This is the basis of a new trend in Project Management. With it, a broader view on projects is established, where these assume strategic relevance. In fact, modern projects are conceived by organizations (public or private) as instruments to carry out their strategies. The value of a project is determined, in this context, by its contribution to the strategy realization and, so, to the whole organization performance.<\/p>\n
A bridge must then exist to connect projects to the business and its strategy , that can be attained with Balance Scorecards.<\/p>\n
Balanced Scorecards<\/h3>\n![\"\"](\"https:\/\/www.primanedacademy.com\/wp-content\/uploads\/BSC1.png\")
Figure 1 – Example of a BSC (2)<\/p><\/div>\n
Developed and introduced by Kaplan and Norton in 1992, a Balanced Scorecard is typically defined as a tool for strategy performance measurement, but it is much more than that. It is a methodological framework that helps organizations to think through their vision and goals, articulate them in a strategy and finally translate that strategy into their business operations, as seen in Figure 1.<\/p>\n
Without a proper link to execution, strategy becomes a bunch of utopian ideas that fail to be understood and engaged by executioners. So, it is very seldom realized. This is true for both private and public sector, including governments.<\/p>\n
Ultimately, with a BSC, the vision of the organization is converted into tangible performance measures, allowing all operations and activities to be aligned with the strategy. Clear objectives and targets are defined, so everyone will be aware what is expected from them. These will act as benchmark to measure the performance against and, thus, to evaluate how well the strategy is being implemented.<\/p>\n
The Reasoning behind Balanced Scorecards<\/h3>\n
In the past, organizations were just concerned on the short-term situation. So, performance was just being evaluated regarding specific financial measures and indicators. Yet, as Kaplan and Norton described, \u201cfinancial measures tell the story of past events\u201d which are \u201cinadequate, however, for guiding and evaluating the journey that information age companies must make to create future value\u201d. [3]<\/p>\n
As the name suggests, Balanced Scorecards enabled organizations to balance actual results with less objective measures that drive future performance, from past and current operations and change initiatives. So, their measures cover four different perspectives:<\/p>\n
![\"\"](\"https:\/\/www.primanedacademy.com\/wp-content\/uploads\/BSC2.png\")
Figure 2: The four perspectives of a BSC (4)<\/p><\/div>\n
\n- Financial<\/strong> \u2013 Focus on short-term results of actions taken. In case of public entities this is referred as stewardship<\/em>;<\/li>\n
- Customers<\/strong> \u2013 The focus is on customer\u2019s satisfaction. Their requirements and needs must be identified and understood and measures must be created, aligned with those. Known as stakeholders\u2019<\/em> perspective within public entities;<\/li>\n
- Internal Processes<\/strong> \u2013 Key business processes and competencies must be identified, excelled and monitored to ensure satisfactory results;<\/li>\n
- Organizational Capacity<\/strong> \u2013 An organization must be able to enhance and innovate their capabilities to grow. Originally, this was known as Learning and Growth<\/em>.<\/li>\n<\/ol>\n
With this structure, not only organizations know where they are, but can also look ahead and see where they are going, to assess if they are creating and delivering sustained value.<\/p>\n
Balance Scorecards and Projects<\/h3>\n
From what was exposed during this post, it seems clear the fit between the basis of the Project Management new approach and the Balanced Scorecard rationale \u2013 creation of long-term value by linking execution to strategy. Actually, a Balanced Scorecard might be the ideal instrument to \u201ccapture, model, analyze, predict, measure, report and inform\u201d value-related data of projects, that needs to be tracked as we track schedule or costs.<\/p>\n
Project impacts should be assessed, observing strategic performance measures, against some predefined targets, with a BSC, as any other activity of an organization. These impacts will represent the project value.<\/p>\n
Figure 1 – Example of a BSC (2)<\/p><\/div>\n
Developed and introduced by Kaplan and Norton in 1992, a Balanced Scorecard is typically defined as a tool for strategy performance measurement, but it is much more than that. It is a methodological framework that helps organizations to think through their vision and goals, articulate them in a strategy and finally translate that strategy into their business operations, as seen in Figure 1.<\/p>\n
Without a proper link to execution, strategy becomes a bunch of utopian ideas that fail to be understood and engaged by executioners. So, it is very seldom realized. This is true for both private and public sector, including governments.<\/p>\n
Ultimately, with a BSC, the vision of the organization is converted into tangible performance measures, allowing all operations and activities to be aligned with the strategy. Clear objectives and targets are defined, so everyone will be aware what is expected from them. These will act as benchmark to measure the performance against and, thus, to evaluate how well the strategy is being implemented.<\/p>\n
The Reasoning behind Balanced Scorecards<\/h3>\n
In the past, organizations were just concerned on the short-term situation. So, performance was just being evaluated regarding specific financial measures and indicators. Yet, as Kaplan and Norton described, \u201cfinancial measures tell the story of past events\u201d which are \u201cinadequate, however, for guiding and evaluating the journey that information age companies must make to create future value\u201d. [3]<\/p>\n
As the name suggests, Balanced Scorecards enabled organizations to balance actual results with less objective measures that drive future performance, from past and current operations and change initiatives. So, their measures cover four different perspectives:<\/p>\n
Figure 2: The four perspectives of a BSC (4)<\/p><\/div>\n
- \n
- Financial<\/strong> \u2013 Focus on short-term results of actions taken. In case of public entities this is referred as stewardship<\/em>;<\/li>\n
- Customers<\/strong> \u2013 The focus is on customer\u2019s satisfaction. Their requirements and needs must be identified and understood and measures must be created, aligned with those. Known as stakeholders\u2019<\/em> perspective within public entities;<\/li>\n
- Internal Processes<\/strong> \u2013 Key business processes and competencies must be identified, excelled and monitored to ensure satisfactory results;<\/li>\n
- Organizational Capacity<\/strong> \u2013 An organization must be able to enhance and innovate their capabilities to grow. Originally, this was known as Learning and Growth<\/em>.<\/li>\n<\/ol>\n
With this structure, not only organizations know where they are, but can also look ahead and see where they are going, to assess if they are creating and delivering sustained value.<\/p>\n
Balance Scorecards and Projects<\/h3>\n
From what was exposed during this post, it seems clear the fit between the basis of the Project Management new approach and the Balanced Scorecard rationale \u2013 creation of long-term value by linking execution to strategy. Actually, a Balanced Scorecard might be the ideal instrument to \u201ccapture, model, analyze, predict, measure, report and inform\u201d value-related data of projects, that needs to be tracked as we track schedule or costs.<\/p>\n
Project impacts should be assessed, observing strategic performance measures, against some predefined targets, with a BSC, as any other activity of an organization. These impacts will represent the project value.<\/p>\n
- Customers<\/strong> \u2013 The focus is on customer\u2019s satisfaction. Their requirements and needs must be identified and understood and measures must be created, aligned with those. Known as stakeholders\u2019<\/em> perspective within public entities;<\/li>\n