A BENEFITS OPPORTUNITY — FOR YOU
by smalpass on January 31, 2012
Explain to me this…
- We commission projects to realize the benefits (if we deliver the project but don’t realize the benefits, where’s the value in that?)
- But we treat benefits as some afterthought or hoped for after-effect, rather than the project’s raison d’etre
- When we do measure benefits we make it incredibly hard, labour-intensive and (usually) value destroying!
How did we get to this situation? Benefits realization management is not a mainstream discipline or process, but it should be.
Why is effective benefits management such a rare sight? There are many reasons and pressures to keep benefits management off the agenda – “not mature enough, it makes executives too accountable, too many things change for it to be meaningful”, and so on.
But there is one underlying, invisible reason that undermines benefits management — operational management thinking.
Operational management manages costs to budgets. Each year a month-by-month budget is approved, and each departmental manager works to ‘make budget’. Overspending requires a ‘Please explain’ as does under-performing on the revenue side. But the majority of managers know they have to manage cost as a primary control measure. They therefore bring this thinking into the project world.
Look at your project/program/portfolio reporting and I guarantee that the majority of the reporting is cost centric. Costs to date, costs to budget, costs to complete, committed costs, etc. All of these are important, but…
Project delivery management should be managed to value. Each project’s cost-to-deliver, needs to be managed in relation to the value available. The project manager needs to manage the productivity of the project delivery team and the quality of the outputs so as to deliver, enable and support the realization of the full business value for the least practical cost.
“Delivering on budget” is never the goal – “Delivering the business value” is the real goal; and you can’t deliver value by just controlling costs.
Yes, yes, yes, cost control is important as it impacts the net value realized. Every dollar/pound/euro spent over and above the least possible cost reduces the net value of the project and business results. Cost management, in the project delivery context, is a value management process.
Value management requires the full and timely delivery of the maximum available benefits and their financial value for the least practical cost. Every aspect of the project must be visibly aligned to and driven by value management.
To achieve this we don’t need complex benefits measurement processes, the project is the primary benefits realization process — but most project delivery approaches currently miss this as the project activities are not directly connected to the realization of the business benefits. It is believed and hoped that “The benefits will be realized after the end of the project”, but this is neither necessarily true nor a reason for not focusing on benefits from the day they are identified.
As a result of mis-focused thinking we have institutionalize three project delivery approaches that individually and cumulatively destroy the very reason we do projects – ie the realization of the business benefits.
- We manage projects to cost – and hope the value will follow. It doesn’t, as we’ve seen in practice for many years.
- We separate projects from benefits realization so that we need to create a separate stream of activities (and overheads) to track and measure benefits.
- We treat benefits realization as a measurement or accounting exercise rather than as a change delivery process. To realize the benefits we need to take action, not just measure something!
What happens when we change these three approaches to focus on true benefits realization? The number, nature and value of benefits realized go up exponentially!
- Benefits increase at the business case stage as more benefits are identified. Usually the value of the benefits goes up by at least 50% and often over 100%.
- The value of the benefits realized during the project increase as many benefits are realized during the course of the project (and we don’t just mean some ‘quick wins’ here).
- And they increase at and after the project’s delivery as every aspect of both the project and business’s changes have been focused on realizing the maximum available value.
When benefits management is put mainstream, a doubling in the value of benefits realized is common. This results in a doubling of the return on investment.
In these tight economic times, a doubling of the return on capital invested in projects needs be a priority for everyone. It is a great opportunity for you. And it is not difficult – it is really quite simple when you understand the true nature of benefits and value management and how it can be simple.
A beneficial opportunity – for you
In February 2012 I am commencing an eight-week online course for a select few individuals. This course is not for everyone. This course is only for those who want to consistently increase the returns on their projects – not just marginally but massively; for those who want worldwide leadership in this critical area.
To apply go to http://totallyoptimizedprojects.com/pages/Opportunity-to-make-an-impact and we’ll make contact with you to discuss your application and desires. As I said, this course is limited to those that qualify.
Apply now and we’ll organize an hour-long strategy session to discuss your needs. What have you got to lose?
I look forward to hearing from you.
JOIN THE REVOLUTION IN PROJECT GOVERNANCE
by admin on December 8, 2011
Project Governance has been neglected yet a governance team can destroy more value in five minutes than a project team can destroy in five weeks.
