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Milvio DiBartolomeo 18 articles
Residence: AU Brisbane, Australia
OGC Gateway Assurance Expert | Author | Agile, Project, Programme & Portfolio Management and Better Business Cases Specialist

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Benefits realisation – Everyone is responsible

Managing Benefits by Steve Jenner highlights that a common misconception about benefits identification, measurement, management and realisation is the “cart before the horse” mentality. Typically a project begins, and then afterwards it starts the process to identify the measurable financial and tangible benefits that will result from that investment. That is, attempts to identify the necessary financial benefits to justify the costs to support a positive net present value. This practice of identifying benefits after investment is often a leading cause of failure for organisations that confuse ends with means, processes with outcomes and pursue activities that sound good, look good and allow project owners to feel good but in fact contribute little to organisational (including portfolio) performance. The solution is to adopt benefits-led change projects that ‘start with the end in mind’ and where the scope of the project is rightfully determined by the benefits required. In short, the benefits required should determine the project scope (and business requirements) rather than vice versa.

Net Present Value

Net present value (NPV) refers to the difference between the value of cash now and the value of cash at a future date. In project management, net present value is used to determine whether the anticipated financial gains of a project will outweigh the present-day investment — meaning the project is a worthwhile undertaking. Typically, an investment with a positive NPV should be profitable, shortlisted for portfolio optimisation and form part of the portfolio strategy and portfolio delivery plan. An investment with a negative NPV, on the other hand, will likely result in a financial loss for the organisation and should not be carried forward. Hence why, benefits should always be closely tracked against accurate and realistic forecasts to inform the investment decision to continue, discontinue or vary the scope for implementation.

Everyone is a change agent

Simply, change management provides the structure for effective benefits management and realisation. Change management, when executed well, is a continual, evolutionary and all-encompassing activity that is embedded across the organisation to sustain transformational or business change. As such, change should never been perceived or used as a single, occasional or supplementary process. Since every change, no matter how insignificant, will have some level of impact to the organisation. People are likely to embrace change more readily when they understand that the change is not something out of their control or imposed upon their work, but is simply another part of their role. Like AgileSHIFT states everyone, to a greater or lesser extent is an agent of change, and is involved to an extent with identifying, progressing, enabling and achieving change in parallel with their business-as-usual or run-the-organisation work. If benefits are the measurable improvement resulting from change then by extension, everyone is also responsible for benefits realisation. 

Start with the end in mind

Unfortunately efficacious business change and to a greater extent, benefits realisation does not happen automatically no matter how much an organisation wills it. Successfully delivering digital, ICT and ICT-enabled projects without business change simply results in an output. That is, a specialist product that is handed over to a customer. Note that management products are not outputs but are created solely for the purpose of managing the project. As such, organisations need to be explicit by communicating that the benefit is what matters, not the output, capability or outcome (i.e. the result from change or the enablers). What’s important is the measurable improvement resulting from change perceived as positive by one more stakeholders contributing to organisational (including strategic) objectives. It’s only then that organisations can begin to create that true - clear line of sight - between strategic intent and the realisation of benefits, both expected and emergent. So, consider the measures set, and ask yourself whether they motivate behaviours, personalities and mindset that are consistent with, or contrary to, the enabling changes and benefits. Then review organisational performance to ensure that measures have the anticipated effect. The hardest part is getting organisations to change.


Published at pmmagazine.net with the consent of Milvio DiBartolomeo