What is benefits management?

Benefits management is “A process concerned with delivering the predicted business benefits defined in the business case. The process includes managing projects to deliver the predicted benefits and, after the project has been implemented, checking progress on achieving these benefits and taking any actions required to enable their delivery.” (Business Analysis, 4th edition)

A benefit is defined as “A positive gain to an organisation expected to follow from carrying out a business change programme or project.” (Business Analysis, 4th edition)

In this article, we:

  • Explain the importance of benefits management
  • Provide an overview of the benefits management process
  • Share hints and tips for effective benefits management

Why is benefits management important?

The Project Management Institute has reported that there is “a greater need now than ever to ensure that the investments in portfolios, programmes and projects lead to clear, sustainable benefits”.

In addition, Paul and Cadle note, “The importance of using investment funds wisely and delivering the business benefits predicted for business change initiatives has become increasingly necessary to the survival of organisations.

As part of our State of Project Management research, only 36% reported that they mostly or always deliver the full benefits of their projects.

How often do projects deliver their full benefits? - The State of Project Management
How often do projects deliver their full benefits? – The State of Project Management Report

So when we asked respondents which project management processes added the most value when appropriately undertaken and which were most challenging to embed, it was no surprise that benefits realisation was reported as one of the most undervalued and most difficult processes to embed.

PPM Processes: Value vs. Difficulty to Embed – The State of Project Management Research

It is a common misconception that we must list as many anticipated benefits as possible in our business case to convince executives that our investment proposal should be authorised. Often, little thought is put into what the project team and broader organisation must do to turn this list of benefits into a reality.

Once an initiative has been approved, it is not unusual for people to forget about some of the benefits documented in the business case until the project or programme is ready to be closed. By this point, it is considered too late to take corrective action.

Sometimes, sponsors agree to a change request or an exception report without understanding their decision’s impact on the organisation’s ability to achieve its predicted benefits. This can make it challenging to recognise when a business case is no longer viable.

Furthermore, delivery teams can work diligently to produce their outputs, discover later that no one in the organisation has followed through with using them, and measure and report any benefits realised during business-as-usual.

Effective benefits management can mitigate these issues. It helps project professionals to:

  • Remember the reasons why their organisation is undertaking a project.
  • Understand their roles and responsibilities for delivering positive change.
  • Increase stakeholder buy-in to implement benefits realisation activities.

In addition, it helps organisations to:

  • Improve their prioritisation and selection of projects & programmes.
  • Gain a holistic view of planned benefits across different business functions.
  • Increase the visibility of realised benefits and achievement of strategic objectives.

It is essential to appreciate that successful benefits management relies on a team effort, which involves a joint commitment from the business and the delivery team(s) to identify and realise the benefits. Organisational culture means everything. If your senior management and benefit stakeholders are unaware of what is in it for them, then you will face a serious barrier to success when implementing your process.

Benefits management process

It would be best if you managed your project benefits throughout all your defined project lifecycle stages, from Concept through to Post-project:

  1. Concept Stage (Identify high-level benefits)
  2. Definition Stage (Perform detailed benefits planning)
  3. Delivery Stage (Monitor project progress & update benefits management artefacts)
  4. Handover & Closure Stage (Hand over outputs & benefits realisation plan to BAU)
  5. Post-project Stage (Realise, sustain, & report on benefits)

Senior management must provide sponsorship for benefits management within your organisation so that you can experience fewer barriers to success and achieve a sense of consistency in approach across your change initiatives.

You can scale your approach when managing projects that follow a lifecycle with fewer stages and scale it for programme and portfolio benefits by aligning the appropriate benefits management activities to your defined programme and portfolio lifecycle stages, respectively. Where your project is within a change programme, following a consistent approach to benefits management is essential.

To secure senior management sponsorship and consistency, consider drafting an organisation-wide benefits management strategy defining the process, document templates, everyday language, and critical roles and responsibilities.

1) Concept Stage (Identify high-level benefits)

Adopting a benefits management approach early will help develop a credible business case and foster future benefit stakeholder engagement. It will also ensure that project planning and design focus on the objectives and benefit outcomes instead of the technology or project deliverables.

“Outcome: The results obtained through the use of portfolio, programme, and project outputs.

