Summary

There seems to be a conspiracy to ensure that the data you require to quantify your project’s financial benefits is not readily available! Quantifying your benefits’ value is always an exercise of discovery, extrapolation, estimation and assumptions. It sure ain’t easy.

This “How to quantify your financial benefits” Guide takes you through a process of identifying how you’re going to get the necessary data, where you’re going to find it and how you’re going to present it.

There’s a downside to this process. If your benefits don’t stack up this process will reveal this! But, with all of the financial benefits identified through our “How to identify your project’s benefits” process, this is rarely a problem.

What is important, however, is that your benefits value quantifications are

1. complete
2. their bases, assumptions and value drivers are clear and able to be verified as reasonable
3. and their value can be tracked and monitored throughout the project to ensure the benefit’s and project’s continuing viability.

This last point is critical. It’s the VDM difference.

Too often benefit calculations are fine for the business case as they generate a number that can be used, but they cannot be easily tracked or monitored. They’re a one-off calculation.

This is not good enough.

Therefore, we’ve designed a benefits quantification spreadsheet format that, throughout the project, allows the real, up-to-date figures to be entered progressively to show the current value of the benefit.

As we explain in Understanding Benefits the value of any financial benefit can legitimately change during the course of a project due to external or other events unrelated to the project itself. Interest or exchange rates can change. Customer order mixes can change. The number of staff in an area can change. These changes in your project’s value drivers are usually missed as there is no easy way of tracking the business case value quantifications during the project.

But now our approach allows you to state your financial benefits in a way that makes clear the key value drivers that need to be tracked and progressively entered so as to compute each financial benefit’s current value at any time. This can require a different way of thinking at times to translate, say a product launch financial projection, into a value quantification spreadsheet.

We also provide a set or recommended standard financial policies and rules so that the consequent benefit values quantified are comparable in that they have all been computed from a common basis. Simple, obvious, but not always the case.

Benefits

This Guide will

1. equip you to source and generate your project’s financial benefits
2. provide a common framework for financial benefits presentation that can be maintained throughout the project
3. allow your financial benefits to be easily summarised at benefit type and category levels within the business case
4. enable you to track and validate the value of any one financial benefit throughout your project — including identifying any decreases in value that are ‘not your fault’
5. makes easy proving the viability of your project at any point in time.

If you’re serious about your financial benefits, then this is the way to go.

Who should read

This Guide should be read and used by

1. The Project Team to compute the current value of the project at all times
2. The Governance Team to verify and track the current value of the project at all times
3. The PMO to verify the validity of the financial calculations and the viability of the project
4. The Investment Committee/Board to understand the basis of financial benefits calculations
5. Auditors to verify the bases of business case benefits and ongoing project value.

This approach moves benefits quantification from an exercise into a trackable process.

Contents

1. Understanding the dynamics of financial benefits
2. The end-to-end benefits quantification process
3. How to maximise your financial benefits from your list of benefits
4. How to prepare for the financial identification workshop
5. How to run the financial identification workshop
6. How to discover your benefits’ financial information
7. Understanding the benefits calculation record design principles
8. Understanding the benefits calculation record as a ‘live’ document
9. Understanding the benefits calculation record policies and rules
10. How to enter and quantify each benefit
11. How quantify your risk reduction benefits
12. How to agree your financials
13. How to monitor your portfolio’s project/program’s financial values
14. How to govern your benefits value
15. How to present your financial benefits.

This Guide is supported by a proforma spreadsheet that enables those quantifying the benefits capture the financials correctly.

Bonus

Financial benefits spreadsheet format
A spreadsheet format for capturing and computing the value of each financial benefit.

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