Organizations that adopt a mature approach to managing benefits waste $112 million, or 67%, less for every $1 billion invested in projects and programs than those that don’t ($54 million vs $166 million respectively). According to findings from the Project Management Institute’s (PMI) 2016 Pulse of the Profession®: The Strategic Impact of Projects, most organizations are missing major opportunities to add strategic value because they lack a formal and focused approach to benefits management.
The new study from PMI quantifies the value of ensuring that identified project benefits are aligned with strategic goals. When the two are aligned, 80 percent more projects meet or exceed forecasted ROI and 57 percent more meet goals and business intent. In addition, 45 percent more are within budget, and 50 percent more are on time. Despite these clear indicators of the value added by managing benefits realization, data from PMI's 2016 Pulse of the Profession shows that a staggering 83 percent of organizations lack maturity with these processes.
"Setting up a planning milestone dedicated to identifying and aligning desired benefits will get project managers, business owners and executives on the same page and ultimately help their organizations increase the value of their investments," said PMI President and CEO Mark A. Langley. "Formal and focused benefits management draws purposeful attention to which projects and programs are approved—and why."
More than six in 10 (62 percent) organizations implement projects even though the related business case is not closely aligned with the organization’s strategy. Study participants from these organizations report a range of reasons these projects are allowed to proceed:
- Schedule pressure to begin (50 percent)
- Business case insufficiently articulated (43 percent)
- Vested interests in project independent of alignment (38 percent)
- Strategy not well understood (37 percent)
- Failure to recognize importance of alignment (36 percent)
“The fact that more than half of organizations knowingly proceed with projects that do not align closely with strategic goals should be a wake-up call to senior executives everywhere,” noted Langley. “Some of this ‘failure to align’ can be corrected through better communication, but there are projects being green-lighted that should not be. Wasting resources on misaligned projects prevents organizations from being nimble and flexible enough to take advantage of emerging opportunities.”
The process of identifying project benefits has increased the visibility of formalized project management throughout the organization, say just over half of respondents. This suggests a potential to move the topic of benefits—and how to deliver them through projects—to the top of the agendas of both executive management and project management.
Recommendations:
- Make benefits identification part of the formal project management process. Project and program benefits should be identified as integral parts of the business case, and tracked from project initiation through transfer to the business and beyond. The study shows that when project benefits are identified before the start of a project, 54 percent more projects meet original goals and business intent. Benefits identification ultimately gives organizational leaders insight into whether they are making the right investments at the right time.
- Share responsibility for benefits identification among the organization's executive leaders, business owners, and project professionals. Project teams will be better equipped to deliver on business needs and ensure higher levels of benefits realization if they are part of a collaborative effort with leadership and business owners from the outset. Empower project managers to succeed -- the study revealed that 38 percent of project managers are accountable for identifying project benefits, but only 27 percent are accountable for ensuring that those benefits are strategically aligned.
- Take a strategic view of benefits Organizations need to become far more effective at identifying the benefits that projects deliver, especially the intangible benefits that can’t be quantified in monetary amounts, and ensuring alignment with strategic goals. The study shows that only about half of organizations specify benefits adequately in relation to strategic goals, only one-third of organizations distinguish between short- and long-term benefits, and only about half indicate that project benefits, as identified, are well aligned with strategic goals.
Download a copy of Pulse of the Profession® In-Depth Report: The Strategic Impact of Projects.
The 2016 Pulse of the Profession® In-Depth Report: Strategic Impact of Projects is based on a global survey of 1,189 project management practitioners and in-depth interviews with senior executives, PMO directors and directors of project management. Study participants come from a range of industries, including information technology, financial services, energy, government, manufacturing, healthcare, construction, telecom, consulting, automotive, aerospace, transportation, retail, training/education, pharmaceutical, food and beverage, and mining.