Value-Driven Project Management By Harold Kerzner, Ph.D. © 2009 International Institute for Learning, Inc .
Percent of Projects Using Project Management Current use of  project management
The “Traditional” Project <ul><ul><li>Time duration of 6-18 months </li></ul></ul><ul><ul><li>The assumptions are not expe...
The “Nontraditional” Project <ul><ul><li>Time duration over several years </li></ul></ul><ul><ul><li>The assumptions can a...
Traditional vs. Nontraditional Projects MANAGING TRADITIONAL  PROJECTS MANAGING NONTRADITIONAL PROJECT Single person spons...
Customer RFP Requirements <ul><ul><li>Contractors must have PMP ® s </li></ul></ul><ul><ul><li>Contractors must have an EP...
Customer’s Expectations Contractor’s Expectations Business Solutions Long-Term Strategic Partnerships “ Engagement” Expect...
Before and After Engagement Project Management BEFORE ENGAGEMENT PROJECT MANAGEMENT AFTER ENGAGEMENT PROJECT MANAGEMENT Co...
Benefits <ul><ul><li>Good methodologies allow us to: </li></ul></ul><ul><ul><ul><li>Shorten project schedules </li></ul></...
Project Failures <ul><ul><li>Methodologies can lead to project failures if: </li></ul></ul><ul><ul><ul><li>The methodology...
Client Stakeholders Inputs Tools Outputs Customer Satisfaction Management Requirements Business Case Assumptions I P E M C...
Defining Value Metrics (KPI)  PAST VIEW PRESENT VIEW Metrics are fixed for the duration of the project Metrics can change ...
Dashboard Design Dashboard
The Changing Definition of Success <ul><ul><li>Success is simply the triple constraint </li></ul></ul><ul><ul><li>Customer...
Success <ul><ul><li>Success is not necessarily achieved by completing the project within the triple constraint. Success is...
Models for Value Analyses <ul><ul><li>Intellectual Capital Valuation </li></ul></ul><ul><ul><li>Intellectual Property Scor...
Measuring Value from Benefits Expected Benefits  or Results Value Conversion Profitability Easy Customer Satisfaction Hard...
A Comparison: EVMS, EPM, and VMM Variable EVMS EPM VMM Time Cost Quality Scope Risks Tangibles Intangibles Benefits Value ...
Types of Performance Reports Status Reports Forecast Reports Progress Reports
Benefits and Value at Completion Forecast Reports <ul><li>Time at Completion </li></ul><ul><li>Cost at Completion </li></u...
The Project Pipeline (Without a PMO) PROJECT PIPELINE PROJECT  FAILURES COMPLETED PROJECTS IDEAS
The Project Pipeline (With a PMO) PROJECT PIPELINE PROJECT  FAILURES COMPLETED PROJECTS PMO BUSINESS CASE FILTER BENEFITS ...
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International Project Management Day Webcast:

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  • © 2005 International Institute for Learning, Inc.
  • International Project Management Day Webcast:

