Value measuring methodology (or VMM) is a tool that helps planners balance both tangible and intangible values when making investment decisions, and monitor benefits.
Formal methods to calculate the Return on investment (ROI) have been widely understood and used for a long time, but there was no easy and widely-known way to provide a formal justification for decisions based on intangible values, which can include the reputation of an organization, the wellbeing of staff, or the impact on society or the environment at large. It was particularly difficult for decision makers to work through the trade-offs between costs and intangible benefits, especially for long-term investments by commercial organizations, and for governments and non-profit organizations who are primarily concerned with intangible values without wasting limited funds. Even within commercial organizations, units traditionally viewed as "cost centres" found it difficult to get acceptance of proposals for projects that would lead to general and long-term efficiency or capability gains, as the benefits were difficult to assign to "profit centres".
The approach of the VMM is to start by developing a framework of values, including costs, risks, tangible returns and intangible returns, then assign scores to each element in the framework. Once the relative scores of the different types of values are assigned and agreed, it becomes possible to examine alternatives and give yes/no decisions in a fairly objective and repeatable manner, and review progress using a range of traditional quantitative program management techniques. As well as allowing comparison of different values within a project, the quantitative approach of the VMM permits review of the total contribution to a particular value across a range of projects.
Read more about Value Measuring Methodology: History and Adoption, Outline of The Steps in The VMM, Uses in Capital Investment Planning, Related Theories
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