Our consulting company, Capability Management International, is 15 years old this year. So we start the year with 15 of our most critical insights.

The Value Equation™ changes the focus of projects

Why does everyone measure to time, effort, budget and specification? Because that’s about the only set of measures available to measure to. Any project benefits are usually buried in the business case and are not linked directly to project outputs and therefore don’t provide a basis for end-to-end measurement.

The Value Equation™ changes all of this.

Time, effort and budget are still important, but these are measures of project delivery efficiency, not effectiveness or success.

But now, with the Value Equation we can link each project activity to the delivery of a ‘desired business outcome’ and its associated benefits. We can also track the current value of each and every financial benefit. This gives us the opportunity to focus on and manage projects by measuring their value proposition.

We can measure the achievement of project outputs as progress towards each outcome.

We can measure each outcome’s delivery as progress towards each benefit.

We can track each benefit’s value so we know what value exists to be realized when the benefit is delivered and the causes of any variances.

We can identify and quantify the value impact of scope, time and other project changes putting a whole new perspective on project-related decisions.

The Governance Team now has a quite clear role — to ‘own’, protect and deliver the value proposition, and they can now manage each element of the project from that perspective (and not try to be super-project managers).

The Value Equation™ is the missing link between projects and the business value expected.

Simple really.

The Value Equation™ is discussed in more detail in both “Understanding Benefits” and “The search for the ‘holy grail’ of projects” — both available from Valuedeliverymanagement.com

The Value Equation™ is a trademark of Project Sponsor Pty Ltd

© Jed Simms, Australia 2009.