Identifying the Value of  Project Management      Presented by  Wayne Brantley. MS Ed    PMP, CPLP, CRP       Senior Direc...
Agenda• Identify why you need to measure the value of  project management• Introduction to the ROI Methodology• Explain th...
Why Do We Need Project Management?• Approximately 70% of projects are:   – Over budget   – Behind schedule• 52% of all pro...
Resistance to Implementing Project                 Management•   It takes to long•   Just do it attitude•   Costs to much ...
What is ROI?        Net Monetary BenefitsROI =                           X 100           Program Costs                    ...
WRONG!• Okay, right if you’re an MBA• It is a story of how you collected the data• Identifies where the data comes from• S...
ROI Uses   Project ManagementOrganization Development        Consulting    Change InitiativesTechnology Implementation   Q...
The ROI Process Takes A Balanced View by            Measuring and Reporting:•   Reaction to program•   Learning and attitu...
What You Can Do With an ROI Evaluation•   Show contributions of project management•   Earn respect of senior management•  ...
Why Use an ROI Analysis?Reactive• Justify/defend budgets• Identify inefficient processes that need to be  redesigned or el...
Why Use an ROI Analysis?Proactive•   Aligns project management strategically to business needs•   Earn respect of senior m...
ROI Methodology Basic Elements• Evaluation Framework  – 5 levels of evaluation  – 6 types of data• A process model  – 10 s...
Level                       Measurement Focus1. Reaction & Planned     Measures participant satisfaction with project   Ac...
THE ROI PROCESS       Evaluation                   Data Collection       Planning                                Level 1: ...
Tabulate Costs                                  Tabulate Costs               Data Analysis        of Solution  Reporting  ...
Evaluation Planning                      16
Step 1 – Develop Objectives• Level 1 and 2 objectives provide  – Reaction on initiative  – Feedback on implementation  – I...
Criteria for Selecting Programs for Levels           4 & 5 (ROI) Evaluation  • Expected life cycle of projects  • The impo...
ROI Target Options1. Set the value as with   other investments, e.g.   15%2. Set slightly above other   investments, e.g. ...
Evaluation Planning• Initial Kick-off Meeting   – Who should be involved?   – What would increase success?   – What do we ...
Step 2 – Develop Evaluation Plans and                    Baseline Data• Data Collection Plan  –   Broad program objectives...
Evaluation Planning• ROI Analysis Plan  – Data Items (from level 4 objectives)  – Methods for Isolating the effects of the...
Evaluation Planning• Project Plan  –   Major Milestones  –   Deliverables  –   Timelines  –   Flow                        ...
Data Collection                  24
THE ROI PROCESS       Evaluation       Planning                                     Data Collection                       ...
Data Collection –   Step 3 - During Program    Method       Level 1 Level 2SurveysQuestionnairesObservationInterviewsFocus...
Survey/Questionnaire Design•   Determine the specific information needed•   Review with stakeholders•   Select type(s) of ...
Survey/Questionnaire Design• Common mistakes  –   Vague statements/questions  –   Too many questions  –   Improperly worde...
Data Collection        Step 4 - Post Program    Method                      Level 3 Level 4• Surveys• Questionnaires• Obse...
Action Plan Part IName: (optional) _______________________________________Company/Organization: (optional) _______________...
Action Plan Part II  Name: (optional) _______________________________________  Company/Organization: (optional) __________...
Data Analysis                32
Tabulate Costs                              Tabulate Costs      Data Analysis             of Solution Reporting           ...
Step 5 - Isolating Methods•   Isolation shows your contribution•   Techniques used    •   Control groups    •   Trend line...
Schedule Delays                                 100%Percent of Project on Schedule                                        ...
Example of a Participant’s Estimation                                                   Adjusted  Factor that      Percent...
Step 6 –    Converting Data to Monetary Value•   Challenging    •   Use data bases    •   Look at past project performance...
Example of Converting Data Using           External DatabaseCost of PMP Certified Consultant*Non –certified PM            ...
Example of Converting Data UsingHistorical Records & Expert InputThe Cost of a Schedule delay           Actual Costs      ...
Example of Converting Data UsingHistorical Records & Expert InputThe Cost of a schedule delay          $852,000 Per Day / ...
Co       Step 7 - Intangible Benefits     mp        lai            nt   s   Teamwork Con f li c t s          Commitment   ...
Step 8 - Tabulating Costs•   Consider all costs    •   Analysis costs    •   Planning costs    •   PM costs    •   Monitor...
