Collaborating to Get To the "FINALIZED" VBS for the Valhalla Development Program

My LinkedIn article “Please Help the VBS for Valhalla Island Development Program!” that I posted two days ago has drawn interest, and some incisive comments, often critical (which is definitely NOT a drag!).

I’m now going to go through the model VBS that I assembled for this purpose, explain what it’s trying to say, respond to some of the comments it received, and try to show that many of those comments were EXACTLY what a VBS is intended to elicit!

(I honestly believe that these two articles together may be the most important ones I’ve ever published on LinkedIn.)

POINTS ABOUT A VBS TO KEEP IN MIND

1. People are likely to understand and agree that programs are intended to create value. Therefore a document that attempts to “map out” how the value will be driven and will accumulate is usually seen as beneficial, worthy of collaborative effort. And then it focuses team members on that value generation, forgetting which is often a big problem on programs!

2. While the final VBS, developed collaboratively and perhaps even a part of the program contract, can have great value, it’s the INITIAL VBS that triggers all that collaboration! So while it’s worth making the effort to have the first iteration make sense and reflect reality, the program manager should have no illusions that the initial version will be “correct”! Nor should there be surprise if there is criticism and intense debate—that’s what we are trying to achieve! But ultimately we seek compromise and agreement.

3. A VBS for a project is much simpler than at the program level—but also much less valuable because (a) programs are usually much bigger, more complex, cost more, generate more value, and have more stakeholders; (b) relationships between program elements are often far more diverse geographically and technically, and stakeholders may have very different interests.

4. Value is NOT additive and does NOT accumulate UP a VBS in the way that cost does in a WBS: landing gear on a $200K airplane, either wheels or pontoons, is mandatory, and thus adds $200K of value. But while being an amphibious plane may have added value, both wheels and pontoons probably won’t make plane worth $400K. An acre of real estate may be worth $200K. A specific type of house may be worth $300K. But put THAT house on THAT acre and it may be worth either more OR less than $500K!

5. Whereas sequencing of activities for a project is usually driven by “technical logic” (basically, Newtonian physics), sequencing for a program should be driven by generating maximum value. Since projects create complete things, it’s often physically possible to do them in parallel amp; complete them independently of each other. But inventing the parachute before the Wright brothers developed the airplane shows that Leonardo wasn’t a great program manager!

6. While the final VBS, developed collaboratively and perhaps even a part of the program contract, can have great value, it’s the INITIAL VBS that triggers all that collaboration! So while it’s worth making the effort to have the first iteration make sense and reflect reality, the program manager should have no illusions that tat initial version will be “correct”! Nor should there be surprise if there is criticism and intense debate—that’s what we are trying to achieve!

7. An Enabler is work/product that permits other work/products to add value, or even to exist. A Kindler increases the value-added of other work/products that can exist and add some value even without the Kindler--but the Kindler helps, sometimes a lot!

Now let’s look at the VBS for the Valhalla Island Development Program.

TOP LEVEL

A. The top level of the VBS states the total value of the program as $20B. This is an estimate. It communicates important info to the program leaders. NO corporate executive or government minister should ever be authorized to spend the amount of shareholders’ or taxpayers’ money this program will require WITHOUT providing an estimate of the total expected value.

B. WHEN will this value accumulate/be realized? Immediately upon completion? One year, five years, forty years later? Or will some of it start accumulating with the completion of specific projects within the program? That must be discussed and fleshed out.

C. How will delay OR ACCELERATION of program completion impact the expected value? This will likely require some amount of financial analysis.

D. How will the projects (and other work, if necessary) contribute to the overall program value? How much is each expected to contribute? What are significant factors of scope, quality, risk, schedule and budget(s) that will impact that contribution?

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SECOND LEVEL

E. Here we have indicated that creating means of transportation to and from the island is mandatory. It is an Enabler of the construction: without it, there will be no significant development and ZERO value from the program.

