Output, Outcome and Benefit in PRINCE2

Abstract

Before starting the project, it is essential to make sure that the project is worth to conduct which means the product will be desirable after finalization and valid throughout its lifetime. Deep knowledge about the project’s product is a crucial pending planning stage. PRINCE2 using terms “output, outcome, benefits” define the product, what changes the product will bring and the improvement which can be measured. This article will cover the meaning of these terms and what is the difference between them. Moreover, explanation of basic structure of PRINCE2 will be provided.

PRINCE2

Figure 1: PRINCE2 model

PRINCE2 (PRojects IN Controlled Environments) is the newest version of methodology PRINCE which is created based on the Project Resource Organisation Management Planning Technique (PROMPT). This is one of the most common methods used during managing a different kind of projects in the world. It has been constructed in the way allowing to be applied to the projects in diversified environment irrespective of the organisation, type, and scale.

The PRINCE2 is structured of 4 aspects :

• Seven Principles

• Seven Theme

• Seven Process

• Project environment

The seven principles

The PRINCE2 is developed according to seven principles which provide a guideline for participants involved in the project to be successful. It can be interpreted as steps leading to align the project with the PRINCE2 philosophy. If the project is conducted with omitting any rules it cannot be managed with PRINCE2 any longer.

1. Continued Business Justification – The business case must be updated after every stage of the project to ensure that is still doable.

2. Learn From Experience – Each project is a lesson so the managers should use previous experiences in order to avoid making again the same mistakes.

3. Define Roles and Responsibilities – very important thing is to increase awareness in everyone involved in the project about the individual as well as the other responsibilities. This principle also includes knowledge who is in charge of making decisions.

4. Manage by Stages – Divided project into smaller stages is easier to plan, control and manage. An additional advantage is a better overview of all aspect of the project.

5. Manage by Exception – A PRINCE2 has elaborated tolerances for each project objective. It has been done in order to reduce management intervention. Only in case if defined tolerances will be or might be exceeded then information goes to next level management.

6. Focus on Products – product focus attitude is very important in order to deliver a good quality product on time.

7. Tailor to Suit Environment - The methodology can be tailored to suit project environment according to its needs.

Not all aspects of the methodology can be fully applicable to the project, thus all have a note on scalability. It gives guidance for management team how to proceed. This solution allows the PRINCE2 methodology to be tailored to different kind of project regarding its needs.

The seven themes

7 themes bring an overview of how to manage the project regarding PRINCE2. Themes can be interpreted as guidance on how principles should be used in practice and established at the very beginning of project conduction and carefully monitored during realization.

1. Business Case – closely related to the first principle of business justification. Main information provided by this theme is knowledge if the project is achievable and worthwhile.

2. Organisation – theme linked with the third principle about the roles and responsibilities of the participant involved in the project. Creates the structure of the project in accordance with responsibilities.

3. Quality – theme linked with the sixth principle about the focus on the product. The idea is to establish quality requirements at the beginning of the project. This set clear aim regarding the final product and makes it easier to keep work on track.

4. Plans – explain the way how previously established goals are going to be achieved. This is developed based on time, quality and cost.

5. Risk – this theme idea is to determine and keep under control events which result is uncertain. However, it must be distinguished between negative and positive risk. Negative risk brings undesirable result which is called threat and the positive risk is called opportunities.

6. Change – the purpose of this theme is to manage unexpected changes and issues which might cause a need for change in the project.

7. Progress – this theme is about following progress in the project. Very important activity which makes it possible to be updated and control whether everything goes as is was planned or not. Progress theme reduces the possibility of failing a project.

The seven processes

In PRINCE2 also describe the running of the project into seven processes. Every single one is supervised by project managing team. Each step consisted of:

1. Starting Up a Project (SU) – this process is about creating project team in which composition comes project brief, executive and project manager.

2. Initiating a Project (IP) – in this process is established what is necessary to do to finalize project successfully.

3. Directing a Project (DP) – this process last from the beginning to the end of the project. Managing team supervise activities such as: initiation, stage boundaries, ad hoc direction, project closure.

4. Controlling a Stage (CS) – “which dictates how each individual stage should be controlled, including the way in which work packages are authorized and distributed.”

5. Managing Product Delivery (MP) – process describe the way of communication between managing team and project manager.

6. Managing Stage Boundaries (SB) – in this process every previous stage is analyzed and after that board with project manager are making a decision whether to continue project or not. This decision is made based on analyze: plan for the next stage and update project plan.

7. Closing a Project (CP) – final process which consists of decommission the project, identify follow-on actions and preparation of benefits.

Project Environment

This aspect is closely related to the 7th principle. PRINCE2 can be used in many different projects regardless of organization type, how big the project is or its complexity because methodology provides guidance on how it can be tailored.

Output

What is Output? According to PRINCE2 term, the output can be understood as a product delivered by the project. For example, a new IT system is a project’s product called output. The output can be a tangible product or intangible service and are created by the process and the output of the project is in fact deliverable.

Deliverable

It is a final output of the project however, it is impossible to use is to measure generated benefits. Deliverables is a result of the project and in most cases occur as an interval named milestone. To picture the differences between those two terms this example can be used:

Building an innovative bridge at some point of the project the bridge becomes the longest ever made. This is an outcome of this project and not a deliverable. Whereas, the outcome is not consisted of executed work but of accomplishment of the work.

