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Originally Posted On: https://www.rosemet.com/blog/value-delivery
Are you a project manager looking to improve your project management skills and help your organization grow? In the constantly changing field of project management, it is essential to know and be familiar with the system for value delivery – it is a necessary part of your strategic planning and business success. With the fast pace of business, the system for value delivery can seem overwhelming.
Envision yourself as knowledgeable and with the necessary tools and insights to drive projects successfully and efficiently; you will gain a profound understanding of the multifaceted nature of the value delivery system and master critical project management principles. You will confidently align projects with organizational objectives, optimize resource utilization, and foster stakeholder engagement to deliver tangible value at every stage of the project lifecycle.
Discover the importance of organizational governance systems, delve into essential project-associated functions, learn how to navigate the project environment, and ensure you are communicating and building relationships with internal and external stakeholders.
Take the next step towards mastering the value delivery system and project management. Whether you are a seasoned professional or just starting your journey, these insights will equip you with the information and tools necessary to drive projects successfully and contribute to organizational growth. Do not miss this opportunity to unlock your full potential as a project management professional.
What is a System for Value Delivery?
The system for value delivery refers to a structured framework and methodology used in project management. Project value delivery drives to fulfill its intended purpose and deliver tangible value that is aligned with the business strategy, with support from both stakeholders and business leaders. This system encompasses processes, principles, understanding customer preferences, and best practices designed to optimize project outcomes while aligning with organizational objectives. In a nutshell, the system promotes the value-creation process through the lenses of project management but also through the customers’ needs and stakeholders’ expectations.
For starting professionals transitioning to project management, understanding and implementing the value delivery system is relevant for projects and meeting stakeholders’ expected value. The system for value delivery provides a holistic approach to managing projects, emphasizing the creation, delivery, and realization of value throughout the project lifecycle and to organizational success and growth.
By the principles outlined in the Standards of Project Management and PMBOK Guide 7th Edition, a system for value delivery is a framework designed to optimize project outcomes and ensure the realization of value for stakeholders. This system integrates various components and considerations that play a vital role in facilitating the successful delivery of value within the project context.
Creating Value
At the core of the system for value delivery lies the objective of creating tangible value for stakeholders through project initiatives; this involves identifying and prioritizing the outcomes, benefits, and deliverables that align with organizational goals, strategies, and stakeholder needs.
For example, customer satisfaction is one measurement that a project and operation use to identify whether value is realized. Further, many organizations tend to have projects without a higher purpose. According to Nieto-Rodriguez, in 2021, purpose-driven projects have a higher chance for success than ones that do not inspire. In this context, the purpose is directly related to the relative value created by these projects.
It is imperative that project teams and the business unit are aligned to ensure tangible benefits are realized by the customer. By focusing on value creation throughout the project lifecycle, organizations can maximize the return on investment (time, money, and resources) and enhance overall success.
The following are ways to ensure value is delivered:
Organizational Governance Systems
Effective organizational governance systems form the foundation of the value creation model and delivery, providing the structure and oversight necessary to ensure that projects are performed and delivered in alignment with strategic priorities, ethics, policies, and organizational values.
Organizational governance systems include establishing clear roles, responsibilities, and decision-making processes to promote accountability, transparency, and ethical conduct throughout the project lifecycle.
Organizational governance supports the different value-creation strategies to integrate sustainable growth as it aligns with the company’s success, compliance framework, and ethical standards.
Functions Associated with Projects
A system for value delivery encompasses a range of knowledge areas associated with the project lifecycle, including initiating, planning, executing, and closing (PMBOK, 2017). Each knowledge area plays a role in value delivery by enabling effective project governance, resource management, risk mitigation, and stakeholder engagement. Organizations can optimize project performance and outcomes by integrating these functions into a cohesive framework.
Customer value or the desired outcomes are established at the start of projects. The aim is to achieve a system of value delivery; whether you leverage the predictive project management methodology or use the incremental and iterative approach of the Agile framework, your objective should be to develop long-term value and customer/client satisfaction (both internal and external stakeholders) based on project requirements and specifications while keeping scope creep and constraints in mind.
