Value System to Be Implemented on A PMO Assignment

Description

The attached article explores the Concept of Value Creation in Program Planning and Systems Engineering Processes for the Defense and Aerospace Industries. The hypotheses of the authors is that the program management and systems engineering disciplines might benefit from a better understanding of the concepts of value both theoretically and empirically. If programs will learn how to include a formal concept of value in their program definition and systems engineering processes, the awareness of teams toward achieving that value will increase and overall end results will better serve the needs of customers, teams, and performing organizations (Patanakul and Shenhar, 2009). After reviewing the article, respond to the questions below:

1. Prepare a summary of three of the values you consider to be most important in your PMO. Explain how each of these values will be evaluated and implemented drawing upon your readings and your own research.

2. Class discussion on one of the value systems you would implement in your PMO.

Please prepare

3 power point slides.

Regular Paper
Exploring the Concept of Value Creation in
Program Planning and Systems Engineering
Processes
Peerasit Patanakul1 and Aaron Shenhar2 *
1
School of Technology Management, Stevens Institute of Technology, Hoboken, NJ 07030
Rutgers Business School, 180 University Avenue, Room 311, Newark, NJ 07102
2
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
Received 16 July 2007; Revised 13 March 2008; Accepted 10 June 2009, after one or more revisions
Published online 20 October 2009 in Wiley Online Library (wileyonlinelibrary.com)
DOI 10.1002/sys.20155
ABSTRACT
Almost every large system is initiated with an intention of building something, which has new value to its
stakeholders. Yet, turning this simple statement into reality is often problematic since the concept of value
is not always explicitly defined or structually incorporated in the formal frameworks of program planning
and systems engineering. Quite often, beyond traditional financial measures or technical and operational
requirements, there is little agreement of what program value really means, and there are limited
theoretical models that could help conceptualize and focus its essence. In this exploratory study, we
investigated the components of program value in several major defense programs that were nominated
for Aviation Week’s Program Excellence Award. Among other things, these programs had to declare what
value their product created. Our findings resulted in an initial framework, which identifies program value
according to three major groups: value to the customer, value to the performing organization, and value
to the team. The specific value components identified in our data suggest that program value could be
formally and explicitly integrated into program planning and systems engineering processes. It can also
lead to further research and new applications that will be focused on value creation, rather than just
meeting performance and technical specifications. © 2009 Wiley Periodicals, Inc. Syst Eng 13: 340–352,
2010
Key words: defense programs; program value; value management; program management; systems engineering; strategic program management
1. INTRODUCTION
almost all projects or programs are initiated with the intention
of creating something that has new value for stakeholders. The
value could be tangible such as financial gain or better operations, or intangible such as the creation of new knowledge.
However, in a rather paradoxical way, beyond financial measures, there is limited agreement of what does value really
mean—how to articulate it, measure it, or manage the process
of its creation. This gap exists both at the conceptual level as
well as the practical level. On one hand, very little has been
written in the research literature on how to define and study
value that is created by a program, and there are no accepted
The defense and aerospace industry has traditionally been the
home of large programs, which help companies translate their
strategies into growth and profitability and serve the longterm needs of their customers. It goes without saying that
*Author to whom all correspondence should be addressed (e-mail: ashenhar@business.rutgers.edu; Peerasit.Patanakul@stevens.edu).
Systems Engineering Vol 13, No. 4, 2010
© 2009 Wiley Periodicals, Inc.
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VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
theoretical frameworks that could guide such research in the
future. On the other hand, in spite of broad statements in
acquisition guidelines, it seems that program stakeholders do
not always provide an explicit statement of the value created
by their programs and managers have difficulty defining it to
their teams. While programs are typically well defined in
terms of expected performance and requirements and even in
terms of long-term financial goals, they sometimes overlook
the obvious and do not articulate what is the value that
stakeholders should expect from such programs. If the expected value is not clearly defined at the outset, it will be more
difficult to manage programs toward achieving this value.
These questions motivated the current study. Our hypothesis was that the program management and systems engineering disciplines might benefit from a better understanding of
the concepts of value both theoretically and empirically. If
programs will learn how to include a formal concept of value
in their program definition and systems engineering processes, the awareness of teams toward achieving that value will
increase and overall end results will better serve the needs of
customers, teams, and performing organizations.
Thus the objective of this exploratory research was to study
the concept of program value. The fundamental research
questions were: “What is the value that is created by programs? How do programs articulate such value, and how
could such articulations become a standard part of every
program’s planning phase?” To achieve this objective, we
examined the submissions of several major defense and aerospace programs that were nominated for Aviation Week’s
Program Excellence Award [e.g. Aviation Week, 2009]. The
award guidelines require programs to define the value they
have created, beyond the classical measures of meeting time,
budget, and requirements goals, and beyond the common
financial objectives to the performing organization. We examined the submissions of 18 programs; searching for consistency and patterns that may guide further and deeper research
and eventually help articulate a value component in program
