In our economic and political environment marked by uncertainty and competitive pressure, your organization is undoubtedly under pressure to optimize the allocation of its scarce resources.
This is the context in which value-based management takes root. Project management no longer appears as an execution discipline, but as a strategic instrument for value creation.
In this blog post, I revisit the foundations of value-based management, its application mechanisms at the project and project portfolio levels, as well as its implications for the governance and performance of your organization and your business as a whole.
The Triple Constraint: Cost–Time–Scope
When I was trained in project management back in the 90s, the discipline was structured almost exclusively around this triple constraint: cost, time, and scope. The remainder of initiatives to develop new products and deliverables was considered, in most cases, as prototyping.
Yet even when all three sides of the triangle were successfully managed, the operational success of a project did not necessarily guarantee value creation for the organization. This remains true today. The overall duration of projects, in a context where change is increasingly rapid and even constant, strongly impacts the benefits delivered by the project in an environment that is no longer the one it started in.
This observation led to the emergence of a value-centered approach, which has since been incorporated into international frameworks such as Management of Portfolios (MoP) by AXELOS and The Standard for Portfolio Management by the Project Management Institute.
Value-based management rests on one central question: to what extent does your project effectively contribute to the strategic objectives and overall performance of your organization?
What Is Value?
Value can be defined as the measurable contribution of an investment of the organization's resources toward achieving one or more of its strategic objectives.
Several dimensions must be taken into account:
Strategic (competitive advantage, market positioning, reputation, references, market share gains, organizational know-how). It may be acceptable for a company to achieve fewer immediate financial returns in favor of organizational or strategic gains, but not too often, or it risks losing the ability to invest in future projects.
Financial (return on investment). Promising business cases are plentiful, but how many actually meet their objectives, and what measures have you put in place to verify the added value of your deliverables?
Organizational (process and skills improvement). A dimension not to be underestimated when it comes to the organization's future projects.
Societal and environmental (environmental and social impact — CSR). The importance of this dimension has grown significantly over the past decade and has become unavoidable, which is, of course, very positive.
Value therefore, goes beyond immediate, short-term profitability to encompass tangible and intangible benefits over the longer term.
Projects have become vehicles for strategic investments that enable major transformations and the achievement of more ambitious objectives. As mentioned earlier, the key is to put in place the metrics needed to ensure the effective realization of expected benefits — including after the project closes, when you have already moved on to the next one.
Key Elements at the Project Level
The Business Case as the Foundation of Value-Based Management
The business case should contain, in the most detailed and factual way possible:
The strategic objectives supported by the project
The expected benefits (financial, organizational, tangible, and intangible)
The metrics and performance indicators to track progress and then deliverables
The risks involved, both negative and positive (opportunities), and clearly stated assumptions
The business case must be a living document, reassessed at each major milestone and phase gate review — not a document used solely to secure initial funding and then left to gather dust on a shelf.
Value Tracking
Unlike a traditional approach centered on delivering well-defined outputs on time and within budget, value-based management requires going further.
To track the value your project produces, you need to:
Define and agree on benefit indicators that are factually and easily measurable
Identify who will track the benefits achieved and report them to project governance
Conduct repeated post-implementation reviews, every six months, for example, to verify adoption of the project's deliverables
Of course, this logic extends the project lifecycle well beyond its administrative closure and the traditional end-of-project celebration.
Value-Based Management Starts at the Portfolio Level
At the organizational level, the portfolio is the primary lever for future value creation.
Project selection must be based on each initiative's contribution to the company's strategic priorities. Multi-criteria evaluation frameworks make it possible to compare heterogeneous initiatives, typically by assigning a weight to each of the company's major strategic objectives and rating each project's contribution to each one (on a scale of 1 to 5, for example).
Resources are always limited.
Resources are always limited. Value-based management requires trade-offs in resource allocation:
At the outset, to clarify project priorities
During regular portfolio reviews, where inevitable stop or redirect decisions must be made based on progress and new projects entering the pipeline
Through semi-annual or annual reviews of the entire portfolio, since the company's strategic priorities can shift
You must remain continuously adaptive and flexible.
Building a Balanced Project Portfolio
A well-balanced project portfolio knows, or learns, how to maintain equilibrium across several dimensions:
Short-term projects alongside longer-term ones
Innovation initiatives balanced with process and product optimization
A mix of risk levels, not all high-risk
The overall value of your project portfolio depends far more on its overall coherence than on the individual performance of each project in isolation.
What Are the Main Conditions for Success?
Value-based management reflects an evolution of project management toward a strategic decision-making logic.
It profoundly transforms the role of the project manager, who becomes an agent of organizational performance, and reinforces the importance of project portfolio governance.
Of course, this approach often requires deep cultural change: moving from a delivery culture (deadlines, deliverables, costs) to an impact culture (business and organizational value).
Fundamental Requirements
Clear governance
A results-oriented culture
Maturity in portfolio management
High-performing information systems
Challenges and Limitations
Overly optimistic bias in forecasts
Difficulty quantifying intangible and strategic benefits
Resistance to change
The need to measure each project's results over the long term
The political and strategic dimension of evaluations
