Explain to me this…

1. We commission projects to realize the benefits (if we deliver the project but don’t realize the benefits, where’s the value in that?)
2. But we treat benefits as some afterthought or hoped for after-effect, rather than the project’s raison d’etre
3. 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.

1. We manage projects to cost – and hope the value will follow. It doesn’t, as we’ve seen in practice for many years.
2. We separate projects from benefits realization so that we need to create a separate stream of activities (and overheads) to track and measure benefits.
3. 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.

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

You can find out more here.

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).

Many years ago I saw a specification for a “sub-second response time nationwide” for a notification of staff absence to HO transaction. This was a transaction where a three-minute response time could have been tolerable.

The person specifying this performance level had no idea of the costs associated with meeting this request.

This event prompted me to develop a guide for executives that spelt out the cost implications of some of their unthought through demands.

In view of the desire for sliders, I have converted the quality performance dimensions into a set of sliders. There is no mutual exclusivity, they merely show the tradeoff between quality/performance and cost – the higher the quality standard, the higher the cost to supply and maintain. Simple.

These sliders are intended to give business management a mechanism to control their systems costs. As systems are invisible in their nature there is an unconscious belief that their quality options are free. If you want 24/7 availability, that comes with a cost. At least a discussion can be held as to the level of quality you’re willing to pay for.

For more information and detail on each option – see How to control your systems costs.

This brief Guide gives Project Sponsors, and their governance teams, information on 12 key system cost drivers so that they can specify their systems performance and cost criteria on business terms.

This Guide puts the business in control of its downstream systems costs. Buy now

Accountability for poor project performance
We’ve talked about poor project performance and how it happens, but ultimately whose problem is it?”

Many organizations expect IT to own project delivery. But IT is, at best, only accountable for the technical delivery stream and, while many IT project managers relish the opportunity to lead projects, technically-led projects are usually a recipe for value destruction. Indeed, technically led projects indicate a Level-1 maturity organization – the least effective maturity level – see “The 3+2 Capability Maturity Model” in chapter 10.

Some organizations choose instead to allocate accountability for project delivery to the Project Portfolio Management Office (PPMO). But most PPMOs don’t have the authority to do much about project performance even if they wanted to. They can introduce new (cost controlled focused) methodologies, and then ‘huff and puff’ for their acceptance, but in practice they are often ignored. For example, two years and tens of millions of dollars after the introduction of their new home-grown project methodology, a bank we’ve worked with found that less than 25% of project teams were using it.

Some organizations assign accountability to special project teams established to ‘Uplift our project performance’. Often made up of project professionals, these project teams look to upgrade the project management tools and techniques – but use the project cost control lens instead of addressing the root problems caused by the absence of the business perspective. And few such projects last long anyway. One such team spent $32 million and delivered nothing.  Of course, some software suppliers did very well for themselves on the project.

All of these approaches still view project performance through the project/cost control lens and tend to ignore the business/governance value and strategic investment lenses.  So who is accountable?

When you take these additional lenses into account, it becomes clear that (the lack of) project delivery success is the Board and Executive Team’s problem.

The importance of your project delivery capability

Project delivery is a required capability in every organization. As projects deliver strategy, it is a core capability. It requires all of the project delivery lenses to be used in order to be effective. Failure to address and improve your project delivery capability will damage your organization, both internally and externally, as well as being very expensive.  It will…

• Destroy over half the possible value from projects. To subsequently earn back this value you usually have to commission more projects at additional cost with, probably, the same (poor) net level of success.
• Delay business or competitive opportunities.  The project outcomes are under-delivered and/or are delivered late, and workarounds and other makeshift solutions are often needed to cope with project shortfalls.  These increase ongoing costs and reduce the net value.
• Waste capital.  Inappropriate projects are funded and continue to be funded even when they are unviable or irrelevant, while more valuable projects are waiting to be funded.
• Create a competitive disadvantage. If your competitors can deliver more projects and more value in less time and at less cost, they can create a sustainable lower cost organization.

Excellent execution is a strategy in itself. As a Board or Executive Team, you need to …

1. Set the standards of success. What constitutes acceptable ‘success’.

Currently most organization’s success standards are very low and only use the project cost control lens, allowing inadequate business results to drift by as acceptable.

2. Sustain the focus on improving the organization’s project delivery capability.

Many organizations start to tackle this problem but the effort fades out, often within months. All capability uplift programs need to be relentlessly pursued until they deliver the results required (usually at least 2 years).

3. Understand all options available.

Value Delivery Management allows you to immediately break out of your current single lens project delivery perspective to realize exponentially greater business results.

4. Plan, govern, and measure compliance with the new project delivery processes and lenses. Project delivery is an area where everyone has a theory and a belief system but few deliver the full results, so you have to overcome protests from experienced project practitioners who believe they know a better way.