definition and systems engineering processes. Our findings
identified some lessons, which could lead to a more extensive
study in the future. We hope that this process will eventually
help create better guidelines on how to explicitly define value
ahead of time and how to focus large programs on value
creation during the program’s lifecycle. Such guidelines are
relevant both for program planning and for systems engineering processes. Note, however, that this study was conducted
to investigate the value of aerospace and defense programs of
for-profit organizations. Additional research must be done to
investigate the value of programs in other industries or notfor-profit organizations.
2. BACKGROUND
Typically, the concept and definition of value has been dispersed and dependent on the perspectives of individuals and
their disciplines [Ahmed and Yannou, 2003]. Yet, much of the
literature of systems engineering has been devoted to the
systems engineering process. The process has typically focused on defining the right system requirements and developing the means to achieve them [Sage and Rouse, 2009; Bahill
341
and Henderson, 2004]. As for system value, Blanchard [2004]
suggested that a system should be measured in terms of its
total value to the consumer, using both technical and economic factors. On the technical side, the value of the system
depends on its operating characteristics, broken down into
performance and effectiveness. The economic factors focus
on benefit (revenues) vs. cost (lifecycle cost). Ridder and
Vrijhoef [2007] proposed a dynamic systems engineering
approach for adding value. They suggested that, in a construction environment, the system value can be defined in terms of
the psychological value, functional value, and technical value.
The system cost, on the other hand, is broken down to development costs, operational costs, and maintenance costs. The
purpose of this approach is to increase the system benefit (the
difference between value and cost) through the dynamic
control of the aspect systems, subsystems, and elements. In
Space Systems, Nilchiani and Hastings [2006] proposed a
six-element framework for measuring the value of flexibility.
They claimed that this framework will allow the decisionmakers to measure the value of flexible systems design in its
different dimensions through which flexibility in engineering
systems can be mapped. Rouse and Boff [2004] and Bodner
and Rouse [2007] discussed value in the R&D-related issue.
Rouse and Boff [2004] proposed 10 principles for characterizing, assessing, and managing value of value-centered
R&D organizations. Later on, Bodner and Rouse [2007] used
organizational simulation to investigate the R&D value creation. They focused their study on the issues of (1) how does
one attach a value to a particular proposed R&D activity and
(2) how does one allocate funding over the various stages
comprising an R&D value stream. While these studies did not
define directly the program value, their findings were used to
guide and enrich our research.
In a broader context it would be helpful to look at the
project management literature. However, here too, project
management research has rarely focused on project value.
Some studies [e.g., Kwak and Ibbs, 2000; Ibbs and Reginato,
2002] proposed a model to calculate the financial value (return on investment) of project management. Also, Thiry
[1997; 2004a] attempted to link the classical concepts of value
management to project management. Many studies can be
found on project selection and portfolio management. Most
of these studies suggest that projects should be selected based
on the benefits they are expected to contribute to the organization’s strategic direction [Pennypacker and Dye, 2002].
Those benefits can be captured in terms of financial benefits,
organizational benefits, competitive benefits, etc. Numerous
project selection techniques have been proposed [Cabral-Cardoso and Payne, 1996], where resources, operation, and technology limitations of the organization must be considered.
Overall, these studies suggested that management should
maintain a balanced mix of projects in the organization’s
project portfolio [Cooper et al., 1998].
Value creation is clearly connected to an organizational
strategy and long-term goals. Thus, several works have indicated that projects and programs should help companies
transform their business strategy into action [Bowen et al.,
1994; Cleland, 1998]. This realization has focused researchers’ attention on the strategic aspects of project management, studying, for example, the concepts of project
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PATANAKUL AND SHENHAR
strategy, strategy implementation by projects, and alignment
of project management with business strategy (Artto et al.,
2004; Morris and Jamieson, 2005; Shenhar et al., 2005;
Milosevic and Srivannaboon. 2006].
Another relevant area of study deals with the question of
project and program success. Traditionally, projects were
judged based on time-cost-performance dimensions. However, similar to corporate balanced scorecard studies, some
project management researchers have suggested using a
compound stakeholder approach to evaluate project success. This approach proposes multiple success dimensions
such as project efficiency, benefits to customers, benefits
to the performing organization, and preparation for the
future [Decotiis and Dyer, 1979; Pinto and Slevin, 1988;
Freeman and Beale, 1992; Shenhar et al., 2001]. Clearly,
project success dimensions and project expected value are
closely related. Once we explicitly define the concepts of
project value, they can be used as a basis for assessing and
measuring project success.
Finally, no discussion of program value is complete without looking at Value Engineering. The Society of American
Value Engineers (SAVE) and the European Governing Board
of the value management training and certification system
(EGB) suggest that “value” can be defined as a ratio between
the satisfaction of an explicit or implicit need and the resources invested to achieve it. Value, therefore, can be seen as
typical ratios between quality & cost, function & cost, worth
& cost, performance & resources, satisfaction of needs & use
of resources, and benefit & investment [Thiry, 2004b]. SAVE
and EGB also define Value Management (VM) as the combined application of value methodologies and other methodologies at the organizational level in order to improve
organization effectiveness. VM includes, for example, the use
of processes, tools, and techniques derived from the work of
Lawrence Miles [1961] and specific value methodologies
