Use initial project justification to measure business value

Here's what to do if you're asked to measure the business value of a project once it is finished.

In my opinion, one of the holy grails that companies are searching for is an easy way to determine the business value of projects. The bad news is that there's usually not an easy way.

If a project has "hard" business benefit, the results are usually easier to measure. Hard business benefit means your project will result in more sales, a cost reduction, producing products for less money, and so on. You should subsequently be able to measure whether you achieved this same business value after the project completes.

However, many projects produce "soft" business benefits and these benefits are hard to measure. For instance,

  • Some projects produce incremental process improvements that are hard to quantify.
  • Some projects result in improving client satisfaction or increasing the quality of a product.
  • Some projects involve infrastructure, which is used by large groups of people. For instance, it would be hard to calculate how much more productive people will be if you buy faster servers.
  • Some projects result in an increase in the amount of information people have available. It's hard to know exactly how the information gets leveraged to produce better decisions.

If your company asks you to determine the business value of a "soft" project, you should immediately find the documents that were used to justify the project to begin with. This might be a cost/benefit analysis, value proposition, business case, etc. These documents will say that if a project delivers a certain set of functions and deliverables, a certain business value will be achieved. The job of the project team is to validate that the functions and deliverables were, in fact, delivered as promised. The sponsor and business team should then be able to validate whether the business value was achieved.

For instance, let's say that your project results in reducing the time to complete a certain task from five hours to two hours. You may get asked after the project whether you really produced business value. You can't speak exactly as to the business value, but you should be able to measure whether you cut the process from five hours to two hours. The sponsor must then determine whether the value associated with this time reduction was achieved.

Likewise, let's say that your project results in critical business information being available real-time instead of next day. After your project is over, you may get asked to validate the business value. You may not be able to determine the exact business value, but you should be able to validate that the information is now available real-time. The business benefit of this real-time availability should have been described before the project was started, and it will be up to the sponsor to validate that the business benefit associated with the real-time date was achieved.

In summary, generally it is not up to the project team to justify a project from a business perspective. Normally the sponsor and the business client do that. The sponsor states that if the project delivers certain functions and deliverables, then a stated business value will be achieved. So, if your company wants to determine business value, the project team should validate that the functions and deliverables were, in fact, delivered. The sponsor and the business client must then determine whether the business benefit was achieved as they promised.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All