Benefits Realization Management to Maximize Project Effectiveness

Abstract

Benefits Realization Management also referred to as BRM describes the concept of aligning projects, programs and portfolios to the organization’s strategic objectives to deliver measureable benefits and therefore maxizime project, program and portfolio value. BRM addresses accountabilities across stakeholders to identify, execute and sustain benefits to drive strategic outcomes. BRM ensures the value being created through the completion of the given project is derived from determined project deliverables.

Operating in a rapidly changing and highly complex business environment, companies fight to maintain a competitive advantage over their competitors. Most companies manage and assess projects, programs and portfolios in terms of efficiency based on the Iron Triangle, which addresses time, quality and cost. Yet, they fail to assess whether the projects contribute to achieving the company’s overarching strategic objectives. A project may be successfully delivered in terms of time, quality and cost but it may conform to the company’s strategic goals, thus decreasing its value and its benefit to the company. Benefits Realization Management bridges the gap between corporate strategy and project management. This effective management practice supports better decision making in both the prioritisation of projects and the ideal level of investment.

Benefits Realization Management in general applies to project, program and portfolio management but this article will focus on the effectiveness of management practices in the domain of project management. To ensure a better understanding of Benefits Realization Management the article will define the terminology of deliverables and benefits, following, the difference between these concepts regarding the concept of efficiency versus effectiveness will be discussed. In this context, it will give an example of measuring benefits. After clarifying the link between corporate strategy and benefits, a PMI application is detailed which implements the BRM framework specifically, identifying, executing and sustaining measurable 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.

Benefits

Figure 1: Example of Potential Benefits that may be realized by an Organization

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. Benefits can be categorized in the following groups whereby more than one type may be assigned:

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.

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 a shorter cycle time for carrying out 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.

Direct or Indirect Benefits

• Direct benefits can be measured. They are the result of realized 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 time zones. The higher capacity of the call centers is a direct benefit of the company’s actions.

• 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 capable to better respond to incoming calls.

Figure 1 displays examples of potential benefits that may be realized by organizations. As depicted in the figure, the range of realized benefits can be very broad and diverse depending on an organization's individual strategic goal. 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

The concept of effectiveness vs efficiency is a method of assessing and evaluating different processes. Efficiency is commonly referred to doing things right meaning whatever activity is performed is being performed with the best use of the given resources. Effectiveness on the other hand is referred to doing the right things as in making the right decisions i.e. selecting an output that there is a demand for.

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 project management performance that creates the project-specific deliverables. However, 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.“ In this light project success in assessing how well a project delivers the benefits required to meet strategic goals can be considered as improving project effectiveness.

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. Therefore, it is crucial to establish a benefits focused culture to add value to an organization. BRM provides a set of processes that clearly identifies and supports achieving intended benefits to turn an organization’s overarching strategic goal into reality. By ensuring that the most valuable project initiatives are being employed BRM improves project success. Hence, it constitutes a key driver in an organization’s project management and overall effectiveness.

Linking Strategy to Benefits

Benefits Realization Management is based on shifting the traditional focus on deliverables towards one on generating and realizing benefits in order to boost an organization’s effectiveness and increase the value created. Figure 2 details the link between achieving an organization’s strategic goals through the realization of planned benefits:

Executive leadership defines an organization’s strategic goal. Strategic goals such as staying competitive in a market can be very broad and may need to be decomposed into several objectives to be achieved. In the context of project management these organizational objectives are achieved by selecting the appropriate projects to invest in. Throughout the course of a project initiative deliverables are being produced that lead to certain results that are referred to as outcomes. The successful delivery of the project outputs alone do not constitute the realization of the intended benefit but only using and sustaining deliverables resulting in the achievement of the benefits. Subtracting costs connected to achieving the benefits from the net result of the benefits leads to the final value that is being added to the organization.

Let us take the example of a government organization of a tourism region that strategically plans to increase its economic growth. To achieve that strategic goal, it intends to make the municipality more attractive as a tourist destination. It continues to initiate several projects among which one is to renew an outdated national park that has become less attractive over the years. The project successfully delivers the output of a modernized park including new tourist itineraries. The outcome of these deliverables is the capacity to attract more visitors who are interested in the region’s natural heritage. The benefit of the modernization project would be the increase of economical welfare in the entire region through the generation of new jobs as the number of tourists to the municipality around the national park increases. The value created is then determined by the net result of the economical welfare subtracted by the costs associated with renewing the national park.

Figure 2: Visualization of Connecting Project Benefits to Corporate Strategy

Measuring Benefits

An organization's essential activity in the context of BRM is monitoring Benefits across the BRM life cycle. Measuring benefits throughout all stages from development over delivery to sustainment is crucial to keep track of the progress of realizing benefits and to constantly reevaluate whether benefits are still achievable. It allows an organization to respond to these observations by taking appropriate measures and formulating courses of action if necessary.

