Workshop: Value and benefits management: optimising benefits when affordability is an issue - as it always is!

Steve Parker, Gutteridge Haskins and Davey Ltd (and APM Value Management SIG), Technical Director


The Benefits Management SIG welcomed Steve to the third annual summit to share his perspective on how the methodologies of value management (VM) and benefits management (BM) can be combined to ensure that best value for money is obtained from investments in projects or business change.

Steve opened with the observation that project and change management methodologies often jostle to occupy the higher ground, in terms of strategic organisational objectives. The growth of benefits management thinking has led to the articulation of benefits to prioritise and justify project investment. However, BM methodologies do not consider how much it will cost to deliver these benefits, and consideration of cost is the only way to give a value for money [VfM] ranking. Benefits realisation management is one of the most important things that an organisation needs to do - but not at any cost!

Link between Benefits and Value Management

Steve gave an overview of the link between BM and VM, beginning with the well-known benefit: cost ratio - key to demonstrating VfM - especially in government business cases.

While definitions of value and benefits and their management differ, there are important similarities which can help draw the disciplines together.

Both adopt a similar mapping style. VM emphasises that any investment should provide function; this reflects the notions of strategic objectives/primary benefits, which can be scored comparatively across different options and costed to give a VfM rating. Both BM and VM consider the why of the project [starting with the vision, mission and objectives] and the how - covering enablers and outputs. Both approaches also provide a clear ‘line of sight’ from objectives through to function, benefits and/or outcomes.

Steve emphasised the fact that benefits identification should be a precursor to the business case. Quantifiable benefits usually feed into business cases while intangible ones are often wrapped up in narrative, but both may also be illustrated using a benefits dependency map or value function diagram. 

The methodologies also share a similar process-driven rigour; useful guidance can be found in the Axelos Management of Value [MoV®] guide and the APMG International Managing Benefits™ Guide.

Steve illustrated how both approaches follow a process of staged and iterative interventions. These can be mapped onto project lifecycle stages, and business case development, offering several workshop opportunities – for example, to check whether scope is still appropriate [in value management] and then to review benefits and how they might have changed.

Differences between BM and VM

Steve highlighted the key distinction between benefits and value: while benefits management provides assurance of benefits delivery, value management considers the relative importance and appropriateness of benefits, considering their cost and affordability.

Business case and BCRs

The HMT Green Book Five-Case model represents a series of logical questions, but Steve asked what should be done to establish a reliable vehicle for repeated options testing, without exhaustive business case work? There is a strong case for a process to hone options using a Value and Benefits Model with multi-criteria analysis.

The case for integration

The need for benefits to truly represent value for money provides a compelling argument for integrating VM and BM disciplines, over the project/business change, asset lifecycle or BAU, as appropriate. However, Steve emphasised the importance of recognising and maintaining the initial intention of both disciplines.

Benefits and value appraisal model

Steve then demonstrated a working benefits and value appraisal model, in the form of an Excel spreadsheet analysing 3 alternative route options for the fictitious “Anytown Road Bypass” project.

The model can capture both quantifiable and intangible benefits, can incorporate stakeholders’ judgments, and records the iterative process so that decisions/changes can be revisited.

A value-tree lists objective and primary benefits [e.g. reduction in CO2 emissions, journey time savings, reduced road accidents, reduced noise nuisance] plus intangible [often subjective] benefits.

Benefits are weighted using a paired comparison matrix which generates a value profile, where it is possible to ‘drill down’ to see where most cost is incurred. Benefits are then scored for each route option, to show how well that option attains the identified benefits. Value metrics must be recorded to provide evidence for scoring decisions.

Webtag data can be used to develop a consistent performance score across benefit types. For each option, the model generates both a value index [the product of all weighted scores] that indicates which option would generate the most benefits, and a value for money ratio, considering the cost of delivering the benefits / whole life costs; critically, options can rank differently for each.

While the spreadsheet provides a simplistic example, the model may be applied across whole portfolios on a value for money basis.

Steve concluded the session by showing a useful map illustrating the links between VM, BM and other disciplines and processes, including risk and opportunity management, procurement strategy and asset management.

Steve Parker – Technical Director, Gutteridge Haskins and Davey Ltd.
Steve is an experienced manager of project and change initiatives with a focus in UK transportation and infrastructure.  As a Chartered Quantity Surveyor with an MSc in project management, he specialises in programme and project management, governance and integrated assurance, establishment of PMOs and their functions, business change, value management, benefits realisation and Lean.

Steve is a Professional in Value Management and is Chair of the UK Institute of Value Management.  He is a Committee member of the APM’s Value Management and Benefits Management SIGs and was a Reviewer of the APMG Managing Benefits™ Guide 2012.

Write up by Sarah Earl
Benefits Management SIG committee member 

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