Undertaking projects and programs needs to bring about benefits. This is to ensure that return on investment is achieved.
This has led savvy organizations to start focusing on benefits realization. Benefits realization management is a process that is undertaken to get ready for and manage planned benefits through change. The fundamental reason for doing this is that it is possible to maximize the benefits. Taking a more structured approach to this helps to achieve it. However, many organisations do not focus effectively on benefits realization, if indeed they invest any energy into it at all. This is a problem because the competitive environment for most businesses is intensifying. Working towards achieving real benefits can ensure that the organisation is focused on the right activities. In addition, it is relevant because many projects fail and do not deliver the benefits it desires.
What are benefits?
Before exploring benefits realisation management in further depth, it is helpful to clarify what I meant about “benefits”. Benefits should be quantifiable and possible to measure. It is useful to make the required benefits SMART to ensure this. This means making them specific, measurable, agreed, realistic and time bound. Often, benefits will have either a monetary or resource value that is tangible that can be assigned to them. They should also be considered to be positive by one or more stakeholders. Benefits of undertaking projects usually fall into one of the following categories: increase revenues; lower costs; comply with a legal requirement; continue to deliver business as usual; or provide a tangible contribution to a business imperative. Benefits realisation management helps by turning business goals into measurable benefits that can actually be tracked.
Why work towards benefits realisation management?
As mentioned above, benefits realisation management is important from the perspective that it helps maximise the quantifiable benefits that can be achieved for the organisation. Failing to undertake benefits realisation management is costly and means that there is a strong chance that projects are not delivering all that they could for the organisation. Research carried out by the PMI in its Pulse of the Profession report on the Strategic Impact of Projects in 2016 showed that 83% of organisations are immature with regard to benefits realisation. The study also identified that organisations with low benefits realisation maturity waste $166 billion per $1billion. What is more, 44% of businesses did not forecast the return on investment of projects either “always” or “often”. The chances that these organisations are not maximising project benefits are very high.
In fact, benefits realization management is especially useful from the perspective of being able to make a good business case for the change and in making sound business decisions on it as well. It enables projects to be more closely tied to business performance, and projects are more clearly linked to organizational strategic objectives. This helps to drive a culture of performance in the business. Benefits realization management is highly beneficial in terms of making better decisions on how to invest time, resources and money within the firm. The information on the benefits realized can be shared with employees throughout the organization, which is good for morale.
Benefits realization management needs to be driven from the top of the organisation. It should be integrated into the process of strategic planning, to ensure that undertaking any particular initiative will definitely bring about quantifiable benefits that are worthwhile for the business. The focus needs to shift somewhat from outputs and deliverables, more towards benefits and value. Project managers have responsibility for driving this shift, and business leaders for ensuring that it integrates the approach within the strategic goal from the very outset.
The Process of Benefits Realisation Management
Benefits realisation management is not a one-off event. In fact, it is something that is ongoing throughout the project or program management. After identifying benefits, a plan for achieving each must be created. This includes prioritizing different benefits and seeing if they are actually achievable. It considers the inputs to achieve them in terms of time and resources, including money. For example, in some cases the cost of achieving it may simply be too great to make it worthwhile. This information needs to be fed back into the strategic decision-making process, and decisions reconsidered.
The project management plan dovetails with the benefits realization process since all projects should guide the delivering of benefits. The benefits realization management plan ideally will also include monitoring of progress towards benefits realization to ensure the project or program stays on track. Some benefits may be delivered faster than others, with some realized before the entirety of the project is complete. In addition, another step is working to ensure the benefits can be sustained in the longer term.
Some organisations appoint a benefits champion to be accountable for the process throughout the project to ensure it gets followed through. This does not need to be an additional headcount. It can be a team member within the project team. Such a person can create a register of benefits and monitor the metrics to track benefit realisation for the project or program. They can also lead on engaging stakeholders in this area, finding ways on engaging people who need to be but perhaps aren’t. Skills for such a role include good relationship building and interpersonal capabilities as well as effective communication.
To summarize, benefits realization management helps both the strategy and the project to start with the end in mind, through aligning benefits with strategy. Having quantifiable, SMART benefits to work towards ensures that the business can achieve the desired return on investment of the project. Failing to pay attention to benefits is likely to be costly and unproductive. A benefits champion can be helpful in keeping track of benefits, monitoring progress towards achieving them and engaging stakeholders with the project or program.