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Adding value to project clients

FEATURED PAPER

By Alan Stretton

Sydney, Australia


 INTRODUCTION

In recent articles in this journal (e.g. Stretton 2016b, c, d, e) I have been advocating that project management should move from a focus on project execution which many still have, to broader perspectives and involvement, which could include:

  • increased involvement in converting project outputs to (business) outcomes
  • increased involvement in project initiation activities, including
    • capturing client’s needs
    • planning to convert these needs into outcomes
    • defining the project to best contribute to these outcomes
  • increased involvement in organisational strategic planning, including
    • helping set organisational strategic objectives
    • developing, evaluating & choosing best strategic options for achieving the objectives
    • developing portfolios of projects to achieve these strategic objectives

From time to time in these articles I have made the point that early involvement in project initiation stages (whether collectively as in organisational strategic planning, or with individual project initiation activities) gives project management the opportunity to add value to the client (or to the client organisation). This article explores the matter of adding such value in a little more detail.

It should be noted here that the Japanese (in PMAJ 2008) put value creation right at the forefront in their definition of the nature of a project, as follows:

A project relates to a value creation undertaking based on a project mission, which is completed in a given or agreed timeframe and under constraints, including resources and external circumstances.

The Western project management literature has traditionally been rather more concerned with product creation than value creation. However, the latter was very much at the heart of the development of project management with my old employer, Civil & Civic, in the 1950s and 1960s. We will first briefly look at their experience.

A PARTLY PERSONAL HISTORICAL PERSPECTIVE – VALUE TO THE CLIENT

It should first be noted that most of my nearly forty years hand-on experience in project management was with project-based organisations – i.e. organisations that derive most (if not all) of their revenue and/or other benefits from creating and delivering projects. This article strongly reflects this perspective on project management. In particular, when we are talking about value, we will be talking specifically about value to the project’s client – or the client organisation, as I sometimes describe it.

Therefore this article does not necessarily reflect the perspective of project managers operating in production-based organisations, which derive most (if not all) of their revenue and/or benefits from producing and selling products and services. Evidently, value can mean different things to different people in this environment. We start with a snapshot of the Australian building industry in the 1950s.

Value (or lack thereof) in the Australian building industry through the 1950s

Through the 1950s (and indeed well beyond the 1950s) virtually all non-dwelling buildings in Australia were delivered under the traditional tender system. Buildings were designed by architects, and put out to competitive tender for construction. This system virtually assured that the client received poor value, for two primary reasons.

  • Architects had little incentive to design in value for the client, either because of their fee structure, or with the prevailing architectural ethos up to that time.
  • Separation of design from construction denied clients possibilities for benefiting from value-adding practical construction advice in the design phase.

Adding value in the design phase

Civil & Civic (C&C) was formed in Australia in 1951, and initially operated in the local building industry as a building contractor. Echoing the last bullet point above, Civil & Civic’s construction people (along with most other building contractors) very directly recognised “that the important cost savings in any building project are to be made on the drawing board …” (Murphy, 1984:7). There were no checks-and-balances mechanisms at the time to help ensure that consultants’ designs were efficient and/or effective.

It is quite certain that few people at the time had any idea of how inefficient and/or ineffective architectural designs often were. Civil & Civic soon found out that, in active management of the design of its own developments, effort spent on refining the design was invariably effort well spent. Along with its own development work, it was a natural step to offer design-and-construct services to external clients, which was initiated in the mid-to-late 1950s.

Perhaps even more revealingly, we began getting requests to do “rescue missions” on external projects which were going awry. Many of these were real eye-openers. In so many cases the genesis of the problem was design-related. It was not unusual for us to be able to reduce the final project cost by up to 40% (in one spectacular case double that!) by redesigning the project to improve efficiency, and in many cases to improve effectiveness as well.

Adding value by helping clients determine their business (or equivalent) needs

In describing the problems on these “rescue mission” projects as design-related, it should be emphasised that many of them were actually due to a failure to really clarify what the client’s real needs were in the first place – by clients needs I mean their business (or equivalent) needs.

More …

To read entire paper, click here


Editor’s note: This series of articles is by Alan Stretton, PhD (Hon), Life Fellow of AIPM (Australia), a pioneer in the field of professional project management and one of the most widely recognized voices in the practice of program and project management.   Long retired, Alan is still accepting some of the most challenging research and writing assignments; he is a frequent contributor to the PM World Journal.  See his author profile below.

 


 

About the Author

pmwj34-May2015-Stretton-PHOTO
Alan Stretton, PhD

Faculty Corps, University of Management
and Technology, Arlington, VA (USA)
Life Fellow, AIPM (Australia)

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Alan Stretton
is one of the pioneers of modern project management.  He is currently a member of the Faculty Corps for the University of Management & Technology (UMT), USA.  In 2006 he retired from a position as Adjunct Professor of Project Management in the Faculty of Design, Architecture and Building at the University of Technology, Sydney (UTS), Australia, which he joined in 1988 to develop and deliver a Master of Project Management program.   Prior to joining UTS, Mr. Stretton worked in the building and construction industries in Australia, New Zealand and the USA for some 38 years, which included the project management of construction, R&D, introduction of information and control systems, internal management education programs and organizational change projects.  He has degrees in Civil Engineering (BE, Tasmania) and Mathematics (MA, Oxford), and an honorary PhD in strategy, programme and project management (ESC, Lille, France).  Alan was Chairman of the Standards (PMBOK) Committee of the Project Management Institute (PMI®) from late 1989 to early 1992.  He held a similar position with the Australian Institute of Project Management (AIPM), and was elected a Life Fellow of AIPM in 1996.  He was a member of the Core Working Group in the development of the Australian National Competency Standards for Project Management.  He has published over 170 professional articles and papers.  Alan can be contacted at [email protected].

To see more works by Alan Stretton, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/alan-stretton/.