Where does value go: 5%-50% value loss from failing to realize the benefits at the time of implementation or post project
by jed simms on June 2, 2010
You can lose value by not effectively planning, tracking or governing the delivery of benefits at the time of implementation and post-project, thereby allowing them to ‘fall by the wayside’.
Post-project benefits can frequently represent over 50% of the available benefits.
Despite the presence of ‘benefits’ in the business case, most projects are not focused on the delivery of benefits – benefits are essentially “hoped for” rather than planned for.
Some methodologies now have ‘benefit owners’ and ‘benefits realisation plans’ but these are treated as separate to the project, further absolving project teams of benefit considerations and delivery. This is all wrong and leads to significant value loss.
Benefits are why we do projects. We want the ‘gain’ for the ‘pain’. We commission projects to achieve the desired business outcomes and benefits. If we don’t get the benefits we’re worse off than if we had not started as we’ve incurred the ‘pain’ without the commensurate ‘gain’.
So, benefits realization is not some ‘hoped for after effect’ but should be the central focus of projects. This simple truth changes the whole focus of projects.
- The business case, with its value proposition, should now be the central focus of the project as it defines the value proposition to be delivered.
- The project plans should now be essentially ‘change plans’ designed to move the organization from its current state to the defined future state and realise the associated benefits. Benefit realisation is now a central element of project planning.
- And then you need to track, measure and deliver the benefits – during the project, at the time of implementation and afterwards. This is not ‘extra activity’ but why you’re doing the project in the first place.
When you focus on benefits realisation the value derived from projects goes up exponentially.
Obviously really – but it does require an effective benefits realization focus and process, such as the Value Delivery Management™ benefits realization process.
2 comments
Jedd,
I fully support your comments. I suspect the problem is as much cultural as it is process related to how organisations manage “continuity of change”. That is, the project/change outlives the tenure of the iniator, the executive who has already got their accolades for the iniative before it is complete has moved on. Most executives have their focus on short term KPI’s and their bonus. Today organisations seem keen on turning over their executives either as a fast track developement process or due to organistaional upheavals driven by takeovers, replacenment of more senior management or stockholder pressure on being seen to be doing something. What gets lost in this “body replacement” is the focus on delivering the full benefits of projects/change that are already underway as the new executive focus on their own initiatives. I think it is therefore essential to build a cultural change along side the process change to ensure continuity of focus and responsibiity for delivering project benefits.
by Peter Moritz on June 2, 2010 at 12:44 pm. #
Peter you are correctly pointing to the power/influence of the eco-system within which projects are done. If there is little focus on benefits and value after the business case, then no processes will be effective as there is no incentive to deliver
So, as part of our Benefit Realization Mgt Program we deal with the cultural/eco-system issues as, without these, benefits mgt is doomed.
Even if you take the ‘take it out of future budgets’ approach to benefits management, this actually does not measure benefits realization, only that the budget change has been achieved but whatever means the manager can get away with
by Jed Simms on June 9, 2010 at 2:41 pm. #