One of the things that you can say about technology
projects, of all kinds, is that the industry has overwhelmed us with a plethora
of systems, technologies, and spreadsheets that inundate us with massive
amounts of data about our projects. Unfortunately, even with all this data we
seem no closer to answering very simple questions about these projects and
their true progress.
True progress must be a measure that gives the customer
(i.e., the buyer and user of the solution being delivered) a meaningful picture
of when the benefits offered by this investment will begin to be realized. To
the customer, the project is simply an investment vehicle. The result of that
investment is a solution that when implemented will generate benefits to the
organization. These benefits can be anything that the customer believes will
help optimize the organization’s performance and assist it in more effectively
achieving its goals. These benefits range from lower costs, less waste, faster
responsiveness, simplicity of operation, increased market share, reduced
The point is that from the customer’s point of view, the
only measure of progress that matters is ROI. In other words, when will our
investment start paying off? When will we see the business benefits of the
solution we are investing in?
This is what we mean by value.
The vast majority of project management systems, books, and
classes never dwell on this shortcoming, but instead impress on us the
importance of the vast analytical array of data that they can collect. Instead
of getting insight into what customer’s really want to know, they shower us
with “%-completes”, “actual vs. plan”, and other cost accounting analyses.
These are easy and look impressive and have a lot of analytical sizzle, but are
essentially meaningless when it comes to understanding, much less predicting,
when the customer will begin to see real business value.
The reason for this is simple. Cost accounting is not value
Further, while we have for decades tried to forge a useful link
between cost and value, we have nevertheless been left with very unsatisfying
results. In fact, it is not too difficult to conclude that the knowledge,
however deep we may have, of costs and burn rates brings us no closer (and is,
in fact, highly misleading—one has only to look at the typical phenomenon of a
task taking three times as long to finish the last 20%, than it did the first
80%) to understanding when the system will be delivered. That is, when we will
actually realize the promised business value.
Fortunately, the answer is really quite simple. The elusive
value metric we are seeking is right in front of us. It is requirements. More
accurately, validated and delivered requirements.
See Golden Triangle diagram.
To see how this works, the diagram illustrates what
one could call the golden triangle of value. This golden triangle is true of
all technology projects of all types and sizes, and is completely independent
of all methodologies, software engineering approaches, or project management
What the golden triangle says is that the way to manage
value delivery to your customer is to aggressively manage these three artifacts
and their connections.
We start with the premise that customers are seeking not
just solutions, but quality solutions. That is, solutions that perform as they
expect, all the time, every time. We know from the quality industry that
quality is not a subjective sense of “relative goodness” or some arbitrary
opinion, but is rather simply meeting the requirements that the customer has laid
down for that solution. The more effectively the solution meets those
requirements, the higher quality the solution.
So, as we see in the diagram, if we can say with precision
that the requirements fully define the solution we are seeking, and we can say
that we have test cases that cover those requirements. Then, when we execute
all those test cases against this evolving solution without generating any
failures, we can say with confidence that the solution meets the requirements,
… that we have a quality solution.
Accordingly, the value accounting metrics become:
the number of validated and delivered requirements per labor hour (or labor
Time, the number of calendar days necessary to validate and deliver a
Value, the ratio of the number of requirements that have been validated and
delivered to the total number of requirements in the solution
Naturally, there are more value metrics than these three,
but they provide the foundation.
The key take-away is you should augment your cost accounting
with value accounting if you truly want a window into how your project is doing
and when it will be done successfully. And, the key to value accounting lies in
understanding requirements and how effectively they are being validated and
delivered to your customers.