Tabulating Costs•   Recommended items    •   Needs assessment    •Travel/lodging/meals    •   Development costs   •Partici...
Tabulating Program Costs            Direct                   Indirect•   Program Materials   •   Needs Assessment•   Metho...
Step 9 - Calculating ROIBenefits/Cost        Monetary Benefits        Ratio   =                       Program Costs       ...
ROI ExampleCosts for project                  $80,000Benefits from project             $240,000          $240,000      =  ...
Reporting            47
Tabulate Costs                              Tabulate Costs      Data Analysis             of Solution Reporting           ...
Step 10 - ROI Impact Study•   Complete report    •   General information    •   Methodology    •   Data analysis    •   Co...
How do you get started with ROI?• Develop an evaluation strategy• Build capability  – Training  – Publications  – ROI Cert...
Summary• Identified why you need to measure the value of  project management• Introduced the ROI Methodology• Explained th...
Contact Information• Wayne Brantley – Villanova University• 1-800-874-7877, ext. 509• Wayne.Brantley@VillanovaU.com       ...
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Brantley.wayne

  1. 1. Identifying the Value of Project Management Presented by Wayne Brantley. MS Ed PMP, CPLP, CRP Senior Director of Professional Education Villanova University 1
  2. 2. Agenda• Identify why you need to measure the value of project management• Introduction to the ROI Methodology• Explain the benefits of implementing the ROI Methodology in your organization 2
  3. 3. Why Do We Need Project Management?• Approximately 70% of projects are: – Over budget – Behind schedule• 52% of all projects finish at 189% of their initial budget 3
  4. 4. Resistance to Implementing Project Management• It takes to long• Just do it attitude• Costs to much in resources• We already manage projects• We don’t want to know how bad 4
  5. 5. What is ROI? Net Monetary BenefitsROI = X 100 Program Costs 5
  6. 6. WRONG!• Okay, right if you’re an MBA• It is a story of how you collected the data• Identifies where the data comes from• Shows all the numbers• Shows who deserves what credit• Reports intangibles!!!• It is a methodology 6
  7. 7. ROI Uses Project ManagementOrganization Development Consulting Change InitiativesTechnology Implementation Quality / Six Sigma Training and Learning Coaching 7
  8. 8. The ROI Process Takes A Balanced View by Measuring and Reporting:• Reaction to program• Learning and attitudes• Application on the job• Impact in work unit Customer e Customer e loye loye Emp Processes Emp Processes• Impact on the customer Financial Intangible• The financial results• Intangible benefits• Nature and source of problems and opportunities 8
  9. 9. What You Can Do With an ROI Evaluation• Show contributions of project management• Earn respect of senior management• Gain the confidence of clients• Improve support for project management initiatives• Enhance project management processes• Identify inefficient processes that need to be redesigned 9
  10. 10. Why Use an ROI Analysis?Reactive• Justify/defend budgets• Identify inefficient processes that need to be redesigned or eliminated• Show contributions of project management 10
  11. 11. Why Use an ROI Analysis?Proactive• Aligns project management strategically to business needs• Earn respect of senior management/administrators• Improve support for project management• Enhance initiation and planning processes• Identify successful processes that can be implemented in other areas 11
  12. 12. ROI Methodology Basic Elements• Evaluation Framework – 5 levels of evaluation – 6 types of data• A process model – 10 step process• Operating standards and philosophy – 12 guiding principles• Case application – Document and tell your story• Implementation – Teach it – Internalize it 12
  13. 13. Level Measurement Focus1. Reaction & Planned Measures participant satisfaction with project Action management processes and captures planned actions, if appropriate.2. Learning Measures changes in knowledge, skills, and attitudes related to project management.3. Application Measures changes in on-the-job behavior or actions as project management is applied, implemented, or utilized.4. Business Impact Measures changes in business impact variables.5. Return on Investment Compares project management benefits to the costs. 13
