Beyond project success: Benefits realization opportunities and challenges

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Clemith J. Houston, Jr., Ph.D., PMP, CISSP

This paper explores current challenges and opportunities in implementing and managing a benefits realization program and methodologies and metrics, and identifies unique sector-specific challenges. The sectors addressed include government agencies, commercial, and higher education organizations.

Introduction

This paper explores current challenges and opportunities in implementing and managing a benefits realization program and methodologies and metrics, and identifies some unique sector-specific challenges. The sectors addressed include government agencies, commercial, and higher education organizations. Definitions of benefits realization include the process for the identification, definition, tracking, realization, and optimization of benefits, ensuring that potential benefits arising from a program of change are actually realized; measurable improvement resulting from the outcome which is perceived as an advantage by a stakeholder; and finally a realization and understanding of why the organization is embarking on a specific initiative. Benefits realization goes beyond the identification and measurement of project or program deliverables by focusing on new capabilities and opportunities that are the result of the endeavor, along with the capability to measure them.

Benefits through change is a common theme and how change serves as a catalyst for pursuing projects and programs is explored in this paper. In addition, the intersection of benefits realization with other project management issues is explored.

Management of benefits realization is commonly a process of identification, definition, plan, and realization associated with the endeavor. Tools, methodologies, and processes have been developed to track this process and how this is achieved may be impacted by sector or domain specific issues. Some of the issues are explored. How organizations can meet these challenges is discussed with some salient examples. Areas that remain as challenges are also explored, and the suggestions for how they may be resolved are explored.

A Few Myths and Truths Regarding Benefits Realization

Myths regarding benefits realization:

  • All successful projects have benefits.
  • “My project was completed on-time, under budget and provided all the planned deliverables, so it must be beneficial?”

Truths regarding benefits realizations:

  • Benefits realization starts early in the project progress.
  • Benefits can be realized significantly after the project has closed.

Brief Overview of Benefits Realization

Why is benefits realization a challenging area? One of the reasons is that benefits are often not realized immediately, they are difficult to quantify, and other factors may confound them. Existing techniques are not always appropriate for perceiving their value, and it is difficult to plan when they may be realized (Giaglis, Mylonopoulos, & Doukidis, 1999; Lin & Pervan, 2003; Sanchez & Robert, 2010). Benefits realization can be described as a process where value is delivered from a program. A benefits realization plan can be used to define the expected benefits during the early stages of a program and then define the success criteria for the stakeholders. Earlier attempts to make sense of this include techniques such as total value management (Al-Yousefi, 1999). Value is defined as the lowest cost to satisfy required functions, needs and desires, and user expectations. A value index could be derived by quantifying the sum of function and quality relative to cost. Value engineering seeks to optimize and improve decision making to realize the optimal expenditure of owner funds while meeting the required function at the lowest life cycle cost (Al-Yousefi, 1992; Al-Yousefi, 1999).

Value engineering is not obsolete. It can still be used by the project manager in the project management toolkit and can help address multiple project management challenges. Some examples include determining the value of a project for prioritization and ranking against other projects based upon its comparative value. Value engineering activities can also be mapped against and augment the PMBOK (Project Management Body of Knowledge) processes, such as during the initiating phase by clarifying the project vision, identifying unnecessary product components and scope features and establishing the product value (Merla, 2010).

Organizations attempt to realize benefits from investments in IT-enabled change and through this process attempt to develop and enhance their benefits realization capability (Ashurst & Hodges, 2010). How organizations approach this varies based upon research. Nonetheless, it is clear that benefits are often pursued via change processes in the enterprise, and managing these changes as well as stakeholder expectations is a challenge. Organizations can use their change management processes in parallel with a benefits realization management program to be successful.

Benefits realization management was supported in the United Kingdom, representing an early proponent in this area,providing a means to ensure project success and was adopted by the government. Processes to support this are documented by the United Kingdom Office of Government Commerce (Jenner, 2012). Project benefits realization management refers to the management of a set of process needed to ensure programs, projects, and portfolios are delivering and embedding into the current operations of an enterprise all of the requirements of established business strategies, with the result of sustainable value (Bradley, 2010; Office of Government Commerce, 2007; Melton, Iles-Smith, & Yates, 2008; Jenner, 2010, Serra, 2013).

There can be increasing levels of organizational maturity as it relates to how various factors contributing to benefits realization are managed. These factors include measuring success, having a broader view of change, sustaining benefits realization, managing the benefits realization portfolio, the capacity for benefits realization and the competence of individuals (Ashurst & Hodges, 2010). For example, managing the benefits realization portfolio can be matured and thereby enhanced by moving from simply establishing control of the IT project portfolio to emphasizing business innovation and learning on the high end.