The Project Environment
The project environment, characterized by internal and external factors, significantly influences the delivery of value within projects. This includes organizational culture, industry dynamics, regulatory requirements, technological advancements, and market trends. A system for value delivery acknowledges the complexity of the project environment and adopts adaptive strategies to navigate uncertainties and capitalize on opportunities effectively. Internal and external stakeholders may be part of these environments, further establishing the importance of stakeholder management. Value is delivered if stakeholders are treated as customers; this perspective creates the foundational guidance of creating customer value equating to business value creation. Analysis tools such as PESTLE and SWOT are also available in a PM’s toolkit to assess both internal and external project environments.
Product Management Considerations
Incorporating product management considerations is essential for ensuring that projects deliver results in alignment with customer requirements and market demands. This involves defining product requirements, conducting market analysis, managing product life cycles, and prioritizing features to maximize customer satisfaction and competitive advantage. By integrating product management principles into project planning and execution, a company can enhance the relevance, usability, and marketability of deliverables. Customer feedback is also a big factor when conducting competitive analysis; these facets support the iterative and incremental processes of product management.
Reasons You Need to Know about the Role of Value Creation in Organizations
Comprehending the Role of Value Creation in Organizations
The crux of organizational success lies in the value creation process, which entails a multifaceted approach transcending financial gains. It encompasses an array of endeavors, including meeting customer requirements, fostering positive social and environmental impacts, enhancing operational efficiency, facilitating organizational evolution, and perpetuating benefits over time.
Meeting Customer Needs
Central to the value creation process are products, services, or outcomes is the need to address the requirements and expectations of many customers. By furnishing solutions that alleviate customer pain points and align with their preferences, organizations offer enhanced customer satisfaction and loyalty, laying the groundwork for sustained growth and success. Ultimately, if there were no happy customers, businesses would struggle.
Social and Environmental Responsibility and Contributions
Value creation extends beyond financial considerations to encompass affirmative contributions to society and the environment. Organizations wield the power to drive meaningful change by championing sustainability, diversity, and corporate social responsibility in their operations and offerings, resonating with the ethos of stakeholders and society.
Improving Efficiency and Effectiveness
Integral to value creation is operational efficiency, productivity, efficacy, and adaptability within the organizational framework. Through the optimization of processes, resources, and innovative methodologies, organizations bolster their competitive edge, positioning themselves for long-term viability amidst dynamic market landscapes.
Efficiency and effectiveness are also measures of value creation. Both contribute to economies of scale, and scaling value creation introduces the value proposition of projects.
Project management is a process, and it mirrors other frameworks in terms of value creation. Instilling project management practices, especially the Agile framework, contributes to the business agility capabilities of the organization. Key factors that affect efficiency and effectiveness are the willingness and capabilities of employees to accept change.
Enabling Organizational Transition
Value creation is pivotal in facilitating organizational metamorphosis toward future states. Whether through strategic initiatives, transformative projects, or change management endeavors, organizations leverage value creation models to navigate transitions and realize enduring objectives. Organizational changes should empower business value creation through business agility.
Sustaining Benefits
An indispensable facet of the value creation model involves the sustainability of benefits engendered by other related or unrelated programs, projects, or business endeavors. By leveraging past achievements and fortifying existing capacities (through lessons learned), organizations maximize value generation and ensure sustained relevance and resilience.
The Significance of Organizational Governance Systems
Organizational governance systems serve as the bedrock of project management, furnishing effective direction, control, and oversight of pursuits, including projects. These systems encompass a gamut of policies, procedures, and practices geared toward achieving several paramount objectives:
Achieving Organizational Objectives
Organizational governance systems link project undertakings with the strategic objectives, furnishing strategic direction and guidance to ensure that projects contribute to organizational imperatives.
Projects not aligned nor have no higher purpose may still be worth the initial investment of time, resources, or money but there will be further questions relating to the project’s contribution to the value chain, its overall implication to the company’s success, or possibly a question that most successful businesses answer every day: will it be creating value?
With the rise of better technology, generative AI, for example, organizational objectives are put into the spotlight. Will they adapt to the technological changes or become obsolete? Value delivery models need to adjust alongside how governance systems are updated to accommodate changes in the landscape and also be in alignment with traditional constraints like costs, schedules, and resources.