F. Once we create access to and from the island, some development is likely to occur. Individuals and/or private developers, outside of the program, are likely to build homes. Stores and other service will probably appear, to an estimated value of $2B within the time horizon of the program. But without the program’s planned construction, including the major league basketball and ice hockey, only 10% of the value will be generated. Thus the buildings, and the private developers contracted to build them, will have added value of 90% of the $20M, or $18M.

G. Outdoor recreation is a Kindler of the value of the program. Tennis and pickleball will generate little or no revenue. The golf course will generate some. But all three will add value, and revenue, by making the homes more marketable and thus increasing their value. The homes will, in turn, provide season ticket purchases for the indoor sports arena and utilize the shopping mall.

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THIRD LEVEL

H. The Bridge is mandatory, or there will be no development. If just the bridge is built, WITHOUT the Rail or Highway, the development value would drop to 10% and the buildings could not be built. If the Bridge and Rail are constructed, but not the Highway, the value would be 50%. If just the Bridge and Highway, but no Rail, the value would be 60%. nbsp;

I. The medical center will not generate revenue, but is regarded as adding value to the homes by making senior citizens more likely to purchase.

J. But during the collaborative discussion, it’s pointed out that while the shopping mall and the homes kindle value in each other, and the luxury hotel and indoor sports arena also have a value kindling relationship, neither the shopping mall nor the luxury hotel will add much to the other Level 3 items. We therefore redraw the arrows to and from those two items, and move to the deeper discussion of how much value each is kindling in the other. The hotel executive and the arena executive decide to investigate whether designing a climate-controlled moving passageway between the two buildings would add value to both.

K. The developer of the residences notices there is no swimming pool, and insists that an indoor-outdoor swimming pool is a must. A forum for negotiating how it will be paid for is established.

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OTHER CONCERNS

L. Trevor K. Nelson (perhaps representing the Prosedda Provincial Council?) points out that the VBS show “rail and highway as enablers, and the bridge as mandatory. But the bridge is only necessary if the rail/highway are also built, AND, the bridge is only mandatory as an enabler to the sports teams contract (as is the stadium). So there's a co-dependent aspect to some of these. We must do both, or we don't need to do either.” It’s a thoughtful point (that, importantly, is only made visible by the VBS!)—but as mentioned above, even without the development program (including the stadium), the TRANSPORTATION would make Valhalla Island more accessible and result in $2B of value instead of $20B. (This is reflected in the “BUILDINGS” being optional with a value of $18B).

M. Lead Master Scheduler Ed van der Tak then suggested his own idea of Critical Effort, “a calculation for defining priorities for every task in a schedule network. I actually called it ‘value based scheduling’ and only later discovered the VBS. My drive was to support team members in making the right decisions, because they do not know what the value of all succeeding tasks is.” The VBS is not a schedule—but especially with program scheduling, it’s a valuable(?) basis of developing a “value based schedule”! I am very interested in hearing more about Critical Effort from Ed!

N. Trevor then said that “whats missing is the contingent or decision factor. For example, you show addtl bedrooms and bathrooms, as optional, but what are the factors theyre dependent on that would move them from optional?” I think a number of aspects are probably missing, as I intentionally kept this model simple. I’m sure that in real life, there would be other things to consider. But as far as the RESIDENCES item is concerned, I assume that the developer/builder would allow the market to determine the size/design of the residences: more young families would call for more 3-bedroom units.

So in conclusion, the initial VBS is intended to stimulate discussion to elicit this information, to drive the key stakeholders AND the program team to considered conclusions, including compromises, about how the overall value that is DRIVING this project will be generated and accumulate. Yes, the process of finalizing a VBS for a large program would require several days, or even weeks, of intensive work. But then we’d have a SINGLE VBS, reflecting the input, compromises and value estimates of ALL the key stakeholders. This would ease the current (frequent!) problem of different stakeholders demanding changes/rework even as the project is being executed.

Finally, I have to believe that this sort of value analysis is being done on at least SOME big programs. It seems ludicrous to think that a multibillion dollar program would be initiated WITHOUT such analysis. The VBS simply provides a clear and standard format for stimulating and doing it.

Steve the Bajan