Benefits realization management has grown in interest over time, and one of the reasons for this is borne by the experience of stakeholders whereby they are aware that project was completed and met its delivery requirements, but are not sure if the enterprise is much better off. Another justification for focusing on benefits realization management is that it is associated with greater maturity in the PPM area based upon the maturity life cycle (Derby & Zwikael, 2012).

Why Worry About Benefits and Leading Challenges

Benefits management can be hard to perform in an enterprise, and that is a contributing factor to the perceived disconnect between a successful project and one that delivers benefits. Based upon a recent survey of PMO managers, five areas were identified as the challenges. In results order there was no defined governance around benefits; benefits are not standard or comparable; accountability for benefits is misplaced; unrealistic business cases; and benefits are not verifiable (Santiago, 2012). The top response supports the insight that where governance exists in organizations for project and portfolio management it has been designed to ensure projects are completed, often with conformance to only constraints (time, quality, cost, etc.), rather than to ensure benefits delivery. A recommendation is that once benefits tracking is operational, more benefits will become reality. Also, looking beyond project closure, which may be associated with project success, is another recommendation. As is often the case, from the perspective of project managers and the PMO, and perhaps to lesser degree program managers, once the project is complete, the focus is elsewhere, often due to the scarcity of resources and limited horizons. Other challenges include lacking comparable standards or metrics for evaluating benefits.

Accountability for benefits realization management is also important and forces the enterprise to look at the life cycle of their products and services and the projects that help create them. Project managers should be responsible for delivering capabilities. Program, business, or service managers should focus on the outcomes and enterprise leadership and sponsors should review the benefits at the strategic and overall capabilities enhancement perspective (Santiago, 2012). Remaining challenges include unrealistic business cases or initial justifications for doing the project, which then make confirming results either fruitless or unnecessary, often due to project failure. Finally, not being able to verify benefits is another reason and supports the justification, as well as enterprise investment, for having established metrics and methodologies up front. Not being able to verify benefits also includes the requirement of an initial baseline upon which to make comparison. Findings from a study of 331 project management practitioners and 40 professionals in project governance on the relationship between the practices of strategic alignment and project success established evidence that project success rates are greater in groups of projects where benefits realization management practices were applied (Serra, 2013).

Organizations need to distinguish between project success and project benefits. Project success is usually measured based upon project delivery or delivery to the business or enterprise of the intended outcomes and this can be depicted in a checklist of key project deliverables. What is missing is also delivering benefits that ensure the enterprise is building upon a foundation that will enable greater effectiveness, efficiency, and strategic capabilities (Milton, 2013).The sponsor or client of a project may view success based upon the achievement of objectives specified in the business case. Nonetheless, this may not guarantee or be synonymous with the delivery of benefits. Some of the challenges can be summarized around the areas of governance: how does the organization manage the realization of benefits; how do you ensure benefits are delivered.

Causes of project failures have been well documented. Some of these include lack of clear direction on how to execute the project or develop a business case for the investment; insufficient focus on tracking progress and not on benefits realization during implementation; communication problems between stakeholders and project teams; and more. However, another source is related to behavior, that specifically project managers lack an understanding of what their clients expect. Communication barriers may be a reason for this (Karamitsos, Apostolopoulos, & Al Bugami, 2010). There should be concern regarding projects that were not obvious failures, yet could be inadequate in terms of providing long lasting benefits.

Metrics and Methodologies

How the practitioner measures the effort and progress related to benefits realization is supported by various metrics and methodologies. Examples include a Benefits Dependency Network (BDN) developed by Peppard, Ward, and Daniel (2007) that is a tool which shows cause and effect and how each of the desired improvements can be achieved by a combination of business changes and new IT (Information Technology) capabilities. This approach for IT professionals and business managers looks at the ends (the target performance improvement), the ways (the ways the business must work differently) and the means (the enabling IT capabilities). Five principles were identified for realizing benefits through IT, including acknowledging IT has no inherent value. The other principles were that benefits arise when IT enables people to do things differently; only the business manager and their users can release business benefits; all IT projects have outcomes, but not all outcomes are benefits; and finally benefits must be actively managed to be obtained. An organization can proceed with a benefits management agenda using these guiding principles as a foundation, as well as recommendations for change in processes, strategies, and priorities.

Another approach is segmenting benefits into categories. Use of categories such as hard or easily quantifiable, less easily or soft quantifiable, and qualitative is one recommendation. Establishing and providing examples for each of these to project sponsors and project teams will help in lessening any ambiguity.