5. Measure the progressive improvement in business results delivered through your projects. Today, less than one-third of organizations actually measure their realized benefits and even less do this effectively.

© Jed Simms, valuedeliverymanagement.com. Australia 2010

Until midnight on Thursday 9th December you can get my entire Governance Team Program for HALF-OFF. Here’s where you can obtain your copy for half-off.

I’m holding this special sale as a way to say THANK YOU to all the people who read my weekly newsletter/blog ☺.

Here’s where you can grab your copy and save 50%

The Governance Team Program comprises 11 guides with a unit price that totals US$290 – it normally sells as a program for $199 – and now is 50% off even that price (only $99.50)!!! With this comprehensive program you get 11 Guides:

	Understanding Project Governance	Our introduction to a topic more not understood than misunderstood
	Understanding ‘Why am I here?’	Answering the question so many Project Board/Steering Committee members are non-consciously asking — What is my role?
	How to be an effective Governance Team member	More than just showing up, how can you ensure you will be effective?
	How to govern project set up	What to look for and what questions to ask at the critical project set up and initiation stage
	How to govern project planning	What to look for and how to ensure your project’s plans are worthwhile
	How to govern project delivery	What to look for and what questions to ask during the project delivery phase
	How to govern project closure and beyond	When do you know your project has finished and then which governance accountabilities continue?
	How to manage your critical success factors	CSFs are the things which are outside the control of the project team that need to exist or go right for your project to succeed— they are the accountability of the governance team – how do you identify them and what do you do about them?
	How to manage the leading indicators of failure	What will tell you your project is going ‘off the rails’ months before the formal reporting does?
	Understanding why IT projects are different	How are IT projects different from normal projects? What difference does that make to how they need to be governed?
	Understanding governance meetings and reporting	As a governance team, what information should you expect at your meetings?

You’ve got to admit that this is some list of Governance materials – and you get the whole program at half-off.

Go here right now and claim your copy before this offer has gone.

If you know anyone else who’d be interested in this opportunity that you’d like to thank – please forward this article link to them so they can get the program for half price by Thursday.

Jed Simms

Lean Six Sigma is probably the most common business improvement tool used today. But, it has a big hole in it that constrains its value and reduces the potential results.

Six Sigma seeks to improve product/service quality through eliminating variation.

Lean Six Sigma seeks to improve process flow by eliminating waste and improving the speed of process throughput.

Both versions of Six Sigma are data driven to both identify the problems and measure their elimination.

Lean Six Sigma definitely improves the efficiency of processes and the quality of products and services. But, while great emphasis is put on ‘the voice of the customer’ to ensure that the improvements are relevant to and valued by the customer, insufficient emphasis is put on the strategic intent of the process.

Lean Six Sigma is about removing waste and time from the process. To do this the focus is on the metrics, the data. What Lean Six Sigma does not ask is “Why are we doing this process at all?” and “What is the strategic intent of this process?” This is the big hole.

The data focus takes you away from the strategic viewpoint. When you’re down in the data weeds it is very difficult to step back and ask, “What role does this process have in our business model?”

For example, a Lean Six Sigma exercise improved the efficiency by which a bank’s mortgage application forms were generated and captured. They made the form easier for the customer to complete. What they did not ask is, “Why do we have a mortgage application form at all? What value does this form have?”

Michael Hammer and James Campy, who invented business reengineering in 1989, advocated reengineering the business from scratch using a clean sheet of paper. Now business is too complex to do this as advocated; but the concept of a fresh look as the means by which you can break out of improving the current ways of doing processes to find new ways of doing business is a great idea.

It is interesting that the original concept was business reengineering but the current Lean Six Sigma led focus is on process reengineering. The assumption is that continuous process efficiency improvement will deliver improved business performance. It will, gradually. But, if you want to deliver a quantum increase in business performance you need to get back to business reengineering – and this requires a strategic perspective.

It is not that you can just add a ‘strategic intent’ review to Lean Six Sigma as the whole Six Sigma approach takes you in the opposite direction to that needed to achieve quantum increases in business performance. With Six Sigma you are constrained to the size of process area where you can gather meaningful data.

To deliver quantum performance improvement you need to move away from the data to analyse and review your processes end-to-end together with all of their supporting processes and determine the strategic intent and value of both each process and each process step. (In several cases we have reengineered complete businesses end-to-end in 60 days – which would be impossible with Lean Six Sigma – consistently achieving around 45% reduction in process complexity while increasing the business performance.)

Our Simplification approach is not driven by data but by an understanding of what drives the company and customer values – focusing on what drives business performance and value (not just what drives efficiency and cost).

To illustrate the difference in results, one bank used Lean Six Sigma to increase the efficiency of their mortgage processes by 14% and it took them 7 months. Another bank used our Simplification program to redesign their mortgage processes, improving performance by 49% in 60 days. And this improvement was achieved by five internal staff (only one full time) and 12 workshop participants led by one consultant part time – no expensive black, white, green, yellow or whatever belts.

