By: Hajime Estanislao, PMP, CSM & Dr. Michael Shick, MSPM, PMP, CSM
Are you tired of projects that seem to fall short of expectations? Do you struggle to align the project outcomes of your business leaders and organization? If so, you're not alone. Many project managers face the challenge of delivering projects that make a difference. But fear not! Because there's a sustainable way to deliver more value: value creation in project management.
Value creation lies at the heart of project management, driving outcomes and business success. It's more than just meeting deadlines—it's about aligning your projects with strategic objectives and maximizing their impact, thus supporting the business value creation process through projects. But how exactly can you harness or manage the value-creation process in your projects?
With project managers prioritizing alignment with strategic objectives, shareholder value creation, social and environmental responsibility, and customer satisfaction, one can ensure that your projects not only meet their intended objectives but also contribute meaningfully to the success of your organization. Through strategic alignment, engaging internal and external stakeholders, and resource optimization, projects are sure to deliver outcomes. But it doesn't stop there-by going beyond the basics and embracing innovative project management and value creation approaches, you can take your efforts to new heights.
When you deliver projects that fulfill stakeholder expectations and drive long-term value for your organization, you promote sustainable growth and customer loyalty and satisfaction. With the right strategies and techniques, you can unlock the full potential of value creation in project management.
Ready to elevate your project management game? Dive into the strategies outlined in this article and start implementing them in your projects today. By prioritizing value creation and adopting a proactive approach, you can drive business success and innovation in your projects like never before. Don't wait-seize the opportunity to exploit the value creation process and transform projects centered on value creation.
What is Value Creation?
Value creation lies at the heart of project management, serving as the driving force behind successful project outcomes. It encompasses the strategic process of delivering results that significantly contribute to organizational goals, create customer value, and align with stakeholder expectations. Rather than merely focusing on completing tasks and meeting deadlines, value creation entails aligning project objectives with the broader strategic vision of the organization and maximizing the benefits derived from project outputs.
At its core, value creation in project management involves several key elements:
Alignment with Organizational Objectives
Projects need to be aligned with the overarching goals and priorities of the organization. It ensures project outcomes directly support the organization's mission, vision, and strategic initiatives.
By aligning the project objectives with organizational objectives, project managers can ensure that their efforts contribute meaningfully to the organization's success and deliver the most value. In addition, creating value becomes integrated from start to end, achieving desired outcomes that fulfill the project's role in the value chain. Remember, projects aligned with strategic objectives will have a higher purpose.
Stakeholder Satisfaction and Engagement
Value creation requires a deep and comprehensive understanding of stakeholder needs and expectations. Project managers must actively engage with stakeholders throughout the project lifecycle to identify and prioritize their requirements.
PMs focus on stakeholder satisfaction and fostering open communication, and through these facets, project managers can ensure that project outcomes meet stakeholder expectations. It is relevant that the business leaders supporting your projects can visualize the value creation model through your engagement with them. Time is a component that helps in creating value and ensuring time is not wasted for your company's stakeholders.
Optimization of Resources and Processes
Effective value creation involves optimizing the allocation and utilization of resources. It includes human resources, financial resources, and other project assets. By implementing efficient project management processes and continuously monitoring performance metrics, project managers can maximize the efficiency of resource utilization and enhance value delivery.
Project professionals can only generate more value and maximize resources if the correct and aligned measurements are in place.
Managing the value creation process as part of project management is about delivering outcomes that make a tangible difference to the organization and its stakeholders. Aligning project objectives with organizational goals, prioritizing stakeholder satisfaction, and optimizing resource utilization ensures project delivery remains the focus.
Why Managing Value Creation is Important in Project Management?
In project management, prioritizing value creation is a fundamental pillar of success, guiding managers to achieve outcomes harmonized with organizational objectives and stakeholder expectations.
Through emphasizing value creation, project managers ensure that projects not only meet their intended goals but also significantly contribute to the overall success of the project team and the organization.
Managing value creation in project management is supported by several reasons:
Firstly, it ensures alignment with organizational goals, driving progress towards strategic initiatives.