Managing Risks Appropriately
A cardinal tenet of organizational governance pertains to the management of risks intertwined with projects and organizational endeavors. These systems institute risk identification, assessment, and mitigation, thereby safeguarding organizational interests and assets and exploiting positive risks for the benefit of the project or organization.
Optimizing Resource Utilization
Organizational governance systems ascertain the judicious utilization of resources, including financial, human, and physical resources, and by instilling clear accountability structures and resource allocation mechanisms, the systems maximize the value derived from organizational investments.
Value creation out of talent is not new. Inventions turn to innovation when value-creation models are established alongside newly created, protected, and monetized products or services. Optimization of several resources, costs, and schedules supports value delivery either through numerous projects or consistent delivery of results in operations.
Promoting Compliance and Ethics
Effective governance promotes and champions adherence to ethical standards, regulatory requisites, and industry best practices. Through the guidance of codes of conduct, compliance frameworks, and reporting mechanisms, these systems nurture a culture of integrity and accountability within the organization, enhancing the reliability and alignment to the goodness of the value creation model.
Enhancing Transparency and Accountability
Organizational governance systems foster transparency and accountability by instituting mechanisms for performance monitoring, reporting, and evaluation; by advocating open communication, stakeholder engagement, and performance measurement, these systems promote informed decision-making and iterative enhancements.
The Role of Project-Associated Functions
These functions are the project knowledge areas indispensable for the seamless planning, execution, and control of projects. These knowledge areas are pivotal in the attainment of project objectives and the delivery of value to stakeholders. Here’s an overview of the ten knowledge areas:
Project Integration: Encompasses the coordination and amalgamation of diverse project management processes and activities to ensure the realization of project objectives. Creating value throughout the project life cycle and integrating actions toward expected outcomes is one of the value propositions of managing projects. Project integration is one of the critical knowledge areas a project manager should perform with continuous innovation, continuously integrating the agility mindset even within the constraints of the traditional framework.
Scope Management: Entails the delineation, control, and management of the scope of work imperative for the successful culmination of the project, thereby forestalling scope creep and meeting stakeholder expectations.
Schedule Management: Involves the formulation, monitoring, and regulation of the project schedule to ensure timely execution of project activities, optimal resource management, and mitigation of schedule risks.
Cost Management: Focuses on the estimation, budgeting, and regulation of project costs throughout the project lifecycle, ensuring adherence to budgetary constraints while optimizing value creation for stakeholders.
Quality Management: Encompasses processes and endeavors ensuring that project deliverables adhere to predefined quality standards and stakeholder requisites, augmenting product reliability and customer satisfaction.
Quality management not only focuses on the actual results of the project delivery but also the value creation model related to it. Consistently good quality project deliverables affect how the system for value creation is perceived. A reliable and stable result may produce loyal customers or stakeholders.
Resource Management: Involves the acquisition, development, and management of human, material, and financial resources requisite for project execution, thereby optimizing resource utilization and buttressing project objectives.
Communication Management: Centers on facilitating timely and effective communication among project stakeholders, ensuring dissemination of pertinent information, solicitation and redressal of feedback, and stakeholder expectations.
Risk Management: Entails the identification, analysis, and mitigation of project risks to curtail their impact on project objectives, thereby fortifying project outcomes and enhancing project resilience. On the other side of the spectrum, risking progressively and exploiting positive risk may be an important step to gaining a competitive advantage.
Procurement Management: Involves the acquisition of goods and services from external vendors or suppliers to fulfill project requisites, thereby ensuring cost-effective procurement and compliance with regulatory structures.
Stakeholder Management: Focuses on the identification, engagement, and management of project stakeholders to address their interests and expectations throughout the project lifecycle, thereby fostering stakeholder support and alignment with project objectives. Treating stakeholders as potential customers integrates their different values and approaches to produce and deliver project results. Alignment with stakeholders is a must.
Building rapport and establishing a high-value relationship with the stakeholders is a must for project professionals.
The Influence of the Project Environment
The project environment encompasses internal and external factors influencing projects and value delivery. Here’s an overview highlighting the different aspects of the project environment:
Internal Factors: Encompass the organizational culture, structure, and resource allocation mechanisms that shape project management practices and workflows, influencing project performance and outcomes. Environmental assessment may be through a SWOT analysis. Value creation through this analysis provides the stakeholders and the project team guardrails to support the delivery of requirements. Shareholder value creation is an important aspect when considering internal factors.
