Harvesting Project Value: Part 1 of 2
Categories:
project management 3.0
Categories: project management 3.0
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This is Part 1 of a 2-part blog post, which was inspired by a presentation from Dr. Harold Kerzner. The content shown here is used with kind permission from Dr. Kerzner and remains his copyright and that of IIL. Here, in Part 1, I will give the background of the topic of Benefits Realization Management and the solid connection between that and the element of triple-bottom-line, long-term thinking. In Part 2, I will extend this concept as Dr. Kerzner did in his presentation (regarding Project Management 3.0) to the idea of ‘project value’, presenting some specific thinking in the area of decision making and scoring of projects based not only on their immediate deliverables but how they deliver value on a sustained basis, and will consider "harvesting" of project value. Let’s start with some statistics from Dr. Kerzner:
This is striking, and in stark contrast to what we read in the latest CHAOS reports from the Standish organization, which indicate that – although many are ‘challenged’ in delivering on time, scope, or budget, only 25% or so of projects “fail”.
So what’s going on here? What’s the reason for this massive divergence? Which is true? Are 70% of projects failing, or are 25% failing? Well, of course, it all depends on when you look and how you define success. This one distinction is the main point of our recent book, “Driving Project, Program, and Portfolio Success”. In it we talk about redefining success. We use examples, such as the Sydney Opera House to illustrate that projects which may fail at “Project Management Success” may yield great benefits later. Conversely, projects like “New Coke” may be managed with great “Project Management Success” but never deliver any positive value. In other words, we were (without knowing it) writing about Dr. Kerzner’s Project Management 3.0 when we wrote that book (and in ongoing blog posts since then). Let’s continue with the concept of Benefits Realization Management as defined by Dr. Kerzner. The ‘one-two punch’ that I noted in his presentation is that (1) the value that projects deliver is not always immediately available as a metric, and (2) many of the metrics for monitoring value are made up of intangibles. This fits very nicely with the challenge I posted last month having to do with a project decision as to which type of pavement material to use on a segment of highway. You may want to take that challenge again, or for the first time, after reading these two blog posts. With regards to the intangible benefits, Dr. Kerzner has a very good list for reference:
Note that the list does include sustainability. And remember – sustainability is not only about reducing pollution or saving a species. Sustainability in its most productive sense includes economic, social, and ecological, so that would include the Employee Morale, Image/Reputation, and even the Culture, Collaboration, and Quality of Life elements above. We can see that there is great alignment between what Dr. Kerzner discusses and what we’ve been talking about for a while, here on this blog, in the Driving Sustainable Success book, and going all the way back to our original work on the topic, Cleland Award-winning Green Project Management. However, let's return to Benefits Realization Management (BRM). Here’s how Dr. Kerzner describes it: "The ultimate goal of benefits realization management (BRM) is not merely to achieve the benefits, but to sustain them over the long term" That’s a good basis for this topic. Let that “soak” a while. In Part 2, I’ll continue this thread to encompass Dr. Kerzner’s view of Business Value and its importance in a true assessment of project success, which will come back around to help us solve this divergence we see between the 70% failure rate and the 25% failure rate I point out above. Stay tuned to People, Planet, Projects, and Profits for Part 2!
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