Additionally, prioritizing value creation enhances stakeholder satisfaction by actively engaging stakeholders and delivering outcomes that meet expectations. These stakeholders then become loyal customers to the project managers, setting up the iterations or incremental progressions. In the agile space, these engagements become central to the value-creation process.
Moreover, it facilitates the optimization of resources, enabling project teams to maximize efficiency and minimize waste. Projects prioritize value creation to gain a competitive advantage in the market by delivering impactful outcomes and value to customers and stakeholders.
Adopting a proactive approach to embedding value-creation principles into project management processes fosters innovation and long-term success.
Long-term value creation is essential when projects start. Although most projects are temporary, the outcomes generated by these endeavors look into the future. Projects are a part of the company's success and bring into the limelight the value proposition it provides to the organization.
Customer Satisfaction
In managing projects, customer satisfaction is one of a few specific metrics project managers should also consider. It is evident in this article that the value creation model and process tend to focus on internal and external stakeholders, how customers perceive the strategic alignment of projects, as well as creating value for customers through the project deliverables. A company's success can also be measured through its customer satisfaction scores.
Financial value relating to customer satisfaction is also an essential part of the value chain which projects should be able to include in its life cycle.
Three Different Ways to Manage Value Creation as Project Managers
As project managers, we are tasked and responsible for delivering projects on time and within budget and ensuring that they create tangible value for our organizations and stakeholders.
Managing value creation involves adopting strategic approaches prioritizing alignment with organizational goals, stakeholder engagement, and resource optimization.
Below, we explore three ways to effectively manage value creation in project management, drawing insights from the PMBOK Guide and industry best practices.
- Strategic Alignment for Value Maximization
- Stakeholder-Centric Value Delivery
- Resource Optimization for Value Enhancement
Transitioning from theory to practice, let's delve into these value-creation strategies and discover how project managers can implement them successfully to drive project success and organizational growth.
Strategic Alignment for Value Maximization
One of the fundamental ways to manage value creation as project managers is by ensuring strategic alignment with organizational goals. It involves thoroughly understanding the strategic objectives of the company managers and organization and mapping project objectives to them.
Project goals should be synchronous with the broader strategic vision; project managers can ensure that project outcomes contribute directly to the organization's success. To execute this step effectively, project managers should perform the following:
Conduct a comprehensive analysis of organizational goals and priorities.
Analysis of organizational goals and priorities is the first few steps when identifying the alignment of projects to strategic initiatives. Projects tend to have a few goals and priorities; this sets up the business value creation model within projects that should generate competitive advantage or increase customer and employee satisfaction based on the deliverables for internal and external stakeholders.
Clearly define project objectives and deliverables in alignment with organizational objectives.
Defining what the project intends to deliver is as relevant of a task as the delivery itself. Project requirements tend to veer from what was agreed upon, especially for long-term projects. Some projects tend to suffer from scope creep.
Clearly defining these objectives and deliverables and ensuring value is embedded in the steps will maximize value and strategic alignment.
Continuously monitor project progress and make adjustments as necessary to maintain alignment with strategic goals.
There are numerous tools project managers can use to monitor project progress and if it is moving away from the initial requirements. Project managers are empowered to make the necessary adjustments to maintain the value proposition of projects and their alignment with the strategic objectives.
Stakeholders will have different agendas and functional managers will contribute to the broad range of project tasks and deliverables; that being said, customer experience, financial value, and process innovation all help align the projects with the organizational strategic objectives.
Stakeholder-Centric Value Delivery
Another critical aspect of managing the value creation model is adopting a stakeholder-centric approach to project management. It involves actively engaging stakeholders throughout the project lifecycle to understand their needs, expectations, and preferences.
By prioritizing stakeholder satisfaction and fostering open communication, project managers ensure the project outcomes are complete and to execute this step effectively, project managers should:
Identify key stakeholders and their respective roles and interests in the project.
Project managers should not ignore any aspect of stakeholder support. Creating value that aligns with the stakeholder's interests helps boost the progress of projects. In many ways, stakeholders affect the project through the different customer needs they represent.
Stakeholders are there for a reason; it is a must for project managers to effectively manage the value the project stakeholders can provide to gain or maintain the value propositions. For example, some stakeholders may focus on revenue growth, while others veer toward the results.
