling of customer expectations |
ABB | Future | Project audits to seek out continuous improvement opportunities |
Westfield Group | Internal | Development of an online intranet enterprise project management system |
Antares Solutions (Medical Mutual) | Customer related | Customer-focused change control process |
As mentioned previously, it is important to know whether the measurements of benefits and value should be done incrementally or at the end of the project. Examples of incremental versus end point measurements are shown in Table 19–7. As mentioned, end-of-project measurements are generally more accurate, but some measurements may also be made incrementally.
TABLE 19–7 EXAMPLES OF BENEFITS
Benefit Category | Benefit | Measured Incrementally | Measured at End |
Internal | Speed up sign-offs | Yes | |
Financial | Improving ROI, NPV, IRR and shortening payback period | Yes | Yes |
Future (Strategic) | Speed up product commercialization process | Yes | |
Customer related | Improving customer satisfaction | Yes |
Value is what the benefits are worth either at the end of the D Phase or sometime in the future. Even though the benefits may be on track for achievement, the final value may be different from the planned value based on the deliverables produced and the financial assumptions made. Here are two examples of converting benefits to value:
In both cases, the companies received multiyear benefits and value from the projects.
One of the challenges facing executives is in the determination of who is best qualified to function as the leader for benefits harvesting. Some people argue that the project manager should remain on board even after project is ready to “go live.” In this case, because benefits harvesting could require a great deal of time, the project manager may very well be functioning as a functional manager in which case the skills needed could be different from those required for traditional project management. This is shown in Table 19–8. A project manager may not be qualified to assume the role of a go-live project manager on all projects.
TABLE 19–8 CHANGE IN SKILLS FOR A GO-LIVE PROJECT MANAGER
Traits | Differences |
Authority | From leadership without authority to significant authority |
Power | From legitimate power to judicious use of power |
Decision making | From some decision making to having authority for significant decision making |
Types of decisions | From project-only decisions to project and business decisions |
Willingness to delegate | Length and size of project will force project managers to delegate more authority and decision making than they normal would |
Loyalty | From project loyalty to corporate vision and business loyalty |
Social skills | Strong social skills are needed since we could be working with the same people for years |
Motivation | Learning how to motivate workers without using financial rewards and power |
Communication skills | Communication across the entire organization rather than with a select few |
Status reporting | Status of strategic projects cannot be made from time and cost alone |
Perspective/outlook | Having a much wider outlook, especially from a business perspective |
Vision | Must have same long-term vision as the executives and promote that vision throughout the company |
Compassion | Must have much stronger compassion for workers than in traditional or short term projects since the team members may be assigned for years |
Self-control | Must not overreact to bad news or disturbances |
Brainstorming and problem solving | Must have very strong brainstorming and problem-solving skills |
Change management | Going from project to corporate-wide change management |
Change management impact | Going from project to organizational change management effects |
The project tracking metrics identified in Table 19–5 are design to track individual projects in each of the categories. However, specific metrics can be used to measure the effectiveness of a portfolio of projects. Table 19–9 shows the metrics that can be used to measure the overall value created by project management on individual projects, a traditional PMO and a PPMO. The metrics listed under project management and many of the metrics under the traditional PMO are considered micro-metrics focusing on tactical objectives. The metrics listed under the PPMO are macro-level metrics that represent the benefits and value of the entire portfolio. These metrics can be created by grouping together metrics from several projects. Benefits and value metrics are also used to help create the portfolio metrics.
TABLE 19–9 METRICS FOR SPECIFIC TYPES OF PMOs
Project Management | Traditional PMO | PPMO |
Adherence to schedule baselines Adherence to cost baselines Adherence to scope baselines Adherence to quality requirements Effective utilization of resources Customer satisfaction levels Project performance Total number of deliverables produced |
Growth in customer satisfaction Number of projects at risk Conformance to the methodology Ways to reduce number of scope changes Growth in yearly throughput of work Validation of timing and funding Ability to reduce project closure rates |
Business portfolio profitability or ROI Portfolio health Percentage of successful portfolio projects Portfolio benefits realization Portfolio value achieved Portfolio selection and mix of projects Resource availability Capacity and capability available for portfolio Utilization of people for portfolio projects Hours per portfolio project Staff shortage Strategic alignment Business performance enhancements Portfolio budget versus actual Portfolio deadline versus actual |
Both the traditional and PPMOs are generally considered as overhead and subject to possible downsizing unless the PMOs can show through metrics how the organization benefits by their existence. Therefore, metrics must also be established to measure the value that the PMO brings to the parent organization.
It is important to understand that some of the micro-metrics used for tracking benefits may have different meanings for customers or ultimate consumers. As an example, let us assume that you are managing a project for an external client. The deliverable is a component that your customer will use in a product he or she is selling to customers (i.e., your customer’s customers or consumers). Table 19–10 shows how each of the metrics may be interpreted differently. It is important to realize that benefits and value are like beauty; they are in the eyes of the beholder. Customers and contractors can have a different perception of the meaning of benefits and value as well as of the associated metrics.
TABLE 19–10 INTERPRETATION OF THE METRICS
Benefit Metric | Project Manager’s Interpretation | Customer’s Interpretation | Consumer’s Interpretation |
Time | Project duration | Time to market | Delivery date |
Cost | Project cost | Selling price | Purchasing price |
Quality | Performance | Functionality | Usability |
Technology and scope | Meeting specifications | Strategic alignment | Safe buy and reliable |
Satisfaction | Customer satisfaction | Consumer satisfaction | Esteem in ownership |
Risks | No future business from this client | Loss of profits and market share | Need for support and risk of obsolescence |
Because of advances in metric measurement techniques, models have been developed by which we can show the alignment of projects to strategic business objectives. One such model appears in Figure 19–5. Years ago, the only metrics use were time, cost, and scope. Today we can include metrics related to both strategic value and business value. This allows us to evaluate the health of the entire portfolio of projects as well as individual projects.
Since all metrics have established targets, we can award points for each metric based on how close we come to the targets. Figure 19–6 shows that the project identified in Figure 19–5 has thus far received 80 points out of a possible 100 points. Figure 19–7 shows the alignment of projects to strategic objectives. If the total score in Figure 19–6 is between zero and 50 points, we would assume that the project is not contributing to strategic objectives at this time, and this would be shown as a zero or blank cell in Figure 19–7. Scores between 51 and 75 points would indicate a “partial” contribution to the objectives and shown as a 1 in Figure 19–7. Scores between 76 and 100 points would indicate fulfilling the objective and shown as a 2 in Figure 19–7. Periodically we can summarize the results in Figure 19–7 to show management Figure 19–8, which illustrates our ability to create the desired benefits and final value.
No matter how hard we try to become good at benefits realization and value management, there are always things that can go wrong and lead us to disaster. Fourteen such causes of failure that can occur along the entire investment life cycle include:
Item 14 is often the solution to correct the first 13 problems from recurring.
Because of the importance of benefits and value, today’s project managers are more business managers than the pure project managers of the past. Today’s project managers are expected to make business decisions as well as project-based decisions. Project managers seem to know more about the business than their predecessors.
With the growth in measurement techniques, companies will begin creating metrics to measure benefits and value. While many of these measurement techniques are still in their infancy, the growth rate is expected to be rapid.
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