Lean Six Sigma is constrained to process improvement; Simplification enables business performance improvement. Your choice.

© Jed Simms, Australia, 2010

Einstein was looking at a clock tower and then realized that the rays of light he was seeing were coming from the clock tower. This insight, this different perspective, was the spark that led to the theory of relativity and quantum physics.

In the world of theology (as you would all know!) for hundreds of years scholars talked about secular and religious laws in the Old Testament. Then, in the 1960s, an experienced lawyer studied theology and saw that the laws in the Old Testament were simply standard civil and criminal laws. His insight has led to a different perspective on these laws ever since.

Did either of these insights or different perspectives require additional maturity? No. They involved changing your way of thinking – looking at the same thing a different way.

Once Einstein has thought in terms of the light coming towards him, he started asking about the speed of light and other issues, his whole frame of reference on the world changed.

Once Old Testament scholars, who were mostly ordained clergy with, therefore, a religious perspective, saw the laws in terms of being civil and criminal, their whole frame of reference changed on how ancient Israel operated.

But in neither case did anyone suddenly ‘mature’; they merely accepted and used a new perspective as the basis of their subsequent work.

In the world of projects the existing frame of reference is – projects. Project standards are built by and trained by people experienced in – projects. Every dimension of a project is viewed through the lens and from a perspective of – projects. The project delivery industry is led by the high priests of projects – as you’d expect.

But there is another, more relevant frame of reference to be used in relation to projects – business value – initiating, directing, managing and measuring the delivery of business value from projects. Changing the lens and frame of reference from the delivery of projects to the delivery of business end states, benefits and value realization does not require ‘additional maturity’ – it requires changing your perspective and then following through on the resultant questions and implications.

Some of these implications can be significant. For example, when your focus is on the delivery of business value, you cannot say, “We’re not mature enough to think about benefits management” as it is to deliver benefits that you now do projects. Benefits management becomes central to your projects rather than peripheral. And then benefits delivery can be found to not be harder or extra work, but a way of refocusing what is already being done on to business outcome delivery.

Moving to a value delivery-based mindset requires a change of perspective, not years of maturing.

The conventional maturity models of repeatability-to-optimisation do require time and energy to master the relevant processes. But this type of ‘learning/use maturity’ is quite different to being able to see and adopt a new frame of reference. You can choose to do that today.

“We’re not mature enough to focus on delivering business value” is a mindset, not a reason. I would ask, Why continue to destroy value when you can, simply by changing your perspective, create it instead?

Your comments?

There is a worrying trend in projects – that people are more focused on what they are doing than what they are delivering.

Reporting tends to focus on ‘what’s going on’ and ‘what we’re going to be doing next month’ rather than ‘what was due to be delivered and what was actually delivered’.

This trend allows ‘busyness’ to overwhelm results. Progress is not measured by how busy you are, but how effectively you are delivering 100% complete tasks and plans to schedule.

Here the emphasis is on “100% complete” as only wholly complete tasks can be readily picked up and used for the next stage.

A little while ago we analysed a major project four months into Phase 2 of its delivery and found that 25% of the effort was still trying to close off Phase 1 (which the governance team thought was long since finished). This project had allowed many items to be ticked off as ‘finished’ when they were only 90% or so finished. As most of you know, that last 10% can take another 90% of the time and effort.

Obviously, we have to plan and manage ‘doing’ – but our measure of success is ‘delivery’. Our whole mindset needs to be focused on ‘delivery’. Every task, activity, plan needs to deliver something tangible, something measurable so that we can both ascertain that it has been produced and that it is to sufficient quality. (100% complete rubbish is obviously worthless)

But, focusing and reporting on ‘doing’ allows us to get away with unmeasurable suggestions of progress. “They’re doing a lot,” said one Governance Team member to me recently about his project; but were they making progress? He did not know. Were they likely to deliver on time? He did not know, but hoped so!

Our view of progress is brick-like. Each desired business outcome is progressively achieved through the delivery of many activity deliverables (bricks), one by one, building on each other until the outcome is delivered. The ‘doing’ is the means, but the ‘delivery’ is the end.

When we break down our workload structures, let’s ensure that every set of activities generates a verifiable deliverable. Then, let’s report how many of the deliverables scheduled to be delivered this month have been delivered this month. That’s the true measure of progress. If we’ve missed any, we’re late. Simple.

Let’s change our mindsets from busyness to delivering results.

© Jed Simms, valuedeliverymanagement.com, Australia, 2010

In a number of organizations I have noticed two conflicting trends

1. organizations want business cases produced earlier (to prevent wastage of funds)
2. organizations want increased estimation accuracy – typically ± 10%.