External Factors: Encompass socio-economic, political, and regulatory dynamics impacting project feasibility, funding, and market demand, influencing the project objectives and outcomes. External assessment may be through a PESTLE (political, economic, sociological, technical, legal, and environmental) analysis.
Impact on Value Delivery: The project environment shapes value delivery within projects, influencing project scope, budget, and timelines, requiring adaptability and strategic maneuvers to ensure value delivery amidst dynamic environments.
Risk Management: Project professionals must understand the project environment to anticipate and address potential threats and opportunities. These risks can manifest in both negative and positive forms.
Negative risks or threats are events or circumstances that could potentially harm the project’s objectives. Examples include budget overruns, scope creep, resource shortages, or technical failures. To mitigate negative risks, professionals can employ strategies such as risk avoidance (eliminating the risk), risk mitigation (reducing the probability or impact of the risk), risk transfer (shifting the risk to a third party through contracts or insurance), or risk acceptance (acknowledging the risk and preparing contingency plans).
Positive risks, also known as opportunities, are events or circumstances that could benefit the project if they occur. These might include the availability of new technology, unexpected cost savings, or an early completion of tasks. To capitalize on positive risks, PMs can adopt strategies such as risk exploitation (actively seeking to make the opportunity happen), risk enhancement (increasing the probability or impact of the opportunity), risk sharing (collaborating with stakeholders to maximize the benefits), or risk acceptance (embracing the opportunity while being prepared to manage any associated challenges).
In both cases, projects require thorough analysis, clear communication with stakeholders, and the implementation of appropriate strategies tailored to the specific project environment. By proactively addressing both negative and positive risks, a project manager can enhance the likelihood of success and achieve better outcomes.
Adaptability and Resilience: Understanding the project environment empowers a project manager to adapt plans, efficiently allocate resources, and promptly respond to emergent challenges or opportunities, thereby fortifying project resilience and maximizing the value creation process.
The Role of Product Management Considerations
Product management considerations wield a profound impact on the alignment of portfolios, programs, projects, and products with organizational strategy and objectives. Product management aligns with the value creation model and below is an overview of its significance:
Alignment with Organizational Strategy
Involves the identification, selection, and prioritization of products in alignment with the organization’s strategy, thereby maximizing value creation for the organization and its stakeholders.
Business leaders are empowered to steer the ship and express the organizational strategies to generate products or services the customers need.
Product Life Cycle Management
Covers the planning, development, launch, and sustenance of products catering to evolving customer expectations and technological advancements, thereby continually achieving product relevance, competitiveness, and profitability.
Portfolio Management
Project and product management in value creation involves strategically selecting, prioritizing, and optimizing projects and products within an organizational portfolio. This process aims to minimize inefficiencies and maximize return on investment. By carefully curating the portfolio, resources are managed effectively, reducing wastage and enhancing overall value generation. This strategic approach ensures that projects and products align with organizational objectives and market demands, fostering innovation and sustainable growth. It emphasizes the importance of deliberate decision-making to achieve optimal outcomes and maintain a competitive edge in the marketplace.
Program Management Integration
Ensuring the achievement of program objectives hinges on orchestrating the synchronized execution of interconnected projects and products. This approach facilitates the delivery of integrated solutions that resonate with stakeholder needs and expectations. Harmonizing the various elements of the program, such as projects and products, a cohesive strategy emerges, maximizing the effectiveness of the overall endeavor. This concerted effort enhances the likelihood of meeting program goals and strengthens stakeholder satisfaction and engagement. It underscores the importance of alignment between components to create holistic solutions that address diverse requirements and propel organizational success.
Strategic Decision-Making
Informative strategic decision-making processes about product development, innovation, and investment enhance the likelihood of project and product success.
Continuous Improvement
Emphasizes the importance of continual enhancement and adaptation even with the shifting market dynamics, customer feedback, and technological advances, thereby sustaining competitiveness in the marketplace.