Poorly understood, poorly supported and poorly executed it is not surprising that more projects fail due to poor project governance than poor project management.
Yet while we invest millions in project management we invest next to nothing in project governance.
Even getting people to agree what ‘project governance’ is, is a challenge.
Governance support materials are sparse and usually superficial. Not helped by executives insisting they only want “the questions I need to ask,” not understanding they need much more to be effective.
So, after 20 plus years in project governance roles and over 12 years teaching, coaching and supporting executives in governance, we are providing a world-first solution that will revolutionize project governance knowledge.
THE TOP™ PROJECT GOVERNANCE KNOWLEDGE CENTER
This is both a comprehensive resource center for executives in project governance roles and a support base for those accountable for project governance performance in their organizations.
The Project Governance Knowledge Center provides the direction, information and support required to move project governance from being a potential liability to being a key driver of success.
Whether you want to confirm your understanding of project governance, build you personal competency in a governance role or develop your organization’s governance capability – this Knowledge Center will equip and support you. It is designed by executives for executives.
For example, it provides
- Charters, checklists and cheat-sheets (Tools and templates)
- Answers to frequently asked questions (FAQs)
- Short videos on how to deal with specific topics – such as “What to do if your project goes red” (Education Programs)
- Short guides on how to assess business cases, govern risk and more than 20 other topics (Guides)
- Practical frameworks that explain why projects fail, plus others that change how projects are viewed, approached and delivered (Frameworks)
- Articles on project governance – topic specific (eg How to champion your project) and some story based (eg Death by 1000 cuts) (Topics)
- Lessons to be learned – such as The Tale of Two Projects – that shows how easy it is to in good faith oversee a failure and what good project governance (and project delivery) looks like. (Topics)
- Easy-to-read books on important topics such as getting the best out of consultants – Consultants.CON (Topics).
And, for those accountable for project governance in their organizations, the Center also includes
- Comprehensive terms of reference for each role (Tools and templates)
- How to plan a project governance education program, and more (Guides).
This is all explained in more detail here.
Additional material is added each month to make the Center a continuously relevant resource for all in project governance roles.
To launch the Project Governance Knowledge Center on a worldwide basis for a short time only we are offering you a 2-week trial.
Access to the Center is by membership subscription only. There are three levels of membership that are all explained in the video.
The TOP™ Project Governance Knowledge Center equips you to join the revolution and transform project governance into a core competency for yourself and your organization.
Click to join the TOP™ Project Governance revolution.
The 40-40-20 rule for Project Governance
by jed simms on November 25, 2011
Executives know all they need to know — at least they think they need to convey the impression that they know all they need to know. And, to get to an executive position you need to have some sort of track record and experience.
But, when it comes to projects and project governance this model falls down. Being a Sponsor or Steering Committee/Project Board member is not like any line management role. It is partially hands off and partially hands on. It has full accountability (for the delivery of the business outcomes, benefits and value) but not full control (of all of the elements involved in their delivery). It is part way between being an overseeing board member and an involved manager.
Project governance is a complex role that is certainly not intuitive. Even ex-project managers do not understand the governance role well as it is a very different way of thinking to being a project manager. (Just as being a board member is a different role to being a line executive.)
Yet, educating executives on their project governance role and how to perform it effectively is rarely done. Why?
Executives are reluctant to put their hand up for help, as they believe they should know enough, everyone else seems to be coping with the role and they appear to be muddling through no worse than anyone else.
Project, program and portfolio managers are reluctant to say to tell executives that they need to be trained in the role. So nothing happens.
But things do happen. Projects continue to fail (on one or more dimensions) while being ‘governed’ by otherwise competent executives. When the causes of project failure are analysed, inadequate project governance is always in the top 3 reasons for failure (above inadequate project management).
So, by burying our heads in the sand, we continue to allow poor project governance to destroy projects week in and week out.
I often point out to governance teams that they can destroy a project’s value and intent in 5 minutes; whereas it can take a project team 5 months to achieve the same result!
However, we have found over the past 13 years that when you do teach executives about project governance, their confidence in the role increases, their performance improves and poor projects are called out by their governance teams.
