When recently reviewing a project that had a projected benefits value of $32m we found that the true available value was over $100m.
So, if the project delivered the $32m is this true success? Or, is it a failure for failing to realize the other $70+m?
One of our surprising findings when we conducted our worldwide research into where the value went on projects was that the business case was the greatest single destroyer of value. Most business cases left vast amounts of money ‘on the table’ unidentified.
How business cases are generated, their myopic focus on dollar benefits that actually reduces the value identified, and their inability to compute benefits in ways that could be tracked throughout the project, all contributed to the loss of value.
Missing 25% of the available value was common. Many, as in the case above, missed more than they found.
As business case generation is part of the project, surely inadequacies in this area are a ‘failure’ of the project. And, if you don’t identify the benefits you’re unlikely to realize them. So, the full available value goes unrecognised, untargeted and unrealized.
NB Most projects still struggle to realize the value they target, so this is a double loss — some value is missed and of the remainder some is lost or destroyed.
So when I class projects like the example above as having ‘failed’ on at least one dimension (full realization of the available benefits) is this fair or being unreasonable?
What do you think?
© Jed Simms, Australia 2008
“How to complete your business case” and “Understanding Project Success” are available from valuedeliverymanagement.com. No tags for this post.
Jed, I think you may be drawing too long a bow here. Do you mean that the project, as specified, is capable of realising $100M in benefits, or do you mean that the project has not been specified correctly and hence will not realise these benefits? Surely the failure of a business to recognise business benefits or opportunities is, in the end, a fundamental fact of life and something that distinguishes good from bad businesses. If the business specifies a billy-cart when it could specify a rocket, then while it’s true that when the billy cart is delivered (probably with three wheels) they have missed the opportunity to build a rocket, it’s also true that they never saw the opportunity, and the billy-cart was never going to fly. Noticing that the billy-cart could be a rocket is not a failure of any delivery process – it’s a failure of vision, and I don’t see how a delivery methodology or business case process can help the blind to see.
In response to Peter’s question, in this case the $100m was available but not recognized. Our research into the benefits side of projects found that 90% of them missed available benefits that were often greater than the benefits identified. So the benefits identification process is deficient resulting in the benefits delivery process delivering less value than is there for the taking.
Yes, this is a business accountability but they often follow the business case process as proscribed by the project team.
All we do to identify this missing value is apply our value proposition-generation process to the project and hey presto, the value increases substantially. So it is a process problem.