  14. 14. THE ROI PROCESS Evaluation Data Collection Planning Level 1: Reaction, Level 3: Satisfaction, and Application/ Planned Actions Implementation Develop Develop Collect Collect Collect Collect Develop Develop Evaluation Evaluation Data During Data During Data After Data AfterObjectives ofObjectives of Plans and Plans and Solution Solution Solution SolutionSolution (s) Solution (s) Baseline Data Baseline Data Implementation Implementation Implementation Implementation Level 2: Level 4: Learning Business Impact 14
  15. 15. Tabulate Costs Tabulate Costs Data Analysis of Solution Reporting of Solution Convert Data Convert Data Calculate the Calculate the Generate GenerateIsolate the Isolate the to Monetary to Monetary Return on Return on Impact Impact Effects Effects Value Value Investment Investment Study Study Level 5: ROI Identify Identify Intangible Intangible Measures Measures 15
  16. 16. Evaluation Planning 16
  17. 17. Step 1 – Develop Objectives• Level 1 and 2 objectives provide – Reaction on initiative – Feedback on implementation – Information on knowledge and skills obtained• Level 3 and 4 objectives provide – Expectations on initiative – Satisfaction for program sponsors – Ties project management to strategic goals 17
  18. 18. Criteria for Selecting Programs for Levels 4 & 5 (ROI) Evaluation • Expected life cycle of projects • The importance of the project in meeting the organization’s goals • Cost of the project • Visibility of the project • The size of the target audience • Extent of management interest 18
  19. 19. ROI Target Options1. Set the value as with other investments, e.g. 15%2. Set slightly above other investments, e.g. 25% ROI3. Set at break even - 0%4. Set at client expectations 19
  20. 20. Evaluation Planning• Initial Kick-off Meeting – Who should be involved? – What would increase success? – What do we cover? 20
  21. 21. Step 2 – Develop Evaluation Plans and Baseline Data• Data Collection Plan – Broad program objectives for each level of evaluation – Measures – Data Collection Method/Instruments – Data Sources – Timing – Responsibilities 21
  22. 22. Evaluation Planning• ROI Analysis Plan – Data Items (from level 4 objectives) – Methods for Isolating the effects of the Program/Process – Methods of converting data to monetary values – Cost categories – Intangible benefits – Communication targets for final report – Other Influences/Issues during implementation – Comments 22
  23. 23. Evaluation Planning• Project Plan – Major Milestones – Deliverables – Timelines – Flow 23
  24. 24. Data Collection 24
  25. 25. THE ROI PROCESS Evaluation Planning Data Collection Level 1: Reaction, Level 3: Satisfaction, and Application/ Planned Actions Implementation Develop Develop Collect Collect Collect Collect Develop Develop Evaluation Evaluation Data During Data During Data After Data AfterObjectives ofObjectives of Plans and Plans and Solution Solution Solution SolutionSolution (s) Solution (s) Baseline Data Baseline Data Implementation Implementation Implementation Implementation Level 2: Level 4: Learning Business Impact 25
  26. 26. Data Collection – Step 3 - During Program Method Level 1 Level 2SurveysQuestionnairesObservationInterviewsFocus GroupsTests 26
  27. 27. Survey/Questionnaire Design• Determine the specific information needed• Review with stakeholders• Select type(s) of questions• Keep simple• Develop the questions• Design for easy scoring• Develop administrative procedures• Address anonymity issue 27
  28. 28. Survey/Questionnaire Design• Common mistakes – Vague statements/questions – Too many questions – Improperly worded questions – Confusing instructions – Too difficult to analyze 28
  29. 29. Data Collection Step 4 - Post Program Method Level 3 Level 4• Surveys• Questionnaires• Observations on the job• Interviews• Focus Groups• Action planning/improvement plans• Performance contracting• Performance monitoring 29
  30. 30. Action Plan Part IName: (optional) _______________________________________Company/Organization: (optional) __________________________Job Title (optional): _____________________________________Course Date: ___________________________________________ Specific Steps: I will do this End Result: So that 1. Action 1 2. Action 2 3. Action etc….. Expected Intangible Benefits: 30
  31. 31. Action Plan Part II Name: (optional) _______________________________________ Company/Organization: (optional) __________________________ Job Title (optional): _____________________________________ Course Date: ___________________________________________ AnalysisA. What is the unit of measure? Does this measure reflect your performance alone?B. What is the value? $________C. How did you arrive at this value?D. How did this measure change during the last month of the evaluation period compared to the average beforethe program?E. What percent of the change was actually caused by the application of the course?F. What level of confidence do you place on the above information? 100%=certainty and 0%=No Confidence Actual Intangible Benefits: 31
