While for-profit companies generally have goals of achieving a better bottom line, improving profit margins, and reducing time-to-market; for nonprofits, success is often measured through social impact and can therefore be difficult to quantify.
For-profit organizations focus project management goals on the fundamentals of execution and Earned Value Management (EVM), a process whereby a project’s success is measured against specific earning targets and cost outlays. Not-for-profits, by contrast, use a logical framework to prepare the project and link it to desired outcomes. While these approaches appear distinct on the surface, using data as prescribed by the EVM can actually help not-for-profit Chief Operating Officers and project leaders to better allocate resources and to assess the effectiveness of project execution. Read on for a dive into how earned value management can help non-profit executives to lead more cost-effective, successful projects.
Earned Value Management: The Standard for For-Profit Project Management
For-profits engage in project-based work, albeit for a very different purpose than INGOs. In for-profits, the return on investment and production of a healthy financial margin are the main goals. Earned value management, or EVM, is a calculation measuring the scope and variance of a planned project against its actual costs and its projected vs. actual return. This focus may be narrow, but it also neatly fits the objective of an organization designed to earn revenue. It helps for-profits to account for direct costs such as salaries, which are calculated as billable time back to individual projects.
Logical Framework: The Standard for Not-For-Profit Project Management
Not-for-profits intend to realize social impact. While the change they seek is less tangible than the profit margins desired by for-profits, INGOs nonetheless use similar processes to establish targets and indicators to measure whether their efforts are successful. Since INGOs cannot rely only on a balance sheet, they must determine how to measure the desired social impact of a given project. Through KPIs, not-for-profits can evaluate their project based on the otherwise intangible outcomes it was designed to achieve and report results to donors.
How EVM Can Benefit Not-For-Profit Project Management
Even though the logical framework does a more effective job of capturing the more elusive goals, objectives and challenges of a not-for-profit project, there is also a role for an EVM outlook in non-profit project management. Although INGOs tackle more challenging issues that cannot always be reduced to financial success or failure, analyzing data about the progression of a project while it is ongoing can help improve the overall work of the organization. Without revenue, however, not-for-profits are entirely dependent on funds from donor agencies, governments and individuals. Pairing the logical framework approach with an EVM analysis helps not-for-profits satisfy their transparency and reporting requirements without feeling constrained by a need to maximize the bottom line.
Additionally, adopting a data-centric approach can help not-for-profits to determine what resources and strategies were effective once the timeline has lapsed. By definition, not-for-profit projects are ambitious, challenging and implemented in an environment of constantly shifting variables outside the organization's control. Knowing the details about what aspects of the project execution managers and personnel can control helps to create new models of delivery that enable not-for-profits to serve more people and communities.
Henk Onstwedder is Global VP at Unit4 focusing on the Not for Profit and Public Services industries. He is responsible for building Unit4’s value proposition, creating and delivering on industry product roadmaps, developing the ecosystem, and leading strategic sales engagements.Last modified on Wednesday, 11 April 2018