At the University of Colorado, Boulder, benefits realization is addressed through a number of tools within the scope of the project and portfolio management process and this is supported by an initial assessment of and prioritization of proposed projects. The current project prioritization matrix includes nine weighted and scored categories (Exhibit 1). These include:

  • Strategic alignment
  • Is the project required?
  • What is its level of urgency?
  • What is the perceived value to customers?
  • What is the customer base?
  • What is the estimated cost?
  • Is there schedule flexibility?
  • What is the current state of the initiative?
  • Does this initiative empower its users or increase effectiveness and
  • What efficiencies are to be gained?
  • These questions and this process does not guarantee that all the benefits will be realized, but does serve to create a baseline upon which future evaluation can be made. It also serves to establish a reasonably objective means by which project benefits and value can be compared with those in the portfolio, both active and proposed. Project scoring addresses the enterprise impact, from minimal to system-wide and from benefiting perhaps just a few hundred customers to tens of thousands. Other tools are in development to further refine these objectives and assessments.
Project prioritization matrix

Exhibit 1: Project prioritization matrix

The project portfolio managed by the Office of Information Technology at CU Boulder tracks and documents benefits for each of its projects. Each project charter is required to identify the expected benefits of that initiative. Also, prior to the project charter creation stage, each potential initiative is evaluated on its merits, as previously discussed. The project charter also serves to establish a baseline for benefits realization by including project success criteria, including the deliverable or benefit and the associated measurement criteria.

A project transition guide is also used in the benefits realization process by ensuring a well-documented hand-off of the service or application into the operation. Lessons learned sessions also serve to confirm that the benefits were delivered, communicating those successes and documenting areas for improvement for similar endeavors and project initiatives in general.

During the project process, creation of a requirements traceability matrix that links business and functional requirements and outcomes and documents how they are realized, tested and confirmed serves to promote benefits management and tracking.

Exhibit 2 reflects the major project roadmap at CU Boulder OIT. There are multiple opportunities during this life cycle for assessing benefits and validating benefits.

Major project roadmap

Exhibit 2: Major project roadmap

Another recommendation is to create a simple listing that associates project key objectives, success criteria, benefits, and risks. This listing provides an easy-to-view and understand relationship between what the deliverable or outcome is; what that translates to in terms of the operations or daily activities of the organization; and what that translates to in terms of new or enhanced capabilities, gaps removed, and new opportunities that the enterprise can build upon and communicate as “value-add” items to their customers, partners, investors and stakeholders.

An enterprise architecture that includes IT governance, portfolio management, program management and project management, all organized to deliver business value is a key value contributor and tool. This coordinates what, who, and how to make IT decisions, which IT initiatives will be pursued, and how they be executed. This is reflected in Exhibit 3.

Deriving business value

Exhibit 3: Deriving business value

Recent research demonstrates that for some groups, there were no common success factors among senior management, project core team and project recipient stakeholder groups (Davis, 2013). In order to address this, benefits management methodologies can provide some assistance by forcing the organization to ask some questions. These questions include: what are the gaps or questions that aren't being asked by governance committees? They can include “can we,” “are we,” and “did we.” “Can we” translates into: does the organization have the time, money, resources and motivation to undertake innovative and potentially profitable initiatives? “Are we” asks if the project is on track to deliver the profit or cost savings that allowed for its approval in the first place. “Did we” means: did the project actually lead to the envisioned profitability or cost savings? (Swanson, 2011).

There are available approaches for developing key strategic performance indicators that measure the achievement of objectives during the progress of project portfolios (Sanchez & Robert, 2010). These indicators can help measure the achievement of a portfolio's strategic objectives taking into account the realization of key benefits. The challenge that remains is that benefits realization practices are not being adopted in a consistent, comprehensive or coherent manner (Ashurst, Doherty, & Peppard, 2008). What is lacking is an ongoing commitment to, and focus upon the benefits, rather than the technology, throughout the system's development, implementation, and operations. Ashurst, Doherty, and Peppard posed seven questions as part of the benefits management approach and benefits realization plan. They include: why must we improve; what improvements are necessary or possible; what benefits will be realized by each stakeholder if the investment objectives are achieved; how will each benefit be measured, who owns each benefit and will be accountable for its delivery; what changes are needed to achieve each benefit; who will be responsible for ensuring that each change is successfully made; and finally, how and when the identified changes can be made.

