Value Creation as Prime Focus of Project Management

Soji Egbonwon 11/19/14 1802245

CONTENTS

Introduction...............................................................2

Arguments for Value Creation...............................................2

How this current debate could be resolved in the future....................3

References.................................................................4

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INTRODUCTION

The creation of a unique product, service and/or result (PMI,2008) is the central objective of project management. BrentSummers’ (DT, 2014) statement ‘Success is better defined andmore frequently achieved when based on delivering business valuerather than producing a pre-defined “thing”‘ evokes the debateabout value generation as prime focus of project managementinstead of mere product generation. He emphasizes emerging,iterative value creation as a worthy pursuit than focusing ondetailed planning of the product from the onset. It contrastswith “product creation, as the overall focus in the management ofprojects” (Winter et al., 2006). This debate piques my interestbecause 1) lack of effective focus on value is a common issue ininformation system (IS) projects (Pass and Ronen, 2014) and 2) itaffects how (IS) projects should be managed and measured.

ARGUMENTS FOR VALUE CREATION

Summers (DT, 2014) argues for result focus more than scope focus.The project manager uses planning tools such as WBS and Ganttchart to coordinate scope-related tasks, ensuring that no stoneis left unturned, as it were, to achieve pre-defined goal. Thatleads to scope focus. Schedule expansion or provision of moreresources (funds, personnel) may be essayed in order to realizescope in the event of challenges. Even when scope is reduced,stakeholders may be dissatisfied that initial intention wasmissed. Summers’ position is that organizations should ratherexamine and seek to maximize benefits from realized deliverables.After all, irrespective of industries and purposes (corporatestrategy implementation, business operations, R&D, IT/ISdevelopment), successful project execution should bring values tothe organisation (Cooke-Davies, 2002).

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Summers also advocates quick and iterative execution of a limitedset of ideas/scope as a better alternative to lengthy, detailedscope that takes much longer time and planning to execute. Thesooner a project moves through the lifecycle, the better (DT,2014). It is practical particularly for complex IS/IT projectswhich can span many years. Businesses must start to benefit fromERP projects while they are on course or undergoing variousphases (Nicolaou and Bhattacharya, 2008). Also, software servicessuch as Facebook, YahooMail or Gmail, are constantly changing asmany new features added or removed periodically. When it started,Facebook did not have the instant messaging it now boasts. Fullproduct specification is not as important as remaining dynamic byreleasing new features.

The use of Balanced Scorecard for project performance measurement(Kaplan and Norton, 1992; Toor and Ogunlana, 2010; Lee et al.,2000) and IS researchers’ arguments, especially those based onthe RBV theory (Killen et al., 2012) tend to vindicate this value-creating orientation. For instance, Pass and Ronen (2014)recommended that, for IT/IS project to be effective, the goal ofvalue creation should guide project performance and becomecriterion for approving scope changes.

Furthermore, Summers argues that value orientation helpsbusinesses stay agile and run lean. The time from ideation todevelopment is shorter when projects are quickly implemented andstakeholders interact with tangible output. They can test theviability of an idea in the market, allowing them to harness userand community feedback in the product development process. Healso argues that such quick delivery enables organisation tolearn. However, organisational learning or ability of anorganisation to learn through sensing, experimentation andinteraction with its environment, called absorptive capacity(Carlo et al., 2012), is a great moderating factor. The essence ofagility and learning will be lost if it cannot be harnessed.3 | V a l u e C r e a t i o n a s P r i m e F o c u s o f P r o j e c t M a n a g e m e n t

There are some limitations in Summers’ arguments. They arefocused on benefits derivable from single project and nothing issaid about value contribution to strategic objectives. There isan inherent risk of too much short-termism (Eriksson, 2013) whichcan cause serious problems and revision in future.

HOW THIS CURRENT DEBATE COULD BE RESOLVED IN THE FUTURE

Nonetheless, I would agree with Summers and other proponents ofthe value proposition. The debate can be resolved by separatingproduct from scope and considering business strategies andcontingency factors in project management.

There is often confusion in the concept of product and scope.Product scope is the complete list of features, functions, orcharacteristics that a product or service is intended to providewhile activities used to complete the product scope is theproject scope (Project-Management-Guru, 2012). Product istherefore, a component of scope. If completion is necessary torealize value (as in construction or automobile projects), thenpartial implementation is ill-advised. However, IS projects thatare based on the agile and project management practices (White,2006; Christensen and Thayer, 2001) allow value generationthrough iterations. Each iteration should have pre-defined focusbut then, subject to changes by new realities or changes inprevious phases/iteration.

Also, the higher order values that the scope aims to delivershould be considered. These are the strategic aims, objectivesand mission of the performing organisation such as increasingfirm competitive position and satisfying customers and otherstakeholders (Patanakul and Shenhar, 2012; Killen et al, 2012;Resch, 2011). Pre-defined “thing” should contribute values tobusiness goals since attention to plan is not as critical in IS

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projects as satisfying customers and achieving objectives (Bastenet al., 2011).