Establish regular communication channels to gather feedback and address stakeholder concerns.
Feedback loops tied within the regular communications between the project team and stakeholders create continuous innovation during the project life cycle.
Both traditional and agile executed projects depend heavily on communicating; studying feedback and maintaining best practices contribute to operational efficiency are the nitty-gritty steps the project team does daily.
Examples of a very well-established and "operationalized" way of project management are ticket tracking in project management software and the Scrum Framework that provides insights on how to communicate better, send feedback, and collaborate across the different teams and entities involved in project delivery.
Incorporate stakeholder feedback into project planning and decision-making processes to maximize value delivery.
In both traditional and agile project management, feedback is relevant at all steps along the way. As mentioned above, feedback loops are essential. Creating value from feedback instills a continuous improvement mindset; a company culture that includes aspects of Kaizen (changing for the better) establishes that stage wherein fundamentals and feedback become the backbone of project delivery.
Project planning and data-driven decision-making promote the value creation model; there is value in planning in phases or iterations.
Resource Optimization for Value Enhancement
Optimizing resource allocation and utilization is another essential strategy for managing value creation in project management. It involves strategically allocating human, financial, and material resources to maximize value creation while minimizing waste and inefficiencies.
With PMs implementing efficient project management processes and continuously monitoring performance metrics and key factors, we can enhance value delivery and optimize project outcomes. To execute this step effectively, project managers should:
Conduct a thorough assessment of resource requirements and constraints.
Resource requirements not only talk about people and monetary value invested into the projects. It also discusses time, highlighting the need to see and assess the triple constraint.
In hybrid projects, the constraints may have some wiggle room to fit and create more customer value through the project deliverables.
Creating value ensures the initial investment is transformed meaningfully and is aligned with relevant requirements and constraints.
Develop resource management plans to allocate resources effectively and efficiently.
About the resource requirements and the constraints, effective management of acquired resources matters in the value creation model.
It is integrated within project management knowledge areas to extract relevant capabilities to deliver project requirements at the right time, within budget and scope, and ensure project quality outcomes.
Monitor resource utilization throughout the project lifecycle and make adjustments as necessary to optimize value creation.
By adopting these three unique approaches to managing value creation, project managers enhance project success and drive organizational growth.
Through strategic alignment, stakeholder engagement, and resource optimization, project managers can ensure that projects deliver tangible value and contribute to the long-term success of the organization.
Key Considerations for Successfully Managing Value Creation in Project Management
While the steps outlined above provide a solid framework for managing the value creation model in project management, there are several additional considerations that project managers should keep in mind to ensure success.
VALUE CREATION IS A PART OF THE PROJECT LIFECYCLE
It's relevant to recognize that creating value is not a one-time event but rather an ongoing process that requires continuous monitoring and adaptation. Project managers should remain vigilant throughout the project lifecycle, proactively identifying opportunities to enhance value creation and delivery and address emerging challenges or risks.
COMMUNICATION IS A CORE FACET OF CREATING VALUE
Effective communication plays a pivotal role in managing value creation. Project managers must ensure clear and transparent communication with all stakeholders, informing them about project progress, changes, and potential impacts on value delivery.
By fostering open communication channels and actively soliciting feedback from stakeholders, project managers can maintain stakeholder engagement and alignment with value-creation objectives.
ADVOCATE SAFE SPACES FOR INNOVATION
Embracing a culture of innovation and learning is essential for successfully managing the value creation model in project management. Project managers should encourage creativity, experimentation, and knowledge sharing among team members, empowering them to explore new ideas and approaches that may lead to the most shareholder value, improved customer experience (or even team experience), and potentially contribute to maintaining competitive advantage through strategically aligned projects.
By advocating a culture of continuous improvement and learning, project managers can drive innovation and ultimately deliver value to the organization and its stakeholders.
Taking it to the Next Level: How to Enhance Value Creation Beyond the Basics
To truly excel in managing value creation in project management, it's essential to go beyond the three different ways outlined earlier and leverage the principles and standards of project management.
One way to achieve this is by integrating the value creation model into every aspect of the project management process, from initiation to closure.
