Organisations that fail to bridge the gap between strategy design and value delivery are wasting eye-watering amounts of money on poor project performance. Most executives don’t recognise that strategy is delivered through initiatives, nor do they understand the importance of effective project and programme management as the driver of organisational strategy.
In Success in Disruptive Times, expanding the value delivery landscape to address the high cost of low performance, (PMI, 2018) based on a survey of more than 5,000 project professionals, the authors conclude that on average projects waste $99m for every $1bn spent. As this was a global study, the percentage waste figure applies to UK project £s as well.
Champion organisations have high benefits management maturity
The survey identified a group of ‘Champion Organisations’ that buck this wasteful trend, typically completing 80 per cent or more of projects on time, and on budget whilst meeting business intent. These organisations are characterised as having ‘a steady focus on benefits, necessary to execute strategy.’ However, the same study concludes that only one in three organisations have a high level of benefits management maturity.
In sharp contrast, organisations characterised as having a low benefits management maturity are labelled as ‘under-performers,’ wasting on average 21 times the amount wasted by their counterparts. In these organisations projects may start out well enough, with benefits identification and planning activities carried out diligently; producing an assortment of products such as benefit dependency maps, profiles and benefits realisation plans.
However, as pressure mounts to get the project over the line (project delivery), any previous interest that may have existed in monitoring benefits realisation plans and forecasts (value delivery) quickly wanes and may disappear altogether.
To increase the level of benefits management maturity, start at the top
If organisations are to successfully bridge the gap between strategy design and value delivery, it is best to start at the top and work down the organisation. Benefits management should be implemented and sustained as an internal capability at a strategic-level - for example as part of an enterprise project management office (EPMO), or transformation office (TO) - and they need to manage investments as a coherent portfolio of change initiatives.
All change initiatives should be treated as investments. How investible is a particular initiative? Does it represent value for money and what is the return on investment (ROI)? Will it contribute to achieving one or more investment objectives, eg a reduction in the cost of existing services (economy), improved throughout of an existing service whilst reducing unit costs (efficiency) or to meet some form of statutory, regulatory, or organisational requirement (compliance)?
Benefits management and integrated value delivery
If it is to be effective, benefits management needs to be tightly integrated into the full project and programme life cycle. At each stage or phase in the life cycle, benefits management activities and knowledge products provide a key input into decisions about the viability and value of an initiative.
This is where benefits management helps us to determine the investability of a portfolio of initiatives, whilst providing the assurance that we are spending money on the right ones. Constrained by budget limits and competition for scarce resources, we must ensure that initiatives are affordable and worth the effort. Benefits management helps us to understand which initiatives we should start, continue or stop.
Champion organisations understand that high levels of benefits management capability maturity won’t happen automatically, or overnight – it will take time, effort and in many cases, a change in mind set.
So if you’re interested in bridging the gap between strategy design and value delivery, and addressing the high cost of poor project or programme performance, I recommend that you invest in the benefits management discipline.