such as value analysis (VA) and value engineering (VE).
3. RESEARCH DESCRIPTION
The main objective of this research was to investigate the
expected value created by programs beyond typical financial measures. Specifically, we looked at the value of major
defense programs in for-profit organizations. We also investigated the value of programs of different types, categorized based on different stages of program lifecycles,
namely, development, production, or sustainment programs. The complexity of the programs we studied was at
the “system level,” according to Shenhar and Dvir [2007].
This enabled us to look for system program values both in
planning and systems engineering processes. None of the
programs we studied were at the assembly or array (systems of systems) level.
Data sources: In 2004 Aviation Week and Space Technology Magazine initiated an Annual Program Excellence Award
for the aerospace and defense industry. The goal of the Award
program was to create higher standards of excellence in the
industry and share lessons learned across companies for better
future performance. Each year, major aerospace and defense
contractors are encouraged to submit their leading programs
Systems Engineering DOI 10.1002/sys
as candidates for the Award. About 20 programs are then
nominated. Based on a common framework, every nominee
submits a report detailing the management of their program. The submissions are then evaluated by an independent team of judges, who score the submissions on
different criteria. The evaluation is based on four major
criteria areas, divided into several subcriteria. The areas
and their relative weights are: Value Creation (10%), Organizational Processes (30%), Addressing Complexity
(30%), and Metrics (30%). The information in the reports
submitted for the Award is unclassified and it relates only
to the managerial aspects of the programs, and not to any
propriety, business, or technical data; thus enabling crosslearning by sharing the data across the industry. In addition,
nominees are asked to describe any best practices they
developed internally, which can be shared with the industry
during Aviation Week’s A&D annual conference.
Sample: Out of 19 programs that were nominated for the
award in 2006, we studied 18 programs from 6 for-profit
organizations (see Table I). The only program that was
dropped was from a nonprofit organization. Studying programs from different organizations helped ensure the validity
of the findings across organizations.
Content analysis: Using the nomination reports, we conducted content analysis [Bauer and Gaskell, 2000] to identify
what was declared as program value. To extract the most
information from each report, we performed content coding
into major and secondary groups. Based on such coding, we
were able to group the value of programs into three categories—value to the customers, value to the performing organization, and value to the team. We then performed cross-case
analysis to finalize the categories of the value elements in each
category.
Pattern analysis and discriminant analysis: The programs
we studied were in different phases in their lifecycle—development, production, and sustainment. This distinction had an
impact on the dynamics of program management, especially
when the programs were very large and extended over long
durations. The typical main activities of development programs involved the creation of a totally new product or system
through development, testing, and validating. In production
programs, most development was already completed and
major activities involved manufacturing work and improvements of production lines. In a program in the sustainment
phase, the system was already operational and the main activities of the team were to maintain the system’s operation
capabilities and to keep improving them. The only development activities that were performed at this phase related to
system enhancement, upgrades, and modernization.
Having these data points, we investigated the different
value statements of programs in different phases. To do so,
we employed pattern analysis based on frequency count to
observe any emerging pattern. We also performed some
statistical analyses, namely, tests of equality of group
means and discriminant analysis. This was done to observe
any statistical significant difference among program value
of different types.
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
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Table I. Sample Programs Studied
4. RESULTS AND DISCUSSION
4.1. Toward a Definition of Program Value
As the literature review shows, although several definitions
of value were suggested, there is very little agreement of what
program value really means. In this study, we initially defined
program value as:
The explicit and implicit benefits to the program stakeholders
generated from the program’s outcome versus the tangible
and intangible resources invested to achieve those benefits.
This definition is a formal expression of: “Are you getting
value for your money?” or “Are you getting your money’s
worth?” Both conceptually and practically, different individuals or organizations may or may not perceive the same value
of a program. These perceptions are dependent on the benefits
each stakeholder expects to gain and the resources they invest
into the program. This definition is similar to the general
definition of value, suggested by the Society of American
Value Engineers (SAVE) and the European Governing Board
of the value management training and certification system
(EGB). However, it is interesting to note that this definition
is broader than the Department of Defense’s definition of “the
capability provided by a new product or service, and the
schedule and financial terms allocated to generate that capability.” While both definitions are similar, we believe that
value should be seen as more than just “creating capability,”
and that benefit can be in a wider range of options—safety,
security, or quality of life, to name just a few.
4.2. How Did Program Managers Articulate
Their Program Value?
Even though we defined the value of programs as mentioned
above and used it to frame our research, based on content
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analysis, we found that the concept of program value has not
been fully articulated as such by the nominating programs
across the board. When asked to describe the program value,
the majority perceived the value in terms of benefits gained
from the program outcomes (first half of the definition).
Others described value in general terms such as better outcomes or improvements. This observation leads to several
