6 Steps for managing benefits realisation
From the The Money Files Blog
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
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A benefit is the improvement you get from a change. Projects deliver change, and we should always be doing things that deliver some kind of benefit to a group of stakeholders or the organisation. Benefits realisation management is the process of ensuring benefits are identified, defined, linked to strategic outcomes and delivered.
Benefits realisation management is a key topic in programme management, but it’s equally relevant for large projects. There are six steps to planning a successful approach to managing benefits.
1. Create a benefit management strategy
This is the outline for how the project or programme will achieve the desired benefits. How will you measure benefits? Who will be responsible for doing so? How long will you track them for?
2. Identify benefits and tie them back to project/programme objectives
Benefits, like project tasks, have dependencies. What are your benefits dependent on? What benefits do you hope to see as a result of your project or programme? How do they all fit together to deliver coherent change, and does this take you in the right direction?
3. Plan when benefits will appear
Just as you plan tasks on a schedule, plan out when you expect the benefits to appear. Some deliverables will have benefits immediately. Others may take longer before you start to see any tangible results. If the benefits are going to appear after the project or programme is finished, who is going to be responsible for recording and tracking them? Tie this back to the benefit management strategy.
4. Realise the benefits
OK – now’s the time to deliver the change and make those benefits possible!
5. Conduct a benefit review
Review the expected benefits against the actual results seen. How do they match up? Are your original plans still valid? Do the stakeholders want to see anything else?
6. Identify new benefits and tweak existing benefits
Part of the ongoing project and programme management (or the role of the benefits manager, if the project work is over) is to see if the change can result in any new benefits. What else has been identified as positive improvement as a result of the project? What improvements can be delivered to further enhance the benefits that are being delivered already?
The benefits realisation management approach is set out below. I’ve adapted this from the benefits realisation process in Managing Successful Programmes.
Posted on: January 23, 2011 06:39 AM |
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Comments (12)
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Hi Elizabeth
Thank you for a very good article - it does make common sense. In addition if we were to think about company wide benefits realisation that equate to reducing costs lets face it this is what most companies are currently actively doing. The best way is to get departmental individuals right across the company to think how to save money - starts with an idea, it could be an initiative or a proposed project, this idea is then put forward to a Management Steering Team for them to make decisions whether it is viable for a project to be initiated and whether the proposed benefits [reduced costs, saving £'s] will be realised by the business and by when ! [1 year, 2 years, 3 years how long will it take to benefit from these big savings]. I suppose what I am saying before a project is a project that will incur manpower, resources and financial costs will these projects outweigh the business benefits ! if not realised
Vasoula - this is the benefit of portolio management! That process should give consideration to benefits as part of the project selection criteria.
Sunando Chaudhuri
Director - PMO & Governance| Modon
Dist: Burdwan, West Bengal, India
Hi Elizabeth,
Thanks for this article. Though it states the obvious, I have not managed to get my team (and management) realise this principle for the last 2-3 years.
In my group, we identify a few key projects ( we call them initiatives) every year that would deliver the real value at the end of the year or sometimes in 2-3 years and put in quite a bit of time and effort to give them some shape. I won't say they are complete failures but most of the time we rarely see any actual value (in £ or $) which is frustrating to me personally. Most of the time this becomes a way to get senior management's visiblity (that you are participating in such initiatives) and not really deliver business value as per me. Also sometimes the initiatives are focussed from internal - > external (customer) and not the other way round which I think should be the right approach, I mean look at what the customer wants/ demands and allign initiatives accordingly.
Any ideas/ suggestions how this attitude can be changed or something we can do differently to achieve real benefits?
Thanks, Sunando
Sunando, you say that your group identifies initiatives that would deliver real benefts but that most of the time you don't see any value from them. Why is this? Do the initiatives not get management support and therefore they don't happen, or do the projects deliver late/over budget/with not the full scope or to poor quality or some other reason that stops them from achieving the benefits that you had hoped for? If the initiatives aren't delivering to their potential, will better project management processes help you achieve thir objectives? Changing attitudes is always difficult but it can be done - maybe you could volunteer to track benefits for example, if no one else is taking responsibility for this.
Finally, don't think that benefits always have to be financial - achieving cultural change through internally focused initiatives is also a worthy benefit.
