Identification of Owner’s Project Value Interests

Abstract

Identifying the unique ways in which a project can add value to an owner’s organization is an essential part of project delivery. Every project has defined requirements, such as budget, schedule and engineering specifications that must be met; but there are other attributes of a project that are not always immediately evident; yet, when implemented, can add significant value. A delivered project that meets cost, schedule, engineering and operational requirements is not necessarily a project that provides the most value possible. To maximize the value of a project, it is first necessary to identify the ways in which it can add value. Only after that can an effective strategy be developed to exploit fully the value-adding potential of a project. However, because these value adding attributes, or value interests, are not always driven by operational or engineering requirements, they can be difficult to identify. Identification begins with understanding what aspect of a project drives the value interests. Since a single owner may engage in different types of projects and the value set of one may not be the value set of another, it is logical then to conclude it is characteristics of the project itself, not the owner, that drive the presence of value interest. It is this hypothesis, that project characteristics drive value interests, which is presented and validated in this thesis. The hypothesis is supported through the development of a mathematical model in which the parameter estimates show specific project characteristics are significant in explaining the importance of individual value interests to a project. The model was developed through binary logistic regression of industry survey data, and validated statistically and empirically. A sensitivity analysis showed the key cost- and schedule-related value interests are not significantly sensitive, and an examination of the parameter estimates showed realistic and common sense relationships are present. The methodology presented here shows that value interests are, indeed, driven by project characteristics. However, there is neither a single characteristic nor a standard set of characteristics that drive all value interests. Instead, each value interest has its own unique combination of driving characteristics.