What is value-driven project management? The very essence of what “project management is” is going through significant changes at this time.
For many years, project management has been heavily associated with what I call a “traditional plan-driven approach to project management” where the primary emphasis has been on planning and control to achieve predictability over project costs and schedules for delivering well-defined requirements.
- In that environment, it was assumed that the “well-defined requirements” accurately reflected the business value that was needed for the solution being developed and the primary measure of success and value of the project was simply whether it met its cost and schedule goals.
- However, there have been many projects that have met their cost and schedule goals but failed to deliver an acceptable level of business value and that shouldn’t be considered a success at all.
The primary emphasis all along should have been on producing value. This is not to say that meeting cost and schedule goals for a project has no value, but that is only one component of value and not necessarily the most important component.
“There is nothing quite so useless as doing with great efficiency, something that should not be done at all”Peter Drucker
The Role of Uncertainty in a Project
In particular, a traditional plan-driven approach to project management starts to break down when there is a significant amount of uncertainty about the project. That uncertainty can be either:
- Requirements Uncertainty – What is needed to satisfy the business need the project is intended to fulfill and deliver a sufficient level of business value?
- Technology Uncertainty – What is the best approach for satisfying these needs from a technology perspective?
Of those two areas of uncertainty, requirements uncertainty typically poses the most significant challenge. As business solutions have become more complex, it has become difficult to fully articulate the requirements that the solution must satisfy and define exactly what is needed to provide a sufficient level of business value. And, ignoring the level of uncertainty and attempting to force-fit a project with a high level of uncertainty to a traditional plan-driven project management approach can have some significant negative consequences:
- Project managers are often forced to make assumptions to try to resolve the uncertainty; and many times, those assumptions will be wrong.
- An excessive emphasis on planning and control can stifle the creativity and innovation that may be needed to maximize the value of the solution.
In today’s world, as solutions become much more complex, we must learn to live with uncertainty. It cannot be ignored. We need to openly acknowledge the level of uncertainty in a project and develop a project management approach that is appropriate to the level of uncertainty. The need to deal with uncertainty has been the primary driving force behind an Agile approach; however, there was a significant pendulum swing associated with Agile in the early years.
- Many people saw Agile and traditional plan-driven project management as binary and mutually exclusive alternatives that could not be blended together in the right proportions to fit a given situation.
- The tendency among many people was to “throw the baby out with the bath water”, completely abandon a traditional plan-driven approach, and replace it with an Agile approach, but that’s not the way uncertainty works. Uncertainty is never an “all or nothing proposition where a project is either 0% or 100% uncertain.
That’s why a blended approach is often needed.
The Evolution of Agile Project Management and Value
When I started this journey a number of years ago, many people were skeptical that there was such a thing as “Agile Project Management”. The words, themselves, sound like an oxymoron; and on the surface, it seems like blending oil and vinegar to get them to work together. I set a goal to help people understand what “Agile Project Management” is and show people that it is very possible to blend an approach to fit a given situation. To that end, for the past 10-15 years, I’ve been a very vocal proponent of the topic of “Agile Project Management”:
- I’ve published three books on Agile Project Management:
- Making Sense of Agile Project Management – Balancing Control and Agility was published in 2011.
- Managed Agile Development – Making Agile Work for Your Business was published in 2013.
- The Project Manager’s Guide to Mastering Agile – Principles and Practices for an Adaptive Approach was originally published in 2015 and a new edition was recently published in 2023 and has been adopted as a graduate-level textbook in several universities.
- I’ve developed a complete online training curriculum on Agile Project Management on three different platforms with over 250,000 students.
- The first of those courses was launched in 2014 on the Udemy platform,
- Since that time, I’ve expanded the training I offer to the Pluralsight platform, the Teachable platform, as well as Udemy for Business, and
- Several major corporations have adopted my training for all their project managers.
- I’ve also written over (150) articles on Agile Project Management on this blog site.
All of that work is still very valid, but an additional emphasis is needed. Becoming more agile should not be a goal in itself. The goal should be on maximizing the value that a project delivers,
The Need for a Blended Approach
Producing “Value” should be the primary goal of any project management approach, but “value” can be elusive and might mean different things to different people:
- Some customers may know exactly what they want; and “value”, to them, means delivering exactly that on time and on budget.
- Other customers may not know exactly what they want and some level of flexibility and adaptivity combined with some level of creativity and innovation might be needed to explore potential solutions to satisfy their need. The cost and schedule for delivering the solution may not be the most important component of “value for these customers, and the number of customers who fall in this category is likely to increase significantly as solutions become more complex.
- And, of course, many customers will fall somewhere between those extremes.
“Value” should be the common denominator of any project management approach; and in many cases, it may require blending an Agile and traditional plan-driven approach in the right proportions to fit the customer situation and provide the right level of value. There are very few customers who will say that cost and schedule are completely unimportant, but it might not be the most important component of value to them.
There is No “Cookbook Approach
- “Agile Project Management” focuses on defining “how” project managers can go about adapting their project management approach to develop a more flexible and adaptive approach, and
- “Value-driven Project Management” and an emphasis on value is the “why” these changes are necessary and essential.
