How projects can deliver organisational value
Benefits realisation process
The objective of benefits management is to identify and quantify the project benefits that will achieve the organisation goals, thus ensuring project efforts focus on achieving tangible, targeted benefits in response to a specific organisational problem or opportunity. To achieve benefits realisation, effort must be allocated to continually assess the benefit applicability, feasibility and accuracy throughout the project lifecycle as illustrated in Figure 2.
Benefits realisation is not about whether the project delivered things on time and on budget. While these are important measures of project efficiency and delivery, benefit realisation is concerned with obtaining the stated contributions to organisational value expected from the project after implementation and upon which the project business case was approved.
In the project initiation and planning phases, high-level benefits are identified and subsequently developed as the project progresses, validating that the project remains worthwhile. There should be a business case that quantifies what benefits are expected, at what cost, and when they can be realised. The business case benefits should be re-tested against the base case and also other portfolio alternative investments at regular subsequent review points or stage gates. The lifecycle process ensures appropriate measurements and data collection methods exist to monitor benefits realisation over time. Benefits realisation targets must be aligned closely to business goals, as failure to achieve them would compromise the organisation’s performance outcomes.
In its simplest form, the benefits management process involves these key elements: identifying and quantifying benefit outcomes; planning and implementing actions to deliver the benefits; and measuring and reviewing benefit achievement. An additional element is to ensure handover of accountability for benefit realisation by the business owner(s) after completion of the project.
Benefits should be quantified with specific targets relative to a baseline, either the existing starting point or ‘do nothing’ scenario, and be described using organisationally accepted performance measures. Key performance indicators (KPIs) link together the performance baseline and future targets arising from the project and validate translation of project benefits to business and strategic goals. The KPI Value Tree (see Figure 3), together with the benefits realisation plan and KPI tracking/reporting approach, clearly demonstrates this relationship between project delivery and business benefits and ensures visibility and accountability for outcomes by the appropriate parties.
By using KPI links to business unit and corporate goals, employing regular and visible measurement, and including KPIs in business sponsors’ scorecards, organisations can reinforce accountability for project benefits realisation and ensure the process is taken seriously.