Creating value through the delivery of new products sustains the system for a value-creation model. Products tend to be iterative and incremental (Android OS, iPhone, microprocessors, etc.); while these products are as common as the grains of sand, the way these products affect certain parts of the business and the value creation model highlights the importance of product and project management in securing the most value or success out of these products or projects.
Wrapping Up and My Experience with the System for Value Creation
Understanding Value Creation: Value creation in project management encompasses meeting customer needs, fostering social and environmental contributions, improving efficiency, enabling organizational transition, and sustaining benefits over time.
Recognizing these dimensions is vital for project delivery and contributing to organizational growth. Delivery of project requirements through the end-to-end framework through traditional or iterative and incremental has shaped the perspective on attaining competitive advantage.
Ultimately, it is imperative that project managers understand value creation includes customer experience and the potential financial value it may have along the value chain.
Importance of Organizational Governance Systems: Effective governance systems provide the structure and oversight necessary to align projects with organizational goals. Managing risks, optimizing resource utilization, promoting compliance and ethics, and enhancing transparency; these systems facilitate successful alignment with value creation objectives; value creation through the lens and guidance of organizational systems promotes accountability from stakeholders and project leaders.
Knowledge areas: Project integration, scope management, schedule management, and stakeholder management are required for optimizing project outcomes and delivering value. Understanding these functions equips the PMs with the tools to execute projects efficiently and meet stakeholder expectations. The knowledge areas are a set of guidance, and input for process innovation, as project leaders deliver results through the life cycle.
From another perspective, the knowledge areas in the traditional waterfall project management framework and the agile ways of working are established value creation models. Creating value from the project requirements, delivery of incremental and iterative results, and aligning with the definition of done mirrors how other parts of the business contribute to their respective value chain.
Navigating the Project Environment and Product Management Considerations: Adapting to internal and external factors influencing projects is essential for successful value delivery. Additionally, integrating product management principles into project planning and execution ensures alignment with customer needs and market demands, driving project relevance and competitiveness. Project and product management are both relevant and have market share in executing the system for value delivery.
Continuous Learning and Improvement: Deepening understanding of value creation and project management principles through continuous learning ensures alignment with evolving organizational objectives,market dynamics, best practices, and industry standards. By staying abreast of best practices and industry standards, PMs can drive project success and contribute to organizational growth.
Assessment of present value indicates the importance of continuous learning. An incremental and iterative approach through agile methodologies can be a guide not just for the project manager but also for the stakeholders and customers. Visibility is key to showing how the project delivery works and the benefits aligned to customers and the company.
As a project manager, my experience within the system of value creation has been typical. Understanding its concepts and context related to project management has driven the point further while being equipped with better insight into the different facets of value creation and its delivery.
This article serves as a simple statement; a reminder of the actions taken within company operations and projects. The steps are identified and are within the context of what people already do – it is just a matter of relating them to labels, putting names in the actions, and getting more formal and invested as a part of the system for value creation, and to deliver value and benefits.
For new project professionals, understanding the system for value creation is pivotal in establishing a foundation for success. Whether it is generating financial returns or devising strategic initiatives, this model provides a standardized framework to guide your efforts. By embracing this perspective, you will gain clarity on task priorities, allocate resources, and optimize project outcomes. This enhances your ability to deliver tangible results and cultivates a proactive approach towards value generation. Embracing this model empowers you to navigate complexities and ensures that your projects contribute meaningfully to organizational objectives and stakeholder expectations.
Ultimately, the different aspects of the system for value creation and the broad range of overlapping concepts with product and project management drive the entire point and importance of understanding and navigating the system. It is a continuous approach, a step-by-step guide to creating value.
You are now equipped with a value proposition centered on creating more value through project management and the system for value creation.
References:
Project Management Institute. (2021). A guide to the project management body of knowledge (PMBOK Guide) (7th ed.). PMI.
Project Management Institute. (2017). A guide to the project management body of knowledge (PMBOK Guide) (6th ed.). PMI.
Project Management Institute. (2017). Pulse of the profession: Success rates rise: Transforming the high cost of low performance (Report No. PMI-SP5-1505-14111, p. 11). PMI.
Nieto-Rodriguez, A. (2021, October 21). Does Your Project Have a Purpose? Harvard Business Review. https://hbr.org/2021/10/does-your-project-have-a-purpose