arguments.
On one hand, it suggests that the definition of program
value has not been clearly defined to managers in the program,
and it is the reason why some discussed only “the explicit and
implicit benefits to the program stakeholders generated from
the program.” On the other hand, it also possibly shows that
these practitioners focused on the more tangible outcomes of
their programs such as meeting requirements. The argument
is that value to the user is already articulated in user requirement documents. In addition, many would argue that national
defense is extremely costly and benefits such as protecting
freedom or saving human lives are hard to quantify in terms
of dollar value. This point clearly needs more research.
Yet, how important is it for program managers to fully
understand the value of their program? Perhaps if one just
sticks to initially well-defined requirements, the value will
consequentially be created. However, it is well known that
“things that don’t get measured don’t get done.” Conceptually, one could argue that the higher the managers’ understanding of their program value, the more it will help them
effectively lead their program to achieve it.
Furthermore, since systems engineering plays a critical
role in any major defense program, it makes sense to ask: How
do systems engineers deal with the definition and expected
creation of value? From a systems engineering perspective, if
the program value is not clearly defined, it may be difficult
for a systems engineer to identify the total system value and
to distribute its components across the system and/or its
development phases.
One may also argue that, although the program value was
not always well articulated, those programs were among the
most successful. Yet, it is difficult to determine the degree of
success without the articulation of value, and it is unknown
whether program management and systems engineering were
executed effectively. Finally, we may also ask: How does the
lack of value definition impact the performance of less successful programs? How many programs in progress today are
Table II. Program Value to the Customers
* Number of programs explicitly or inexplicitly states this benefit.
Systems Engineering DOI 10.1002/sys
struggling because the program value concept is still not fully
understood and not formally incorporated in the planning and
systems engineering processes of large programs?
While still exploratory, this research suggests that there are
still a few open questions, which need a better understanding
regarding the role of value in major programs and their
systems engineering processes. However, at this point we
were able to categorized program value into three groups:
value to the customers, value to the performing organization,
and value to the team. The following sections discuss each
group in more detail.
4.2.1. Value to the Customers
The programs we studied were mostly government-contracted programs, having US Army, US Navy, US Air Force,
and FAA as their main customers. While not stated explicitly,
we found from the content analysis that the value to the
customers as reported by these programs can be grouped into
consistent subgroups with either near- or long-term benefits
(see Table II).
The most common value to the customer of these programs
was the near-term value of operational excellence (15 out of
18 cases). The program managers’ perception was that with
operational excellence, the customers would have an ability
to maintain a leadership role in their operation arena. For
example, from the GPS program we learned that “developing
new capabilities of GPS IIR-M is the first step toward major
advancement in the GPS which will assure continue US
preeminence as a world leader in Global Navigation Systems.” And for the F-22 program, the program manager
reported “the F-22 Raptor is the US Air Force’s air dominance
fighter for the next 40 years.” It is important to note, however,
that due to its high cost, there is an on-going debate between
the Air Force and the DoD about how many planes would
finally be produced. (It may be that the Air Force may only
be able to order about 120 aircraft, instead of the requested
380, or initial Air Force estimates of 740). This example
demonstrates clearly how the resources portion of the value
definition put into question the overall benefits from a program.
In addition, from the end users’ (e.g., war fighter) standpoint, program managers in our study perceived that having
operational excellence means having the ability to effectively,
safely, and securely perform day-to-day operations by having
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
a system with superior performance that will perform better
in combat operations and will eventually lead to better mission success. The program manager of GCSS reported,
“GCSS will revolutionize the way the US Army performs its
logistics operations. It allows commanders on the ground to
make tactical decisions using real-time, reliable data.… [T]he
program is an integral part of the US Army’s transformation
plan to become leaner and more agile, able to respond to
situations with significantly decreased lead times.” ARH program reported that “[t]he ARH-70A provides the war fighter
an improved net-ready, see first, understand first, act first, and
finish decisively capability over the venerable OH-58D [existing aircraft in use].”
Another important value is modernization, which may in
turn lead as well to operational excellence. The program
manager of F21 stated, “It has transformed maneuver C2
operations from using analog voice radio traffic and paper
maps with grease pencil markings to using modern digital,
computerized, moving map displays and convenient shortform digital messaging.”
Finally, customers may also see the long-term benefits of
the program as a platform for future effort (e.g., F21 and
ERAM). In some of the programs we studied (RSLP, ICBM,
and F21); the scope of the programs was providing systems
engineering and integration or mission assurance, verification, and validation.
Overall, it seems that knowing and explicitly defining the
value to the customer could benefit program management and
systems engineering in many ways. First, it will help managers and customers align their mutual expectations beyond
achieving the formal requirements and specifications. If such
alignment does not exist, programs may deliver a system that
meets its performance goals but does not satisfy the updated
need of the customer. Such situations may happen when
dynamic changes in markets or operational arenas have
shifted beyond what was originally articulated in system