    1. 1. Value-Driven Project Management By Harold Kerzner, Ph.D. © 2009 International Institute for Learning, Inc .
    2. 2. Percent of Projects Using Project Management Current use of project management
    3. 3. The “Traditional” Project <ul><ul><li>Time duration of 6-18 months </li></ul></ul><ul><ul><li>The assumptions are not expected to change over the duration of the project </li></ul></ul><ul><ul><li>Technology is known and will not change over the duration of the project </li></ul></ul><ul><ul><li>People that start on the project will remain through to completion </li></ul></ul><ul><ul><li>The statement of work is reasonably well-defined </li></ul></ul>
    4. 4. The “Nontraditional” Project <ul><ul><li>Time duration over several years </li></ul></ul><ul><ul><li>The assumptions can and will change over the duration of the project </li></ul></ul><ul><ul><li>Technology will change over the duration of the project </li></ul></ul><ul><ul><li>People that approved the project may not be there at completion </li></ul></ul><ul><ul><li>The statement of work is ill-defined and subject to numerous changes </li></ul></ul>
    5. 5. Traditional vs. Nontraditional Projects MANAGING TRADITIONAL PROJECTS MANAGING NONTRADITIONAL PROJECT Single person sponsorship Governance by committee Possibly a single stakeholder Multiple stakeholders Project decision-making Both project and business decision-making Inflexible project management methodology Flexible or “fluid” project management methodology Periodic reporting Real time reporting Success is defined by the triple constraint Success is defined by the triple constraint and business value KPIs are derived from earned value measurement (EVM) Unique value-driven KPIs can exist on every project
    6. 6. Customer RFP Requirements <ul><ul><li>Contractors must have PMP ® s </li></ul></ul><ul><ul><li>Contractors must have an EPM system, and it may have to be qualified or approved by the client </li></ul></ul><ul><ul><li>Contractors must capture best practices and share intellectual property with the client </li></ul></ul><ul><ul><li>Contractors must identify a reasonable maturity level in project management </li></ul></ul>
    7. 7. Customer’s Expectations Contractor’s Expectations Business Solutions Long-Term Strategic Partnerships “ Engagement” Expectations
    8. 8. Before and After Engagement Project Management BEFORE ENGAGEMENT PROJECT MANAGEMENT AFTER ENGAGEMENT PROJECT MANAGEMENT Continuous competitive bidding Sole-source or single-source contracting (fewer suppliers to deal with) Focus on near-term deliverable value Focus on lifetime value of the deliverable Client must understand the contractor’s project management methodology Contractor designs a customer-specific project management methodology
    9. 9. Benefits <ul><ul><li>Good methodologies allow us to: </li></ul></ul><ul><ul><ul><li>Shorten project schedules </li></ul></ul></ul><ul><ul><ul><li>Reduce and/or better control costs </li></ul></ul></ul><ul><ul><ul><li>Prevent unwanted scope changes </li></ul></ul></ul><ul><ul><ul><li>Plan for better execution </li></ul></ul></ul><ul><ul><ul><li>Predict results </li></ul></ul></ul><ul><ul><ul><li>Improve customer relations during project execution </li></ul></ul></ul><ul><ul><ul><li>Adjust the project during execution to fit changing customer requirements </li></ul></ul></ul><ul><ul><ul><li>Provide senior management with better visibility of status </li></ul></ul></ul><ul><ul><ul><li>Standardization in execution </li></ul></ul></ul><ul><ul><ul><li>Capturing of best practices </li></ul></ul></ul>
    10. 10. Project Failures <ul><ul><li>Methodologies can lead to project failures if: </li></ul></ul><ul><ul><ul><li>The methodology must be followed exactly even if the assumptions and environmental input factors have changed </li></ul></ul></ul><ul><ul><ul><li>The methodology focuses on linear thinking </li></ul></ul></ul><ul><ul><ul><li>The methodology does not allow for out-of-the-box thinking </li></ul></ul></ul><ul><ul><ul><li>The methodology does not allow for value-added changes that are not part of the original requirements </li></ul></ul></ul><ul><ul><ul><li>The methodology does not fit the type of project </li></ul></ul></ul><ul><ul><ul><li>The methodology uses nonstandard terminology </li></ul></ul></ul>
    11. 11. Client Stakeholders Inputs Tools Outputs Customer Satisfaction Management Requirements Business Case Assumptions I P E M C Methodology <ul><li>PMBOK ® Guide </li></ul><ul><li>Processes </li></ul><ul><li>Unique Tools </li></ul><ul><li>Unique KPI </li></ul><ul><li>Dashboards </li></ul>Deliverables <ul><li>Best Practices </li></ul><ul><li>Lessons Learned </li></ul><ul><li>KPI Library </li></ul><ul><li>Improvements </li></ul><ul><li>for Next Project </li></ul>Feedback Adaptive Methodology Usage
    12. 12. Defining Value Metrics (KPI) PAST VIEW PRESENT VIEW Metrics are fixed for the duration of the project Metrics can change over the duration of the project (Metric-Driven Project Management)
    13. 13. Dashboard Design Dashboard
    14. 14. The Changing Definition of Success <ul><ul><li>Success is simply the triple constraint </li></ul></ul><ul><ul><li>Customer satisfaction must also be considered </li></ul></ul><ul><ul><li>There are other (secondary) factors to be considered </li></ul></ul><ul><ul><li>Success must have a business component </li></ul></ul><ul><ul><li>The constraints must be prioritized </li></ul></ul><ul><ul><li>There are multiple definitions of success (each customer/stakeholder can have a different definition) </li></ul></ul><ul><ul><li>There are categories of success, and value is now a component of the success criteria </li></ul></ul>(2004) (2008)
    15. 15. Success <ul><ul><li>Success is not necessarily achieved by completing the project within the triple constraint. Success is when the planned business value is achieved within the imposed constraints and assumptions. </li></ul></ul>Value Triple Constraint
    16. 16. Models for Value Analyses <ul><ul><li>Intellectual Capital Valuation </li></ul></ul><ul><ul><li>Intellectual Property Scoring </li></ul></ul><ul><ul><li>Balanced Scorecard </li></ul></ul><ul><ul><li>Future Value Management ™ </li></ul></ul><ul><ul><li>Intellectual Capital Rating ™ </li></ul></ul><ul><ul><li>Intangible Value Stream Modeling </li></ul></ul><ul><ul><li>Inclusive Value Measurement ™ </li></ul></ul><ul><ul><li>Value Measurement Methodology (VMM) </li></ul></ul>
    17. 17. Measuring Value from Benefits Expected Benefits or Results Value Conversion Profitability Easy Customer Satisfaction Hard Goodwill Hard Penetrate New Markets Easy Develop New Technology Medium Technology Transfer Medium Reputation Hard Stabilize Work Force Easy Utilize Unused Capacity Easy
    18. 18. A Comparison: EVMS, EPM, and VMM Variable EVMS EPM VMM Time Cost Quality Scope Risks Tangibles Intangibles Benefits Value Tradeoffs
    19. 19. Types of Performance Reports Status Reports Forecast Reports Progress Reports
    20. 20. Benefits and Value at Completion Forecast Reports <ul><li>Time at Completion </li></ul><ul><li>Cost at Completion </li></ul>Traditional Reporting Future Reporting <ul><li>Time at Completion </li></ul><ul><li>Cost at Completion </li></ul><ul><li>Benefits at Completion </li></ul><ul><li>Value at Completion </li></ul>
    21. 21. The Project Pipeline (Without a PMO) PROJECT PIPELINE PROJECT FAILURES COMPLETED PROJECTS IDEAS
    22. 22. The Project Pipeline (With a PMO) PROJECT PIPELINE PROJECT FAILURES COMPLETED PROJECTS PMO BUSINESS CASE FILTER BENEFITS FILTER VALUE FILTER IDEAS

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