VALUE DRIVEN DELIVERY
"Generating Business Value" is the main reason behind any project. This business value can take many forms such as producing a new benefit or improving a product or service.
Value Driven Delivery With Agile Projects
Even if your project benefits are to improve safety, or meet regulatory compliance, such benefits can be expressed as business value by considering the business risk and impact of not undertaking them.The main reason any project is undertaken,is to generate business value. This business value can take many forms such as producing a new benefit or improving a product or service.
Delivering Business Value and Agile
Providing business value is central to agile methods. Agile manifesto values and principles state “working software over comprehensive documentation”, “deliver working software frequently” and “working software is the primary measure of progress”. For these reasons, the focus for our project must be of value driven delivery.
Over the past several decades, there has been an increase in projects based on knowledge work rather than traditional ‘industrial work’. The latter using predictive and defined project methods, while knowledge work requires methods that rely on empirical process.
It is helpful to compare the value-driven delivery approach of agile against traditional predictive and defined project methods:
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Agile Value Proposition
As you can see, using the agile value proposition, business value is delivered early while project risk is greatly reduced right from the start of the project.
Maximizing value is an overarching theme for agile teams, who make their decisions by considering which choice will add the most value for the customer. This focus on delivering value drives many of the activities and decisions on an agile project and is the driver of many of the practices within the agile toolkit.
Delivering Value Early
As shown in the above diagram, one of the main ways that an agile team will try to maximize value is by delivering value early. An agile team will take the customer requirements and vigorously prioritize them in terms of features to be delivered.
In this way, they will deliver the highest value portions of the project as soon as possible. In short, value-driven delivery means making decisions that prioritize the value adding activities and risk reducing efforts for the project – and then implementing based all those priorities.
The Business Value Horizon
The longer the project runs, the longer the horizon becomes for risks, leading to reduction in value such as failures, decreased benefits, erosion of opportunities and so on. To maximize success is best to deliver as many high-value products as soon as possible.
It is important to recognize that early delivery of value will enhance stakeholder’s satisfaction. And as such, engaged and committed sponsors and product owners are vital for removing the project obstacles and declaring successes.
The very act of delivering high-value elements of early is a powerful demonstration that the agile team understands the stakeholder needs while proving that they can deliver.
In this way, tangible results by the team boosts the confidence of stakeholders while building rapport.
Minimizing Waste
Agile methodologies have adopted the Lean concept of minimizing waste and other non-value adding activities, since that is obvious that wasteful activities reduce value.
Lean manufacturing is based on a just-in-time model of production to avoid the waste associated with overproduction, waiting and excess inventory.
The seven wastes are categories of unproductive manufacturing practices identified by Taiichi Ohno, the father of the Toyota Production System (TPS). These days, there have been additional types of waste that I have categorized below:
Overproduction Waste
Manufacture of products in advance or in excess of demand wastes money, time and space.
Waiting Waste
The flow of operations should be smooth and continuous. Processes are ineffective and time wasted when one process waits to start while another finishes. As much as 99 percent of a product's manufacturing time is spent waiting.
Transportation Waste
Moving a product between manufacturing processes adds no value, it is expensive and can cause damage or product deterioration.
Inappropriate processing Waste
Overly elaborate and expensive equipment is wasteful if simpler machinery would work just as well.
Excessive inventory Waste
This wastes resources through costs of storage and maintenance.
Unnecessary motion Waste
Resources and time are wasted when individuals have to bend, reach or walk distances to do their jobs. This can be improved by carrying out a workplace ergonomics assessment and leads to a more efficient environment.
Defects Waste
Inspecting and quarantining inventory takes time and costs money.
Under-utilization of skills Waste
Each employee will have a specific skill set. However, they will also have are other skills and insights that can be brought into the workplace and used.
Unsafe workplaces and environments Waste
Employee accidents and health issues waste resources and are a direct result of unsafe working conditions
Lack of information or sharing of information Waste
Research and communication are essential to keep operations working to capacity.
Equipment breakdown Waste
Poorly maintained equipment can result in damage and waste time and cost.
Value Driven Delivery by waste reduction
Although the seven wastes list was created for manufacturing, the categories can be adapted to apply to most types of workplaces. Wherever we find project activities that are wasteful we will want to try to eliminate them.
Assessing Value
As I have previously mentioned, business value is normally assessed in financial terms. Some projects are undertaken purely for safety or regulatory compliance purposes and do not have an easily determined monetary value.
Such projects can have their value assessed by looking at the financial ramifications of not carrying out the project. These could be a lawsuit, a heavy fine, or the business being forced to close.
The other option is the senior management could simply call the project mandatory, and not spend any additional time trying to quantify its value.
Financial assessment metrics for Delivering Value
It is usual that most projects have clear business value, and this is normally calculated using financial metrics such as return on investment (ROI), internal rate of return (IRR), and net present value (NPV).
Whether you are running traditional projects at all agile projects, such metrics can be used in the same way.
The main purpose of using such financial forward is to assess project value is that they removed individual bias and emotion from the process of selecting and justifying projects.
Such metrics go even further, as their use will not only justify or not, an individual project, but also can be used to prioritize the best projects to proceed within an organization.
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