Value-driven project management is mostly a mind-shift and there is no “cookbook” solution for how to do it. You have to accept that traditional plan-driven project management is not the only way to do project management and a broader emphasis on producing value is needed. Project Managers for a long time have been used to what I call a “cookbook” approach to project management:
- They might be used to a well-defined and prescriptive methodology and might even use a heavily document-centric approach with fill-in-the-blanks documents for project deliverables.
- And, in the past, PMBOK was over (500) pages long and attempted to provide a detailed checklist of things to do in almost every conceivable project management situation.
I think PMI® has recognized that approach is no longer viable and the latest version of PMBOK® is a lot shorter. Instead of attempting to tell a project manager what to do and exactly how to do it, the approach has shifted to conveying an understanding of the principles involved and relying on the project manager to use some level of judgement and skill to figure out how to apply those priniples to a given situation. That’s exactly what’s needed for value-driven project management. The principle of producing of producing value is what’s important and there is no “cookbook” approach to tell you how to do it.
Principles of Value-driven Delivery
Nicolas Gouy (http://www.infoq.com/resource/minibooks/agile-guts/en/pdf/AgilewithGuts-final.pdf) has identified four key principles associated with value-driven delivery and this section is based primarily on his work.
- Goal – The first is to have a clearly defined “Goal” that is defined in terms of the business outcome and value that the project is trying to achieve.
- Uncertainty – The second is to learn to recognize and accept uncertainty as a fact of life that you have to deal with. Value, in particular, can be an elusive term and means different things to different people. It is also somewhat subjective and subject to change.
- Tradeoffs – The third principle is related to “Tradeoffs”. There are typically many tradeoffs that need to be resolved to arrive at an optimum solution and an objective approach is needed for evaluating and resolving these tradeoffs.
- Speed – The final principle is related to “Speed”. This principle recognizes that the idea of value can change rapidly; and, for that reason, it is essential to deliver something as fast as possible.
We’ll discuss each of these areas in more detail in the following sections:
Having a clearly defined goal for a project is extremely important and the goal should be defined in terms of the desired outcome of the project in terms of the business value that the project is trying to create, not in terms of how it will be achieved:
- Goals should be specific,
- They should be measurable and achievable,
- And they should be realistic and timely.
We need to accept and acknowledge that some level of uncertainty is a fact of life in all projects, and it cannot be ignored:
- We need to recognize that you can’t make all uncertainty go away and
- We need to develop an approach that is appropriate to the level of uncertainty,
The most important points are:
- In a typical project, if we focus on the “Why”, there is typically a lot of uncertainty associated with that kind of goal because a lot is left open as to the “Who”, “How”, and “What” will be required to achieve that higher level goal.
- But that’s very appropriate because jumping into a solution to the “what”, “who”, and “why” of how that goal will be achieved may not lead to the most optimum solution. For that reason, an objective and well-thought approach is needed for dealing with uncertainty.
People’s egos often get in the way of dealing with uncertainty. Many people don’t want to readily admit that they don’t know everything that they need to know about a particular subject. A more healthy and mature approach is to recognize that there is a lot that we don’t know that we don’t know.
There is a tendency with Agile to rush too quickly into a solution which may not be optimal, and a systematic approach is needed to evaluate alternatives.
The final point, of course, is that speed is important.
- All of this has to be done quickly and efficiently to arrive at a solution.
- Taking time to evaluate alternative solutions is important but we can’t let it drift into “analysis paralysis”.
The Importance of Incremental and Iterative Delivery
The diagram below shows a typical value delivery curve for a traditional plan-driven project:
The important point is that the customer may not see the solution until it is 100% complete and ready for delivery. There is obviously a big risk in that. An Agile delivery approach is much more incremental and iterative, and the customer gets to see the solution as it is being developed and to provide feedback and inputs to maximize the value of the solution:
Another important value of incremental development as shown in this diagram is that if the work is properly prioritized, it becomes more apparent where the project has reached a point of diminishing returns where the incremental value being produced no longer exceeds the incremental cost. A common problem of many plan-driven projects is “gold plating”. The customer may ask for every possible thing that they can possibly imagine because they fear if they don’t ask for it, they won’t get it at all.
Value-driven Project Management is focused on maximizing the value a project provides to customers which can go well beyond simply delivering well-defined requirements on-time and within budget. It requires a mindset change for project managers to recognize that traditional plan-driven project management is not the only way to do project management.
Prioritizing customer needs based on value is essential to a successful project approach; however, defining and prioritizing customer values is not an easy thing to do, and many people underestimate the difficulty and complexity of this task.
- “Value” can be difficult to assess and quantify and it can also be very subjective,
- Customer ideas about quality are often confused and difficult to see clearly,
- And, different stakeholders may have different views of value and it might be difficult to reach consensus on an overall solution.
It’s definitely not as easy as asking a customer what they want and getting a simple answer. It is very easy to underestimate the difficulty and complexity associated with identifying and prioritizing customer values and it can require a systematic approach to do that. In my online training course, “Introduction to Agile Project Management”, I provide more detail into a number of approaches for identifying and prioritizing customer value in much more detail. That course is the third of seven courses in my overall Agile Project Management curriculum.