requirements.
Second, a clear understanding of those expectations can
help program managers develop a program strategy for leading programs to better satisfy their customers. Once again, a
clear articulation of value can help both sides to see potential
benefits along the way that were not recognized during the
program inception and lead to improvements that otherwise
would not have been included.
Third, the explicit value of the program to the customer
should be articulated in the systems engineering process. It
will help a systems engineer better understand the customer’s
needs and the total system value even before system requirements are written. Taking an earlier viewpoint and including
formal value statements in the systems engineering work may
enhance the chances of later success. After the needs and the
total system value are clearly identified, the later steps in
systems engineering process can then be executed more effectively.
Finally, most of the programs we studied were DoD-contracted programs and are guided by formal processes and
documentation under the Joint Capabilities Integration and
Development System (JCIDS) (e.g., CJCSM 3170.01C, updated in May 2007). Most of these guidelines relate to such
processes as needs and capabilities analysis, solutions and
345
performance analysis, and capabilities development and production. While the DoD guidelines are mostly process-oriented, they indeed require that analyses will relate to issues
such as objectives, scope, scenarios, desired capabilities,
functions, and doctrines. These requirements are later translated to system parameters and technical specifications, which
form the basis for acquisition decisions and vendor selection.
It is most likely that a clear focus on program value would
contribute to higher success in addressing the JCIDS.
4.2.2. Value to the Performing Organization
Besides value to the customer, programs also generate value
to the performing organizations. From an organizational perspective, the value of programs is frequently expressed first
in terms of financial measures. There are several financial
models available to calculate returns on project/program investment [Loch and Kavadias, 2002; Meredith and Mantel,
2005]. However, it was encouraging to see that, in addition to
financial values in terms of revenue and growth, programs
indicated that they created other types of value to the performing organization. Once again, these kinds of values appeared
to be consistent across programs and related to issues such as
market opportunity, strategic positioning, organizational
learning, name and brand recognition, and relationship development (see Table III).
Even though revenue and growth was recognized as important, market opportunity was mentioned in more cases to
be an important value created by programs. Fifteen out of 18
program managers perceived that their program helps the
company restore and expand market share in existing markets,
exploit opportunities in new market segments, and leverage
them to future business opportunities. For example, the program manager of ARH mentioned, “the ARH contract will
likely be one of the last manned rotorcraft purchased by the
U.S. Army. Winning this contract brings a major former
customer, the US Army, back to Bell and ensures another 30+
year relationship.… [T]he ARH program represents the potential sales of up to 1,000 airframes when considering U.S.
government purchases and foreign military sales.” For ICBM,
the program will lead the expansion to adjacent markets via
new client projects. The program manager of GCSS wrote that
his program helps the company “increase market share in the
logistic arena.”
Strategic positioning was also noted as an important value.
Eleven out of 18 program managers reported that their program supports organizational business strategy and will put
the company in a unique strategic position. For example,
“STAR is the world’s only ISR platform in use today which
provides real time GMTI data as well as providing real time
battle management. Thus, the company is uniquely positioned
to exploit this advantage.” The program manager of ICBM
wrote, “We are viewed as leaders in supplier quality management and large scale integration.” For the GPS program, “As
the developer and supplier of 21 GPS IIR satellites, the
Lockheed Martin/ITT team became the premier Navigation
satellite provider beginning the mid 1990’s.”
Six out of 18 program managers reported organizational
learning as an important value to the organization. Organizational learning leads to the improvement of process, people,
and products from program learning and the opportunity for
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Table III. Program Value to the Performing Organization
* Number of programs explicitly or inexplicitly states this benefit.
knowledge sharing within and across the organizations. “Execution of the IIR-M program has positioned the Lockheed
Martin/ITT Team to lead the way for developing even more
exciting advancements in GPS capabilities,” as reported by
the GPS program manager. Similarly, “Methodologies from
ATLAS that are demonstrated to be ‘best practices’ are passed
on to both the enterprise and corporate levels and support the
core competency and strategic objective of critical knowledge
sharing across product lines.” The program manager of ARH
reported that the program helps “develop and strengthen
several key core competencies such as complex avionics
integration.”
Name and brand recognition was also mentioned among
the values generated by programs. By doing a great job, the
program manager of RSLP noted that the company would be
recognized in the community, which will enhance the company’s strategic position. “429 helps restore the Bell Helicopter brand name for customer satisfaction after Bell’s less than
meaningful participation in the market with 427,” as articulated by the 429 program manager. Finally, we also found that
the program can bring value in terms of relationship development with the customers, or enhancing future business opportunity.
This finding is not surprising. Clearly, programs could
create more value to the organization than just financial. Yet,
it was encouraging to see how well some program managers
were able to recognize this value, especially strategic positioning. Notably, in previous studies, conducted at the project
level, managers had difficulty articulating their project’s contribution to the strategic aspects of the organization [e.g.,
Morris and Jamieson, 2005]. Such difference may relate in
part to the positions and seniority of program managers in our
study. The majority of program managers were either Vice
