One of the holy grails of metrics is to be able to accurately capture the business value produced by a project. In some cases the value is obvious. For example, sales could increase, inventory levels could be reduced or fewer people may be needed in a process. However, in many projects, the business value can be difficult or impossible to quantify exactly.
Measuring Project Business Value
Some common problems of measuring business value include:
- The project produces soft benefits, such as improving client satisfaction or product quality.
- The project involves infrastructure that is used by large groups of people. For instance, how much more productive will people be if you double the memory in their desktop computers? What is the quantifiable value provided with a new internal phone system? The fuzziness of these questions makes it hard to quantify a business benefit.
- The project results 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.
- Things improve as a result of multiple projects over a period of time, but it is hard to know exactly how much value each project delivered.
- The results are improvements that are hard to meaningfully roll-up to a measurable level. For instance, eliminating steps in a process. That process takes less time, but the time gets taken up by other work.
The best approach to determining the business value of a project is usually to look at a value proposition or Business Case that was completed before a project began. Look at how the benefits were quantified in this document to see if you can actually measure similar results when the project completes. If there are hard benefits identified, the metrics should be able to show how much value was delivered. If there were soft benefits identified, you will probably need to stick with anecdotal, survey and indirect evidence of the value provided.
The benefits of the project typically do not start until the project is completed, so these must be captured after the fact. At that point the project team has usually disbanded. Therefore, the customer organization (the organization gaining the value of the project) should take the lead on capturing the follow-up metrics to validate the business value.
The business value of the project should be measured for as long as the benefit payback period in the Business Case. For example, if the Business Case benefits were proposed over three years, the value of the project solution should be measured over three years to see if the proposed benefit was achieved.