Output: The expected deliverable of a portfolio, programme, or project.” (PMI, 2020)

One of your first actions should be facilitating a workshop with known key benefit stakeholders to identify the predicted benefits, clarify expectations, and obtain business buy-in. Once you have identified the high-level benefits, specify who will receive each benefit by name, role, function, or geographical area. If possible, quantify how many people will benefit, e.g. thirty administrators from Human Resources or the whole organisation (approximately 12,000 staff).

Don’t forget to identify high-level disbenefits, defined as “A consequence of change perceived as negative by one or more stakeholders” (APM Body of Knowledge, 7th edition). For the business case to be viable, your identified disbenefits mustn’t outweigh the identified benefits.

Also, remember to set SMART project objectives (Specific, Measurable, Achievable, Relevant, and Time-bound) to avoid misinterpretation about what your organisation wants to achieve.

For benefits that can be measured, identify how you want the organisation to evidence that they have been realised. Engage with benefit stakeholders to collect baseline measurements so that you have some data for comparison. For example, if you want to reduce overhead costs by 10% for the next five years, you should obtain data available for this financial year and a reasonable number of previous years. Alternatively, to increase staff satisfaction, consult the latest staff survey report for key metrics.

“Tangible Benefit: A benefit that can be measured objectively based upon experience.

Intangible Benefit: A benefit that cannot be directly measured objectively and instead relies on a proxy or representative, measure, or evaluation.” (PMI, 2020)

Where appropriate, cite your organisation’s strategy documentation to demonstrate how your business case aligns with the long-term vision and goals. In addition, interdependencies with inflight or planned change initiatives should be considered. For example, your project could leverage benefits realised by another programme, or your project may create a disbenefit for another change initiative.

In the next stage of the plan, create tasks and target dates for completing detailed benefits planning. Also, identify the support you need to develop the associated artefacts. For example, you may request that a Business Analyst join your project team.

You can move to the Definition Stage if your business case is approved.

2) Definition Stage (Perform detailed benefits planning)

Once your project has moved to the Definition Stage, work with your team to ensure that benefits management is embedded in the heart of the project. One way to do this is to refer to the process in what you document for your project roles and responsibilities. All team members should agree to be responsible for identifying and communicating any emergent benefits or disbenefits, as well as logging any risks that could have a positive or negative impact on the planned outputs.

“Emergent Benefit: An unexpected benefit that arises during or after a programme, a project, or within the context of a portfolio. Also known as an unplanned benefit or unanticipated benefit.” (PMI, 2020)

This stage calls for detailed benefits planning. Depending on the size of your change initiative, you might receive support from Business Analysts to facilitate workshops with benefit stakeholders and document key information in benefits management artefacts, for example, the benefits register.

“Benefits Register: A repository in which benefit profiles are recorded. This may be used in aggregated ways at different levels of the organisation to fit its needs.” (PMI, 2020)

Populate your benefits register with the planned benefits and relevant information you documented in the business case, and include any emergent benefits in the future. Once created, you must maintain this document throughout the benefits management process. Otherwise, there is a risk that the register will become out of date very quickly.

Categorise your benefits by benefit vs disbenefit, tangible versus intangible, financial vs non-financial, planned versus emergent, direct versus indirect, internal versus external, the stakeholder groups impacted, and strategic alignment. These categorisations can be used to organise your benefits and for communication purposes.

Once you have gathered the basic information required in your benefits register, engage with your stakeholders to further analyse and build the benefits profiles.

“Benefit Profile: A description of the benefit, its intended beneficiaries, and criteria for its realisation. This is a component of the benefits register.” (PMI, 2020)

In each profile, provide the following:

  • What’ – Describe the benefit your organisation will offer once realised.
  • Who’ – Determine who will gain (or lose) from this (dis) realised benefit.
  • How’ – Decide the method for delivering and measuring this benefit’s success.
  • When’ – Declare when the business should expect to measure this benefit.

Agree on roles and responsibilities with your benefit stakeholders so that everyone can understand their duties during the project and post-project. For benefits management to be successful, you must secure a long-term commitment from your stakeholders to undertake enabling activities, take measurements at the agreed frequencies using the appropriate methodology, and provide timely reporting to senior management.