Outcome

According to PRINCE2 term, the outcome can be understood as a change caused by using the project’s output. For example, a user can do faster and more complex calculations. A very important aspect of conducting a project to receive a satisfactory outcome is to learn from the previous experience and having a motivated team. The best way to motivate team members is to state a clear purpose of the project. When people believe in what they do they become self-driven which leads to great outcomes. Sometimes the idea can last even longer than the initiators.

Stakeholders

The decision about what final outcome should look like belongs to stakeholders, especially for the person or group of people who has the biggest financial input which gives them right to be a decision maker. Those two factors (decision and money) are crucial in the process of planning the project’s strategy because money plays an important role.

Stakeholders are the people who have an interest in any projects and especially in their outcome. In most cases, they are part of the board, project management team, customers, users or sponsors because of the investment they made in the project. This is very important to be in constant contact with stakeholders. This practice helps to avoid unexpected changes and unnecessary wastes of money and time. Two types of stakeholders can be distinguished:

Project stakeholder is a single individual or entire organization who are affected by the outcome of a project and regardless if the outcome is positive or negative. The fact of being affected makes them stakeholder.

Key project stakeholders are actually the same as project stakeholder however, their will must be satisfied. If something in the project makes them unhappy key project stakeholders can break the project.

Process vs Outcome

Everybody has some goals to reach in the project for example making more money. These goals motivate people to do their best. However, is the outcome focus thinking the best way to achieve goals?

The problems come when managers become obsessed with reaching the result and forgetting about properly conducting process. The thing that should motivate to action causes wrong habits and behavior. Instead of taking care of how to manage the project in a good way, the manager becomes focused on what they do not have which makes them distracted. With that mindset manager are focused on the missing parts of the project instead of what actually is under their control. Checking the same step couple times in a short period of time will not give any valuable information. In the end, reaching the established goal without taking care of every process stage may cause other problems like for example, something may not work properly after finishing a project.

On the other hand, in process focus attitude it is all about doing the right things without looking at the result. The attitude that doing proper activities will give a desirable outcome. All activities are under managers control and this is the only thing that can be controlled. The final result consists of many factors and some of them can be out of control. For example, change in management team or lack of money.

Benefit

According to PRINCE2 term, the benefit can be understood as an improvement which can be measured. For example, reduced cost by 15%, increased income by 10%. Most benefits are measured by looking at the scale of improvement in cost reduction.

By virtue of different kinds of projects and programs, a few types of benefits can be distinguished . For example, the first classification:

• Economic benefits are related to all profitable financial operations

• Effectiveness benefits are related to standard development

• Efficiency benefits are related to resource allocation development

Another way to classify is to divide them into quantifiable (tangible) and non – quantifiable (intangible) benefits. Benefits called tangible are quantifiable (measurable) and show for instance organization financial gains. Quantifiable benefits include among others efficiency and effectiveness development. On the other hand, non-quantifiable called intangible include development of such areas as exposure reduction or organizational performance improvement. Sometimes it is hard to measure benefits. For example, stakeholder’s satisfaction.

There is also another benefit classification:

• Performance driven benefits

• Value-driven benefits

• Societal benefits

The first category includes organizational performance outcomes, stakeholder’s satisfaction, and investment return. The second category includes ease of use, flexibility, and accessibility. Last but not least category is about environmental impact such as reduction of pollution and traffic, unemployment and perspective on the market.

However, it is important to keep in mind that measurable outcome can be negative and instead of giving profit may cause a loss for beneficiaries. Then those unfavorable outcomes are called dis-benefits.

Identifying Benefits

Before conducting a project one of the first activity is identifying benefits after project finalization. A most common tool to identify different benefits is brainstorm which gives an overview of potential gains and then managers make a decision which gain is worth to chase. Base on that it is possible to make an analysis about future steps and business strategy.

Identifying benefits is a crucial part of the entire business case. It takes in to account internal and external factors and consider potential risk which may occur during project realization. After Benefits identification that is common with the company’s strategy another specific plan is created and responsible person is assigned for managing this plan.

Sustain Benefits

Figure 1: Output, Outcome and Benefit in PRINCE2

The last stage that focuses on the project’s outcome is sustaining benefits. Project’s beneficiaries and benefit owners are executing sustaining benefits which is a constant activity. To their job belongs to ensure that achieved benefits have been realized within planned time and were tracked. Once the benefit’s input in the organization’s performance is known it should be shared in order to provide ongoing development in future operations. However, the need of setting substituting benefits may occur for instance in the case when established benefits will not be achieved due to unexpected reasons like market regulations or political situation.

Summary

Summing up the article conclusion can be made that management methodology PRINCE2 is a powerful tool in managing a project. Despite constraints which were not mentioned above due to its flexibility it can be used in various types of projects, regardless of their size and environment in which is treated. Following based guidelines like seven principles, themes processes and project environment which is the basis of the PRINCE2 management team is enabled to conduct a project under control. Conducting every project whether follow PRINCE2 methodology or not always at the end there is some output which is the final product. Afterward, outcomes can be seen which is change caused by the project’s product (output) and the then measurable effect of this change is called benefit.