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Financial Aspects of Project Launch:
Clarifying Project Value

By Helen Cooke, PMP, PMI Fellow

Chicago, Illinois, USA

An aspect of professional project management that was part of the PMP exam and Global Standard in 1986, but fell out of active use during the IS/IT boom years, is overt attention to assessing the value of a project as part of its initiation process.

Perhaps assessing a project’s ‘business value’ fell out of favor because of the ‘IS/IT bubble.’ When every expenditure on both systems and software generated money, the comparison of projects across-the-board to compare their value contribution fell into disfavor. But it is back ‘with a vengeance,’ according to HSBC’s SVP-PMO Michael Chachula, speaking at a mid 2009 dinner of the Chicagoland chapter of PMI.

Return on investment, internal rate of return, and net present value are back in the project assessment process. As to project managers, their superiors and senior management all pay attention to project value calculation. “They all know they need it, they just don’t know why they do it,” he says. There is nothing like an economic downturn to clear the air. As Chachula quips, often “management does not have two nickels to rub together.” They need the leverage of a good financial return to get a project through the approval process.

Ignoring project value is no longer an option: the projects that promise big return get funded first, or the ones that “avoid big losses.” It has always been the author’s contention that organizations embrace project management either when they stand to gain a profit by doing it, or lose a lot of money or opportunity by not doing it.

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About the Author By Helen Cooke Author Helen Cooke, BA, MA, PMP is a Fellow of the Project Management Institute (PMI), former member of the PMI board of directors, and former PMI chapter president and founding member of the PMI Chicagoland Chapter’s Executive Council.  She is an author of the McGraw-Hill 36-Hour Course: Project Management.  Helen is vice president Consulting Services for OPM Mentors of Chicago, Illinois,  where she provides independent consulting on management, project management and project management maturity.  She is an instructor in Advanced Project Management at Depaul University in Chicao.  Helen has over 20 years in project management, with experience at Deloitte, McDonalnds Corporation, American Management Systems and United Airlines, along with several years of independent management consulting in corporate, government, high technology and defense.  She also has several years experience as a compliance officer in the US government.  A sought-after keynote speaker, Helen has delivered featured presentations in Australia, Finland, India, Italy, Scotland, South Africa and the USA in recent years.  Helen served on the PM Journal’s Editorial Board (PMI) and the board of PMI’s Educational Foundation.  A consultant to organizations on advancing organizational project management maturity. She is currently working on a second book on ways to make sure projects deliver value.  She can be contacted at Helen.Cooke@mindspring.com.