The Challenges of Proving the Value of Project Management

The Challenges of Proving the Value of Project Management
(part 2 of 2)

Last time, I described the challenges of trying to prove the value of project management. However, this does not mean we have to throw up our hands and give up. There are some ways to derive the value. 

Estimate benefits based on industry analysts

This is usually the place to start. Although you may have difficulty estimating the value of project management, other organizations have done detailed research. If you have nothing else, you can always take someone else’s word for it. There are reports from the Project Management Institute and some consultancy groups that show savings and project improvements associated with the use of project management. I have never seen a report that stated the use of project management practices was bad.  For example, if you find a report showing a 10% savings per project, you could apply this figure to your projects – assuming you are applying similar project management discipline.

Calculating detailed benefits per project management process

You can survey each project manager at the end of a project and ask questions about the specific value they observed, versus what would have happened if they did not use a specific process. This allows you to look at individual projects and project managers. Some project managers may think they managed projects well previously and do not see a lot of incremental value in a new common process. Other project managers may see tremendous value.

In this approach you look at all the specific benefits associated with standard project management and work with your project manager to place a value on them. Examples might be.

• Savings in time and hassle associated with better managing client expectations.
• Savings from scope change requests that are made but not approved. For example, the project manager may say that in old projects all scope change requests were included in project scope. Instead, using good scope change processes resulted in one-third of the requests being rejected. There are cost savings and accelerated schedules associated with not doing this work.
• There is value associated with accurate estimating. As you do a better job planning and managing the work, you should find that your project estimates become more and more accurate. This allows the customer to better manage their financials and make better business decisions. You can agree with your customer on the value this better estimating provides to them.
• If you managed risks well the project should have had fewer problems compared to the past. You can estimate the value of fewer problems on your schedule and budget.

You would need to define the detailed criteria that would be applied to each project. Then as each project completed, the project manager (and the sponsor) would sit
down and consider the value of the project management processes that were applied.

Consider the savings from projects cancelled

Planning projects more thoroughly and managing projects more closely may result in
some projects being cancelled that might have been executed before. This is the result of more information being available regarding the total cost of the project versus the
business benefit. If a project gets cancelled based on sound planning and management,
you should take credit for this as a win for the organization, and the budgeted money not
spent should go into the value side for project management.