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Categories: benefits
You’ve got a great project with a ton of benefits coming your way. Everyone’s really happy. And then someone says: “Exactly how much are we going to get from this project?” Suddenly it’s no longer enough just to list benefits – you have to quantify them as well, and that means producing an accurate forecast. Ouch.
So what can you do to get that benefits forecast as accurate as possible? Here are some tips for building a more reliable outlook.
1. Strong leadership
This almost goes without saying. If you have your project sponsor encouraging you to be transparent and honest with the estimating process, challenging your assumptions and leading by example then you will get a better result.
2. Validate first
Don’t invent a way of measuring benefits (when they are realised) that you can’t test. Test your benefits capture mechanisms, and then change them when they don’t work the way you thought they would!
3. Account for them now
People are more inclined to produce accurate forecasts if they know they will be held to account. If you expect your project to deliver a certain financial benefit, put that in the right department’s budget today. If it’s a productivity benefit, build that into the team’s annual objectives or performance targets.
4. Be negative
Take the opposing view to challenge estimates. Think critically about the other side of the argument and what would happen if the benefits aren’t delivered as planned. This can help you avoid optimism bias and come up with a realistic range.
5. Get another opinion
Pick a trusted project management colleague or even someone in a different team to review your estimates. This independent challenge can give you another perspective and help you avoid getting sucked into a project team mentality in which you make unrealistic assumptions. An internal auditor could carry out this role for you, or someone from your PMO.
6. Don’t estimate alone
Use the Delphi technique or other group estimating tools – you’ll get a far better, more accurate result than if you came up with the benefits forecast by yourself.
7. Forecast a range
As with financial forecasts, predicting an amount in a range gives you more flexibility. Avoid single-point forecasts (“We’ll generate $689.52 extra revenue”) and opt for a spread of figures (“We’ll bring in between $550 and $700 in extra revenue”).
8. Review your estimates regularly
As your project progresses, go back to those estimate and make sure that they are still accurate. Your project will change and those changes could well have an impact – positive or negative – on the benefits forecast. Keep your forecast up to date and communicate any changes to the key stakeholders. A change too far in the wrong direction could mean your project is no longer viable. Linking back to the first point on this list, that’s the time when strong leadership comes into its own. It might mean cancelling the project or backing out some changes that have an adverse effect on the benefits profile.
Benefits are the reasons we do projects and programmes, so if the benefits aren’t there, you have to have a very good justification for continuing to work on the project. That’s why benefits realisation is important. More effective benefits realisation happens when estimates are good, people understand how they have been calculated and above all, they are realistic. It isn’t hard to do, but more often than not project teams and the organisations they work for don’t spend the time on the benefits planning stages to get good results at the end.
What does your company do? Let us know in the comments below.
Posted on: July 22, 2014 06:08 AM |
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