Benefits Realization Management as a key driver of Project Management Effectiveness
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Revision as of 20:07, 22 February 2019
Contents |
Abstract
Benefits Realization Management also referred to as BRM describes the concept of aligning projects, programs and portfolios to the organization’s strategic objectives by delivering measureable benefits and therefore maximizing project, program and portfolio value. BRM includes accountabilities across stakeholders to identify, execute and sustain benefits to drive strategic outcomes. Thus, it ensures benefits – meaning the value being created as a result of the successful completion of a project - are derived from project deliverables. [1]
Operating in a rapidly changing and highly complex business environment, companies find themselves in the need to generate and maintain a competitive advantage in the market. Many companies manage and assess projects, programs and portfolios in terms of efficiency based on traditional measurable outputs - such as time, quality and budget. Yet, they fail to constantly monitor whether the projects contribute to achieving the company’s overarching strategic objectives. A project may be successfully delivered in terms of time, quality and budget but it may not be in alignment of the company’s strategic goals therefore decreasing its value and not generating benefits for the company. Benefits Realization Management tackles this gap between corporate strategy and project management shifting project management towards an effective management practice by supporting better decision making about which projects to prioritize and appropriate levels of investment. [2]
Even though Benefits Realization Management applies to project, program and portfolio management equally subject of this article is BRM in the context of improving the effectiveness of management practices within the domain of project management. To ensure a better understanding of Benefits Realization Management the article will define the terminology of deliverables and benefits and explore the differentiation in light of the concept of efficiency versus effectiveness. It will continue to elaborate on the concept of Benefits Realization Management and outline its application in its main processes of identifying, executing and sustaining benefits. BRM focuses on generating benefits both tangible and intangible. The latter can be difficult to measure therefore the article will conclude by reflecting upon the limitations of the concept of Benefits Realization Management.
Terminology
It is crucial to differentiate between the terms deliverables and benefits in the context of project management to further discuss Benefits Realization Management.
Deliverables
Deliverables are the final output resulting from processing inputs over the course of a project endeavor. They are quantifiable, unique goods or services transferred to a third party upon the completion of a project which is very likely to be the project sponsor or beneficiary outside of the project. Deliverables are typically tangible but can also be intangible. Most importantly, deliverables cannot be utilized as a metric to measure the benefits that are created by a project within an organization for it is indeed the impact of using and working with the deliverables that generates benefits. [3]
Benefits
![](/images/thumb/4/45/Potential_Benefits.jpg/500px-Potential_Benefits.jpg)
Benefits are the advantages and gains derived from the deliverables of a completed project. Project benefits are the created value for the project beneficiary as a result of the successful completion of a project and are traceable back to project objectives. Therefore, they are measurable improvements that contribute to an organization's competitive advantage. [1] Benefits can be categorized in the following groups whereby benefits can be assigned to more than one type: [5]
- Tangible or Intangible Benefits
- Tangible benefits are measurable based on evidence i.e. a company may execute improvement efforts to directly reduce costs to provide a certain product.
- Intangible benefits are not measurable objectively as they need a substituting metric to represent them i.e. customer satisfaction or a company’s image. [5]
- Planned or Emergent Benefits
- Planned benefits are also referred to as anticipated or expected benefits meaning that they are intended gains chosen and approved by the Benefits Realization Management in place i.e. a producing company may increase its capacity to manufacture its product resulting in an expected decreased cycle time for carrying out incoming orders.
- Emergent benefits are unexpected benefits that may emerge across the lifecycle of a project. They may have a significant impact on the perception of the success of a project. i.e. the increased engagement of an organization in community activities may improve the public perception of the organization leading to an increase in sales. [5]
- Direct or Indirect Benefits
- Direct benefits can be measured as a result of realizing benefits as defined before the start of a project i.e a customer service expands additional call centers in several time zones to better handle the incoming calls across these time zones. The increase in the capacity of the call centers is a direct benefit of the company’s expansion.
- Indirect benefits are derived from direct benefits. They may occur both planned or unplanned. Picking up on the previous example, the call center expansion may also result in an increased employee satisfaction as they are supported in better and more timely responding to incoming calls. [5]
Figure 1 displays examples of potential benefits that may be realized by an organization. As depicted in the figure, the range of realized benefits can be fairly broad. Hence, it is important to identify and determine the set of benefits before the commencement of a project to add value to an organization.
