Two of the most used words up and down the hallways of project and engineering offices are Value and integration. But what does Value actually mean? How do project teams achieve true Value, and if they do - is it actually beneficial?
In an ideal world we would have access to the ultimate project ‘silver bullet’ that would interknit Value, integration, and other key project ingredients together into a tapestry that delivers project success for engineering teams, clients, management and stakeholder communities alike.
If we delve deeper into the Value dimension of this ‘mythical’ tapestry and its meaning, we find that it has been ‘the bane of existence’ for academic researchers exploring the phenomena. Interesting enough, what the research into Value has uncovered is likely what we all do, which is to apply the definition of Value in many different ways depending on the audience and subject matter being discussed.
The main challenge that arises in successful project execution is to align the interpretation of Value from different stakeholders and weave the integration thread into the project tapestry to bring it all together.
According to Standards Australia (2007), the definition of Value is “an attribute of an entity determined by the entity’s perceived usefulness, benefit and importance”. Atkinson (1999) challenged the traditional notion that project management success is based on the iron triangle of: cost, quality and time; and shifted towards a square root model that considered the shared benefits for the organisation and stakeholder community as a measure of Value.
Allee (2000) expanded on this concept further, taking into consideration the potential to increase Value with the use of intellectual capital and intangibles. Allee (2000) perspective was to redefine Value at an enterprise level and extend it to intangible items and outcomes such as business relationships, human competence, internal structures, social citizenship, environmental health and corporate identity. In a sense, Value is the level of importance of ‘things’ in the wider context of what an organization is trying to achieve. Research by Martinsuo and Killen (2014) determined that the definition of value in strategic projects stretches beyond financial outcomes, and should consider the impact of ecological, social, health and safety, societal influences, and learning and knowledge development on project portfolios.
What we can see from research on the definition of Value is that there are two fundamental positions on its interpretation (Ang, Killen & Sankaran 2015; Thiry 2004; Zhai, Xin & Cheng 2009) described as tangible and intangible. The tangible has a financial focus, whereas the intangible contains non-commercial values.
So, where do the project and client teams sit in terms of their interpretation of Value, and do they align? This is where the ongoing balancing act starts for both parties in the quest to determine the most optimal project outcome based on its cost and scope.
It’s well-known that this balancing act occurs when costs are reduced at the expense of scope. Unfortunately, scope reduction frequently runs the risk of reducing functionality or useability. This struggle is referred to as Exchange-Value vs Use-Value, with the research indicating the privileging of the values of management (Exchange-Value) over those of the client and end-users (Use-Value), which ultimately create an inherent risk of having reduced overall project success.
Armed with this knowledge of potential misalignment, the project teams at Okane implement a project framework that integrates Value into project execution through aligning project requirements to optimise the balance between the use and exchange of Value, and to better understand the actual impact of change of cost and functionality.
Let us work with you to align Value and support your Project Success.
Allee, V 2000, 'The value evolution: addressing larger implications of an intellectual capital and intangibles perspective', Journal of intellectual capital, vol. 1, no. 1, pp. 17-32.
Ang, K, Killen, CP & Sankaran, S 2015, 'Value constructs in multi-stakeholder environments that influence project portfolio decision making', in Annual Conference of the European Academy of Management, European Academy of Management.
Atkinson, R 1999, 'Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria', International Journal of Project Management, vol. 17, no. 6, pp. 337-42.
Martinsuo, M & Killen, CP 2014, 'Value Management in Project Portfolios: Identifying and Assessing Strategic Value', Project Management Journal, vol. 45, no. 5, pp. 56-70.
Standards Australia 2007, 'AS4183-2007 Value Management'.
Thiry, M 2004, '“For DAD”: a programme management life-cycle process', International Journal of Project Management, vol. 22, no. 3, pp. 245-52.
Zhai, L, Xin, Y & Cheng, C 2009, 'Understanding the value of project management from a stakeholder's perspective: Case study of mega‐project management', Project Management Journal, vol. 40, no. 1, pp. 99-109.