  32. 32. Data Analysis 32
  33. 33. Tabulate Costs Tabulate Costs Data Analysis of Solution Reporting of Solution Convert Data Convert Data Calculate the Calculate the Generate GenerateIsolate the Isolate the to Monetary to Monetary Return on Return on Impact Impact Effects Effects Value Value Investment Investment Study Study Level 5: ROI Identify Identify Intangible Intangible Measures Measures 33
  34. 34. Step 5 - Isolating Methods• Isolation shows your contribution• Techniques used • Control groups • Trend line analysis • Forecasting methods • End user/performer’s, supervisor’s, and/or management’s estimate of impact (percent) • Use of experts/previous studies • Subordinate’s input of program impact • Calculate/Estimate the impact of other factors • Customer input 34
  35. 35. Schedule Delays 100%Percent of Project on Schedule PM Implementation Actual Average 94.4% 95% 90% Pre Program Average Average of Trend Projected 92.3% 87.3% on 85% Pr o jecti d Tren J F M A M J J A S O N D J Months 35
  36. 36. Example of a Participant’s Estimation Adjusted Factor that Percent of Confidence Percent of Influenced Improvement Expressed as a Improvement Improvement Caused By Percent Caused ByProject 60% 80% 48%ManagementSystem Changes 15% 70% 10.5%Market Changes 5% 60% 3%Process Changes 20% 80% 16%Total 100% 36
  37. 37. Step 6 – Converting Data to Monetary Value• Challenging • Use data bases • Look at past project performance • Look at profits / savings from output • Historical costs / savings • Experts input • End user input • Staff estimation 37
  38. 38. Example of Converting Data Using External DatabaseCost of PMP Certified Consultant*Non –certified PM $120/hr = $240k annuallyCertified PM $180/hr = $360k annuallyCost for PMP 150% increase in billable rate* External data - value obtained from industry professionals 38
  39. 39. Example of Converting Data UsingHistorical Records & Expert InputThe Cost of a Schedule delay Actual Costs Reworks, Penalties, from Records Loss Revenue 35 $852,000 Days Estimated Project Staff Time, Additional from Staff Management Time 39
  40. 40. Example of Converting Data UsingHistorical Records & Expert InputThe Cost of a schedule delay $852,000 Per Day / 35 Days = $24k per day 40
  41. 41. Co Step 7 - Intangible Benefits mp lai nt s Teamwork Con f li c t s Commitment Stress act ion e nt tisf ag em Sa E ng Job Customer Service 41
  42. 42. Step 8 - Tabulating Costs• Consider all costs • Analysis costs • Planning costs • PM costs • Monitoring and control costs • Operating/maintenance costs • Evaluation costs 42
  43. 43. Tabulating Costs• Recommended items • Needs assessment •Travel/lodging/meals • Development costs •Participants’ time • Program materials •Project Management costs • Training costs •Operations overhead • Consulting costs •Evaluation costs 43
  44. 44. Tabulating Program Costs Direct Indirect• Program Materials • Needs Assessment• Methodology • Program Development• Training Costs • Participant Time• Facilities • Administrative Overhead• Travel • Evaluation 44
  45. 45. Step 9 - Calculating ROIBenefits/Cost Monetary Benefits Ratio = Program Costs Net Monetary Benefits X 100 ROI = Program Costs 45
  46. 46. ROI ExampleCosts for project $80,000Benefits from project $240,000 $240,000 = 3.0BCR = $80,000 $160,000ROI = x 100 = 200 % $80,000 46
  47. 47. Reporting 47
  48. 48. Tabulate Costs Tabulate Costs Data Analysis of Solution Reporting of Solution Convert Data Convert Data Calculate the Calculate the Generate GenerateIsolate the Isolate the to Monetary to Monetary Return on Return on Impact Impact Effects Effects Value Value Investment Investment Study Study Level 5: ROI Identify Identify Intangible Intangible Measures Measures 48
  49. 49. Step 10 - ROI Impact Study• Complete report • General information • Methodology • Data analysis • Costs • Results • Barriers and enablers • Summary of findings • Conclusions and recommendations • Exhibits - attachments 49
  50. 50. How do you get started with ROI?• Develop an evaluation strategy• Build capability – Training – Publications – ROI Certification• Conduct an ROI Study• Revise policies and procedures 50
  51. 51. Summary• Identified why you need to measure the value of project management• Introduced the ROI Methodology• Explained the benefits of implementing the ROI Methodology in your organization 51
  52. 52. Contact Information• Wayne Brantley – Villanova University• 1-800-874-7877, ext. 509• Wayne.Brantley@VillanovaU.com 52

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