PM 570 Week 6 Delivering Business Value Example

More Than Compliance: How a Project, a Program and a Portfolio Together Delivered Value at a Rooftop Air Conditioner Maker

[Student Name]

University of Phoenix

PM/570: Projects, Programs, and Portfolios

Week 6 Assignment

[Instructor Name]

[Date]

Red River Air Systems, its results and figures are composites written for a model paper.

Eighteen months after its first conversion project began, Red River Air Systems, the composite light commercial air conditioner maker followed in this course, has converted two of its three product lines to R-454B and is completing the third. The company met the regulatory deadline for its largest line with eight weeks to spare. This paper asks a broader question than compliance: what business value did the company's project, program and portfolio management deliver, where was value lost and what should change?

Defining Business Value

The current standard describes value as the worth, importance or usefulness of something and emphasizes that projects deliver value through outcomes and benefits rather than outputs alone (Project Management Institute [PMI], 2021). Laursen and Svejvig (2016) reviewed research on project value creation and concluded that value is multidimensional and perceived differently by different stakeholders, and that research had moved from a narrow focus on delivering outputs to value created for organizations and society. For Red River, value includes retained revenue, avoided costs, safety, dealer loyalty and capabilities that will matter for future products.

Value at the Project Level

The first project, converting the three-to-five-ton line, delivered a certified product eight weeks before the deadline, within 4 percent of its $6.8 million budget. Its value lies less in the design itself than in what it protected: a line producing about $152 million of revenue a year. Dealer shipments in the first two quarters after conversion held at 97 percent of the market-adjusted baseline. The project also developed the common sensor platform, the most important input to the program.

Value at the Program Level

The program delivered value that no single project could. The common sensor platform was reused on the larger rooftop line and the split heat pump line, saving about $1.2 million against three separate designs, slightly above the $1.1 million target. Sequencing the two environmental test chambers through the program calendar avoided an estimated nine weeks of waiting. The single plant safety design covered all three assembly lines, and there have been no serious refrigerant incidents in the plant or the field. The common training curriculum reached about 1,250 dealer technicians in the first year.

The sensor platform paid for the program office several times over, and no project manager acting alone would have built it.

Value at the Portfolio Level

The portfolio decision in Week 4 shaped value in two ways. Holding six engineers in reserve behind the conversion work allowed the controls team to absorb an unexpected redesign of the mitigation sequence without delaying the deadline. Funding the variable-speed option and the dealer portal at the same time created growth: variable-speed units now make up 14 percent of the converted line's sales, at higher margins, and the portal handles 38 percent of parts orders. Martinsuo and Killen (2014) studied value management in project portfolios and found that firms assessed strategic value through multiple dimensions, including future-oriented and non-financial ones, and that how value was defined influenced which projects were chosen. Red River's choice of growth projects alongside mandatory work reflects that multidimensional view.

Results Against the Benefits Plan

B1, retained dealer sales: on track; shipments at 97 percent of the market-adjusted baseline against a 95 percent target.

B2, engineering savings: achieved; about $1.2 million against a $1.1 million target.

B3, safety: on track; no serious incidents.

B4, dealer readiness: short; 84 percent of active technicians trained before their region's first shipment against a 90 percent target, with two southern regions at about 70 percent.

B5, warranty: on track; 2.4 percent of first-year units against a 2.5 percent ceiling, after the harness correction.

Dis-benefits ran close to plan: unit cost rose by about $150, and plant productivity dropped about 9 percent for six weeks on each line before recovering.

Value Nobody Planned For

Some value appeared that no business case had claimed. Building the common sensor platform forced engineering, quality and service to agree on one way of describing faults, and the resulting fault codes now appear on every unit's control board. Dealers say the codes cut diagnosis time on service calls, and the company's service trainer estimates that average first-visit fix rates rose from about 78 to 84 percent on converted units. The plant safety work also changed habits: leak checks and ventilation logs that began as refrigerant safeguards are now part of every shift's routine, and the plant's overall recordable injury rate fell during the program. Neither gain was a target, but both are part of the value the company received and both would be lost if the new practices lapsed.

Value Measured Against Cost

The program and its projects cost about $19.4 million over eighteen months, close to the $19 million plan. Against that cost sit retained revenue on a line worth about $152 million a year, about $1.2 million in engineering savings, avoided chamber delays, growth from the variable-speed option and the dealer portal and the safety record. A simple return calculation is not meaningful for a mandatory program, since the alternative was losing the market, but the comparison shows that the company spent close to what it planned and received more than the minimum it needed.

Where Value Was Lost or Delayed

Three losses stand out. First, dealer readiness fell short in two regions because training sessions were scheduled during their peak cooling season, when technicians could not leave jobs; some early installations there were delayed, and one dealer group shifted orders to a competitor for a quarter. Second, deferring the automated sheet metal line gave up roughly $1.4 million of value in today's dollars, which the board had accepted, but the conversion program released engineers three months later than hoped, so the deferral lasted longer. Third, a late controls software release on the larger rooftop line consumed most of that project's float, a sign that the controls team remained a bottleneck throughout.

Serrador and Turner (2015), in a study of more than a thousand projects, found that efficiency on time and budget was related to stakeholder-perceived success but explained only part of it. Red River's results illustrate the point: the projects were efficient, yet some value, dealer loyalty in two regions, depended on timing and stakeholder needs that efficiency measures did not capture.

Recommendations

Schedule dealer training by regional season: the director of dealer development should plan sessions in each region's off-season and offer online modules before every regional launch, starting with the next product introduction.

Add controls engineering capacity: the vice president of engineering should hire or contract two controls engineers within six months, since the team limited both the program and the portfolio.

Make benefit reviews permanent: the executive team should keep the quarterly benefits dashboard for all major investments, not only for this program.

Re-sequence deferred work: the portfolio review should start the sheet metal line now that the program's final wave is under way.

Conclusion

Red River's conversion delivered more than compliance. The first project protected the company's largest revenue stream; the program created a shared platform, sequenced scarce resources and produced a single approach to safety and training; and the portfolio protected the program while funding growth. Most benefits met or exceeded their targets. Dealer readiness fell short, a deferred project waited longer than planned and controls engineering remained a constraint. Addressing those through seasonal training, added capacity, permanent benefit reviews and re-sequencing will strengthen the system that delivered this value.

References

Laursen, M., & Svejvig, P. (2016). Taking stock of project value creation: A structured literature review with future directions for research and practice. International Journal of Project Management, 34(4), 736-747. https://doi.org/10.1016/j.ijproman.2015.06.007

Martinsuo, M., & Killen, C. P. (2014). Value management in project portfolios: Identifying and assessing strategic value. Project Management Journal, 45(5), 56-70. https://doi.org/10.1002/pmj.21452

Project Management Institute. (2021). A guide to the project management body of knowledge (PMBOK guide) (7th ed.). Project Management Institute.

Serrador, P., & Turner, R. (2015). The relationship between project success and project efficiency. Project Management Journal, 46(1), 30-39. https://doi.org/10.1002/pmj.21468