While the objectives are totally understandable, they are unrealistic.

Too early

If you insist on a business case too early in the project lifecycle you incur a high level of uncertainty — there are many things that you don’t know or don’t know well enough to accurately estimate. Often business cases are generated based on “high level requirements” – but, as we all know, the devil is in the detail and when the ‘detailed requirements’ are later defined they will often blow the budget.

We need to remember what we’re trying to achieve – ie not waste money, not allocate money to poor projects (however you want to define that) and not have big cost blow-outs. Bringing the business case forward and insisting on greater accuracy will not achieve this.

Instead, what you need to do is…

1   Recognise that there are ‘sunk’ funds, ‘at risk’ funds and ‘total’ funds.

‘Sunk’ funds are the expenditure to date – this money has gone whatever happens in the future. It may be painful, but it is not recoverable.

‘At risk’ funds are the expenditure that you’ll lose if you invest in the next stage and then cancel the project. While you want to minimise ‘at risk’ funds, you also want to invest enough to see if the project will be valuable and viable on a reliable basis.

‘Total’ funds are the total expenditure to the end of the project and are only at risk when they’re allocated and then spent. However great the total funds are, they are not at risk until you put them at risk. Better to spend, say, $5m determining the true value and cost of a project than, say, $500K to generate a baseless business case that later explodes in cost or implodes in value.

2   Recognise that the level of uncertainty is high until the requirements are known and the design agreed. Up until then the level of uncertainty is certainly above 10%.

The progressive questions a project needs to answer (as cheaply as practical) are

A      Is the idea/concept relevant?

B      Is the project likely to be valuable and viable?

C      Can we afford it?

D      Can we deliver it?

E      Do we have the capacity to deliver it?

F      Is this the best use of our resources now?

As soon as any question is failed the project should be stopped and any remaining funding reallocated to other initiatives. The early evaluation process should, therefore, be focused on answering these six questions at minimum cost rather than insisting on early but unrealistic certainty.

3   Ruthlessly review projects/ideas/initiatives to see how they are faring against the six questions – and stopping any that fail as quickly as possible.

Along the way there will still be areas where you won’t know the answer yet – and this then needs to become the focus of the next stage of the project.

By the time you get to the final business case stage you should have no unknowns. Then you can have an estimate ± 10% and rely on it.

Accuracy demands in the face of reality is not a useful approach.

© Jed Simms, Australia, 2010

Both the OGC’s “Managing Successful Programmes” (MSP) approach and Value Delivery Management™ (VDM) are focused on ‘benefits’ the two approaches have different definitions of what a benefit is and different ways of ensuring they are delivered. Not surprising, we find VDM’s much easier, clearer and practical.

4  THE BUSINESS CHANGE MANAGER — over accountable and under equipped?

In MSP the Business Change Manager (BCM) is usually a business area manager (and should never be a contractor). They have the main benefits delivery role.

The BCM has to

• define the benefits and the blueprint
• specify the project outputs required
• verify that these outputs have been delivered
• transition them into the business
• so as to realize the benefits.

All with, usually, little to no project/program delivery experience, training or support.

So, full accountability for business change and benefits realization has been given to the business (good), but with little to no enablement (not good). It is assumed that the Program Manager will allocate resources to fill the skills, knowledge, competency, process, support and other gaps (with, presumably, no accountability for their performance).

BCMs are appointed before the Program Manager as they define what the PM has to do/deliver, and then the PM organizes the delivery of the ‘capabilities’ to enable the subsequent delivery of business benefits.

BCMs define the Blueprint, vision, benefit profiles and transition (change) plans. In addition, to be effective, BCMs need the authority to decide what is possible, needed and desirable, and to harness the business to get the results desired – ie they need to be in a fairly senior role.

The BCM runs transition/change end-to-end – preparing, transitioning and embedding change. But, the BCM is not driving the program (the Program Manager is) or even facilitating it; and so has to coordinate and cooperate (as the Program Manager is on the same level as them reporting to the Sponsor) in order to get the results they need. Basically, they need to trust the PM to effectively manage the program of projects to deliver what they (think) they want so that they can ‘transition’ it into the business and realize the benefits. The PM and BCM run parallel streams of activity with many interconnections and interdependencies, but without anyone below the Sponsor having authority to direct.

VDM takes a more sequential, more easily aligned approach.

VDM defines the business end states (desired business outcomes) and associated benefits at the outset. It then defines the end-to-end change workload required to realize the outcomes and benefits. A portion of this workload is then allocated to the project to action together with clearly defined, measurable project outcomes to be delivered.

Importantly, the project’s measure of success is the delivery of the project outcomes and their enablement of the subsequent business outcomes and benefits.

However, as VDM is

• change based
• value focused
• and designed to be actioned by the business

and, as a result it is the best set of tools, techniques and templates available for a BCM to use to meet their accountabilities.