Project Management 9 - Measuring Benefits PDF

Measuring Benefits The doing of projects is relatively quite easy … except that we have expectations of what is wanted, time and cost are limited, and generally there is an expectation of a financial return to more than justify the cost. Sometimes expectations are more complex So, Project Managem...

Measuring Benefits The doing of projects is relatively quite easy … except that we have expectations of what is wanted, time and cost are limited, and generally there is an expectation of a financial return to more than justify the cost. Sometimes expectations are more complex So, Project Management is not just a fun thing to do ! From Project Management Metrics, KPIs, and Dashboards, A Guide to Measuring and Monitoring Project Performance, 3rd edition, Harold Kerzner 1 Project justification This Photo by Unknown Author is licensed under CC BY This Photo by Unknown Author is licensed under CC BY-SA ✓ What we want, goals & objectives ✓ What is costs ✓ When we want / need this The eternal triangle ✓ ‘Our’ expectations Performance 2 Financial implications of …  Increased turnover / reduced costs  Performance & productivity  Reduced people costs  Efficiency  M & As  Innovation & R&D  Training & staff development This Photo by Unknown Author is licensed under CC BY-ND  Variable v Fixed Costs mix  Other benefits will have financial implications 3 The Executive View – PM is a career path  A strategic core competency for company growth and survival,  Need to understand project management and corporate business issues & priorities  Involved in strategic planning, project selection & capacity planning  Role is to bridge strategy & implementation  Project Managers make project & business decisions Presented by Linden Cole © 20/11/2024 4 This Photo by Unknown Author is licensed under CC BY  Different types of project ‘Mini or Minor’ Traditional Complex Projects Projects Projects Less than ‘3 6 to 18 months 18 months months’ upwards Eg AUKUS The submarines started as a ‘standard’ project, but then expanded 5 What is the difference? Minor projects Tend to be ‘technical’, ‘design’ or ‘administrative’. Another order, another client, another job. Operational and Strategic, – no fundamental changes Traditional projects Business implications eg crises, new products, productivity etc Assumptions generally ‘known’ Complex projects Long term, fundamental implications Everything can change Value and company standing are key drivers 6 Projects less than 18 months? Assumptions -  Technology will not change much.  Assumptions made will remain intact for the duration of the project.  The project team will probably remain.  Objectives are well defined.  ‘Target’ will be stationary  Measures and Kpi will be known This Photo by Unknown Author is licensed under CC BY-SA-NC 7 18 months or more brings faulty assumptions! Eg This Photo by Unknown Author is licensed under CC BY-NC-ND  Cost of borrowing will change?  Procurement costs increase?  When will innovation occur?  Necessary skills will be available?  Markets will not change? Faulty assumptions  Customer loyalty will remain? lead to bad results & unhappy  Disruptive innovation? customers.  Risks remain low & mitigated?  Politics remain as at present? 8 As business needs shift … KPI are needed The more ‘flexibility’ where critical issues the process contains, impact project the greater need for success additional KPIs This Photo by Unknown Author is licensed under CC BY-SA-NC 9 What creates Complexity? No. of functional units interacting? What else creates Global perspectives ‘complexity’? & Cultural Large, complex differences? projects tend to bring large cost overruns & Possibility of schedule Degree of changes? slippages technology involved? Sizes & length of project? 10 Tips measuring benefits…  A few simple kpi’s metrics may not be enough!  Scope (inc. time, cost & performance) may not bring success, if stakeholder value is missing!  The more complex the project, the more thought / care is needed for KPI  The longer the project, the more difficult to decide KPI  Competing globally needs a different mindset for Project Managers 11 Who judges success, and how is it measured? You Other stakeholders Client Business v Management organisation Your Employees company 12  Quote from Kerzner Many years ago, as a young PM, I asked a vice president in my company, “What is the definition of success on my project?” He responded, “The only definition in this company is meeting the target profit margin in the contract.” I then asked him, “Does our customer have the same definition of success?” This Photo by Unknown Author is licensed under CC That ended our conversation. BY-NC 13 ‘New’ Success Thinking? criteria needs to be agreed Governance! From this, decisions & KPI are changes decided supervised Design a dashboard for PM ensures each all team stakeholder – members some KPI understand updated real- time H2 measure 14 What does this tell you about motivation and judging success? This Photo by Unknown Author is licensed under CC BY-SA-NC 15 Do you need to restrict yourself to ‘scope’ to find benefits? Can you initiate / claim benefits from other areas ? (eg case) This Photo by Unknown Author is licensed under CC BY-SA-NC 16  A NEW LOOK AT DEFINING PROJECT SUCCESS. This Photo by Unknown Author is licensed under CC BY-SA-NC 17 Triple constraints -  Time, cost & performance Performance  Unfortunately, even if all deliverables are completed on time and within cost, a project can still fail.  