The project’s value (cash-flow & change management)

Focus on value

One of the biggest problems that affect the IT projects is generated by lack of clear roles and responsibilities. To avoid this dreadful sin is essential to stick to fundamental concepts. The effort of clearing the sources improves a holistic approach.

Whatever the reason for undertaking a project, there are some people who will spend their goods (money – customers and energy – workers) to obtain benefits. Once those benefits are strongly shared among the participants, the enterprise can challenge the future with its load of risks.

Whether these advantages are financial profits or not makes the nature of the project itself. In terms of business, the available monies take the name of budget.

There are many budgets as many stakeholders’ groups. Here below is a simple list where they are listed as per magnitude:

1. Customers’ organization. (How much money they will make available in the time span from the order to the delivery)
2. Performing organization. (The expected revenue shall be deducted from the above amount)
3. Performing team. (The money to be allotted for buying the needed resources).

After some shearing, the Project Manager receives the financial means to carry out all the tasks necessary for producing the “stated” outcome.
The “financial means” shall not reduce everything to few pliable figures. Money is the measurement’s unit to be used for gauging the estimated efforts required.
It is not a mere philistine point of view. Inspiring people is an essential component of management. A strong ingredient, for coalescing people into the idea, lies in its chances of success (Nervos belli pecuniam infinitam) Endless money forms the sinews of war.

Time as well needs to be transformed also in money

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Time and money form a bi-dimensional measure that will be used mainly for sustaining the efforts and then gauging results. These are the main reasons for that:

TIME

Is the delivery date calculated on market’s expected benefits? If so any decision about the arising variation (usually delays) shall be taken on the estimated costs (reduced benefits).

It could be a fine’s amount, if the project’s scope is about conforming to new regulations.

EFFORT

All estimations about the tasks’ duration, shall be worked out into financial figures. Using a simple spreadsheet where each role (or detailed at person level) is “priced”. Put on a second sheet all required tasks (grouped per features). The result comes from adding the single products of time allotted per person to accomplish with the task delivery.

Strategy

How much does it cost the involvement of that professional role?

Does it worth assigning longer time to a junior developer instead of a seasoned one?

SCOPE

Assuming that the whole product can be split into “detachable” features, each of them could receive a value. From this a production’s calendar (priority) can be set in accordance with technical constraints.

Change management

As soon someone (either from customer or technical people) springs up with a “little modification” (too bad if it regards some existing and working code), every bit of time (effort) needed for changing the plan shall be worked out and put on the scale, looking for a new balance between costs and benefits.

Linking time and money brings in two different and complementary tools

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EVM.

Cash flow

Is it possible to split the project’s budget into instalments? If it is, when money shall be made available? This information improves

• the opportunities to shape better contracts
• the company’s financial management
• reduces the project’s (financial) risks.

Can money evaluate quality?

It is possible until the product’s acceptance from the customers (users) influence the perception about the project’s success. In many situations, it is very easy, these are some cases:

1. The application produced by the project helps users to reduce the required working time to complete a task.
2. A market success, where customers pay for the project’s outcome.

Conclusions

Time and money should be the basic figures to be used for setting metrics.
A seasoned (and cynical) person said that setting metrics is a good way to prod people’s fantasy for eluding them. .Complex metrics offer enticing opportunities for this kind of undue creativity.

Concepts like: clock and wallet, are simple enough for being understood by everyone. This is the arena where the manager’s communicating skills are tested.