The following table illustrates potential indicators for quantifying and measuring benefits. It assigns a measurement unit to each indicator and specifies which types of benefits each indicator can measure.

For instance, the financial metric ROI evaluates an organization’s investment profitability which is expressed as a ratio of net gains to net costs. Gains and costs are both quantifiable values, thus, ROI typically measures a tangible benefit. ROI will also measure a direct benefit that is going to be planned. A higher return on investment will very unlikely be an emergent benefit as specific measures are being taken to improve the ratio of net gains and net costs.

Table: Examplary Configuration of Benefits Measurement

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 delivering strategy. Often associated with the requirements of a business case.	D	Needs close management if target is to be achieved. Unlikely to gain a positive 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

PMI's BRM Framework

Even though the advantages of a benefit-centred approach have been widely acknowledged there is a notable lack of succesful BRM implementation within organizations so far. To tackle this gap 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 framework serving as an exemplary organizational model for companies in their pursuit of adopting BRM into their project management practices. The framework provides a set of management processes 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 effects the way managers across the management hierarchy - from high-level executives to project managers - interact with each other the framework proposes a set of governance processes on 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.

Figure 3: Visualization of BRM Framework in the context of Project, Program and Portfolio Management.

The Framework is divided into three generic stages:

1) Identifying Benefits

• determining whether a project can produce intended benefits and add value

2) Executing Benefits

• minimizing risk while at the same time maximizing the opportunity to gain additional benefits

3) Sustaining Benefits

• making sure that project deliverables continue to create value

Role of the Benefit Owner

As project managers are mainly responsible for realizing the deliverables of a project initiative Benefits Realization Management acknowledges the need for assigning the responsibility of achieving the intended benefits to a seperate function. Thus, BRM employs a designated benefits owner who is accountable and responsible for managing and realizing the benefits he is assigned to. The benefit owner does not necessarily need to be part of the project team but is obliged to work closely together with the project manager for successful benefits realization management.

Figure 3 summarizes the mechanism of the framework and gives a compact overview of the BRM framework. It emphasises the role of the benefits owner who is responsible for the realization of benefits across the entire life cycle and the role of project managers who have specific and clearly defined responsibilities. The key activities within the main stages are being supported by measuring, monitoring and re-evaluting the benefits as defined in the Benefits Realization Management Plan. The framework can be adopted as is but may also be modified by organizations according to their individual existing management structure and governance processes.

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.

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.

Benefits Realization Management Plan

The Benefits Realization Management plan constitutes a separate plan but in line with the business case and the organizational objectives. It outlines the activities necessary for achieving the intended benefits and determines a schedule when each benefit will be realized and identifies the tools and resources necessary to ensure the benefits are fully realized over time.

The Benefits Realization Management Plan also covers:

• Contact Informations for benefit owner
• Definition of how each benefit is measured by KPI's
• Risk assessment and probabilities for realizing each benefit
• Definition of progress indicators
• Milestones for benefit realization

Figure 4 illustrates an exemplary concept of the Benefits Realization Management Plan. The Benefits realization management plan is typically complemented by a benefits register. The benefits register serves as a tool to record all planned benefits. Each benefit is specified in detail in a benefit profile, another tool describing each identified benefit, its categorization, the beneficiary and indicators used to measure its development and determine its realization.

Figure 4: Exemplary concept of Benefits Realization Management Plan

Alternative supporting tools

The following tools can also be utilized in the identification stage, however, they will not be discussed any further in this article.

• Benefits map
• Benefits quantification
• Benefits traceability matrix

Executing Benefits

During the executing phase the project manager oversees that the input is being processed to produce the project deliverables. The project manager conveys the progress of the project towards intended benefits to the benefits owner. In collaboration they optimize and ultimately produce benefits. The activities involved in that process include ensuring the alignment with organizational objective and evaluate risks and KPIs for stable delivery of benefits.

The benefit owner is responsible for monitoring, measuring and evaluating the progress of the project. He communicates the purpose of the planned benefits not only to the stakeholders but also to the project team appropriately to ensure it understands how deliverables contribute towards the intended benefits. Furthermore, he keeps track of any emergent benefits or disbenefits stemming from environmental or strategic changes that may require adjusting or even cancelling the benefits realization plan.

Sustaining Benefits

This final phase focuses on deriving outcomes from project deliverables that lead to realizing the intended benefits. Sustaining benefits is an ongoing activity that mainly the benefit owner and the project beneficiaries are performing. These activities comprise verifying that benefits have been tracked and are realized within the given timeframe of the benefits realization management plan and controlling that if emergent benefits have been detected appropriate measure have been taken.

