Summary

One of the most surprising findings in our worldwide research into the drivers and destroyers of project value was that so much value was ‘left on the table’ during the business case generation process.

Even projects struggling to generate a positive ‘return on investment’ (ROI) for their project missed or understated financial benefits substantially.

This is because our conventional approach to identifying benefits is too narrow and one-dimensional.

In many organizations today only ‘hard financial benefits’ are considered valid. This is an understandable (over)reaction to the vague and ‘strategic’ benefits of the 1990s. However, this focus on financial benefits only actually results in many financial benefits being overlooked.

A new, broader approach is needed. This is the VDM difference.

We take a broader approach using our “Benefits Funnel”. The Benefits Funnel takes you through a process of identifying six types of benefits, with ‘financial’ benefits being just one. This approach significantly expands your thinking about possible benefits. (Indeed, we often have the embarrassment of too many benefits!)

That’s one step. Then you need to work through each of your six types of benefits to identify their possible financial implications. Here you find you can translate customer, competitive, capability and other benefits into quantifiable financial benefits. In this way a project with an initial value of $6m was found to have a potential value of $24m and another project with no identified financial benefits was found to have around $40m in value. These real examples show the power of this process.

Our benefits identification approach changes people’s thinking about their projects. A project designed to improve project delivery techniques was found to have customer benefits through enabling faster-to-market product launches. A do-it-yourself ordering system was found to have fraud detection and loss-minimization benefits. An IT infrastructure project was found to save $5.6m in business costs through the opportunity to change supply contracts. It’s amazing what you can find when you look more broadly.

Paradoxically, this broad-based approach, which initially looks away from the “hard financial benefits” actually generates more financial benefits in the long run. (The actual quantification of the benefits financial value is covered in “How to quantify your financial benefits” available from project-sponsor.com.)

Our “How to identify your project’s benefits” Guide takes you through the identification, normalization and maximization process steps so that you take your initial list of benefits and expand it to ensure you have identified all of the major benefits available to you and all of the quantifiable financial benefits.

NB This process can be used at any time in the project, but works best when you’ve already identified your ‘desired business outcomes’ and can use these as your basis for benefits identification.

Benefits

This Guide’s approach

1. routinely doubles and often quadruples your financial benefits
2. often ends up giving you too many benefits, you’ll need to cull some rather than scrape them up!
3. ensures you have covered all angles and identified all of the benefits available (this can add 25% or more to your business case value)
4. takes into account measurable non-financial benefits as valid benefits (not all value is financial)
5. ensures all benefits are real, deliverable and can be tracked and measured
6. simplifies project justification as finding the necessary value is easy — just follow the five steps.
7. meets CFO requirements as the number of financial benefits is usually increased.

There’s the hard way to identifying benefits and then there is this way! Simple, easy and thorough.

The results from using this process are just mind-boggling! Where it has been used on projects that have already tried to generate their business case the following results have been achieved:

1. Mayne Health - $0 to $42m
2. ANZ Bank - $6 to $24m
3. Bluescope Steel - $minus to $5,6m
4. Coles Myer - $32m to $100m+
5. Members Equity - $7.8m to $52m

We cannot promise such radical uplifts in value in every case, but this approach to benefits works!!

Who should read

This Guide should be read and used by

1. The Project Team or those accountable for producing the business case so as to maximize the identified value
2. The Governance Team to enable them to review and track the benefits they are accountable for delivering
3. The PMO to verify the benefits across projects, avoiding duplication
4. The Investment Committee/Board to enable them to understand the process by which benefits are (or should be) generated and the integrity of the process
5. The Auditors to understand where the project’s value has come from and how it has been identified

Contents

The “How to identify your project’s benefits” Guide’s contents includes:

1. Understanding benefits
2. Understanding the value equation™
3. The end-to-end benefits identification process
4. How to identify benefits
5. How to avoid value loss
6. How to run the benefits identification workshop
7. How to state your benefits statements (normalization)
8. How to maximize your benefits
9. How to ‘associate’ your benefit statements to outcomes
10. How to rationalize your portfolio’s project/programs’ benefits
11. How to govern your project’s benefits
12. How to document your project’s benefits.

This Guide is supported by a benefits identification workshop guide that enables those helping to identify the benefits think through the six different benefit types correctly.

Bonus

Value proposition case study
A comprehensive real case study of how an initial value proposition was transformed using desired business outcomes as the catalyst. This document illustrates how the agreed outcomes can be used to define your project’s value proposition.

Benefits Identification Workshop Participant Guide
Workshop guide for workshop participants to help them think through all of the possible benefits and identify each benefit correctly by type.

Benefits Identification Workshop Facilitator slide pack
Set of slides to be used with the project/business team to take them through the benefits identification process and identify the six types of benefits

The end-to-end benefits management process schema and process map
Two simple illustrations of how value is delivered, managed and monitored end-to-end.The schema illustrates the necessary component parts and flows of benefits management. The process map illustrates the different roles in the end-to-end process and how they interrelate and build on each other