One of the reasons I love project management is that it encompasses not just procedural tools and techniques but also the ability to conceptualize other dimensions that – although are not strictly speaking necessary to guarantee good project management – are nevertheless fascinating in their ability to enrich and enhance the project management experience with a greater appreciation of the world around us.
It is in this context that I reviewed John Goodpasture’s new book, titled “Maximizing Project Value“. John is the owner of the “Musings on Project Management” and is one of the writers and thinkers out there whose opinion and thoughts, I believe, do matter.
The book is not a stock standard project management book. It does not tell you, not does it claim to advice on how to manage projects. So, if you are looking for a ‘how-to’ guide to project manager don’t bother. The focus of the book is project value. And, while you have your own thoughts about what ‘value’ really means in the context of project management, you are likely to have a different, or at least modified, view after you’ve finished reading this book.
There are at least two main different types of ‘Values’ you will become familiar with. One is Project Value and the other is Business Value.
Project Value is the worth of the project’s throughput, of the difference in business value measured before and after the project, as earned during the course of the project schedule.
Business Value is the worth of the of a project’s throughput applied to business needs, as measured over some business period.
Maximizing project value is really about optimizing and managing the tension between the project manager’s mission to manage for project value and the project sponsor’s charge to enhance business value.
The book is a journey through the various facets that ‘value’ has (with its different meanings and interpretations) as it makes its way through the inception of a project, where it flows from being a business goal, through strategy and into projects. It then gets elaborated in a business case and is being worked on by teams whose job is to turn it from a concept into a valuable reality through the identification of requirements and the realization of the project deliverables via the control methods known as earned value.
One of the many interesting aspects of this book can be found in the discussion around the concept of the project balance sheet.
The project balance sheet is a tool for managing value-at-risk between the business and the project. Its namesake is the accounting balance sheet. And just like the accounting balance sheet, the project balance sheet totals the interests of multiple parties who all have a stake in the project.
While a ‘normal’ balance sheet comprised of Assets vs. Liabilities and Equity, the project balance sheet is a balance between the sponsor’s needs and wants and the project’s capacity and capability to deliver against these wants and needs. The introduction of risk into this model complicates this simple scenario and the book discusses this impact at length.
While for most project managers the job is done once the project has been handed over to the business, the ‘value’ journey is not yet over as
the business has not yet benefited fro any of the business value of the project. In other words, the project’s business value is only potential; that potential is unlocked when the deliverables are put into operation.
The author refers to this phase as the ‘post-project value attainment’. This requires elaborate change management and specific risk management to ensure the value produced by the project can be realized.
John is a real fan of Game Theory (check out his blog) and the last chapter in his book deals specifically with the concept of optimizing payoff with game theory. You don’t have to read this chapter to realize the benefits of having the book but if you are into the intellectual challenge of such discussions you will find this chapter entertaining and informative.
Broaden your horizons and have a go at it.
Think about it!