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What is the business value of my project?

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Presentation given at the Project Management Institute Professional Development Day.

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What is the business value of my project?

  1. 1. LOOKING BEYOND DELIVERABLES: WHAT IS THE BUSINESS VALUE OF MY PROJECT? Presented at PMI Mass Bay Chapter Professional Development Day Conference 06.19.2015 By Joseph Raynus
  2. 2. Most Projects do not Meet Their Expected Goals  Out of all projects that successfully met their time, budget and requirements goals, many did not deliver the expected business results to their parent companies… What’s the Problem?
  3. 3. My Observations  Most project teams consider project strategy to be simply an alignment of the project’s operational goals with the firm’s strategy by ensuring that the project’s triple constraint (time, budget, and performance goals) is in agreement with the organizational goals.  Strategic focus is generally not recognized, and usually there is no strategic alignment in monitoring and controlling activities.  The project management has focused primarily on the operational aspects, namely on executing processes in the most efficient way.
  4. 4. Question to you What is Effectiveness? What is Efficiency? Operational excellence is associated with efficiency
  5. 5. Focus Strategically Strategic focus is the extent to which project management activities focus on the expected business results from the project outcome.  The project’s strategic value is its contribution to long-term organizational goals.  Strategic focus is associated with business success.  Strategic focus is associated with customer satisfaction.  Strategic focus is associated with future prospects.  Inspired leadership is associated with teamwork effectiveness.
  6. 6. The Big Picture Portfolio Management Align portfolio with Strategy Maintain portfolio balance Maximize portfolio value Enterprise Strategy Investment decisions Project Management € (+24%) €millions) -800 400 1’500 5’600 4’500 20112010 Investment Company Strategy Resource supply and demand, by project and Department Investment Project Prioritization & Optimization Value and Risk Portfolio Value Change Project Strategic Commercial Operational Costs Project score Rank A 90 70 50 60 68 1 B 65 65 50 75 64 2 C 85 85 30 50 63 3 D 75 80 30 65 63 4 E 55 45 55 90 61 5 -500 0 500 1'000 1'500 2'000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Launch probability NPV€millions 0 20 40 60 80 100 120 2012 2013 2014 2015 Resourceuse(%) Dept A Dept B Dept C Dept D 0 500 1'000 1'500 2'000 2'500 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 €millions 50% 25% 10% 75% 90% 1'000 1'500 2'000 2'500 3'000 Pipeline value change: + 1100 m Pipelinevalue( Pipeline-derived Sales
  7. 7. Are we doing the right things? Are we doing them the right way? Are we getting them done well? Are we getting the benefits? Strategic Portfolio Management Business Case Strategic Project Management Quantitative Risk and Performance Management Activities Outputs Outcomes BenefitsResources Strategic Planning Framework
  8. 8. Discussion  Are we doing the right things?  Addresses business direction and program alignment to that direction  Are we doing them the right way?  Addresses business processes & program integration to those processes  Are we getting them done well?  Addresses capabilities, resources, and supporting infrastructure  Are we getting the benefits from them?  Addresses the proactive management of benefits
  9. 9. Alignment of Project Outcomes to Business Value  Most projects focus on efficiency and ignore the strategic aspects of the business. What went wrong here????
  10. 10. Questions Before Project Initiation -  Do we really understand the problem?  Are we making the right assumptions?  Do we really have a business case?  What is the value?  What are the benefits?
  11. 11. What is a Business Case?  A business case is a formal way of asking: ‘‘Because we seek a particular set of outcomes, we have to produce and utilize a certain collection of outputs. Producing those outputs will require significant work and resources. Are you willing to fund the project ?’’
  12. 12. Develop Project Roadmap Strategic Project Planning Process 1. Develop Problem Statement 2. Develop Value Proposition 3. Develop Strategic Project Roadmap 4. Develop Performance Measures Develop Problem Statement Develop Value Proposition & Value Map Develop Performance Measures Strategize MeasureAdjust Roadmap
  13. 13. Exercise:  During the morning and afternoon rush hours one of the greatest disasters which can occur is for a car to stall or break down on the San Francisco/Oakland Bridge. The Bay Bridge has four lanes of traffic in each direction. If a car stalls this eliminates 25% of the bridge’s capacity, backs up traffic for miles and causes people to be 10 - 30 minutes late for work. What is the problem and for whom?
  14. 14. Problem and Opportunity  Define a Problem  What is a problem?  Who is affected by the problem?  How are they affected by the problem?  Why is it important to solve this problem?  Assess an Opportunity  Who is currently addresses this problem?  How is the current solution delivered?  How effective is the current solution?  What can be improved?  Alternative approach?
  15. 15. PM and The Customer Question Customer 1____ Customer N____ How is your customer currently dealing with this task/problem? What do they need to accomplish? What are desired outcomes? What approach are they attempting? What are the interfering factors? What are the economic consequences? – Costs?
  16. 16. PM Needs Assessment Question Customer 1_______ Customer n_______ What is your approach to help your customer? What are enabling factors? Economic rewards? Is our cost consistent with budget?
  17. 17. Now Let’s Talk Value  What is Value?  What is Value Proposition?
  18. 18. Key Activities Key Partners Key Resources Value Proposition Customer Relationships Channels Customer Segments Revenue Stream Cost Structure Value Proposition and Customer Fit 18 Dynamically Interdependent
  19. 19. Strategic Roadmap Activities Outputs Outcomes BenefitsResources Tactical Strategic
  20. 20. The Roadmap: Alignment of Targets Project Initialization Benefits Realization Project Planning Project Execution Business Case Outputs Outcomes Project Activities Project Deliverables Business case is driven by target outcomes. Target outcomes determine the outputs to be produced. Strategic Planning Phase Execution Phase
  21. 21. What is the Worth of My Project?  Benefits generated by the project: relate to the value of desirable outcomes as perceived by the funder.  Dis-benefits arising from the project: relate to the value of undesirable outcomes as perceived by the funder.  Project cost: relate to the cost of developing and (later) maintaining the project’s outputs. Worth of my project? = Fn (Benefits; Dis-benefits; Costs)
  22. 22. Challenges We Discussed  What is the “Big Picture”?  What is the problem you are trying to solve?  What value do you deliver to the customer?  What are the benefits to your company?
  23. 23. Summary  Project teams need to focus on strategic aspects of the project.  Projects are a part of the strategic business planning.  Project success is aligned to overall business strategy.  Project managers are accountable for achieving planned benefits and not just the triple constraint.  Project outcomes are defined up-front in a business case.  Projects are selected according to their contribution to the company’s strategy and expected benefits. 23 Build an agile organization to solve problems & provide value to customers over time
  24. 24. Final Thoughts
  25. 25. Your Questions??
  26. 26. Joseph Raynus joer@sharedynamics.com (781) 863-9633 Thank you!!!