Harvesting Project Value - Part 2 of 2

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In Part 1 of this post, I raised the issue of, and said that we would come back around to the divergence we see between the 70% failure rate (based on “project success” – looking at the steady-state outcome) and the 25% failure rate (based on “project management success”).  You may want to go back and review Part 1 for orientation.

To help explain this major divergence in statistics, we need to revert to the very definition of a project.  Here’s what Dr. Kerzner is saying about this in his talks on “Project Management 2.0 and 3.0”.  I thank Dr. Kerzner for permission to use these images which remain his intellectual property.

Do you catch that rather non-subtle mention of sustainability?  Remember: we’re not talking in particular about saving snails or reducing our carbon footprint.  Of course, those things are part of the concept of the “triple bottom line”, made up of social, economic, and yes, ecological outcomes, but they aren’t the only part.  What Dr. Kerzner is so wisely pointing out is that a project should be concerned with ‘the beyond’ – the sustained view of the project, that is, the way in which its outcome (hopefully) starts to realize business value – in a sustained way.

How can we do this?  Don’t we have to change our view of the lifecycle of a project, expanding it to look past the end, even past what we normally consider the outcome, handover, and even past what we have come to call “Benefits Realization”?  The short and only answer, is: yes.  Yes with a capital Y.

In the figure below you can see that Dr. Kerzner has mapped out timeline that adds an important new element, “VA” – Value Analysis, paired with Benefits Realization, and calls that portion of the Investment Lifecycle “Value Determination”.  Note the name of the figure: Investment Lifecycle.  We know from the PMBOK® Guide that prior to the Project Charter, senior management of an organization “owns” the project decisions, the choice to invest at all, and in fact, is using tools like ROI, IRR, NPV, and Payback Period to determine whether or not a project is even worth the investment.  So I think it’s actually easier for project managers who have been practicing for a while to “get” these green chevrons (IG and PA in the figure).  The tougher part is to switch to a mindset in which the later green chevrons (BR and VA) are considered in project decision making.  If you want to test yourself on this, check my recent blog post “Paved With Good Intentions” – there’s a scenario in that post that challenges your PM thinking in this very area of Value Determination.

Dr. Kerzner takes this idea much further, providing even tools and techniques to help perform Value Analysis.  I provide an example below in which he proposes a scoring system to assess the project based on its deliverables (which is where most of us as PMs are trained to STOP) and also its business value.  It’s no accident that the business value (with thanks to Vilfredo Pareto) is 70% compared to the 30% for deliverables.  In our Project Management World, we see that 30% as The Whole Pizza, when, as Dr. Kerzner is coaching us, it’s just a slice.  A big slice, granted, and a slice without which there’s really no Pizza at all, but still – just a slice. 

Also, notice the symmetry here.  The very same measurements we use and acknowledge, and happy integrate without question, into the PMBOK® Guide, namely Benefit/Cost Ratio, ROI, Payback Period, are used again after the project is handed over.  In effect, we are seeing if our predictions about the project – those that we made during the selection process – are coming true.  We cannot validate this at the ribbon-cutting ceremony, we have to wait, and this is problematic for the mindset of the PM (and I know you, because I am one, and I have the same propensities) - you are saying, "OK, on to the next project, let me have at it!".  It's also a problem from a pragmatic perspective, since we have to wait, perhaps years, to know if a project is providing (harvesting) this business value.

The 70% failure rate that Dr. Kerzner is quoting uses this long-term view.  That’s the difference!  The 25% failure rate shown in the Standish studies – well, that’s using the ‘scope, time, cost’ view, with failure being considered if two of the three are not delivered. 

How do you look at your projects?  Are you focusing only on the deliverables, or are you considering what your project delivers in the steady state?  Importantly, how are you making decisions in your project?  Are you focused on the Triple Constraint, or the Triple Bottom Line?   What Dr. Kerzner is telling you (adjusted to reflect the narrative that I use) is that your focus needs to be not only on project management success, but also on project success.  And that means you should be making those decisions with harvesting value from your project in mind.

Happy Harvesting!



Posted by Richard Maltzman on: October 27, 2017 04:55 PM | Permalink

Comments (8)

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Lifecycle within lifecycles, the way it should be and makes perfect sense. Shouldn't the question under "Value is measured" be: "How do we know we are doing the right things?" I think from a program/portfolio and PMO perspective, they may look at these extended benefits beyond the completion of the project. However for some time to come I suspect the only measure of success for a PM will be the project up until the end of the "D" chevron.

I wholeheartedly agree that there is more to the project than 'get-do-done', and certainly from a value and sustainability perspective there is reason to look beyond the iron triangle.

That said, there can be activities between the 'get' and 'do' piece - capture short and long term goals, value mapping, alignment [substainability].

During the 'do' continue delivering value through engagement and transparency, through a continuous cycle of incremental deliveries and/or requirements [value] validation

Post 'done' the owner is responsible for realizing the benefits and calculating the value. Potentially there could be exercises between business and IT groups in determining those and learning from the results

The hard part as a project manager is being available before and after the project. When I finish one project, I'm usually starting a new one. Unless we can expand the project window to include the pre- and post-investment phases, we may be trying to fit them as a second priority item. And that would be a shame.

Great eye opening for project management. However, I agree with Sante's comment, the measurement of success for the PM is at the end of the project life-cycle, which is highlighted by Stephane, finish one start the new one. The analysis is great to have a wider perspective of the PM's role, but it seems to me is now in the turf of the PMO or the company owner.

I'm not hot on the future definition though.

I'm like Sante, not clear on the future definition

Good article.

Thanks for the article. This implies a hat the role of the PM will become more and more strategic, long-term oriented. PMs end up gaining in importance in their companies and the boards.

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