A Quantitative Framework for Managing Project Value, Risk, and Opportunity

Abstract

Projects should create value. That is the desire and plan, but uncertainties cloud the paths to this destination. All project work should add value in terms of both the resources consumed and the benefits provided (e.g., scope, quality, technical performance, features, and functions), yet adding value is not always straightforward. Conventional techniques such as earned value management focus on time and cost but do not address quality, uncertainty, risk, and opportunity. An integrated approach is needed to account for all of these. This paper presents an integrated framework for quantifying and monitoring project value in terms of the key attributes that matter to its stakeholders. The framework distinguishes four types of project value: desired , goal , likely , and actual . Project management is value management. Project goals, capabilities, risks, and opportunities are evaluated with respect to each key attribute of the desired value. The project value, risk, and opportunity framework is useful for project planning, monitoring, control, and tradeoff decision support. An example project, developing a drone aircraft, demonstrates the framework's application to project planning and monitoring, including setting project goals that balance risk and opportunity. New indices for risk, opportunity, and learning are introduced to track project progress and operationalize new constructs for researchers.