Project Portfolio Management

Significance of Value Index to Assess Strategic Initiatives

Project value is a vital element to sustain a competitive edge in the market. With the help of value management (VM), you can initiate strategic developments and deliver benefits. In this article at the Association for Project Management, Michel Thiry explains the significance of the value index to compare a range of business initiatives.

The Core Value

The value index can help strategy developers, portfolio managers, and program managers to assess the alignment of a project or program with its strategic objective. The process may involve a risk analyst to ascertain the hurdles that might impact project value or its return on investment (ROI).

A substantial value index aids in the comparison between strategic projects and portfolio components. The decision-makers can evaluate and rank the potential initiatives according to their extensive contribution.

Strategic Alignment

The value of a strategic initiative or project helps in achieving the specific goal of a project. Often, the stakeholders share their expectations with the plan to map and prioritize its strategic objective.

Value management extracts project benefits for stakeholders and functional analysts to develop its benefits breakdown structure (BBS) systematically.

The next step is to identify critical success factors (CSFs) and force them to align with the desired score. Each project or product initiative is assessed for its contribution to the weighted CSFs to obtain an alignment score. The consistency of objectives offers an alignment monitoring measure within the entire project development process.

Probability to Achieve

Finances, borders, resources, and complexities are the four significant factors to assess your project’s availability. Each of these groups must determine independent measures. Once decided, its achievability is evaluated on an ideal score.

The probability of the action helps in determining the overall risk associated with the initiative. It can also set risk tolerance for the portfolio or program.

Estimating the Value Index

The value index is the combination of project alignment and achievability as it signifies more value realization. The estimation of a value index represents the possibility of collaboration between available resources and anticipated benefits with the stakeholders and key sponsors.

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