By embedding value creation model and principles into project initiation, planning, execution, monitoring, and closing processes, project managers can ensure that value creation remains a central focus throughout the project lifecycle.
Furthermore, project managers can enhance value creation by leveraging advanced project management techniques and methodologies.
For example, adopting agile or hybrid project management approaches can enable project teams to respond quickly to changing stakeholder and customer needs, and market dynamics, ultimately enhancing value delivery or improving customer satisfaction.
Similarly, embracing advanced risk management techniques, such as Monte Carlo simulation or probabilistic risk analysis, can help project managers identify and mitigate potential risks that may impact value creation or the project's financial value.
Lastly, fostering a culture of continuous improvement and innovation within the project team can drive value creation and customer relationships to new heights. Encouraging team members to regularly reflect on project performance, identify lessons learned, and explore new ideas aligned with the value chain can lead to innovative solutions and approaches that exceed stakeholder expectations.
By embracing a mindset of continuous learning and improvement, project managers can elevate value creation efforts and drive sustained contribution in value proposition and organizational success.
Alternatives to Managing Value Creation in Project Management
While the methods outlined above provide strategies for managing value creation in project management, it's imperative to acknowledge the alternative approaches that may suit different project contexts or organizational cultures.
Measurements, computations, and other quantitative techniques
One alternative approach is earned value management (EVM), which focuses on quantifying project performance in terms of earned value, actual cost, and planned value. By analyzing these metrics, project managers can gain insights into project progress and performance, enabling them to make data-driven decisions and thereby having the object data to assist when creating value.
Become data-driven
Another alternative is predictive analytics and data-driven insights to optimize the value creation model in project management.
By leveraging historical project data, trends, and predictive modeling techniques, project managers can identify patterns and anticipate potential risks or opportunities that may impact value delivery. This proactive approach enables project managers to take preemptive actions to mitigate risks and capitalize on opportunities, ultimately enhancing value-creation outcomes.
Don't ignore the perceived value of projects
Additionally, some organizations may opt for a value-driven project management approach, where project decisions and priorities are driven primarily by the perceived value to stakeholders. This approach emphasizes flexibility and adaptability, allowing project teams to adjust project plans and deliverables based on changing stakeholder needs and market conditions.
With a focus on delivering maximum value to stakeholders, organizations can ensure that projects remain aligned with strategic objectives and deliver meaningful outcomes that drive organizational success.
Wrapping Up and My Experience with Managing Value Creation in Project Management
In conclusion, managing value creation in project management is essential for driving project success and organizational growth. By aligning project objectives with organizational goals, prioritizing stakeholder engagement, and optimizing resource utilization, project managers can ensure that projects deliver tangible value and contribute to long-term success.
Leveraging insights from the PMBOK Guide and industry best practices, we have explored various strategies and considerations for effectively managing value creation in project management.
Throughout my career in project management, I have witnessed firsthand the transformative impact of prioritizing value creation. By adopting a proactive approach that emphasizes strategic alignment, stakeholder engagement, and continuous improvement, I have successfully led projects that have delivered significant value to organizations and stakeholders alike. Importance is shared to have customer loyalty and trusting stakeholders, team members, and a truthful approach to project delivery. All of these are results of value creation.
As project managers, it is relevant to recognize the importance of value creation and to continually strive to enhance our ability to drive value in every project we undertake.
Ultimately, I encourage fellow project managers to embrace the principles and strategies outlined in this article and to leverage them to enhance value creation in their projects.
With value creation as a priority and adopting a continuous improvement mindset, we can elevate our project management practices and drive sustained success in delivering impactful outcomes for our organizations and stakeholders.
References:
Project Management Institute. (2017). A guide to the project management body of knowledge (PMBOK guide) (6th ed.). Project Management Institute.
Alderton, M. (2013). The value proposition. PM Network, 27(8), 40–45.
Project Management Institute. (2021). The value delivery system explainer. PMI. https://www.pmi.org/-/media/pmi/documents/public/pdf/pmbok-standards/value-delivery-system-explainer.pdf?v=8cf8f772-736c-4cb7-b3f9-814e29f40c94
