Benefits management, like project risk management, is practiced poorly by most organizations. While project intake processes usually require some articulation of expected benefits, few companies effectively monitor and control the realization of those benefits over the life of a project and beyond. This is especially true with discretionary investments as the benefits from mandatory projects are usually related to risk reduction and are usually immune to changes in strategic objectives or external environmental influences.
So what are key elements of a holistic benefits management framework?
Beyond stating the expected benefits of a project, an operational definition of how those benefits will be measured and a baseline against which performance can be measured needs to be provided.
It is also important to provide a conservative timeframe within which measured benefits can be directly attributed to a project’s outcomes. This can be quite challenging with enterprise portfolios containing multiple interdependent projects and programs where a single Key Performance Indicator (KPI) might be influenced by a collection of projects. In such cases, governance committees should determine whether expected benefits should be measured at a higher level and the contribution of individual projects pro-rated in some manner. It also helps to have individual sponsorship at the KPI level to avoid overlaps in benefits recognition.
The defense of a project’s business case needs to include a thorough analysis of projected benefits by an independent party. This analysis should focus on assumptions and risks impacting benefits realization. The business case should clearly indicate who is responsible for monitoring and reporting on benefits over the life of the project and for the portion of the benefits tracking lifecycle beyond the end of the project.
Finally, governance bodies should specify a “kill threshold” so that projects whose benefits erode below this threshold will be terminated.
Once baselines have been approved, regular re-forecasting is crucial to avoid continued investment in projects experiencing significant benefits erosion. The specific frequency of these re-forecasts is context-specific, but a minimum cadence should be established at the portfolio level to support normal portfolio monitoring and reporting practices.
Releases, phase end gates and change requests should all include a benefits re-forecast and review.
For those projects where business value starts to accumulate prior to the end of the project, tracking and reporting of these benefits should be incorporated as part of normal project performance reporting practices.
A good project manager will influence factors affecting business value and is not afraid to call for a project’s cancellation if expected benefits won’t be realized.
Post-project benefits tracking
This is the weakest of the stages of benefits management as a project manager is no longer around to influence a business owner to track and report on realized benefits. Confirming ownership for these practices as one of the transition activities at the end of a project can help, but tying the quality of benefits management practices on their past projects to the evaluation of new project business cases is one way to build “skin in the game” for business owners and project sponsors.
The Sixth Edition of the PMBOK® Guide defines project management as “The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.” It would be ideal if the Seventh Edition enhanced this definition by modifying it to “The application of knowledge, skills, tools, and techniques to project activities to achieve benefits by meeting the project requirements.” Doing so will provide a valuable reminder that project management has to be about more than stakeholder satisfaction and delivering within scope, schedule, cost and quality baselines.