TCMFramework_SM.gif (5258 bytes)TCM Framework: An Integrated Approach to Portfolio, Program and Project Management
(Rev. 2012-01-09)
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IV. TOTAL COST MANAGEMENT ENABLING PROCESSES - CHAPTER 11 - ENABLING PROCESSES

11.1 The Enterprise in Society

11.1.1 Description

    This section concerns the value of the enterprise and its strategic assets to society. A premise of the TCM process is that the enterprise and its strategic assets (including the resources and processes it uses, products it makes, and so on) should have a positive sustainable value to society and should continually strive to improve that value. Before proceeding with the discussion, the terms in the opening sentence must be clearly understood:

.1 Societal Values

    This section is included because the TCM processes have been primarily described from a quantitative, monetary perspective with the primary end of the process being the wealth or monetary welfare of the enterprise’s owners. We need to remind ourselves that TCM, at least in the investment decision making process (see Section 3.3), should be concerned with economic costs. Economic costs consider that the value of money is relative to time, currency, and context, including the societal context; that is, an amount of money saved to benefit both the enterprise and society has a greater value than the same amount of money saved to benefit only the enterprise. All societal values must be considered in planning, measurement, and assessment.

    A challenge with considering societal values is in how to measure them. They tend to be highly subjective and differ between individuals, groups, cultures, locales, and so on. It is also difficult to determine who the stakeholders in society are for a given situation. There is lively debate and much active research in the social, economic, and decision science fields (e.g., welfare economics, industrial ecology, etc.) around the issues of measuring and assessing social and environmental values and considering them in economic decisions. Much of the work involves very complex valuation modeling. Some social scientists consider it nearly impossible to make an economic-based decision with any certainty that it will maximize social welfare; however, enterprises are increasingly expected by society (politically, legally, or otherwise) to make the attempt.

    In TCM, these issues arise mainly in the strategic asset planning processes (Chapter 3). For example, starting in Section 3.1, customer and stakeholder needs and desires are elicited and requirements result from analyzing this input. Among those needs and desires are subjective societal values. To simplify and ensure consistency in the requirements elicitation and analysis process (and asset planning and investment decision making later), many enterprises establish policy (i.e. decision policy) in regards to social values. For example, enterprise policy may establish a requirement that all its facilities around the globe must meet the most stringent environmental, health, and safety (EHS: Section 11.5) standards regardless of the value the local citizens place on these social issues. An enterprise must also consider the policies of other enterprises that it works with or establishes relationships with (partners, contractors, etc.). Such policies are important considering that the cost to an enterprise for making a wrong social value judgment may be extreme.

.2 Ethics

    At all times, each person in the enterprise must judge the means and the ends of a process against personal and societal values and rules of conduct. These values and rules of conduct are referred to as ethics. In judging, people and organizations must ask questions about the means and ends such as: Are they fair, respectful, responsible, honest, and honorable? Society sets the framework for this questioning, but individuals and organizations make the judgments and set the rules. Discussions of society values therefore often involve a discussion of ethics or ethical values. Most enterprises will have an ethics policy if none other concerning social values.

    This brief discussion is a lead in to Section 11.2, which continues this discussion in regards to individuals, teams, and organizations, which are subsets of the enterprise and society. Section 11.6 discusses the environment, health, safety, and security, which are key concerns for society.

11.1.2 Key Concepts for the Enterprise in Society

    The preceding discussions briefly touch on a few considerations regarding society. The starting premise for the TCM process is that the enterprise and its strategic assets should have a positive sustainable value to society and should continually strive to improve that value. The following concepts and terminology described in this section are particularly important to understanding the enterprise in society for TCM.

.1 Societal Values. (Section 11.1.1.1).

.2 Economic Costs. (Section 11.1.1.1).

.3 Decision Policy. (Section 11.1.1.1).

.4 Ethics (Section 11.1.1.2).

Further Readings and Sources

    The references from the social sciences, economics, decision science, and related fields are too numerous to mention. Professionals should familiarize themselves with their enterprise’s ethics code and related social decision policy, if any. The AACE International Canons of Ethics (part of its Constitution and Bylaws) includes the following statements: "The AACE member…will apply knowledge and skill to advance human welfare," and further, "Members will hold paramount the safety, health, and welfare of the public, including that of future generations."

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