But when educating executives you are not dealing with a blank canvass. Each executive will know something about project governance and, therefore, there is a danger that the training is seen to be teaching them things they already know. Hence the need for the 40-40-20 rule. This rule says:
- We know you know 40% of what you need to know about project governance.
- We know you think you know another 40% about project governance that may or may not be correct – this knowledge needs to be confirmed or corrected.
- We know you don’t know 20% of what you need to know about project governance but none of us know what that 20% is.
- Therefore, as we go through this training, you’ll hear things you already know; you’ll hear things that confirm or correct what you think you know; and you’ll be given some new insights into important dimensions of project governance.
This frames the education as building on their existing knowledge, that there is up to 60% of potential new or correcting knowledge, and allows them to hear the elements they already know without dismissing the whole training as teaching them what they already knew.
To help you meet the need to educate executives or, if you are an executive to educate you directly, we are launching a world first Project Governance Knowledge Center next week. The first and only one of its type in the world.
Stay tuned.
When do you call it out?
by jed simms on November 18, 2011
The project is finalizing the business case.
It has no clear definition of the desired business outcomes.
It has no process definition of its requirements – just a list of functions and features.
The solution was selected on the basis of others in the industry are using it so it must be okay.
- Featured publication
The configuration selected prevents progressive delivery, delaying the benefits to post implementation.
The benefits that have been identified are mostly spurious and only intended to get the business case past the board.
Even at this stage it is quite clear that the cost to deliver will double before the project is delivered.
Attempts to improve the situation fall on deaf ears.
The project team point to the reputable consulting firm involved as proof that all must be okay. The consulting firm can see years of fees ahead and they are not going to ‘rock the boat’.
The governance team are merely focused on getting the business case approved, “Then we’ll look at the issues.” But they won’t. Read the rest of this entry »
Insight v Innovation
by jed simms on November 4, 2011
Every now and then we get a “Aha!’ moment when we get an insight. When we see something differently for the first time. I remember when in the first few months of my journey to improve the performance of projects I realized that the actual value generated from projects was almost entirely determined by the business – only they didn’t know it, they didn’t know how to do it and no one was helping them.
Einstein had an insight on a balcony in Vienna when we realized that he wasn’t seeing the clock tower across the city but that the clock tower was sending light to him.
Insights are good and valuable but in and of themselves are not innovation. Innovation is insight put into action.
Einstein’s insight led him to explore the speed of light leading to the development of the theory of relativity.
My own initial insight, that the business controlled the value from projects, led to the development of a business-driven approach to projects – TOP™. But is TOP innovative or just an insight?
Think of project delivery as a jigsaw. Currently the “picture” has been drawn by project specialists, and the pieces that exist (and many are missing) are cut from the technical and project management disciplines’ perspectives. For example, technical architecture “pieces” have been developed to plug gaps left by deficient or missing business direction and requirements specification processes; scope management “pieces” have been designed to protect the project manager. And the whole “picture” is coloured by cost control.
What we conventionally see with attempts to improve project performance is either a nip here and a tuck there to improve individual projects steps, or (and sometimes worse) a whole new set of additional activities added to project delivery. (I’m thinking in particular of value management systems that seem to increase workload rather than increase realized benefits.)
TOP’s innovation has been to reorientate project delivery from cost to value management, from project to business centricity, from delivering outputs and capabilities to delivering business outcomes and benefits.
Therefore, when TOP brings a value-focused, business-driven approach to projects it is not only changing the colour of the picture (from cost to value) but also changing the “picture” to be business outcome focused, and changing how the pieces are cut and organized as well. We are, in fact, redefining the whole project delivery jigsaw.
This redefinition changes key aspects of project delivery – for example:
- Making scope management a key governance role, not a project manager role
- Embedding benefits realization management into the end-to-end project delivery process rather than as a separate stream of work
- Inverting business cases to be value rather than cost centric and to be the primary focal document of any project
- Approaching all projects as ‘change projects’ (its amazing how many project and change managers don’t understand this one)
- Moving portfolio management to be a subset of strategy and not a superset of projects. And so on.
Each of these changes may seem small, obvious or inconsequential. However each of them is an example of changes that, like rocks lobbed in a pool, send out eddies of impacts on all of the other aspects of project delivery.
Read the rest of this entry »