The project beneficiaries need to begin deriving the benefits from project deliverables. Once the benefit is realized according to the benefits realization management plan further monitoring makes sure that the benefits continue to perform if applicable.

The insight gained about the benefit’s contribution to the organizational strategy over the course of the project life cycle should be shared to enable continuous improvement especially if behavioral or operational changes need to be made. While executing a project initiative within a changing environment the benefits realization management plan requires flexibility as benefits may have to be adjusted or modified. Depending on the situation a substituting benefit may have to be determined if the planned benefit can ultimately not be realized or if it becomes a disbenefit because of external factors such as changing political regulations.

Guidelines for Project Managers

BRM emphasizes the importance of involving project managers across the BRM life cycle from identifying to sustaining benefits to better understand the importance of their project. Depending on the maturity of a project, project managers can follow these concrete guidelines on how to interact with 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
• If applicable collaborate with managers of higher managerial levels such as program managers

Executing Stage

• Making sure that benefit owner and program manager (if applicable) 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 towards benefits at meetings
• Notify and urge project team to report emergent benefits when detected
• At project closure convey lessons learned

Sustaining Stage

• Support benefit owner with implementation plans and measures in line with BRM plan

Limitations

The advantages and the value of taking a benefit focused approach has been widely recognized. According to the Project Management Institute organizations with a high BRM maturity level spend $112 million less or every $1 billion dollar invested in programs and projects. However, many organizations have not been able to incorporate BRM successfully due to the lack of documentation clarifying the integration process. The PMI has been the first to publish an official guide in early 2019. Due to the recency of the publication the framework is largely unproven and the potential weaknesses of the method are yet to be realized.

Given the framework published by PMI could be implemented appropriately to a given organization some limitations exist in BRM itself which should be addressed. One of the most critical limitations of BRM is the measurability of intangible benefits. To effectively measure benefits there needs to be a comparative proxy and due to the nature of most intangible benefits the proxy used often adds little to critically evaluate the effectiveness of the benefit. For example, an organization’s improved image is a common intangible benefit but this often does not have comparable baseline other than a change over time. A change over time could be effective but it means all the future measurements of the organizations image are based upon a local measurement which cannot be mapped or compared to any other baseline.

Annotated Bibliography

• Benefits Realization Management: A Practice Guide. Project Management Institute: Project Management Institute; 2019: The Project Management Institute is the first to publish a practical, hands-on guide supporting organizations in implementing and adopting the concept of Benefits Realization Management into their own management practices. The advantages of BRM have been widely discussed within the discipline of project, program and portfolio management. However, reliable literature covering the process of implementing BRM is rare leaving organizations without appropriate assistance when adopting BRM. PMI acknowledged the need for a framework and developed a useful set of exemplary governance processes in publishing “Benefits Realization Management: A Practice Guide”.

• Project Management Institute. The Strategic Impact of Projects: Identify benefits to drive business results [Internet]. 2016: Prior to publishing the BRM Practice guide the Project Management Institute has published this report reflecting the impact of identifying and focusing on benefits rather than project deliverables in order to drive the creation of business value within an organization. It contributes and raises the awareness towards the discussion of the advantages of taking a benefits-centered approach.

• Boston Consulting Group. Connecting Business Strategy and Project Management [Internet]. 2016: The report identifies and investigates the challenges of BRM in terms of its adoption. It discusses the fact that organization are keen on implementing benefits realization but only a few successfully do. A major obstacle is the lack of a governance structure that clearly defines roles and responsibilities. This research conducted in 2016 is groundwork for the publishing of the BRM Practice guide published in the beginning of 2019.

• Serra C, Kunc M. Benefits Realisation Management and its influence on project success and on the execution of business strategies. International Journal of Project Management. 2015;33(1):53-66: The article discusses how achieving benefits contributes to the creation of organizational value within the project management practice compared to focusing on delivering project outputs within the constraints of time, budget and scope.

Annotated Figures

This chapter details the references the figures and the table of the article are inspired from. All of the figures and the table were created by the author of this article as stated below:

[Figure 1] Inspired from "Benefits Realization Management: A Practice Guide" but created by Isabel Wang

[Figure 2] Inspired from "Benefits Realization Management: A Practice Guide" but created by Isabel Wang

[Figure 3] Inspired from "Benefits Realization Management: A Practice Guide" but created by Isabel Wang

[Figure 4] Inspired from "Benefits Realization Management: A Practice Guide" but created by Isabel Wang

[Table] Inspired from "Benefits Realization Management: A Practice Guide" but created by Isabel Wang