Presidents of their business units or senior program managers,
Systems Engineering DOI 10.1002/sys
leading large and expensive government contracts. During the
long process of winning a contract, managers must clearly
understand the value and the position that these programs
must create for their mother organizations.
Conceptually, understanding the value that programs bring
to an organization will help programs to be better aligned with
the strategic direction of the organization. Furthermore, as the
specific value components in Table III show, programs can
focus on more than just adding to the strategic alignment.
Issues such as recognition, learning, and relationships can
also be identified upfront as excepted values and become a
focus attention for the team. In sum, if the program manager
and the team members understand the impact of their program
on the strategic direction of the organization, there is a high
possibility that all program management decisions will be
made with the organizational benefits in mind. From the
organization’s perspective, the program value listed above can
also be used as part of the criteria for program prioritization
and program success assessment [Cooper and Edget, 1998].
4.2.3. Value to the Team
In terms of program value to the team, we found that besides
incentives, program value is perceived in terms of challenge
and excitement, career prospect, pride, name and recognition,
networking, and user benefits. Even though it was not defined
explicitly, our content analysis revealed that value to the
customer and value to the performing organization were
mentioned very often in different contexts throughout the
submission reports. However, value to the team was mentioned less frequently or in some cases was not mentioned at
all. Table IV shows the distribution of the value to the team
among the sample programs.
As reported by program managers, many of the teams
perceived that working in these programs is valuable since it
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
347
Table IV. Program Value to the Team
* Number of programs explicitly or inexplicitly states this benefit.
requires “pushing the envelope,” which felt exciting and
challenging. For example “DSP’s evolving technology insertion to provide new capability and its expanded mission are a
source of continuing inspiration and challenge”. The IFIS
program manager noted, “The nature of this product is such
that the engineering team always has new and interesting
features to work.” Career prospects were also perceived by
teams as valuable, particularly when working in the same
program for a long time: “Many employees have stayed on
DSP for decades. In a few cases, two generations of families
have worked on the program.” And some teams felt proud to
work on programs where they could easily identify with their
program’s mission. “People want to work on a successful
program, particularly a program whose mission is so clearly
associated with saving the lives of our war fighters in harm’s
way,” noted F21 program manager. Or as the DSP program
manager wrote, “…[T]heir pride in being part of an extraordinarily successful effort that our war fighters live to tell us
makes a huge difference to our nation’s defense.” And in the
ARH program, “[T]he team knows they are involved in a very
unique program that has great consequences for our nation
and an immediate need for our soldiers in harm’s way.”
Finally, program managers also mentioned networking, as
well as working with people who are professional and knowledgeable help them learn and develop new skills.
It seems that understanding the value to the team helps
program managers create the right working environment,
which may help their teams excel. The explicit and clearly
articulated value can be used as a source of motivation and
encouragement, helping teams to be more effective. Incidentally, as we have seen, cash incentives were not a major driver
of value for the team. In summary, program teams see value
in their pride of being part of a significant and challenging
program, career opportunity, networking, and recognition
gained from working in the program.
As we have seen from the former discussion, explicit value
creation may become an integral part of program management, and program managers should learn to manage their
programs to achieve this value. Similarly, system engineers
should focus on value to the customer in order to understand
the customers’ needs and emphasize it during requirement
analysis and development. In the next section, we will discuss
program value at different stages in program life cycle.
4.3. Program Value and Program Life Cycle
Phase
As mentioned, the programs we studied involved different
types in terms of their lifecycle phase—six development
programs, four production programs, and seven sustainment
programs. We performed frequency analysis (of the specific
values that were mentioned for each program type) to investigate the impact of program types on the perceived program
value (see Table V). Since one program (USSGW) was already completed at the time of reporting; it was removed from
this analysis.
Based on program categorization and frequency count, we
found that programs in different phases have a similar pattern
of value to the customer (e.g., operational excellence—83%
for development, 100% for production, and 71% for sustainment; modernization—33% for development, 25% for production, and 29% for sustainment). Not surprisingly, value in
terms of platform for future effort was not found in all
production programs. Success enhancement is the value that
was only found in sustainment programs. Multiple discriminant analysis also indicated that there is no significant difference among the value to the customer of programs in different
Systems Engineering DOI 10.1002/sys
348
PATANAKUL AND SHENHAR
Table V. Perceived Program Value and Program Type
* The percentage of programs, which mentioned this value out of the total number of programs in this phase
phases, whereas some difference was noted in value to the
organization and to the team as we discuss below (see Table
VI, Tests of Equality of Group Means, with significance at 0.1
level or better).
A similar pattern was found among three different types of
programs in terms of value to the performing organization,
(Tables V and VI). One significant note is that, even though
name and brand recognition is a value that was noted in most
of the development programs (67%), it has not been found as
a common value of programs in other types (0% for production and 14% for sustainment). The result indicates a statistically significant difference among three types of programs
