Project Management

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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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How to keep a business case up to date

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Date

How to keep a business case up to date

You’ll see that at various points in the project management lifecycle you are supposed to review the business case and check it is still fit for purpose, but what does that actually mean? What are you looking for?

I’m not sure that continuing commercial justification of a project sits solely on the project manager’s shoulders, but you can do a first pass review and raise any concerns with the sponsor. After all, power sits with them to make changes to the project or cancel it, should it no longer be fit for purpose and likely to achieve its goals.

Here’s what to look for when you do a business case review to check if the project is still viable.

business case review

Strategic alignment

Hopefully your strategy doesn’t change that often, but if you’re managing a multi-year project or program, or you’ve just had some strategic change at the top, it’s worth checking to see that your project still aligns with the organisation’s goals.

Affordability

Can you still afford to do the project? In other words, have costs spiralled due to unforeseen issues, scope changes, requests from the client that have to be included because the contract was so vague they are saying you have to pay for it (of course, that never happens…) and so on.

The challenge with assessing for affordability is that it then opens up a conversation about sunk cost. If you’re three weeks off finishing the project, it may well be worth the cost uplift to get you across the line. If you’ve got two years still to go, not so much.

Riskiness

Look at whether the riskiness of the project has changed. Hopefully as you know more, risk levels have decreased. But a portfolio manager would probably want to assess the risk of this project along with the risk of the portfolio overall, and if the whole portfolio risk profile has changed, there are some conversations to have.

Look at whether your risk budget or contingency time in the schedule is adequate to cover the risk. If not, if you added more, would that make the project unviable?

Achievability

Consider whether you can still complete the work. Achievability might be challenged if key resources have left, deadlines have changed, a supplier has gone bust, or there are plans for a merger. Anything might affect your ability to achieve the plan as it is today.

If you can’t achieve the baselined plan, would a replan mean other criteria for viability are not met? For example, you could achieve the plan with more time and more money, but that would mean the project would not be a cost-effective initiative.

Benefits

Check that you are still going to get the benefits, or enough of the benefits to make it worthwhile from a cost/benefit analysis. If the project ticks all the other boxes, it might not tick the box for benefits. For example, a delay in the schedule may push back realisation of the benefits to a point that undermines the business case. Additional resources pushing the price up will eat into benefits. Perhaps the project no longer represents value for money.

Carry out these checks at key governance points and gate reviews. Highlight where there are issues to resolve, and come up with a plan if you can. Then discuss that with key stakeholders, the client and sponsor, and see if you can resolve any business case challenges without having an impact on viability of the project. Ultimately, if the business case is no longer viable, the decision is around cancelling the project – and that’s a tough conversation for everyone.

However, if the business case no longer stacks up, cancelling could be the best thing to do.

Posted on: April 15, 2024 08:00 AM | Permalink | Comments (0)

The Evolving Landscape of Benefits Realisation

In December I wrote about benefits realisation and management, and how you get started in a simple way. That prompted a fantastic question from Markus:

 

Reflecting on your thoughts about the growing emphasis on benefits management in project management, it's clear that there's a real shift happening. It's fascinating to see this kind of evolution, where both big and small projects are being scrutinized not just for what they deliver but for the actual benefits they bring. This approach feels much more holistic, doesn't it? … What's your take on this evolving landscape? Do you feel that the focus on benefits management is changing how projects are approached in your organization?

 

So, let me dive into that a little today and reflect further on the shifting sands of benefits realisation.

benefits management


Change #1: Stakeholders

I think the first big change in the landscape of benefits management is that stakeholders are far more open to the idea that there are benefits.

In other words, they want to see benefits, they want to come along to workshops to define benefits and they want to get the credit for delivering benefits! People seem to realise that they can’t simply ask to do projects and someone on high say yes. It’s not that easy any longer.

I think part of this change has come about because there is not the funding sloshing around for pet projects any more. Going back a few years, we might have had funding for projects that didn’t really need to be justified beyond ‘sounding like a good idea’. These days, there is far more scrutiny on where the money is going, so it’s important that stakeholders are seen to be engaging with the process of benefits identification.

In real terms, that looks like a lot more commitment to the benefits identification and tracking process.

Change #2: Accountability

Having willing stakeholders prepared to go through the hassle of setting up benefits trackers is really only the start. They have to be held accountable and those tracked benefits need to be reported. And if the benefits aren’t there, that should be challenged. Perhaps there are good reasons why the benefits are delayed, and that can be factored into financial plans going forward.

Change #3: Over-reliance on benefits for funding

I don’t see this often, but there have been cases where some very good project idea has not been funded with ‘real’ money because the plan is that it will self-fund from the benefits. In reality, funding something with money that you save is really hard because you don’t get the savings until after you’ve done the work. So you either have to commit to doing the work and be really sure that the benefits will materialise, or don’t do the work because you can’t pay for it before any benefits are realised… it’s a bit chicken and egg.

I hope this doesn’t become a new benefits trend: yes, do any project you want as long as it’s self-funding! Even a bad idea could get the go ahead if that was the attitude.

Change #4: Identifying benefits

When I first started out as a project manager, we often talked about benefits, but only really listed intangible things like improved customer satisfaction generally (which we could have actually tracked, if we’d bothered enough) or staff morale, or brand reputation avoidance. Things like that.

Benefits are often a bit abstract or not immediately obvious, or you can’t take a baseline because you’re developing something new so there is no current baseline that’s easy to grab to track the difference.

I think part of the evolution is coming up with better ways to track benefits and identify them, and to be honest, I think large data sets, online tools, big data analytics and company’s interests in understanding everything in lots of detail paved the way for us to have the right approach to do this, and the data sources to back it up.

Markus went on to write:

The whole process of setting up models for benefit calculations can be quite a maze. You've got to bring in experts, wrangle with finance teams, and then there's the task of gathering all that baseline data. It's like piecing together a puzzle without having the picture on the box. Getting everyone on the same page, ensuring they understand and agree on the calculations, is a Herculean task in itself.

I certainly agree. It’s not about setting it up once and forgetting about it. It’s an ongoing effort that only starts with identification. However, the signs are there that more and more organisations are caring about benefits – probably because they have to, and that’s not a bad thing.

What does the landscape look like with you?

Posted on: February 19, 2024 08:00 AM | Permalink | Comments (2)
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