There are multiple approaches for applying benefits management in an integrated way across the life cycle for managing programs. The PMI Standard for Program Management (2008a) encompasses benefits identification, benefits analysis and planning, benefits realization. A modified approach as described by Piney (2010) includes benefits assessment, business case development, benefits realization planning, benefits realization, and completion, which is a bottom-up approach in the sense that benefits should drive projects and programs, rather than the reverse. This approach also aligns better with PMI phases and associated sequential process.

  • A short list of recommendations useful in immediately moving forward and establishing documented progress follows, using work from Karamitsos, Apostolopoulos, and Al Bugami(2010): Do start benefits management on day one of every project.
  • Do involve all potential and known stakeholders early in determination of benefits.
  • Do make sure all dis-benefits are exposed and understood: ensure they are a price worth paying.
  • Do carry out a pilot or prototype if benefits are uncertain to determine what benefits are achievable and how to realize them.
  • Do ensure that all changes that affect the plan are interpreted in terms of the benefits and the benefit plan.
  • Do publicize benefits that have been achieved.
  • Do use benefit management to stop bad projects.
  • Do not expect to be able to predict all benefits in advance—many will only be understood after implementation.

Benefits realization and relationship to other project management concerns

Change Management

Effective change management allows for benefits to be not only realized, but documented, communicated, and evaluated. As changes are introduced in the organization as part of the project management effort, the Change Approval Board (CAB) can evaluate the benefits of proposed changes and associate them with the larger effort of the project.

Stakeholder Management

Effective stakeholder management provides a means for the communication and shared understanding of benefits and specifically the expectations of stakeholders beyond what might already be documented in the project charter.

Sector specific examples

From the perspective of multiple industries, examples that serve to build and design a benefits realization management program for each industry follow.

Telecommunications

Benefits realization from the perspective of a network consultant and research analyst for a major provider of telecommunications services was to provide customers with immediate solutions to network problems and sell consulting services. Benefits realization was limited to the extent for which recommended services and applications were adopted and implemented by customers and assessment metrics were available after their adoption and use.

Water Utilities

Benefits realization for a network administrator and end-user support supervisor was related to providing internal users with enhanced computing capabilities and allowing them to perform their jobs. The metrics used to evaluate benefits was usually based upon feedback from staff regarding their satisfaction with delivered services, which included applications, network access, and desktop support. Benefits realization beyond the initial service and solution delivery was tracked using customer engagement support services.

Higher Education

In project manager roles, such as an academic technology support and services manager, benefits realization is evaluated based upon meeting defined project objectives, supporting customers, providing new tools and technologies in support of the academic mission and minimizing calls into the service center. Benefits realization is staged to become more of an active and ongoing process improvement and measurement program as a result of initiatives that focus on continual service improvement.

Insurance

As an enterprise architect, technical analyst, and technology strategy and architecture coordinator for outsourced infrastructure services, benefits management was executed based upon managing projects with the service provider, providing and enhancing infrastructure services, supporting applications for internal and external customers, managing risk and ensuring internal security requirements. In this case, benefits realization management requires ongoing access to the results of changes in service, product, and organizational leadership.

All of these areas can benefit from the benefits realization management techniques, methodologies, and strategies identified in this paper, tailoring the process to meet the specific domain characteristics, unique products and services and customers.

Areas for future research

The availability of templates that are specific to various industries and domains will allow enterprises to have customized tools for establishing and managing benefits that are most relevant to their domain. The practitioner in each domain can then use these throughout the project life cycle and afterwards.

Other areas include the following:

  • Addressing associated project and program management areas and their interrelationships and dependencies with benefits realization.
  • Prioritizing key value areas.
  • Performance of benchmarking in benefits realization management.
  • Development of sustainable models.
  • Application of portfolio, program, and project management maturity models.
  • Addressing competing stakeholder interests.
  • Development of science based approaches over art.
  • Development of best practices.
  • Benefits realization metrics.
  • The value of accessibility assessments as part of project management life cycles.

An ongoing review of documented case studies involving benefits realization management initiatives will contribute to a diverse and beneficial review of gaps and opportunities for improvements. This will be benefit multiple disciplines in project management, as well as organizational functions responsible for achieving and enhancing organizational effectiveness and quality outcomes across the enterprise.

Summary

This paper has introduced information regarding the topic of benefits realization management and why this is important to organizations. A brief background of benefits realization has been provided, in addition to what is known today regarding this area: myths and facts, sector-specific experiences based upon the author's career, its relationship to established project management methodologies, as well as areas for future research, enterprise investigation, and discovery.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2014, Clemith J. Houston, Jr.
Originally published as a part of the 2014 PMI Global Congress Proceedings –Phoenix, Arizona, USA

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