My new book, Managing Projects as Investments: Earned Value to Business Value was published by CRC Press last week. As a result, I have decided to start this blog to discuss and answer any questions that readers may raise. And periodically, I will post new blogs as thoughts occur to me about this fascinating management science known as project management.
After several decades of thinking about the topic, it has become clear to me that the essence of every project and program is as an investment in work. No sponsor/customer ever funds a project unless s/he believes that the eventual value to him or her will be greater than the needed amount of investment. And this means that, like all other investments, a project’s purpose is always to generate more value than it costs.
Value above cost, or “profit”, is relative – all else being equal, a project that generates value worth 150% of its cost is better than one which generates 140% of its cost. This certainly is the way that all other types of investments are judged: government securities, real estate, common stocks, mutual funds, gold, taxi medallions,…
Yet projects are the only form of investment where investment metrics such as ROI and profit are not the prime metrics for decision-making. Instead, the “success” or “failure” criteria applied to projects are usually based on completing them by an often-arbitrary deadline and for an arbitrary budget. And whether they might have perhaps generated much more value without these numerical straitjackets is left unexplored.
And this is really unfortunate because, unlike many other investments, projects are a special type of investment: one where human effort advised by appropriate analysis can bring great rewards.
This is the focus of my new book. And this and the new techniques and metrics described in that book will be subject of the new entries in this blog.
If the reader wishes to know more about my approach, the four Wikipedia pages linked to the topics below should provide a thumbnail.
(And of course, my book has much more information!)