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From Earned Value to Value Realisation

SERIES ARTICLE

From managing projects to managing business outcomes in change programmes

Advances in Project Management Series

By Roel Wolfert & Roger Davies

Managing Partners @ VGri

The Netherlands & UK


 

One of the most powerful techniques for managing the costs and timelines in a project is through the method of Earned Value Management (EVM). However, it is becoming increasingly important to manage not just cost and timings but also the value outcome to the business stakeholders. This is especially important when it comes to strategic change and business transformation programmes. The track record on this is extremely poor, reflected in research which shows that “69% of top executives think their transformation programs didn’t deliver the expected benefits in the business”i. Value Realisation takes Earned Value Management beyond tracking the cost and schedule of programme outputs to delivering stakeholder value outcomes that the outputs are intended to realise. This is an essential distinction where there is a need for greater predictability concerning benefits from change.

We start with some definitions to set the scene, after which we will elaborate on the need to move from EVM to Value Realisation, explaining the distinctions from a stakeholder value perspective. We describe the IMPACT Value Management Framework, derived by translating 7 repeating failure patterns into solutions. Finally, we show how EVM can be extended into Value Management for the business by integrating it with Value Realisation using the IMPACT framework.

Definitions

Earned Value Management (EVM) is a technique for tracking the cost and schedule status of programme deliverables by calculating the true progress, Earned Value (EV), in terms of the relationship between planned, actual and projected cost at a given time, normally the reporting period.

Value Realisation concerns tracking stakeholder value delivered and forecast as a result of programme deliverables, where value is defined as the difference between benefits and costs and quantified as the net free cash flows expressed as Net Present Value (NPV).

Stakeholders are people, bodies and living entities which have an interest in, influence on or are affected by the change; for businesses these typically include shareholders, customers, staff and suppliers but equally apply to societies and the environment.

Value Management comprises the mindset, process and techniques for precisely targeting, prioritising and aligning programme deliverables to optimise value outcomes across stakeholders.

Why do we need to extend Earned Value to Value Realisation for Change Programmes?

All programmes involve change. In Value Management change programmes refer to business transformation through programmed investment in people, processes and technology. In this context, a shift in culture is treated as much of a deliverable as the launch of a new product, robotic assembly line or Customer Relationship Management (CRM) system, in so much as it is an essential element in a chain of cause and effect needed to realise intended value for stakeholders.

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To read entire article (click here)

Editor’s note: The Advances in Project Management series includes articles by authors of program and project management books published by Gower in the UK. Information about the Gower series can be found at http://www.gowerpublishing.com/advancesinprojectmanagement.

 


 

About the Authors

 

pmwj38-Sep2015-Wolfert-PHOTO1Roel Wolfert

The Netherlands

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Roel Wolfert
is a change leader, strategist, innovator and senior international executive with more than 20 years of experience in disruptive innovation and strategic change. He’s specialised in finding, creating and delivering measurable value to organizations. Roel enjoys helping organizations and executives to make a ‘turn around’ in their business (models) and a mind shift in their thinking and acting. Roel is an investor, entrepreneur, lecturer and performance coach. He is co-founder of VGrip and works on projects across different industries in Europe, whilst also guest lecturing in Value Management at HZ University of Applied Sciences.

 

pmwj38-Sep2015-Wolfert-PHOTO2 DAVIESRoger Davies

United Kingdom

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Roger Davies
is consultant, trainer, author and speaker with 35 years’ experience in transformational change. A Chartered Engineer, he began his career in manufacturing and, as a Chief Engineer with Plessey, led major Computer Integrated Manufacturing (CIM) programmes, the learning from which he integrated into Value Management as his Master of Business Administration thesis. He subsequently grew the value proposition for several large management consultancies, applying it across virtually every sector, both private and public, before founding Impact Dynamics in 2002 and, more recently, co-founding VGrip, a thought leadership company in Value Management. Roger is a Master Practitioner in NLP and provides Breakthrough Coaching. Currently, he is undertaking doctoral research in Value Management with the University of Bristol.

Value Management: Translating Aspirations into Performance, by Roger Davies and Adam Davies was published by Gower in 2011.