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Value as the Criteria for Success

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The Standish Group estimates that in 2013 the worldwide yearly spending for software projects was $750 billion.  The United States accounted for about 40% of this number or about $300 billion. Europe spent about 25% or $200 billion.  Asia accounted for $100 billion.  The rest of the world spent the remaining $150 billion.  Canceled or failed projects were 16% or $120 billion. The United States portion was a little higher and the European portion was slightly lower.  Challenged projects, those that were late, cost more and off-target, were 48% or $360 billion.   Overruns vary with many legitimate reasons, but The Standish Group estimates in 2013 the cost of unintended worldwide overruns is about $80 billion; leaving the cost of worldwide project software failure to be about $200 billion.

However, we have seen many projects that have met the Triple Constraints or successful projects did not return value to the organization or the users and executive sponsor were unsatisfied.  In addition we have seen many challenged projects bring great value to the organization.   We think the better approach is to consider return on value than the Triple constraints.  In researching the $750 billion spent on software projects in 2013, about $200 billion had high value and another $330 billion had an average value.  The remainder had low to no value.   Some of the projects that had no to low value were considered successful and many of the high value projects ended up in the challenged column.

The Standish Group thinks that considering value is the most important criteria for success.  As an example, the United States Government has a distortional percent of the software spending of about $80 billion or 11% per year. However, the cost of their projects is ten times the cost of a similar project in the commercial sector.  For a project that would cost $60 million to develop in a commercial company the government will spend $600 million.  The government’s over spending reduces the value by 90% therefor the value of the $80 billion is down to $8 billion.  We know historically that 20% of the projects will be used therefore the value of the $80 billion is down to about $1.2 billion.

The Standish Group believes that organizations should forget the triple constraints and focus on the value of their project portfolio, not individual projects. In this regard we have created ValueCHECK Optimization and Management Service. The ValueCHECK Optimization and Management Service use our current products of:  ValueCHECK Project Environmental Skills Assessments, individual project assessments, OptiMix, and resolved project assessments. This is a complete service for organizations to outsource their project portfolio optimization and management to us on a continuous basis.

The service is done in three initial steps: Step 1: a skills assessment for any of the group that wants an IT project.  The skills assessment would include a walk through their PM and development process, a project environmental appraisal, and executive sponsor appraisal for current and potential sponsors. Step 2: A pre-project assessment and explosion. Each project would be broken into multiple small projects with firm deliverables.  Each of the small projects would have their own profile with all the constraints. Step 3: Optimization: We would feed all the projects into OptiMix.

OptiMix uses the patented process of converting logical constraints into linear constraints. The key to the approach is relativity. Relativity means the return on value, risk, cost and other constraints are based on the comparison to each of the small projects.  The organization would then complete the projects by the most valued priority. Follow-up:  Each quarter Standish Group advisors would go back to the organization for a few days and do:  a postmortem for completed projects, create profiles for new projects, update the current projects, and run the optimization to update the priorities.

This service will reduce overall project costs, decrease management frustrations, increase innovation, and increase the value of the organization’s portfolio on average of 35% and as much as 50%.

 

Definition of Project Success

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What is your definition of success?  Project Management Institute (PMI) would tell you on-time, on-budget, and on-target also known as the Triple Constraints and the Iron Triangle.  However, we have seen many projects that have met the Triple Constraints and did not return value to the organization or the users and executive sponsor were unsatisfied.   For the last 20 years each project in the CHAOS database had a single rating system. Successful projects were considered on-time, on-budget and on-target with some reasonable flexibility. Challenged projects were considered late, over budget or did not meet the target. Failed projects were canceled or not adopted by the users.  All projects were adjudicated by a Standish Advisor with our set of special rules.

We have spent the last six months coding our CHAOS database with the following attributes: on-time, on-budget, on-target (% requirements) and satisfied (very high to very low).  We already coded the database with value (very high to very low) and on strategic corporate goal (precise to distant).   We then issued a group of Dezider surveys.  In our surveys we asked SURF (Standish User Research Forum) members what is their definition of success.  We also had a open survey on Twitter, LinkedIn and Facebook.  We did consider the open surveys, but for some technical reasons we did not include them in our analysis.

We only had one question on this survey and we asked SURF members what is your definition of success.  We had six distinct choices and all of the above.  The choices were on-budget, on-time, on-target (requirements), on-goal (organizational strategy), valuable, satisfied, and of course all the above.   We had 309 respondents to our Dezider Surveys on the definition of success. Fifteen percent (15%) of the respondents agreed with PMI by picking the first 3 choices. One-third of the respondents selected all of the above. Valuable came in as the top choice with 52% of the respondents casting it as one of their up to four votes. Other results show 32% said on-budget, on-time 30%, on-target 26%, on-goal 29%, and satisfied 41%.

Making inquiries into the CHAOS database we find that if you select all six attributes only 1.2% of projects meet that criterion. Therefore the third of respondents that chose all of the above would be disappointed 99% of the time. However if you selected a single attribute, like on-budget you would be successful 42% of the time.  The Standish Group believes that organizations should forget the triple constraints and focus on the value of their project portfolio, not individual projects. In this regard we have created ValueCHECK Optimization and Management Service. The ValueCHECK Optimization and Management Service use our current products of:  ValueCHECK Project Environmental Assessments, individual project assessments, OptiMix, and resolved project assessments. This is a complete service for organizations to outsource their project portfolio optimization and management to us on a continuous basis. This service will reduce overall project costs, decrease management frustrations, increase innovation, and increase the value of the organization’s portfolio as much as 50%.