In a September 10, 2010 post on his blog, Leaning Agile, Trond Wingard argues that value management is the missing area in the PMBOK. He wrote:
There’s no knowledge area for ensuring that the customer or users gets maximum value, not even that they get something of value – only that they get “something”!
Trond, I’d like to suggest that “value” isn’t a knowledge area – it’s a product. At the project level, the project team maximizes value as the result of a correct balance of cost, schedule, scope, and quality. There is nothing more useless than “perfect, but too late.” Neither is there much value in a product that is on time and on budget, but hobbled with defects or an incomplete feature set. Nor is there much value in a product that is found to be unmaintainable or otherwise doomed to exceed its planned life cycle cost. Thus, value management includes those analyses and decisions that enable delivery of a product that arrives just in time, which delivers whatever features are actually needed at that time, at the quality level required for the success of the users, and is cost effective both at the time of acquisition and throughout the life cycle.
At the program level, value is managed by scheduling the timing and execution of projects so they deliver required benefits while achieving the best utilization of capital, staff, time, and resources to build the capabilities the organization needs, when needed. A good program unfolds as if it was a single project, rather than a coordinated group of projects, and delivers a growing capability just as the organization is poised to benefit from it.
At the portfolio level, value is managed by maximizing the contribution of the capital investments represented by the products, programs, and projects toward achieving the strategic business plan. This means selecting valuable products for development, enhancement, replacement, and retirement, so that the product life cycle is matched to the value curve. It also means timing products to the demand curve, timing the pace of change so that the organization can absorb it, timing activities so that operation and development staff can reinforce each other, and timing capital expenditures to match anticipated cash flow. A good portfolio reflects and anticipates the business plan, at both the strategic and tactical level, and retains enough flexibility to take advantage of opportunities, but is still cost effective.
Should project managers be knowledgeable enough about their business to optimize value by their own hand? I don’t think that’s completely realistic, but I do believe project managers should be advocates for maximizing the value delivered by their projects, and manage the process of selecting the right mix of scope and quality, with the funding and time available. And that advocacy, in interactions with the project team, sponsor, stakeholders, and oversight committee is what will drive delivery of value.