based on name and brand recognition (Table VI). In addition,
when performing stepwise discriminant analysis, name and
brand recognition was the first variable entering the discriminant function, indicating that it can be used as a predicting
Table VI. Tests of Equality of Group Means (Discriminant Analysis)
Systems Engineering DOI 10.1002/sys
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
variable for categorizing programs of different types. In sum,
the results from our statistical analyses indicate that programs
in different phases may have different perceptions in terms of
value to the performing organization. One value that is different is name and brand recognition. The reason is that new
development programs create more public image and excitement than long-range production or sustainment programs
that have been around for years.
As for the value to the team, the results show no significant
difference for all kinds of value except networking and pride
(Tables V and VI). Networking was only found among sustainment programs. Once again, this is because sustainment
programs have been in service for decades (e.g., DSP, ICBM,
and ATLAS exist more than 35, 37, and 50 years, respectively). Working for years in such programs, team members
have had the opportunity to accumulate and share knowledge
and experiences with many colleagues within and outside of
the program. It is surprising, however, that networking was
not found as a perceived value in the other types of programs.
In terms of pride, the results show 50% in development and
production programs and 14% in sustainment programs. And
as mentioned, such a difference is a result of the degree of the
product newness and excitement the program creates.
Overall, when analyzing different program types, we
found that all programs created value of three kinds (to the
customers, to the performing organization, and to the team)
both in the near term and in the long term. Yet, specific values
differed along the lifecycle stage of programs. This analysis
validates our earlier claim that program value assessment
metrics should be developed with specific considerations to
program phase.
5. LIMITATIONS
This study is not free of limitations. First, on one hand, we
must note that the data were not independently or randomly
collected. Most likely, program managers made every effort
to win the Award. Thus, difficulties or problems were typically not reported in these submissions, and we may not know
what really happened. On the other hand, the self-reporting
may have forced managers to do their best in thinking and
articulating the expected values from their programs, thus
contributing to the richness of the data. To remedy this limitation, research in the future should focus on fewer programs
but conduct in-depth case studies that may expose deeper
shortcomings in studied programs.
Second, while several parties were involved in these programs, the study was based on the information provided by
program managers who are responsible for executing programs in the aerospace and defense industry. We may expect
that other stakeholders will have additional perspectives. For
example, customers (who fund these programs) may perceive
additional values such as value to society, public image, etc.
Interviews with customers and other stakeholders will enrich
the data collection process in future research.
Third, the small sample of cases (18 programs in six
organizations) may suggest that program value identified may
be unique to those companies and their industries. Perhaps in
other industries, other program values may have different
349
weights than the ones noted in the defense and aerospace
industry. Similarly, programs in not-for-profit organizations
may indicate other forms of value than those found in our
study. More research is clearly needed to refine and expand
of the concepts of value in major programs both in for-profit
and not-for profit organizations.
6. IMPLICATIONS
Even at its preliminary stage, in addition to an explicit updated
definition of value, this study confirmed that programs create
different forms of value for different stakeholders—value to
the customer, value to the performing organization, and value
to the team. It also suggests that there is a rich ground for
further and deeper conceptual and empirical investigation, as
well as to more detailed research questions. For example, is
there value that is specific to a unique customer? Does the
industry impact the type of value created? Do programs in
not-for-profit organizations create different values from those
of for profit organizations? Another important aspect is the
interdependence among different kinds of values, that is, does
one type of value affect the others? Since this study identifies
each form of value independently, future study should be
conducted to investigate the interrelationship among different
forms of value and the way to address those interrelationships
in program management.
The results of this study are important for practitioners for
several reasons. First, the definition of program value helps
create a common understanding when it comes to the discussion about value during program initiation and execution.
After the expected value is determined, programs should be
managed toward achieving it. A program manager should
consider creating a program strategy, which balances all
forms of value, and all program activities should be linked to
the program expected value.
A program manager must first deal with the expected value
to the customer to help ensure that all program deliverables
will meet or exceed the customers’ expectation. Understanding the value to the performing organization helps aligning program management with the business strategy of the
organization. And understanding the value to the team helps
the program manager create a working environment that
supports greater team effectiveness.
In addition to program management, the value concept can
play a significant role in the activities of systems engineering.
Understanding program value should impact the systems
engineer’s job from the outset. Together with dealing with
system requirements, the systems engineer should focus on
the value proposition, which will have an impact on the rest
of the SE activities. Value creation should be included in
future systems engineering guidelines and frameworks. Once
a problem has been defined and potential feasibility established, systems engineers should become aware of the required value forms and articulate those in their formal
planning process.
While understanding all forms of value is useful, the
