How many companies do you know that actively measure, track and report the benefits derived from projects and programmes? Possibly 1 in 8, at most, and yet the only reason we spend billions of project rands every year is to realise a gain on our investments, whether it’s an increase in sales or a new community clinic.
Our business and delivery landscape has changed. It’s no longer OK to take the outcomes from our projects for granted and to allow money-hungry projects to continue unchecked while other critical strategic initiatives wallow in our choked up portfolio pipeline; we just can’t afford it.
The premise is that there are really only two reasons we don’t do something: either we can’t or we don’t want to. And I’m pretty sure it’s almost always the former. But while Benefits Realisation can be complex, apply some structure and a dose of common sense and “can’t” turns quickly to “most definitely can”.
Let’s not confuse a capability with a realised benefit. Sure, we have got better at project management, delivering fully functional systems and infrastructure, but unless we transition this capability into an outcome that is fully utilised as envisioned in the original business case, we have not realised our benefit.
A benefit is defined as a measurable improvement resulting from a planned outcome that aligns to an over arching strategic goal.
And this definition leads to the four imperatives. Benefits must:
- Be planned for;
- Be measured from pre to post transition;
- Be aligned to strategy; and
- Belong to someone.
/THE 3 STEPS
The Three Steps of Benefit Realisation are: Identify, Plan, and Deliver. They are cyclic, pretty continuous, and iterative.
Step 1: Identify Benefits
- Translate each project output into a benefit or benefits. (Later, I will show you how to translate each benefit into a project output).
- Map each benefit against a corporate or divisional objective.
- Describe each benefit in a benefit profile.
- Categorise, e.g. cashable, non cashable.
- Summarise all your benefits in a benefit register.
Step 2: Plan Benefits Realisation
- Attribute a responsibility for the realisation of the benefit (this should be (determined??) with the business unit affected).
- Validate the benefits credibility with 4 tests:
- Measurement – How will the achievement of the benefit be measured?
- Attribution – Who is accountable and responsible?
- Description – What precisely is the benefit?
- Observable – What are the verifiable differences that will be noticeable?
- Match benefits to business unit performance targets.
- Develop the Benefits Realisation plan.
Step 3: Deliver Benefits Realisation
- Implement the plan.
- Measure the benefits.
- Manage risks to realisation.
- Run benefits reviews during the project life cycle, as well as post project, until the measurement of the return is realised.
/VALUE FOR MONEY
These 3 steps make up the first part of a benefits framework that can be incorporated into your portfolio office’s governance strategy. Look out for future additional articles where I will expand on the activities in this three step approach to deriving value for money from your projects and programmes.