Part 6: Business Value

Part 6: Business Value2022-08-21T04:01:06+00:00

Part 6: Business Value

Business Value

  • In a business, there are tangible assets (the money, the buildings, the equipment).  You can put a dollar value on these things.
  • The value of a successful business is much more than the sum of its tangible assets.
  • Why?  The business also has intangible assets like reputation, knowledge, people, branding and experience.  It’s hard to put a market value on the intangible assets.  
  • So, the Business Value = Value of the tangible + intangible elements of an organization
  • Calculating the Business Value is complicated, and not really in the scope of Project Management
  • If we look at a company like Apple, it might have $200 billion in tangible assets (money, factories, & equipment), but is worth $600 billion.  Why?  It has a reputation, its logo is recognized all over the world, it has many brilliant people working for it.  It can use those things to make money in the future.  If you bought Apple, it would make you money, and then you could sell it to another investor for even more money.  So the marketplace has valued Apple’s intangible assets at $400 billion.

  • Business Value can be measured in the Short, Medium, or Long Term
  • All Organizations, even non-profits and governments, want to create business value
  • Value starts with planning/management
  • An effective Organizational Strategy has
    • Direction for growth/development
    • Performance Metrics to measure success (if it can’t be measured, it can’t be changed!).  We don’t know if we are reaching our goals unless we can measure them.
    • Portfolio Management, which aligns projects/programs to the Strategy
      • Goals are reflected in the portfolio
    • Program Management, which aligns multiple projects for costs/schedule/effort/benefits
      • Determines the optimal approach for managing projects
    • A continuous process to perform Strategic Alignment and Optimize the Organizational Strategy

  • The Organizational Strategy can change based on feedback from the marketplace, market conditions, customers, investors, the government, etc.

  • There are four reasons for an organization to create a project
    • Comply with laws or regulations
    • Satisfy stakeholder needs
    • Respond to changes in technology and business strategies
      • Improve or fix products and/or services

  • Good Project Management
    • Allows a business to meet its objectives and satisfy stakeholders, become more predictable and successful
    • Delivers products at the right time
    • Resolves problems and respond to risks quickly
    • Optimizes the use of organizational resources and constraints
    • Identifies & terminates/corrects failing projects
    • Links project results with business goals

  • Symptoms of Bad Project Management
    • Missed deadlines, poor quality work, overbudget, rework, scope creep
    • Unsatisfied stakeholders
    • Damage to organization’s reputation