“Benefit Owner: The individual or group accountable for direction, related decisions, realisation, and sustainment of benefits throughout the organisation’s benefits realisation management life cycle.” (PMI, 2020)

Therefore, each benefit should be assigned an owner to take accountability for these activities, and their names should be included in the benefits profiles. Typically, a benefit’s owner will come from an area of the business impacting the benefit. That way, they should be invested in the change. Once you have assigned a benefit owner to all benefits, ensure that you obtain their sign-off for the contents in the benefits register and its supporting profiles so that you can establish ownership and avoid any later confusion about items such as the measurement methodology or target and forecast values.

Once your benefit owners have validated the contents in the benefits register and accompanying profiles, you should prepare a benefits realisation management plan.

“Benefits Realisation Management Plan: The planned activities, timeframes, and criteria for achieving one or more planned benefits or group of related benefits.” (PMI, 2020)

In this plan, supply a list of all your project’s benefits. For each benefit, consult your project management plan for the tasks to produce the planned outputs and enable the desired outcomes for the realisation of benefits. In doing so, you will incorporate your project plan with the benefits realisation management plan. Consider creating a benefits traceability matrix to help with mapping your benefits to your outputs. Don’t forget to include key dates and names of assigned resources, to demonstrate that you have planned for the project team to deliver the change required.

“Benefits Traceability Matrix: A grid that maps the planned benefits to portfolio, programme, and project outputs. This is a component of a benefits realisation management plan and may supplement the benefits register.” (PMI, 2020)

Identifying the dependencies between benefits, changes, and enablers can help the benefit owners and the project board to make informed decisions about prioritisation and scope in the future.

In addition, refer to your benefits register and profiles to prepare a benefits realisation schedule, demonstrating that you have thought about what will happen after the project has been closed. Include key dates and quantify the resources required to support the benefits monitoring, realisation, and sustainment activities. That way, there shouldn’t be any nasty surprises later.

Share your benefits realisation management plan with your benefit owners and stakeholders so that they can validate it and provide their support. Inevitably, you will be handing this plan over to the benefit owners at project closure, so they must be on board.

Together with your benefits register and benefit profiles, take your validated benefits realisation management plan to the project board for approval. If the business case is still viable, you will be ready to move to the Delivery Stage.

3) Delivery Stage (Monitor project delivery & update benefits management artefacts)

Once your project has moved to the Delivery Stage, your team will be ready to develop the project’s outputs and manage change. Continue to engage with benefit owners so that you can update them on progress and retain focus on the intended uses for the outputs being delivered.

Consult your benefits register regularly, especially when you are identifying/raising new:

  • Risks
  • Issues
  • Dependencies
  • Emergent (dis)benefits
  • Change Requests
  • Exception Reports

Benefit owners and the project board must be informed of any (potential and actual) impact on benefits before they can prioritise the scope, accept changes to the benefits profiles, and agree on a way forward. If the benefit owners and project board determine that the benefits no longer outweigh the costs, the project may be terminated early.

Whenever the business accepts any changes to the benefits, you must update the living benefits management documentation accordingly. Do this immediately; otherwise, there is a risk that you may misinform key project stakeholders in the future.

As and when you produce more outputs, review them against the agreed success criteria. Typically, this involves some testing. Meeting success criteria will increase the chances of the project’s benefits being realised. Identifying missed criteria as early as possible may allow the project team to change the outputs before the outputs are due. However, the project team must alert the benefit owners when one or more outputs are at risk of not delivering the desired benefits.

Once all outputs in scope have been produced, prepare for the Handover & Closure Stage by ensuring that all your benefits management documentation reflects the present day.

4) Handover & Closure Stage (Hand over outputs & benefits realisation plan to BAU)

Before you close your project, arrange a meeting with your project team, benefit owners, and other appropriate business stakeholders to hand over your project’s outputs. It is essential that you ask your stakeholders to confirm that the outputs received to meet their expectations for use in business-as-usual.

During this meeting, hand over the project’s finalised benefits management documentation to your benefits realisation team, which is your sponsor, benefit owners, and key business stakeholders. They should reaffirm their commitment to carry out the post-project activities detailed in the plan. It is important that you also present this documentation to the project board so that they can provide a sign-off on the final project version.

Before your project team disbands, ensure that you collect and document all lessons learned. These lessons could be helpful to other projects and programmes in your organisation when facing similar benefits management challenges.