systems engineer should pay the highest attention to the value
to the customer. If this value is clearly defined, the systems
engineer can then translate it into better requirements and
Systems Engineering DOI 10.1002/sys
350
PATANAKUL AND SHENHAR
Figure 1. Program value and the systems engineering process in the life cycle. Adapted from Blanchard [2004].
technical specifications. At every step of the process the
systems engineer should test its impact on enhancing the
expected value from the system. Identifying and articulating
the expected value from a program should become part of the
systems engineering process. Figure 1 describes this process
as a modification of the traditional process.
7. CONCLUSION
Given the limited information about program value in previous literature, this preliminary study was initiated to identify how major defense programs look at the concept of
program value. Using data from aerospace and defense companies’ submissions to Aviation Week’s Program Excellence
Award, the study looked for consistent patterns of different
kinds of value that were described by program directors.
Program value was defined as “the explicit and implicit benefits to the program stakeholders generated from the program
versus the tangible and intangible resources invested to
Systems Engineering DOI 10.1002/sys
achieve those benefits.” As seen, the value created by programs can be divided into three different types for different
stakeholders—value to the customer, value to the performing
organization, and value to the team. Furthermore, value of
programs in different phases of their lifecycle, namely, development, production, or sustainment, is perceived differently
by program directors. As we concluded, to be more effective,
both program management and systems engineering need to
formally incorporate the concept of value into their formal
processes. And as suggested, the findings from this study can
be used to create guidelines, especially when they are applied
to different industries, environments, and type of the organizations.
ACKNOWLEDGMENT
We are grateful to Aviation Week and Space Technology
Magazine for initiating the Program Excellence Award Program in the aerospace industry and for providing the data for
VALUE CREATION IN PROGRAM PLANNING AND SE PROCESSES
this study. In particular to Carole Hedden for her continued
support and encouragement of our research efforts.
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Peerasit Patanakul holds a B.E. in Chemical Engineering from Chulalongkorn University (Thailand), an M.S. in
Engineering Management, and a Ph.D. in Systems Science/Engineering Management from Portland State University
(Portland, OR). Currently, he is an Assistant Professor at the School of Technology Management, Stevens Institute of
Technology (Hoboken, NJ). Peerasit’s current research interest includes multiple project management, strategic project
management, and value-focused project management. His works have been published in IEEE Transactions on
Engineering Management, Journal of High Technology Management Research, International Journal of Project
Management, and Engineering Management Journal. Peerasit is a recipient of the 2007 Best Paper Award from IEEE
Engineering Management Society.
Systems Engineering DOI 10.1002/sys
352
PATANAKUL AND SHENHAR
Aaron J. Shenhar, a world leader in project management, is currently a Professor of Project and Program Management
at Rutgers Business School. Until 2008 he was Institute Professor of Management and the founder of the project
management program at Stevens Institute of Technology. Previously he was at various positions at the Universities of
Minnesota and Tel-Aviv. He holds five academic degrees in engineering and management from Stanford University and
the Technion in Israel. He was the first recipient of the Project Management Institute Research Achievement Award,
and the IEEE Engineering Manager of the Year Award. Prior to his academic career, Dr. Shenhar accumulated 18 years
of technical and management experience as an executive at Rafael, a leading organization in the defense industry in
Israel. In his research he is focused on project management, innovation management, and the leadership of professional
workers in technology-based organization. He is co-author of the book, Reinventing Project Management: The Diamond
Approach to Successful Growth and Innovation (Harvard Business School Press, Boston, 2007). The book was selected
among the best five top business books of 2007.
Systems Engineering DOI 10.1002/sys
1
BUSINESS SPORT COMPETITION PMO
Business Sport Competition PMO
BUSINESS SPORT COMPETITION PMO
2
Abstract
Business Sport Competition is a program that focuses on improving the lifestyle of the
employees as well as the relationship between them through holding a regular competition.
Sports activities play an important role in ensuring the fitness of the participant, thereby
improving their health conditions. Employees also can relieve pressure from jobs or daily life via
practices after work. At the same time, it is an involving activity that would give the employees
an opportunity to interact, both with those within the companies and other companies so this
program will facilitate teamwork and productivity. It advantages participated companies and
their reputations. The aim of the program is also to support charity organizations by revenue
contribution such as advertisement income and tickets sales. Simultaneously, private companies
and public society will receive a lot of benefits from the program, Business Sport Competition.
In order to plan and implement this program, it is to pick approach research
methodologies and methods. Firstly, it is important to collect quantitative and qualitative
research methodology for the core plan part of the program. In terms of the qualitative data, the
project of 2012 London Olympics is a good sample provided a step-by-step process I can
consult. As for quantitative approaches, I will use specific statistical analyses in reliability of the
scales, and the assumptions based on pre-estimation or post-statistics. In addition, the analysis
tools and methodologies learned from classes will help this paper well on risk analysis and
stakeholder management such as heat map and stakeholder engagement.
PMO Objectives and Main benefits

The event is organized to motivate the employees

Fundraise for charity organizations

Develop good working and lifestyle habits

Bring employees together

Team building:


Higher productivity

Healthier work environment
Wellbeing:

Exercising promotes a healthy lifestyle

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