BUT

Nothing in incurring costs guarentees creation of value

Nothing in incurring cost gives the investor any data with which they can safely guage the progress towards return on investment.

Costs are identified during investment appraisal as part of planning. Cost is incurred in the purchase of materials, purchase of equipment, purchase of advice (consultancy), of services, and labour BUT it is the “impact” of those purchases that needs to be quantified and integrated into the mechanisms to track achievement of the resource leveled schedule.

A project should start when an investor suspects that an investment may deliver benefits. The early stages of the project should envisage future operating behaviours that generate a revenue stream – that stream needs to be sized across time. The project should identify outputs that when used will enable behaviours that lead to benefits. The (un)certainty of and size of benefits anticipated versus the certainty of costs should inform the Kill or Kontinue decision.

To reliably guage project status requires that during scoping (requirements gathering) we identify the product and process standards whose application verifies that products are ‘conformant to their specification’, and the standards that validate that the outputs are ‘fit for purpose’ and acceptable plus the operating procedures that are the behaviours that when followed will generate the benefits.

As the project’s products move through their development life-cycle their status should be updated from “Identified but work not started” to “Work in progress”, “Ready for test”, “Ok and ready for next step” (or awaiting rework/ in rework/ awaiting retest) then “Ready to integrate”, “Integrated ready for test”, then “Ready for acceptance”, “Ready for delivery”, “Delivered”, “Combined with procedure and delivering benefits in operation”. These status changes should only occur on the evidence from quality control activities and should be recorded in the configuration management database. NOTE the life-span here is explicitly from “Imagined” or “Envisaged” to “In use & Delivering Benefits”.

The control enabled by firstly linking products to applicable standards, then linking development work (incurring of acquistion costs) to quality checks that confirm achievement is the embodiment of Earned Value Management whether the earned value analysis equations such as (EV – PV) or ((Work_Remaining)/(Funds_Remaining)) are used or not.

The expression of how to confirm achievement, as extended into fsBAU are the foundations to extend a matching “Earned Value” into living up to its name instead simply reflecting ‘costs incurred and not (yet) wasted’.

When achievement is measured then cost has a meaningful frame of reference for determination of value received.

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Logical Model provides B2B training in project based change & B2C in PRINCE2 & PMP exams. Our B2-B training and mentoring in #pm_ngt explains the flexible approach and structured steps plus matched tools and techniques that are relevant2reality™ across the end2end™ investment time-line and top2bottom™ span of decision making within all corporate change.

#pm_ngt has a pragmatic, non-exam focus on value to the business’ shareholders

#pm_ngt’s key differentiators are:

1) Projects must work to and from the investor’s time-line – that means right to left planning of strategy, left to right planning of tactics and integration of the two and it means ‘deliver the value’ not ‘follow the process’.

2) Management must delegate and escalate with understanding of what both are – that means cascade goal + constraint + authority + a helping hand + resources, it means receiving and acting on escalations – Read more here

3) Use well know standards pragmatically – It means set-aside exam stupidities and use the tools and techniques of D4(r) to define the future_state_Business_As_Usual (fsBAU), use PRINCE2(r) to create a control structure for decision making and use PMBoK Guide(r) tools & techniques to build baselines, monitor performance and respond to achievements, problems, issues and risks, it means integrate project management framework and product life-cycle to accommodate any development pattern whether optimized for agility of development or whole life life-cost-of-ownership

To find out how to tailor a delivery for your organisation’s needs contact pm_ngt@logicalmodel-dot-net or call +44 (0) 84 52 57 57 07 and look here

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