According to the Business Change Forum "Investment analysis and capital development" is one of the top 10 problems of 20th century management . This includes the problems with project management structures and systems.
Project management structures concentrate on managing activities and performance
Project management has always attempted to manage people, tasks, and activities. This is the cost side of the project. However, even with the attention to the cost side, there is no good method to manage costs. The benefit side is not managed.
The problems arise in investment analysis and capital development from three main sources:
- Failure to plan and manage the economic outputs or results to be produced by utilizing the developed capital to set up value creation
- Failure to define the capital being developed as specific solutions to be utilized in performance to produce economic outputs or results, to capture the cost of development, to set up specific capabilities to support and manage utilization of capital in operation, and to capture the cost of capital consumption in operations
- Failure to organize and manage capital development projects as a business to utilize assigned capital in performance to produce project results as a sub-business of an enterprise result in progress like "implemented capital solution" or "closed development project"
The failure to define results and performance solutions affects both the external management of the capital being developed by the project and the internal project management of performance solutions utilized to produce project results
Project management problems arise because we do not organize and manage the business
These problems arise because we do not organize and manage the business. The precise definition of the enterprise business is "investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results". If we are going to plan, organize, or develop a business, including a project, we must plan, organize, and develop the three components of the business:
- Results: Specific economic outputs of value and quality produced at any level from business performance
- Capital: Specific invested capital available as solutions to be utilized in business performance
- Performance: Utilization of a specific solutions of worth to incur costs to produce specific results
These three components are organized by Result-performance Management (R-pM) for any company, project, or other business enterprise. With R-pM, the business, or any part of the business, can be viewed as a spreadsheet with results to be produced organized in columns across the top and the capital solutions to be utilized in rows down the side. Each cells with a solution deployed to produce a result is a performance domain to record performance costs and effectiveness.
A current business structure organizes the business and a strategic business structure plans the business results and capital solutions required as a strategic horizon. Any other entities used must be defined in terms of results produced, capital investments as solutions, and performance in solutions utilized to produce results.
20th century capital development and project management structures manage the project to develop capital as tangible assets or a completed project, but do not manage the new results to be produced and the specific capital solutions needed to produce the results.
Result-performance Management (R-pM) manages the cost and benefits of projects
These problems are eliminated by simply organizing the business through Result-performance Management (R-pM), to set up business structures for all operations and development. R-pM replaces 20th century capital development and project management with Result-performance Development to manage investments and development projects.
R-pM manages the project through two business structures:
- The project business structure to organize the capital solutions utilized to execute the project and the results to be produced as outputs from the project. The project results are a set of results under an enterprise "closed development project" result. The most important project results are specific implemented, tested, and accepted capital solutions to be utilized in performance to produce business results
- The enterprise business structure to organize specific new or improved results needed and specific capital solutions to be developed by the project to know costs of capital development; and the added value-added to results to be improved to know the benefits, and return on the development investment. This business structure is a subset or contributes to the strategic business structure
The project is managed in operations to produce current enterprise investment results. A fundamental R-pM concept is to develop or acquire and implement new solutions as results in the project business structure to be utilized as capital solutions in performance in the enterprise business structure.
The key to project planning is end-user results
There is a need to get users involved early on. Users utilize capital solutions performance to produce results. Users may not understand the details of the solutions they utilize, but all users have a good understanding of the results they produce. Users must define and analyze the specific business outputs or results they produce to justify the investment by the value to be added to their results. The benefits of development are in the value added to these business outputs or results. A critical piece missing in conventional investment and project management is result development.
So, the key to properly organizing and planning a project is to get the users to understand the project in terms of results that they need, the symptoms of performance problems on their results, and the value of removing the result symptoms by solving performance problems. The return on investment can only come from valuable new and improved results. Users are involved in result teams to ensure that results are improved and to accept new capital solutions tested.
The value-added to results in the result value less performance costs is projected for each result to be improved. If the result needs performance improvement, the performance costs likely will exceed result value at some future point. The result value-added with development is also projected to show the impact of new capital solutions on the result produced. The added result value-added is the result value-added with development less the result value-added without development. This may be difficult to conceive before the business is organized and managed, but becomes routine with experience with R-pM.
The key to capital development is capital and performance management
It is also important to get administrative personnel to look at their responsibilities as supporting specific capital and solutions and solving specific performance problems, so that their solutions were utilized to increase the value of results. A critical piece missing in conventional performance development is the breakdown of capital into specific solutions that would be utilized to produce specific results. Analyzing capital solutions could show that many solutions needed for successful implementation and utilization of the developed capital to produce higher-value results, were not included in the development, and that other parts of development were unnecessary.
It is important to get administrators involved in performance teams for the development of the specific solutions they should support for operation and user utilization.
R-pM integrates operations and development
R-pM has two phases that proceed as one continuum; Result-performance Operation and Result-performance Development. Result-performance Operation identifies result symptoms and performance problems, accepts new goals and expectations to substantiate development, and utilizes new solutions that meet expectations to produce results that reach goals to payback the investment.
Result-performance Development provides one integrated method for all capital development to improve the capital utilized in performance to produce added-value in results. Result-performance Development includes result development to alleviate symptoms and provide benefits, capital development to develop and implement specific solutions, and performance development needed to test and accept solutions to solve problems, incur controlled costs, and produce measured result value-added.
Result development manages project value and benefits
Result development plans the detailed value to be created through utilization of new solutions across the scope of the project, backed up by user-accepted goals to increase result value after new solutions are implemented. The means to know the value of results are included in development. The project does not begin until user goals and acceptance are in place.
Capital development manages investments and costs
Capital development breaks down the investment into the specific capital solutions under capital manager responsible for capital development and support. Each capital solution is produced as a project result and implemented as a capital solution. Performance costs are captured against each solution development to provide and assumed capital worth and an unamortized balance. Amortization of development costs and assessment of capital worth is continued in operations in accordance with enterprise management policy.
Performance development manages implementation and testing to produce results
Performance managers responsible for capital solutions utilized to produce results. All performance managers study the investment to ensure that specific solutions needed to produce results are in the investment and to accept expectations for the performance of their solutions. They help to know the worth and development cost of new solutions included in development. Performance managers ensure that all capital solutions implemented meet expectations to produce results and work with result managers to ensure satisfaction with solutions and to manage performance costs and result value-added in operations.
Result-performance Development manages investment and costs to produce value and benefits
By developing both results and performance solutions, R-pM provides the one right way to manage projects in the 21st century and leaves the 20th century problems in investment analysis, capital development, and project management behind. Learn more about R-pm and download the R-pM Management Guide "How to Manage Projects in the 21st Century" at result-performance-management.com.
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