Chapter 6

Managing Projects for Value

In This Chapter:

• Enhancing Portfolio Management Practices in Organizations

• Validating the Business Case throughout the Business Solution Life Cycle

• Measuring the Business Value of Solution Features

• Measuring the Business Value after Solution Delivery

Previous chapters have discussed the role of the business analyst in strategic planning and goal setting, portfolio management practices designed to execute strategy through valuable programs and supporting projects, and providing decision-support information to the portfolio management governance group. These tasks involve creating and maintaining the business architecture; conducting feasibility studies to identify solution options; identifying, scoping, defining, and preparing the business case for new business opportunities; conducting initial risk assessments for new business opportunities; and preparing the decision package for project proposals.

As rigorous as these business analysis practices appear, they are comparatively easy because they are essentially forecasting and planning techniques. Now the enterprise must use various portfolio management practices to act on the information gathered during these studies. Let’s review how the portfolio management practice works in organizations and then how the business analyst keeps his or her eye on the business benefits throughout the project cycle.

Enhancing Portfolio Management Practices in Organizations

Sound business analysis is needed to make effective, strategic decisions. In his book Good to Great, author Jim Collins writes that although entrepreneurial success is fueled by creativity, imagination, and the spirit to move into unknown territories, it also risks chaos as a company grows and complexity increases.¹ A culture of discipline, Collins claims, is needed as employees, customers, products, and transactions increase and problems arise: “Everyone would like to be the best, but most organizations lack the discipline to figure out with egoless clarity what they can be best at and the will to do whatever it takes to turn that potential into reality.”²

It is time for organizations to impose some professional management practices for making portfolio investment decisions. Effective portfolio management processes allow for both freedom and responsibility within a decision framework. Under the leadership and guidance of senior business analysts, portfolio management provides the discipline to make strategic decisions that facilitate organizational potential, and it provides the framework to act on the decisions.

Senior business analysts and project managers work to design and implement a streamlined, efficient, non-bureaucratic portfolio management process and toolset for their organizations. The sponsor of the proposed project presents information in summary form to the portfolio management governance group, typically using an executive briefing and a complete decision package, as discussed in Chapter 5.

Using project selection and prioritization tools, the portfolio management governance group determines the priority of the proposedproject. Refer to Figure 2-9 and Appendix F for sample project ranking tools.

The portfolio management group compares proposed projects to the list of current, funded, and active projects, as well as to the list of backlogged projects, to determine where it fits in the organization’s project portfolio. If the proposed project is of higher priority than other funded projects, the group decides to either defer existing projects to reallocate resources to the new, higher-priority opportunity, or fund this new project, securing additional resources as necessary. If the proposed project is of lower priority than other funded projects, the group inserts the new project into the backlog list in order of priority.

Validating the Business Case throughout the Business Solution Life Cycle

In many organizations, the portfolio management process stops after the project is selected, prioritized, and approved for funding. To protect this investment, however, it is important to manage the value of the project throughout its lifecycle—and here again, the business analyst plays a critical role.

During the life of the project, the business analyst continually reviews and updates the business case. Most organizations conduct some sort of phase-end review (also called stage-gate review or control-gate review) for large projects. In preparation for each phase-end review, the project team updates detailed project plans and re-plans the next major phase. At the same time, the business analyst updates the business case with current cost, schedule, risk, and benefit estimates to determine whether the business case is still valid and whether the project still warrants continued investment.

After updating the project plans, the project manager, business analyst, project business representative and lead developer collaborate to present a consensus recommendation regarding continued investment in the project. The business analyst often attends management review meetings and helps present the current status of the project and recommendations for future investment. Three basic investment recommendations include:

•    Terminate the project because the costs or the risks associated with achieving the business benefits are too high

•    Redirect the project, reducing the scope of the solution or changing course altogether

•    Continue to invest in the project because it still appears to be a viable investment that will bring significant benefits to the organization

Projects are often difficult to terminate; even major course corrections can be difficult. When the investment has been significant, executives and managers often must continue regardless of results. Many consider it a failure to cancel a project, because it essentially admits that the decision to proceed with the project was wrong or that the project was not managed well. However, world-class organizations keep a close eye on their large project portfolio investments and make adjustments along the way as necessary, just as individuals do with their personal financial investment portfolios.

Measuring the Business Value of Solution Features

The business analyst uses the business case as a guide to elicit, analyze, document, validate, and manage requirements for the new project solution throughout the business solution life cycle (BSLC). The business analyst documents the requirements in increments, each increment containing a set of functions or features, and collaborates with the project manager to conduct a cost-benefit analysis for each feature. The team then prioritizes each increment according to its projected value to the organization, and compares it to the information contained in the business case to ensure priorities align with strategies.

Measuring Business Value After Solution Delivery

During the BSLC, the business analyst plays a vital role in ensuring that metrics and measurements are put into place to track any return on project investment (ROI), often for several months or years after project completion. When the solution is in the operations and maintenance phase of the BSLC, the business analyst reviews and analyzes metrics and measures to determine whether the project outcomes delivered the business benefits forecasted in the business case, and whether the operating costs for the new solution align to original forecasts. Only then can the portfolio management team truly know if it made a sound investment.

If a project fails to realize its forecasted ROI, the business analyst should conduct further analysis to continuously improve the project portfolio management process. For example, a root-cause analysis can determine what circumstances prohibited project outcomes from delivering their expected value to the organization.

Possible reasons a project fails to realize its projected ROI include:

•    The investment was not sound, likely because the economic forecasts in the business case were inaccurate or incomplete (e.g., many organizations do not include total cost of ownership in their cost estimates, as discussed earlier).

•    The project team executed the project poorly, resulting in schedule and cost overruns.

•    The solution was not implemented optimally in the business environment, thus reducing its benefits to the organization.

We have examined the emerging and critical role of the business analyst to help organizations achieve strategic goals through programs and supporting projects. Business analysts provide decision-support information to the leadership team so they can establish a future vision, set strategic goals, select the most valuable projects, and then execute them flawlessly. As the role of the business analyst evolves and matures, senior business analysts will emerge as the key individuals in the organization that have the business and technical prowess to facilitate a process to execute strategy. In the next chapter we will examine the evolution from business analyst to business strategist.

Endnotes

1. Jim Collins. Good to Great, 2001. New York: Harper Business.

2. Ibid.