Benefits management is the identification, definition, planning, tracking and realisation of business benefits.
Delivering benefits is the primary reason why organisations undertake change. A benefit is a positive and measurable impact of change. However, in some cases there may be unavoidable negative impacts of change that are acceptable in the context of greater benefits. These are called disbenefits.
Benefits can be tangible (e.g. money saved, jobs created) or intangible (e.g. corporate reputation, capacity for change). They may, or may not, also be quantifiable in cash terms (e.g. reduced costs or greater customer satisfaction).
The forecast benefits of a programme or project are the basis of its business case. The sponsor owns the business case and is ultimately accountable for the realisation of the benefits.
In a cost/benefit analysis the costs are definitely tangible and quantifiable. The tangible and quantifiable benefits will ideally outweigh the costs. It is dangerous to rely too much on intangible and unquantifiable benefits to justify expenditure.
Benefits-driven change requires proactive management throughout the entire life cycle. An organisation identifies the benefits it needs and initiates changes that are forecast to deliver benefits. During the change, the organisation needs to monitor performance indicators that can reliably predict benefits delivery.
Day-to-day responsibility for the implementation of change and realisation of benefits lies with one or more business change managers. The relationship between the project or programme manager and the business change manager is crucial. The delivery of outputs and the management of change must be closely coordinated.
Benefits management is an iterative process with five main steps as illustrated in figure 3.7.
Figure 3.7: Benefits management process
Define benefits management plan: This explains how benefits will be managed. It sets out policies for aspects such as measurement, roles and responsibilities, priorities and key performance indicators (KPIs).
Identify and structure benefits: Requirements are captured from sources such as the project mandate and stakeholders. Benefits depend on the delivery of outputs and the achievement of outcomes. The interrelationships between these need to be understood through benefits modelling and mapping. Each benefit (and disbenefit) should be documented in terms of priority, interdependencies, value, timescales and ownership.
Plan benefits realisation: This step involves capturing baseline measurements and agreeing targets. Baseline measurements identify the current performance of an operation so that improvements can be measured. The benefits plan illustrates the timeline and milestones for realising benefits, including any dependencies on project outputs or interactions between benefits.
Implement change: Benefits happen when something changes. This usually involves permanently changing attitudes and behaviours as well as physical changes. While implementing change, new opportunities for additional benefits should always be sought.
Realise benefits: Changes to the way people work need to be embedded to ensure that benefits continue to be realised. A business change manager needs to track realisation and ensure that the change is permanent. The bulk of the benefits may only be realised after a project or programme is completed. Long-term actions and monitoring for continued realisation should be documented as part of the handover to business-as-usual.
In most cases the project ends with the delivery of an output. However, some projects will continue through the extended project life cycle to deliver measurable benefits. A project needs to be clear from the outset whether it is delivering outputs or benefits. This will govern how the project is constituted and managed.
Where a project is only responsible for delivering outputs, it must interface with whoever is responsible for delivering the benefits. This may be a programme, portfolio or business-as-usual organisation.
The benefits associated with strategic organisational change are delivered through programmes of multiple-aligned projects and change management activity. Such programmes can contain complex interactions between the outputs of individual projects, outcomes and benefits.
The attribution of programme benefits to individual projects and double counting of benefits across a programme can be difficult issues, particularly where investment approvals are impacted. These should be approached in a pragmatic way and resolved through effective mapping and stakeholder consultation. Where appropriate, the benefit should be attributed to a specific project based on the principle of greatest contribution.
It is important to implement a consistent approach to benefits management across a programme, particularly for consistency of measurement. Without a consistent approach, it is difficult to aggregate benefits across multiple projects and assess their collective impact on business performance across the organisation.
A portfolio will deliver a collection of strategically-aligned benefits. It will do this through its component projects and programmes. Strategy mapping helps ensure that investment decisions, and the scope of each project and programme, are driven by the contribution of benefits to achieving the operational, organisational or business strategy.
A portfolio must have a consistent set of guidelines for benefits management practices for all programmes and projects, including tracking, forecasting and reporting. This enables benefits to be compared and aggregated across the portfolio. It also helps to minimise double counting and facilitates an even-handed investment appraisal. This is essential for the categorise, prioritise and balance phases of the portfolio life cycle.
A well-defined and flexible, portfolio-wide, policy for benefits management will greatly reduce the work needed to develop governance policies at project and programme level.
At a portfolio level, it is possible to make use of data on the performance of benefits management (e.g. optimism bias, which is the tendency to overestimate benefits and underestimate costs). This can be used to improve benefits management practices by sharing and applying lessons learned.