Delivering Value: What Does It Really Mean?
As project managers, we are often told that we must deliver value on a project. In a controlled environment, value is easily calculated in monetary terms. A project has an expected return on investment (ROI) and an expected cost, making it relatively simple to understand what the total value of performing the project would be. In reality, determining the value of a project can be much more complicated. Often, projects build something that costs a lot of money and is expected to deliver a great monetary "value," only to find that the end deliverable ends up underutilized or the project becomes unnecessary. So, what does it mean in the real world to deliver value?
1. What is Business Value, Anyway?
"Business value" does not have a single, agreed-upon definition by all; for the purposes of talking about project management, let's use PMI's definition
: business value is the net benefit that will be realized by the customer of a project. It can be expressed in either monetary or non-monetary terms (though, on the PMP exam, it will likely be measured in monetary terms).
2. Putting Value into Context
Value can mean much more than monetary value in the project world. Often, project managers adopt the mindset that a project is successful if a quality scope is delivered on time and on budget. The PM is not always considered to be responsible for delivering business value. Often, the project sponsors are responsible for value. This topic is recently at the forefront of organizational development conversations, and some now believe that this point of view is outdated. These points of view suggest that the true measure of project success is how well a project delivers business value, and therefore, this should be the responsibility of the project manager.
Relatively recent studies by PMI suggest that project managers need to adopt a "value mindset
" in order to properly think about how a project creates opportunity for an organization. In other words, there may be a gap in the way that project managers think about delivering value, as value is often synonymous with delivering the project objectives. In today's increasingly complex business environment, it is important that we think about the changing needs of the business and keep innovation at the forefront of our minds.
Project managers should take responsibility for understanding the project's vision and ensuring that the customer gets what they have identified as valuable. In some cases, the deliverables produced on a project will inherently provide new value to the business. In other cases, existing products or services will be modified in some way that will create new value for the customer or business.
If a business becomes complacent and does not look to create new value for its customers, a competitor is most likely going to outpace them. Eventually, those organizations who do not have an entrepreneurial mindset will fall behind their competitors. Therefore, a company must always be looking to add value for its customers, or it will go out of business! Projects, therefore, become the cornerstone of a business with an innovative mindset.
3. How Do Project Managers Deliver Business Value?
Project managers should be responsible for delivering scope on a project and therefore are inherently responsible for delivering business value. Let's go through and understand the steps to delivering business value on each project.
3.1 Understand the vision. PMs must begin each project by clearly defining the objectives, how they align with the overall vision of the project, and how they align with the company's goals. The vision includes a high-level scope from the project sponsors and the reason that the project was funded in the first place. Vision should be clearly defined in the project charter, and if necessary, the project manager may have influence in shaping the vision of the project. The first step in delivering value comes from the project manager believing that the project is worth the effort to execute.
3.2 Understand the business value in relation to the vision. This step is where the project manager will work with sponsors and stakeholders to determine how value will be measured. This can vary from project to project. The best practice according to the Project Management Body of Knowledge (PMBOK) is to use monetary terms for value wherever possible. However, as we have discussed, there are often benefits that cannot be measured in strictly monetary terms. Especially for those non-monetary benefits, it will be important to foster a great team who will keep value in mind while they work towards the ultimate goals of the project.
3.3 Communicate the value of the project to the project team. This may seem like an obvious step, but it is not necessarily so. Simply telling the project team what the vision of the project is not the same thing as instilling the vision into the team. If the team truly believes in the vision and the value of the work, they will approach the work with a value-add mindset. Rather than blindly completing the objectives that have been laid out in front of them, the team will consider the worth of each of those activities. Therefore, it is important that the project manager helps the team understand the context behind the work they are doing.
3.4 Foster an innovative team environment. If the team fully believes in the business value that the project will deliver, it will be easier for the project manager to create a team environment that allows for consistent innovation and collaboration. This allows the project team to be more effective and build trust with each other. The team will be more likely to speak up if an activity does not seem relevant to the overall vision of the project and therefore will deliver more valuable results to the business.
3.5 Measure the true business value realized. Measuring business value should never be saved entirely until the end of the project, but for the sake of outlining the steps, we will put it here. Measuring the value actually delivered on a project is done throughout the life of the project and once the project has been formally completed. The project manager must regularly report on the progress of the project. Once the project is complete, the final measure of total return of value to the business is measurable. Sometimes, organizations skip this last step, but it is important to reflect on whether what was built actually delivered the value that was originally intended. In the spirit of continuous improvement, we can never know if our projects were worth the money to the business if we do not take the time to measure actual value.
A successful project no longer solely means that a project delivers quality scope on time and within budget constraints. These factors are important to consider and ultimately contribute to the business value of a project, but they do not tell the whole story. They are not the true measurement of project success. A project is only successful if the originally defined metrics of business value are delivered to the customer. When organizations truly consider the value of the projects they choose to complete, they can make better informed decisions on how to spend their portfolio money, and project managers can focus on what is truly important to the company. And when we (the project managers) focus on delivering business value on our projects, we become indispensable to the companies we serve. We ensure that these companies stay one step ahead of the competition, keep their customers happy, and continue to see project management as the best avenue for innovation.