I’m working with organisations who are putting a lot of thought into benefit management at the moment – more thought than I’ve ever seen in past years. I know benefits management has always been something to consider on projects, but how many project/leaders/organisations actually truly do it?
I’m sure the larger projects are geared up for benefits tracking, but smaller initiatives? Those that might only deliver a few thousand pounds/dollars of benefit per year? Are those being tracked?
I think the trend is changing, and I think there is more focus on benefits tracking, particularly in programmes. Where there is a large programme of work, even small projects get to contribute.
So how do you do it?
The first step is to work out what benefits your project is going to deliver. For example, that could be:
- Cost saving
- Increased sales/revenue
In fact, benefits could be lots of things (shorter cycle times, more calls answered, higher customer satisfaction) but most often they can be reduced to money. Shorter cycle times should mean more projects delivered in a year, so more value achieved, or more widgets through the process, so more sales. More calls answered should convert to more sales, so more cash. Higher customer satisfaction results in more repeat purchases and more testimonials that drive new buyers, so more cash.
Even carbon savings and sustainability targets can often be represented as financial benefits. Carbon has a financial figure associated with it, so you can translate carbon reduction into money.
The trouble comes with trying to get stakeholders to agree on how these benefits will be calculated.
More calls in, for example, might not translate to more sales for several months, depending on your business timeframes and processes. You will need some rules and assumptions around how benefit numbers are going to be worked out where the maths is not straightforward.
For example: if we outsource a service, we can reduce headcount in function and probably make a saving on the cost to serve (budgets are part of the outsourcing decision, after all). That’s a straightforward cash saving: those individuals are no longer on our payroll (even if they were moved across to the outsourced party – the UK has TUPE rules for this).
But do we count that saving as a ‘pure’ saving, or do we have to take off the cost of buying the outsourced service? How long can we claim the service for before it becomes BAU? What happens when we need to add a head or two back in, where do those costs go?
We need assumptions to make benefit calculations work, like what’s the average cost of a sale (so if we answer more calls we should convert x% and make y% extra money as a result).
This first step of creating a model on which to base benefit calculations is the hardest part, in my opinion. There are experts to consult, finances teams to engage, data to gather so we have something to use as the baseline, and lots of maths and spreadsheets to test out so we can model what the benefits might look like.
Getting agreement on how the benefits will be worked out is hard. You need everyone to agree, and more importantly, to understand how it all goes together so they can repeatedly work out the benefit using the same calculation, month after month for as long as you decided to track it for.
That’s no small undertaking, especially for organisations starting out. Especially as many projects have multiple strands and multiple things contribute to the benefits.
What’s the journey like for benefits tracking in your organisation? Let us know in the comments what the biggest challenge is for you – I’m interested to see if you agree with me that it’s the setting up and creating the assumptions and rules for calculation, or whether there is something else that is the hard part.
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