Sunando Chaudhuri
Director - PMO & Governance| Modon
Dist: Burdwan, West Bengal, India
Thanks Elizabeth again and appreciate your suggestions. It might be worth trying to take that ownership myself and try and bring out the some meaningful return from the projects. I think better management and making people understand the value is something missing reading your comments. I also think sometime all the scope is either not evaluated initially or closed before the entire scope is delivered.
I will give you an example on an initiative I handled in the last 2 years. This was called "Showcasing ourselves to Geos"..basically what it meant was to showcase our potential and some key projects/ programs that we had handled in the past to a wider geographical audience and how I see the benefits of this should come out is by getting more business and visibility. As I was leading this initiative, I started from a top down approach asking senior management about their intention/ expecations and tried to bring it down from there to deliverable in the form of package/ deck/ documents my team produces is able to meet those objectives. We tried and did our best and with a lot of time and money spent but I did not see any actual benefits being realised from the initiative. I am not sure even a single business has been generated from all the things that we put together and worked on. Maybe my expcatation is incorrect about this and my scope is over as all the deliverables are signed off and I am out of the project and should not get bogged down with the thought that I should see some business being realised from all the work done.
What I question myself though is, would it have been any better had we wanted to find out what the customer wants and generate our initiatives/ projects from there which would make our deliverables more stringent/ customer focussed and might be able to see some more benefits...
thanks again as I am definitely seeing some light :-)
Hi Elizabeth
Thank you for your answer - I don't totally agree
You said ' this is the benefit of portolio management! That process should give consideration to benefits as part of the project selection criteria'.
Yes there will be many project in the pipeline within the porfolio management, however, my first answer was that unless the benefits are realised before a project becomes a project and it is usually done by individual proposals and more to the point by the business the customer - if they don't know what the benefits will be and these are usually in £ signs saving money in most cases there is no point having a batch of projects within portfolio management for project selection only for project prioritisation will make more sense e.g.. Is it economically viable for a project to start now or shelve it until the following year
Vasoula
Hi Vasoula
You can't realise the benefits before a project becomes a project: realising the benefits means making them real i.e actually getting the benefits. Before the project delivers something there are no delivered benefits, just the prediction that there will be benefits.
I understand what you are saying though about the value benefits analysis adds to project prioritisation within a portfolio. Assuming all the projects that don't deliver any worthwhile benefits have been discounted, understanding the financial models behind the project benefits will ensure that the right projects are done now, and that the right projects are parked until later.
Natalie Kalow
ICT Project Manager| Australian Government
Laverton, Victoria, Australia
Hi Elizabeth,
Thanks for the article! While I recognise the advantage of conducting Benefits Realisation Management on projects I find it difficult to get the business past point 2 - Identify benefits and tie them back to project/programme objectives! You mention things like: "What are your benefits dependent on? What benefits do you hope to see as a result of your project or programme? How do they all fit together to deliver coherent change, and does this take you in the right direction?"
But those questions deal with benefits after you have identified them. Oftentimes, if you are conducting projects on behalf of the sponsor, you need to have their benefits relayed to you, and this isn't so easy! As the PM office you can identify the benefits you want to gain from the project, but first and foremost you need to deliver the benefits to the customer, and that's not so easy when they aren't given!! :D
Hi Natalie
I'd hope that from the Project Brief you've been given you would have some idea of how to work out what the benefits are: a project to open a new shop will have the benefit of more sales; a project to upgrade software has the benefits of happy customers and more sales (that's very simplistic, I know). I think it must be incredibly difficult to deliver a project successfully if you don't know why you are doing it. Have you found ways to talk to sponsors and get round this?
Natalie Kalow
ICT Project Manager| Australian Government
Laverton, Victoria, Australia
Hi Elizabeth,
Thanks for your reply. I've kind of opened a can of worms here so won't go into too much depth but I work for Govt so there are lots of political pressures and competing needs from different areas, as well as all the governance placed upon us.. I think the sponsor just wants the project approved and off their books, regardless of how it pans out - that's our job! so yeah, not too much help in that department in some instances, but we are working on it! I do believe in the advantages of BRM, and if done correctly and given the energy it deserves, can really mean the difference between project success and failure! Oftentimes in worlds of excessive reporting and planning, 'another' plan or management strategy is seen as a hinderance and isn't given the time and energy it deserves :(
Good luck, Natalie! And if you have any chance of changing your sponsor, I'd recommend it, but I understand that given the environment you work in that's unlikely. There's always the option of suggesting the project is cancelled, but again, that's a really difficult conversation to have with stakeholders who aren't able (or choose not) to give the project the time and energy it deserves.
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