Written by Kevin Heisey
on October 04, 2022

Many organizations have moved beyond traditional Project Management and embraced an Agile approach. They’ve realized that budgets and schedules aren’t the best ways to measure business value. Projects can be completed on time and under budget yet fail to deliver business value, while other projects can result in significant business value despite being late and over budget. Can you precisely plan and predict projects while delivering optimal value?

Agile Product Development positions your teams to efficiently innovate and deliver value based on incremental build, measure and learn cycles that allow for data-based adjustments or even pivots away from what’s not working toward something that provides more value. Traditional Project Cost Accounting isn’t well suited to the flexibility of Agile. Planners can’t predict how Agile Product Development will work out and if they do fund teams through traditional budgets it is likely to be wasteful, too restrictive or both.

Fund Value Streams Instead of Projects

The challenge is to move to a funding model that funds value streams, which include the people, processes, technology and anything else required to deliver value in the form of new solutions, products or services. A participatory, Lean-Agile funding approach funds your overall products to include any augmentation or adjustments the occur within a value stream.

Leadership sets the strategy and goals with the fewest possible constraints for the teams who collaborate on determining how to best allocate funds between initiatives prioritized based on the value they expect to be delivered. This creates an environment of transparency, collaboration and engagement that leads to better choices that optimize value delivery across the portfolio.

Take a Lean-Agile Approach

A Lean-Agile funding approach provides flexibility, decentralizes day-to-day decisions and is driven by value delivery.

Phase 1: Fund value streams using lean budgets and guard rails

  • The overall funding and allocation of funds between value streams is established and day-to-day budgeting decisions are decentralized, which gives the flexibility to ensure you are working on the most important initiatives.

  • Guardrails are in place to balance near-term opportunities with long-term strategies by establishing continuous engagement with business owners, approval thresholds and ensuring investment in technology, infrastructure and maintenance are not neglected.

Phase 2: Budgets adjust dynamically based on build, measure and learn iterations.

  • Establish a baseline to test assumptions and gather data by creating a Minimum Viable Product (MVP).

  • Adjust and fine tune based on the data gathered.

  • Press forward with improvements that deliver additional value or pivot to a more valuable activity based on what you learn.

In contrast with a traditional project approach, where you typically don’t start analyzing how you did until a project is completed, a Lean Agile approach to funding within the value stream paradigm helps you continuously measure, adjust, improve and deliver value.

For more insight and an in-depth discussion of Agile portfolio management, watch Part 3 of the Measuring Value in Your Agile Transformation webinar series, Measuring Success In Your Agile Transformation.