Other measures are needed! 18 Customer satisfaction  The triple constraints are a good idea, but we need customer satisfaction too! How do we measure customer satisfaction?  Business case?  More work ? This Photo by Unknown Author is licensed under CC BY-SA-NC  ROI – annualised benefits above cost?  Hot buttons? All clients have them!  How to agree … ? 19 Other (secondary / ‘internal’) factors  Could include ◦ References ◦ Reputation & image ◦ Strategic alignment ◦ Technical excellence ◦ Ethical conduct ◦ ‘Buying’ work ◦ ‘Foot in the door’ 20 This Photo by Unknown Author is licensed under CC BY-NC Example of a ‘Business Component’ Success for Orange Switzerland … a) Delivery within Scope, time, cost, quality b) Successful management of change during the project life cycle c) Management of the project team d) Success of the product against criteria and target during the initiation phase (ROI, adoption rates etc). 21 This Photo by Unknown Author is licensed under CC BY-SA-NC  Success must include value It is essential that there is real value gained. But who judges value if it is qualitative? ‘Time & cost’ does not guarantee value for the business. Warren Buffet (Berkshire Hathaway)... “Price is what you pay, value is what you get.” Or should! The definition of success must be agreed between the sponsor and the Project Leader 22 ‘Triple’ to ‘Competing’ Constraints Complex Projects Competing Constraints Image Reputation Risk Quality Value Scope SCOPE Risk Traditional Projects The Triple Constraints Cost Time IMAGE & REPUTATION 23 So what of the future? What are the changes that are taking place in project management now… ✓ The need to meet the client, and agree at the beginning what will constitute project success 24 This Photo by Unknown Author is licensed under CC BY So what of the future? ✓ Meet with stakeholders (if appropriate) and understand their definition of success. ✓ Agree with each which metrics they want to use, to track and verify that success will be achieved. ✓ Some will be agreeing KPIs This Photo by Unknown Author is licensed under CC BY 25 So what of the future? ✓ You will prepare a dashboard to track the metrics & KPI in real time (rather than rely on period reporting). ✓ The project learning points will used to improve future projects 26 This Photo by Unknown Author is licensed under CC BY-SA  8 postulates… 1) Completing a project on time and within budget does not bring value if you are working on the wrong project. 2) Completion on time and in budget does not necessarily constitute success 3) The triple constraints do not guarantee value is generated 4) Good project management cannot guarantee value has been generated 27 This Photo by Unknown Author is licensed under CC BY 8 postulates… 5) People believe that customers pay for deliverables. (they pay for value) 6) Quality is what customers believe is worth paying for. (quality is just one part of value) 7) Success is when business value is achieved. (the value of a project can change over time) 8) Following a plan does not always bring success if business related changes were necessary, but never implemented. 28 2 considerations Managers manage and leaders lead. So, managers are not leaders, and leaders find it hard to ‘manage’. The Peter Principle is a real issue in modern organisations, as you will find. Ah, but what is the Peter Principle ? 29  Leadership & Values Ineffective values Effective values P E O P L E & O R G A N I S AT I O N ▪ Mistrust ✓ Trust ▪ Job descriptions ✓ Competency ▪ Power & authority ✓ Team working ▪ Conformity ✓ Innovation & risk ▪ Predictability ✓ Flexibility ▪ Internal Competition ✓ Collaboration ▪ Tactical thinking ✓ Strategic thinking ▪ Compliance ✓ Commitment ▪ Meeting Standards ✓ Continuous Improvement 30 Selected extracts from Ken Hultman & Billl Gellerman, Balancing Individual and Organisational Values, 2002 This Photo by Unknown Author is licensed under CC BY Measuring Value Value Metric Difficulty Performance & productivity Easy Profitability Easy Customer satisfaction Hard Goodwill Very Hard Penetrate new markets Easy Innovation and value of ideas Moderate Technology transfer Moderate Reputation & image Hard Workforce motivation & skills Easy to Hard Capacity ultilisation Easy 31 This Photo by Unknown Author is licensed under CC BY  Problems measuring value metrics  Business assumptions effect decision making  Measurement is very subjective  Meaningful data is hard to identify/capture  Value attributes are usually subjective  Value is influenced by the person measuring  Categorising value is a subjective influence  Importance of attributes varies with time  Value can be circumstantial  Judgement is influenced by unrelated issues 32 This Photo by Unknown Author is licensed under CC BY Business Model Format Alexander Osterwalder and Yves Pigneur 33  Growing importance of value TQM and Customer Customers’ Customer Triple Quality Relations Perception Value Bottom Value Based Compliance Management of Quality Management line ISO 9000 (CRM) and Value Programs Climate l u e f v a Types of e o measurement t anc Other ? (metrics) po r g im w in o Traditional Gr 1980’s 1990’s 2000’s 2010’s Future ? 34