PMI just released the Benefits Realization Management practice guide this month which provides comprehensive but still easily consumable coverage of a benefits management framework covering principles, practices and roles. There is no doubt that benefits management is a critical competency for any company whether they are for profit or not-for-profit but it is also not well implemented in many organizations.
Overly optimistic business cases might be one reason for this as I'd covered in an earlier article, but there are other potential causes including:
- An unwillingness to hold sponsors accountable for expected benefits. While punitive measures may create a culture of fear and drive otherwise effective sponsors away but there still needs to be some way of ensuring that sufficient due diligence has gone into identifying benefits. Independent verification of benefits analysis is one way to reduce inflated expected outcomes without scaring off potential sponsors.
- A lack of objective definition of the benefits expected to be realized when executing a given investment. Even for initiatives with a financial benefits motive, it may be difficult to demonstrate causality between the outputs of the project and expected financial outcomes as there will usually be more multiple projects with the same types of measures (e.g. increase revenue, reduce costs).
- Limited monitoring of expected benefits over the life of an investment. Projected benefits like scope, schedule and cost baselines represent what is expected at the point in time when they were defined so ongoing forecasting is crucial. Without this, delivery might be successful within approved scope, schedule and cost constraints, but the project's ROI is never realized. Sometimes there is no owner identified for tracking benefits during the life of the project while other times an owner has been anointed but is ineffective in that role or is unwilling to declare that the project won't deliver expected benefits proactively.
- Benefits realization timelines are excessively long. The more time which passes between the end of a project and when expected benefits should materialize, the more fragile those benefits will be due to the impacts of internal and external changes.
- Poor project delivery. While the outcomes of a given project may not change, if the costs or timeline for realizing those increase significantly due to delivery issues, the project's ROI will be worse than expected.
For leaders looking to improve benefit realization from their project investments, doing some root cause analysis to identify why projects aren't generating expected benefits can help them to focus their improvement efforts.
Mohamed El-Erian - "Investors have to ask themselves two questions. How much can we grow our investments? And, can we afford our mistakes?"