Strategic information system planning (SISP) and technologyroadmap are contingency factors that can help mitigate the riskof short-term focus and planning. SISP is the formal process ofidentifying some computer-based applications for executingbusiness plans and goals (Lederer and Sethi, 1996: 37) and foridentifying strategic business/IT planning approaches,appropriate use and commitment of resources (human, physical andcapital) to IT activities (Wilkin and Cerpa, 2012). Technologyroadmap is a time-based chart containing commercial andtechnological perspectives used to conceptualize and suggest newtechnologies and products, or juxtapose existing ones (Phaal etal. 2004: 10; Rinne, 2004). Together, they define context andhelp focus project activities towards business-IT alignment whereit is not just deliverables that counts. They should guide toIS/IT projects. Where there is no strategic plan or roadmap, itmay be difficult to harness values from individual projects.

In closing, Brent Summers corroborated Winter et al.’s (2006) callfor a re-conceptualization of project as value creation process.The call is relevant to project management especially toinformation systems projects.

REFERENCES

Basten, D., Joosten, D., and W. Mellis, (2011)’manager’sperceptions of information system project success’, Journal ofComputer Information Systems, 52(2) pp.12-21

Carlo, J. L., Lyytinen, K., & G. M. Rose, (2012) ‘A Knowledge-Based Model of Radical Innovation in Small Software Firms’, MISQuarterly, 36 (3) pp.865-895.5 | V a l u e C r e a t i o n a s P r i m e F o c u s o f P r o j e c t M a n a g e m e n t

Christensen, M. J. and R. H. Thayer, (2001) ‘The ProjectManager's Guide to Software Engineering's Best Practices’, IEEEComputer Society, Los Alamitos, CA

Cooke-Davies, T, (2002) ‘The “real” success factors on projects’,International Journal of Project Management, 20 pp.185-190

DT, (2014) stop focusing on the triple constraints. Start focusing on businessobjectives. Available athttp://www.dtelepathy.com/blog/business/stop-focusing-on-the-triple-constraint-start-focusing-on-objectives (accessed:09/11/14)

Eriksson, P. E., (2013) 'Exploration and exploitation in project-based organizations: Development and diffusion of knowledge atdifferent organizational levels in construction companies',International Journal of Project Management, 31(3) pp.333-341

Gantt.com, (2012) Creating Gantt Charts, Available at:http://www.gantt.com/creating-gantt-charts.htm (accessed:10/11/14)

Kaplan, R., & D. Norton, (1992) ‘The Balanced Scorecard –Measures That Drive Performance’, Harvard Business Review, (January-February) pp.71-79

Killen, C. P., Jugdev, P., Drouin, N., and Y. Petit, (2012)‘Advancing project and portfolio management research: Applyingstrategic management theories’, International Journal of ProjectManagement, 30, pp.525-538

Lederer, A. L., and V. Sethi, (1996) ‘Key Prescriptions forStrategic Information Systems Planning’, Journal of ManagementInformation Systems, 13(1), pp. 35-62

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Nicolaou, A., and S. Bhattacharya, (2008), ‘Sustainability ofERPS performance outcomes; The role of post-implementation review

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quality’, International Journal of Accounting Information Systems, 9(1) pp.43-60

Patanakul, P., & A. J. Shenhar, (2012) ‘What Project StrategyReally Is: The Fundamental Building Block in Strategic ProjectManagement’, Project Management Journal, 43 (1) pp.4-20.

Pass, S. and B. Ronen, (2014) ‘Reducing the software gap’,Communications of the ACM, 57(5) pp.80-87

Phaal, R., C. J. Farrukh, & D. R. Probert, (2004) ‘TechnologyRoadmapping—a Planning Framework for Evolution and Revolution’,Technological Forecasting and Social Change, 71 (1) pp.5-26.

Project-Management-Guru, (2012) Project Scope Planning Tools & Techniques.Available at http://www.projectmanagementguru.com/scopeplan.html(12/11/2014)

Resch, M., (2011) Strategic Project Management Transformation: deliveringmaximum ROI & sustainable business value J. Ross Publishing, Inc:Florida

Rinne, M., (2004) ‘Technology Roadmaps: Infrastructure forInnovation’, Technological Forecasting and Social Change, 71 (1) pp.67-80.

Toor, S. and S. Ogunlana, (2010)’ Beyond the ‘iron triangle’:Stakeholder perception of key performance indicators (KPIs) forlarge-scale public sector development projects’, International Journalof Project Management, 28 pp.228–236

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White, K. J., (2006), 'CHAPTER 34: Why IT Matters: ProjectManagement for Information Technology', AMA Handbook of ProjectManagement p. 433 n.p.: Publisher Provided Full Text SearchingFile, EBSCOhost, viewed 4 October 2014.

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Winter, M., Smith, C., Morris, P., and S. Cicmil, (2006)‘Directions for future research in project management: The mainfindings of a UK government-funded research network’, InternationalJournal of Project Management, 24(8) pp.638-649

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