Author: Henny Portman
Partner Hedeman consulting
Management of Value (MoV)
MoV helps to:
– Deliver more of the right things
– Reduce the cost of delivery
– Encourage more effective use of available resources
MoV is answering the question: are we getting the optimal benefits, at affordable costs, with an acceptable risk level. Figure 1 shows that we have to achieve the optimal balance between all stakeholders’ needs, and the usage of resources (money, people, time, energy and material). The greater the benefits delivered and the fewer resources that are used in doing so, the higher the value ratio.
Figure 1: Balancing the variables to maximize value
MoV is based on four integrated concepts:
– Principles (factors that underpin MoV);
– Processes and techniques: methods and tools used in the application of MoV;
– Approach: how to apply MoV in running your business and changing your business;
– Environment: how to response to internal and external influences.
The seven principles represent the most important success factors in delivering success. The seven principles are:
– Align with organizational objectives.
– Focus on functions and required outcomes. Start with the end in mind. What benefits and outcomes do you need?
– Balance the variables to maximize value. Understand the key stakeholder needs and balance those needs to make them acceptable to everybody. Balance these needs against the use of resources like money, people, time, energy and material.
– Apply throughout the investment decision. MoV is applied during all stages of the change life cycle.
– Tailor to suit the subject. The complexity, size, culture, involved risks, etc. will impact the level of effort needed to apply MoV
– Learn from experience. Do not re-invent the wheel, don’t stumbles twice over one stone. Share, share, and share your lessons learned.
– assign clear roles and responsibilities and build a supportive culture. If there is no senior management buy-in and there are no clearly assigned roles and responsibilities it will be a guarantee for failure.
MoV is achieved in programmas and projects through seven main (groups of) processes. The seven processes are:
– Frame the programme or project. Understand the rationale behind the project or programme and the objectives to achieve.
– Gather information. What are the expectations from the MoV study, who do we need on the MoV team, who are the stakeholders, what are their needs.
– Analyse information. Enrich the gathered information, use techniques like FAST (see below) to understand the purpose and analyse alternative ways of performing or delivering the functions.
– Process information. The MoV team will use the information to explore alternatives and create innovative and value-adding proposals. This could also mean that specific not needed functions will be eliminated (compare the MoSCoW principle in an agile approach).
– Evaluate and select. Here we balance the variables (stakeholder needs, required resources, benefits at affordable costs) to maximize the value.
– Develop value-improving proposals.
– Implement and share outputs. Develop the plan, implement, monitor progress and gather lessons learned and share.
MoV uses MoV-specific and common techniques such as Function Analysis System Technique (FAST), Value trees, Function Cost Analysis and Value Engineering (VE).
PPM community, senior managers and risk (opportunities) and operational managers.
5 Scope and constraints
The scope of MoV intended for operational activities as well ad programmes and projects.
- Embedding the mindset of thinking ‘value’ and reducing waste
- Increased stakeholder commitment
- More effective use of resources
- Better control over delivery Projects that do not add value are cancelled or not started
- Greater responsiveness to a changing environment Improvements in return on investments
Constraints: MoV barriers:
- We are already doing ok without it.
- I haven’t got the time or the money to spare for this.
- There is no benefit for me
Relevant links (web links)