Benefits vs. Deliverables in light of the concept of Effectiveness vs. Efficiency
The concept of effectiveness vs efficiency is a method of assessing and evaluating different processes. Efficiency is commonly referred to doing things right meaning that whatever is performed is being performed with the best use of the given resources whereas effectiveness is referred to doing the right things such as making the right decisions i.e. selecting an output that there is a demand for. [6]
Applied to the context of benefits realization management optimizing the processes necessary to produce the intended deliverables of a certain project may be an improvement in the efficiency of the processes that create the project-specific deliverables but it may leave an organization’s overall effectiveness unchanged. Simply put “[t]here is no logic in delivering a great project if it is not the right project for the organization. There is even less logic in delivering one that will fail at its intended outcomes.“ [1]
As of today, many organizations have not yet incorporated a benefits-centred approach in their project management practice. Projects and programs may be completed successfully with the required quality, within-budget and on-time. However, they rarely align those projects with the business purpose due to the fact that they have failed to identify benefits before the commencement of projects. Therefore, it is crucial to establish a benefits focused culture to add value to an organization. Yet, even if benefits have been identified before the commencement of a project, delivering a project does not automatically entail the realization of the intended benefits. Thus, BRM ensures that benefits are translated into an increase in value for the organization making its management more effective by supporting making the right decisions within project management. [1]
Measuring Benefits
The following table illustrates potential indicators for quantifying and measuring benefits. It assigns metrics to the indicators while specifying which types of benefits it can measure for each respective indicator. Taking the example of the indicator ROI (Return on Investment) for instance the measure is typically represented in percent. (to be continued)
Measure | Scale (Example) | Tangible/Intangible (T/I) | Notes | Direct/Indirect (D/I) | Notes | Planned/Emergent (P/E) | Notes |
ROI | % | T | Can be calculated at each aspect of delivery program or strategy. Often associated with the requirements of a business case. | D | Needs close management if target is to be achieved. Unlikely to gain a positice improvement over target but can easily be a negative. | P | ROI is a planned target, improvement unlikely through unplanned action. |
Cost Reduction/Avoidance | %, $ | T | Targets are normally quantitative and either financial or stated as a percentage of an existing financial figure. | D/I | Needs close management if target is to be achieved. Unlikely to gain a positive improvement over target but can easily be a negative. | P | Unikely cost reduction will be unplanned, but it is possible to improve during actual delivery |
Gain Market Share | % | T | This is a specific goal - either achieved or not (gain). | D/I | May change positive or negative through outside influences (competitors circumstances change) or this measure. | P/E | Unlikely cost-reduction will be unplanned, but it is possible to improve during actual delivery. |
Employee Morale | Percent change or scale such as 1 to 10 | I | Whatever goal is set to be the target, it can easily change-generally lost more quickly than gained/improved. | D/I | May also be qualitative and, because of management changes, can have both a positive or negative impact on this measure. | P/E | Both a positive and a negative influenced by both planned and unplanned actions. |
Customer Satisfaction | Percent change or scale such as 1 to 10 | I | As this is a specific target, it can easily change - generally goes down more quickly than it improves. | D/I | Cost change as a direct/indirect consequence of what competitors do and customer experiences. | P/E | May change during the delivery life cycle, either up or down. |
Regulatory Action Avoidance | Yes or no to completion | I | This is a specific "should do" target and may carry both positive and negative changes/consequences. | D | Fixed target - should deliver as planned. | P | Only planned can be achieved as a fixed target. Emergent benefits that fall into this type of measure need to be more discretely planned to establish a fixed target type of measure to be monitored. |
Application of Benefits Realization Management
Introduction to BRM
From Strategy to Benefits
(figure 2)
![](/images/thumb/f/fe/Benefits_Strategy.png/500px-Benefits_Strategy.png)
Basic Concept
figure (3)
![](/images/thumb/9/91/Basic_Concept_BRM.png/500px-Basic_Concept_BRM.png)
PMI's BRM Framework
The Project Management Institute PMI has published a practical guide for Benefits Realization Management that will be main reference to this chapter. It comprises a BRM framework serving as an exemplary organizational model for companies in their pursuit of adopting BRM in their project management practice. It provides a set of governance and management practices to define, execute and sustain planned benefits while ensuring that these benefits are derived from project deliverables. As the BRM approach represents a cultural shift within an organization that also effects the way managers across the management hierarchy - from high-level executives, to project managers and their teams - interact with each other and the stakeholders involved the framework provides governance of general relationships by assigning key activities to associated roles and responsibilities. It emphasizes the approach of a shared responsibility meaning that managers across the hierarchy have to collaborate to work towards the achievement of an organization's strategic objectives. [5]
The Framework is divided into three generic stages:
- 1) Identifying Benefits
- determining whether a project can produce intended benefits and add value [1]
- 2) Executing Benefits
- minimizing risk while at the same time maximizing the opportunity to gain additional benefits [1]
- 3) Sustaining Benefits
- making sure that project deliverables continue to create value [1]
Identifying Benefits
Before the start of a project initial activity comprises the identification of benefits intended to generate through the outputs of the project initiative. Executive leadership brainstorm about which benefits to pursue and which projects are deemed appropriate to invest in to generate these benefits. It is a process that enables robust discussion and analysis of business strategies while taking into account external and internal factors to support decision making about which projects to initiate and to prioritize to achieve the overall strategic goals and organizational objectives. [1]
The process of identifying benefits is part of the development of the business case. The business case defines the type of benefits as categorized in the previous chapters. It considers risks that could emerge over the course of the project endeavor and and specifies the metrics for measuring the benefits.
