Planning, Tracking, and Reducing a Complex Project's Value at Risk
Uncertainty, risk, and rework make it extremely challenging to meet goals and deliver anticipated value in complex projects, and conventional techniques for planning and tracking earned value do not account for these phenomena. This article presents a methodology for planning and tracking cost, schedule, and technical performance (or quality) in terms of a project's key value attributes and threats to them. It distinguishes four types of value and two general types of risks. The "high jumper" analogy helps to consider how high the "bar" is set for a project (its set goals) and therefore how challenging and risky it will be. A project's capabilities as a "jumper" (to clear the bar and meet its goals) determine the portion of its value at risk (VaR). By understanding the amounts of value, risk, and opportunity in a project, project managers can design it for appropriate levels of each. Project progress occurs through reductions in its VaR: Activities "add value" by chipping away at the project's "anti-value"--the risks that threaten value. This perspective on project management incentivizes generating results that eliminate these threats, rather than assuming that value exists until proven otherwise.