Javascript is currently disabled. This site requires Javascript to function correctly. Please enable Javascript in your browser!

Project portfolio management > Project value management

Project Value Management

The business value becomes the new criterion of project success. The project success conditions based on the triple constraint (scope, cost, duration), is not sufficient. We have a lot of examples of projects that are executed on time, within budget and with all planned specifications, but that does not bring any value to the organization. On the other hand, a project may add value to the organization even if it is late or/and exceeds the budget and/or does not meet the original scope. This does not mean that the respect of the triple constraint is not important; a successful project is one that brings value and, at the same time, respects the triple constraint.

Instead of focusing on the delivery of a technically correct product, the project manager should focus on how the project could create value for the organization.

 

How to measure project value?

In order to select the projects with the best value for the organization, this value must be measured and quantified. The project value based on tangible benefits (such as the number of employees replaced by the new system) is easy to measure. It is often expressed by financial indicators such as Return on Investment (ROI) or Net Present Value (NPV).

On the other hand, the intangible benefits are more difficult to measure.

To help organizations to better measure the project business value, we have developed a decision framework based on five criteria groups:

  1. Necessity
  2. Value for Customers
  3. Alignment
  4. Strategic Risks
  5. Financial Value (ROI)

This framework allows you to select and prioritize projects based on specific and quantified measures of business value. This decision framework is supported by a tool that is automatized and very easy to use (see the page RSM-Value)



"There is nothing so useless as doing efficiently that which should not be done at all"

Peter F. Drucker

Business value: Opportunity vs risk

The project's business value is an equation between the opportunities, the risks and the capacity of execution. Usually, there is no opportunity without risk. It is, therefore, very important to find a balance between risks and opportunities to not jeopardize the results (the value) of the project. The point at which you are going to find this balance depends also on your capacity of execution. If your organization has a good capacity of execution, you will be able to better manage risks and, therefore, to better exploit opportunities.

Business Case: Why instead How

Business Case is the basic document for assessing the project business value. This is the document that should help you to assess the value of the project and to justify its inclusion in the actual portfolio. In fact, its main purpose is to tell you why the organization should invest in this project and not how to execute it.

In addition to being useful for the project selection,during the project execution, the business case will allow you to assess whether the planned benefits are still achievable. Finally, at the end of the project,the business case will help you compare the real project results with the planned parameters.
Asset 7