Benefits management starts early – and affects each stage of the program life-cycle

The delivery of benefits from a project normally occurs after the completion of the project.  In contrast, due to the scale of a program, delivery of some or all of the benefits will be within the program scope. 

As a result, management of a program will include setting up the mechanisms for delivering and monitoring the benefits delivered. In order to be able to measure improvements (at the conclusion of the program), the “before” or “as is state” needs to be measured and baselined. 

Business benefits will normally be of four types:

  • Direct financial benefits – those hard, tangible benefits that can be measured and assessed for impact on the bottom line. These may be:
  1. Cost savings – the most predictable and tangible class of benefit
  2. Cost avoidance
  3. Revenue generation – probably the most important class of benefit, but not that predictable as competitor actions can erode/negate the benefits
  4. Revenue protection – a revenue category analogous to cost avoidance; about protecting the status quo
  • Direct non-financial benefits – those tangible benefits that can be measured and assessed, but which do not have a direct correlation to the bottom line – e.g. safety improvements or net social benefits in the public sector
  • Enabling benefits – benefits that enable other projects to deliver benefits, for example the implementation of a new computer system which reduces processing times, enabling a reduction in staff numbers to take place
  • Soft benefits – benefits such as improved morale that may not in themselves deliver financial impact directly.

Providing realistic and usable measures for benefit realization is not straightforward.  Benefits may be owned by different parts of the organization. Some benefits can be tracked using financial measures, while others will need more complex measures, or indicators, to demonstrate their realization.

Some projects may not contribute to benefits in their own right, but they may be providing prerequisites for other projects that will contribute to the realization of benefits.  Links between enablers, improved capability and business outcomes should be clearly mapped and tracked over time.

To achieve benefits delivery, there are a few key tools, including:

  • Benefits model
  • A detailed section on benefits and benefit delivery roles and responsibilities within the management plan
  • Benefit progress reports – preferably integrated into the standard project reporting
  • Activity plans describing what is required to deliver the benefits, and the accountability for these, integrated into the main project plans.

The below diagrams depicts tools used to assess the likelihood of benefits.  Such activity feeds into the business case at the beginning of the program and is then used to assess progress. 

It is important to conduct regular reviews of the main benefits to determine whether they are being realized as originally planned. Even more important is the need to begin managing benefits from the very outset of the program.  

Alxander Lowry

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Comments

  • PJW  On April 14, 2011 at 11:04 am

    Actually, this should be self evident. Since, if you expect not to be able to realize the proposed benefits, you shouldn’t start the programme in the first place. On the other hand, the same goes for Testing, Implementation and Acceptance

    All four should be initiated at the start of the programme (or project for that matter). Failure to do so, or postponing it until later, may cost you dearly. In fact it may cost you your project/programme.
    And probably will, given the evidence around us.

  • Nick C  On April 14, 2011 at 5:52 pm

    Great article Alexander! Your article sheds light on a topic that receives little attention after projects are completed. Managing benefits will also help manage user and stakeholder expectations as well.

    Cheers!

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