In your project closure documentation, ensure that you detail all the outputs your project has delivered, partially or not. This will help your organisation identify and communicate the benefits it can(not) achieve post-project.

Provide an evaluation of all the benefits in your benefits register. Determine if they are likely to be achieved post-project. Share the rationale for partially delivering and not delivering specific outputs. Use your project’s decision log to reference changes in scope, time, cost, etc.

Also, identify appropriate remediation actions. For example, some partially delivered outputs could be developed further as part of further investment.

Once a project is approved for closure, it is expected in larger organisations for the project manager and their delivery team to move on to other projects and not continue their involvement in the final stage in the benefits management process: Post-project. However, the project sponsor should remain involved because they are accountable for the realisation of benefits.

5. Post-project Stage (Realise, sustain, & report on benefits)

Otherwise known as the extended project lifecycle, the Post-project Stage requires the benefits realisation team to carry out all the benefits monitoring, realisation, and sustainment activities outlined in the benefits realisation management plan.

During this stage, benefit owners shall take full business ownership of the outputs delivered by the project. They play a key role in enabling benefits to be realised, primarily by encouraging their teams to put the outputs to operational use for their intended outcomes.

Benefit owners are likely to be senior people in the organisation, so they may delegate and oversee some of their responsibilities, such as measurement capture. They will need to closely monitor their teams’ progress so that they can ensure that measurements are being recorded promptly in the benefits register.

“Benefits Realisation: “The practice of ensuring that benefits are derived from outputs and outcomes.” (APM Body of Knowledge, 7th edition)

The benefits realisation management plan should indicate when the benefits should be formally reviewed, typically after the outputs have been used for a reasonable period. Sometimes multiple reviews are required, to reflect the number of years that benefits have been forecasted.

An independent facilitator should conduct this review. Your organisation may dedicate an assurance function to conducting these reviews, such as a Business Assurance Team, Project Management Office, or Business Analysis Team. The organiser and facilitator should ensure that the review is in the benefits realisation team’s diaries and that all benefit owners have had adequate time to record and share measurements needed before the meeting is scheduled to take place.

The benefits realisation team will come prepared for the review meeting to provide progress updates and share lessons learned. The facilitator will ask the team questions to understand why there are variances between the actual measurements and those forecasted in the benefits management documentation.

After the review, the facilitator will produce a benefits realisation review report, which evaluates the benefits realisation team’s effectiveness and performance, records lessons learnt, highlights benefits not realised by the plan, and recommends actions for the team to take for recovery. This report will be circulated to the benefits realisation team and senior management for broader review and discussion.

The benefit owners will manage any recommended actions as part of business as usual. Subsequent benefits realisation reviews may be used to assess the team’s performance in following through with these actions.

Where benefits are forecasted to be realised over a series of years, the benefits realisation team’s performance mustn’t dip at any point during the post-project stage. Otherwise, there is a risk that benefits may not be fully maximised.

“Benefits Sustainment: The ongoing activities performed by the benefit owners and beneficiaries to ensure the continuation of outcomes and benefits achieved through portfolio, programme, and project outputs.” (PMI, 2020)

The benefits realisation team can analyse its performance through appropriate monitoring and measurement, identify opportunities to sustain its benefits, and possibly identify more emergent benefits. Dashboard reporting can help the business visualise the benefits register and determine which benefits are at risk.

Once the post-project stage has ended, all tasks in the benefits realisation management plan should be completed. All benefits measurements should have been captured, analysed, and reviewed. Where multiple benefits realisation reviews have been conducted, a post-benefits realisation management report should be written to summarise findings and lessons learnt and to recommend any further action.

What can I do to improve my benefits management?

References:

  • Bradbury, P., Jamil, T., Mills. C, Shermon, D. (2019) APM Body of Knowledge, 7th edition, Buckinghamshire, Association for Project Management.
  • Paul, D. and Cadle J. (2020) Business Analysis, 4th edition, Swindon, BCS, The Chartered Institute for IT.
  • Project Management Institute (2019) Benefits Realization Management: A Practice Guide, 1st edition, Pennsylvania, Project Management Institute.

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Monthly Newsletter

By: Susan Riordan

Susan Riordan
Senior PPM Consultant, Wellingtone

Published: 17 August 2021

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