Once benefits are identified that align with the organization’s strategic objectives for each benefit a separate benefits realization management plan is formulated and a designated benefits owner is assigned who is responsible and accountable for ensuring the achievement of the respective benefit.
The benefit owner closely collaborates with the project manager in the development of the business case and benefits management plan by defining key performance indicators and measures to monitor the progress of the benefit’s achievement against the benefits management plan. Depending on the organization’s culture and structure an enterprise Project management office may be involved. After approval of the business case as well as the benefits realization management plan the project manager incorporates the appropriate information into the system and the benefit starts to monitor, measure and record the benefits progress throughout the life cycle and communicate the progress to stakeholder. [1] [5]
- Benefits Realization Management Plan
Figure 4 illustrates an exemplary concept of the Benefits Realization Management Plan: The benefits realization management plan constitutes a separate plan but in line with the business case and the organizational objectives. The benefits realization management plan is typically supported by a benefits register as depicted in figure 4. The benefits register serves as a tool to record all the benefits intended. Each benefit is specified in detail in a benefits profile another tool which describe each identified benefit, its categorization, the beneficiary and metrics used to measure the development and determine its realization.
- Alternative supporting tools
The following tools listed can also be utilized in the identification stage however, this article will not further discuss them in detail:[5]
- Benefits map
- Benefits quantification
- Benefits traceability matrix
Executing Benefits
Sustaining Benefits
Guidelines for Project Managers
Depending on the maturity of a project, project managers engaged in BRM can follow these concrete guidelines on how to interact with the other project participants to increase the awareness of planned and emergent benefits.
- Identifying Stage
- Engage in developing the business case with its intended benefits and realization management plan as deemed appropriate
- Observe and determine expectations of benefits owner and other stakeholders involved
- Collaborate with managers of higher managerial levels such as program managers
- Executing Stage
- Making sure that benefit owner and program manager agree on communication plan that focuses on aligning project work over deliverables to identified benefits as well as aligning project work to BRM performance indicators
- Incorporate BRM plan into project plan and communicate that to project team and other stakeholders involved
- Review and revalidate planned work to benefits at meetings held on a regular basis
- Notify and urge project team to report emergent benefits when detected
- At project closure communicate lessons learned within BRM
- Sustaining Stage
- Support benefit owner with implementation plans and measures in line with BRM plan
Advantages of BRM
to be continued
Limitations
to be continued
Bibliography
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Project Management Institute. The Strategic Impact of Projects: Identify benefits to drive business results [Internet]. 2016. Available from: https://www.pmi.org/-/media/pmi/documents/public/pdf/learning/thought-leadership/pulse/identify-benefits-strategic-impact.pdf?sc_lang_temp=en
- ↑ Boston Consulting Group. Connecting Business Strategy and Project Management [Internet]. 2016. Available from: https://www.pmi.org/-/media/pmi/documents/public/pdf/learning/thought-leadership/connect-business-strategy.pdf?sc_lang_temp=en
- ↑ [Internet]. Mosaicprojects.com.au. [cited 19 February 2019]. Available from: https://mosaicprojects.com.au/WhitePapers/WP1042_Outputs_Outcomes_Benefits.pdf
- ↑ 4.0 4.1 4.2 Benefits Realization Management: A Practice Guide. Project Management Institute: Project Management Institute; 2019
- ↑ 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Benefits Realization Management: A Practice Guide. Project Management Institute: Project Management Institute; 2019
- ↑ Sundqvist E, Backlund F, Chronéer D. What is Project Efficiency and Effectiveness?. Procedia - Social and Behavioral Sciences [Internet]. 2014 [cited 19 February 2019];119:278-287. Available from: https://ac.els-cdn.com/S1877042814021235/1-s2.0-S1877042814021235-main.pdf?_tid=f81047f2-f5b1-4a6d-a215-1e2cbe4471b4&acdnat=1550590115_20a507bfbf38a143e41cfeb002c62f77