The Strategic Value of Projects - A Study of How Project Owners can Increase the Strategic Value of their Projects

Abstract

The purpose of the study was to provide project owners with knowledge on how to increase the value of their investment projects. This originates in a study showing that strategies deliver only 63% of their promised value. Projects play an increasingly important role in modern companies, and the challenge of achieving strategic value development from projects can be considered one of the reasons for these strategic shortcomings.

A literature study was performed to find available theories on topics that were considered relevant for answering the research questions and the management question. Among these were value development from projects, project governance and strategy. To test the theories on a real-life project a case study was conducted of an office building project by the property company Dora in Trondheim. As a part of the case study qualitative interviews with the project owner was performed. The case study also provided real-life information to supplement the theories from the literature and add additional depth to the discussion.

Findings from this thesis showed that theory explains the owner's value development from the project as a second order effect of the user's benefits and value. The project owner itself may tend to be focused on the financial profitability of the project, but may indirectly facilitate benefit creation for the user as a way of assuring project realization. Furthermore, knowledge on how project governance frameworks, theories and tools (e.g. value propositions and customer value propositions) can contribute to support the strategic effects of the project. This will increase the chance of strategic value development. But due to its theoretical nature, understanding how to apply this knowledge and its role in assuring value development requires knowledge of management theory. Setting a project strategy and answering questions on the background, objective and competitive advantage of the project will help assuring its strategic effects. The study also found that additional strategic value from projects can be developed through positive synergies. By aligning the most important projects called strategic projects with the business strategy, chances for creating additional strategic value are improved.

The findings in this thesis are considered generic and are thus applicable to other projects within the building industry. To make it easier to approach the work on project governance systematically a theoretical framework was constructed based on the theories and findings from the discussion.

The empirical verification of the findings in the case study are limited and are expected to represent the main weakness of the case study. Follow-up studies should hence be conducted to support and complement the findings and the theoretical framework.