Seeing benefits in project cost
Is the glass half full or half empty? It depends on whether you consider the water a cost or a benefit. Do you fill up an empty glass with benefits, or do you drain a full glass to satisfy your thirst?
Excuse my imperfect analogy but there’s something wrong with the way we look at our projects if the most important figure is the price tag. I’m guilty of it myself; news about a project often quotes the dollar figure upon completion. In my defence, governments, organisations and consumers often focus on cost when the real focus should be on benefits.
I realise this is easy to say and harder to do. At the 2013 Benefits Realisation Summit in Sydney late last month, a number of speakers elegantly articulated the challenges of the cost mentality, which was often at the expense of actually defining the benefits. One of my favourite experts on the matter, Jed Simms, lamented the practice of putting together a business case post-project in order to justify the budget.
Another speaker, Shane Perkins of Wildfire Consulting Group, made the point that if we focused on cost all the time, private citizens would almost never buy a car. In addition to the actual price tag of the car there are the running costs, including compulsory insurance, and then throw in the fact that most cars depreciate and you have a terrible cost burden when most people’s transport needs can generally be met more cost effectively by public transport, taxis and car sharing programs.
So why do individuals buy a car? The benefits of convenience and accessibility come to mind. Why do people buy luxury cars when a small runabout provides convenience and accessibility? Prestige and social status are other benefits associated with the type of car people purchase.
Then let’s step away from talking about cost as if funding should decide whether a project should go ahead. If there is a business case to do a project, then that should already determine that point; anything that follows is just haggling over the price.
What benefits will the funding buy you? If you can’t afford the bell and whistles, what is the minimum suite of benefits the project should invest in for the budget you have?
All projects should be benefits-led. Focusing on cost just means if you start with an empty glass, you’re simply going to become dehydrated.