Evaluating Benefits: Getting Statistical (Part 2)
William lives and works as an IT project manager in South Florida, and is a member of the South Florida chapter of PMI. He created StatisticalPERT.com.
Continued from Evaluating Benefits: Getting Statistical (Part 1).
Setting Objectives Based on Probabilistic Benefit Outcomes
Best practices in benefits realization management include clearly defining expected outcomes, creating measurable objectives and monitoring project and program outcomes (even after project and program closure) to determine whether the organization and its stakeholders obtained the benefits expected from the investment. But it’s also a best practice to avoid making investment choices based on benefits that may be obtained only 50% of the time. And yet, some organizations do just that by describing uncertain benefit outcomes in deterministic ways.
If an organization makes an investment choice using only the most likely benefit outcome (which is the statistical mode), or using only the expected value of a benefit (which is the statistical mean, or average), then--if the benefit has bell-shaped properties--roughly one-half the time, the organization will be disappointed with its investment choice. Bell-shaped uncertainties have expected values (arithmetic averages) that occur at or near the top of a bell-shaped probability curves. There’s about a 50% chance that an actual benefits outcome will be less than the expected value (and about a 50% chance it could be more).
Here’s a better approach: evaluate quantitative benefits using a …
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"It is an important and popular fact that things are not always what they seem. For instance, on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much -- the wheel, New York, wars and so on -- whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man -- for precisely the same reasons." - Douglas Adams |
