Benefits (Realisation) Management

“Organisations with a formalised benefits management process have a higher number of projects meeting their goals and business intent than those without (74% vs 66%).”

PM Network

“Why are we all here?” It’s a big theological question. Why don’t we all just sit in our PJs and watch Daytime TV?

The answer is because we believe that completing activity (delivery) will result in more benefit than doing nothing. No matter if you take a socialist or a capitalist approach, you believe you can make a (positive) difference.

But how do you know? Has making that product, fixing that defect, reorganising that team really achieved what you hoped?

That’s where Benefit Realisation Management comes in…

First, What is a benefit?

• A measurable improvement
• Advantageous to a stakeholder
• Contributes to an organisational objective
• The value of the change to stakeholders (What’s in it for me)
• Answers ‘so what?’ / ‘why do I care?’
• Dis-benefits are the opposite

Along side the delivery of change there are 5 stages of Benefits Management Activity than can help you to:

• Know what you are doing
• Measure success
• Reap the rewards
• and validate the results.

Not planning for Benefits Realisation is akin to opening a shop and not installing any payment methods!

The Stages of Activity

Stage 1: Identify and Quantify

This is where we define our hopes and dreams at any scale. From buying a new coffee machine through to wanting double digit revenue growth. Improvements require change and change needs measuring.

The key activity here is writing a problem statement, if you can’t define your problem you can’t measure the results of your solution. This is often the hardest and most surprising task for leaders. Habits and assumptions skew opinion, it’s easy to say “delivery is slow because of our Infrastructure” — but is it really? Is it a training issue? Is it a software issue? The ‘5 whys’ technique is helpful here.

Inputs:

• Possibilities and risks
• Needs and Problems
• Regulatory requirements

Outputs

• Problem Statements
• Benefits Map

Problem Statement Activity:

Providing clear answers to these 6 questions helps frame your context and benefits. It’s important to answer each question separately, don’t be tempted to answer them all at once.

1. What area am I focusing on?

• Where are we not succeeding as well as we might?
• What areas do I know I have problems in?
• What objectives are we not meeting?

2) What are the issues / barriers to success?

• What’s going on in this area which means we’re not succeeding?
• What could we do better?

3) What will I see if I fix it?

• What’s the knock on effect?- Look beyond the immediate impact
• On whom?
• What KPIs should improve?

4) What has to change in order to see that happen?

• What enablers need to be present for people to do something better?
• What will they do differently?

5) What will I have to do to make those changes?

• Include human, technological, physical, governance, cultural and any other work

6) Why haven’t we already fixed it?

• What are the risks?
• Dependencies?
• External context?
• Priorities?
• What are you uncertain about?

It is often easiest to define benefits relative to other metrics. There is delicate balance between what you measure and what you experience and it’s worth taking time to get comfortable with your definitions.

To benefit from weight loss you may say “I want to lose 50kg so that I can chase my daughter in the park without getting out of breath and be at lower risk if diabetes.

The 50kg is definite measure but by it’s self it’s meaningless, is that 25% of your body mass? 50%? would you then be of a recommended healthy weight? Chasing you daughter is entirely dependent on her fitness, if she has a budding athletics career you may always get out of breath! Your chance of diabetes may not be impacted just by your weight; lifestyle and genetic factors will also play a part.

A clearer definition might be: “I want my BMI to be in the Health weight range”.

Benefits Map Activity

Taking the benefits defined in the Problem Statement then requires mapping back through to Programmes and Projects that will deliver the necessary change.

• Benefits are the value perceived or realised
• Dis-benefits we want to control and minimise
• Objectives are intended goals — Company vision and organisational priorities
• Outcomes are the results of actions taken (stop doing / start doing / do differently) — The results of Change
• The work needed to be done to get the change

A example Benefits Map, with connections

Identify Assumptions, Risks and Opportunities Activity

Across your Benefits Map it is important to identify potential problems that you will need to consider when planning your benefits realisation. For each action consider where there may be:

• Assumption of an expected outcome (cause and effect)
• Potential disruption (risk) including: Strategic, Operational, Technical, Financial, Human, Regulatory, Governance
• Opportunities when actions may have additional consequences beyond those needed for the desired benefits — there may be supplementary benefits that you can take advantage of.

Identify What You’re Going to Measure

You can’t measure activity at every step, it would be logistical chaos and the cost would prohibit the benefits. Instead focus on milestones in your path, delivery of certain projects, or management of certain risks that will be of higher consequence for realisation of benefits. Understand and measure these.

Make these your KPIs and report on them regularly.

Stage 2: Value and Appraise

The Benefits Map is not a plan, it is just a list of activities. Before it can become a plan it requires review and perspective. Some change is just not worth the hassle and it’s better (and cheaper) to realise this before you start work.

Mark Milestones on Map Activity

You will have ideas on when you would like to realise the benefits of change by. Some changes may be time critical, dependent on regulatory or customer factors; other will be board ambitions for improvement.

You will also have some indication on how long changes will take, if a project or programme is large or small. T-Shirt sizing may be useful here. From this information you can identify when critical outcomes and objectives will be met and can mark these milestones on your Map. Once marked up, consider:

• Is this achievable?
• Is the change effort still worth it?

If the answer to either is no, go back over your map and consider what needs to be improved.

Stakeholder Communications & Engagement

The benefits and the changes needed will not be delivered just by those who will experience the benefits. Suppliers, Customers, Team Members and External bodies will all be factors in delivery. It is therefore vital to garner expert opinion on parts of the map. Your ambition may be to increase revenue growth, but industry experts might be able to inform you that this is unrealistic due to market competition. You may think a programme will take 6 months to build, but your Technical Architect may be better placed to advise realistic timelines — even if it’s only a more accurate estimate.

These parties not need to be exposed to the entire map, but their input is valuable to the component actions.

Business Cases

Another test to interrogate to validity of the outcomes and work needed is to draft up business cases for the Programmes and Projects. Balancing the tangible and intangible costs and benefits, examining the ROI and NPV will help you to answer if the effort is value for money.

It’s easy to suffer optimism bias and believe that the overall benefits will be greater than the sum of the project outcomes, but that will be dependent on all work being completed — is that realistic? Or are there blockers that need to be mitigated first?

Blue Printing

This is simply rewording your objectives into descriptions of future states. For example “The business manufactures 50 million widgets per week and has a backlog of orders for a further 100 million”. Reading this simple description back helps your realise if your ambitions are realistic and if there is potential for the benefits to be realised.

Benefits Profile Activity

Now that interrogation is complete it is time to expand your benefits and dig into the detail. For each benefit list the following information on a page. This will be used later to check your progress.

• Programme name and SRO / Sponsor Name
• Profile status (Draft, Approved, Rejected)
• Benefit identifier and title (e.g. 00032 Customer Satisfaction Survey net score is 300 by 23/March/2023)
• - The benefit type (e.g. Cash releasing / Non Cash releasing / Public Quality)
• - The means of change (Project, Policy, Financial investment etc.)
• - A description of the value (e.g. $$$, Intangible, Cultural)
• - Benefit recipient? (Customer, Team, Supplier, Shareholder etc.)
• Description — an extract of Problem Statement and Benefit Management activity to date
• Baseline Value / Benchmark, what is the value today?
• - Actual value and date if measurement already done.
• - Otherwise the date planned to take the baseline measurement and who will be responsible for it.
• Benefit Start date — When do you expect to start seeing a return on investment? Note: This date must remain fixed
• Owner — Strategic and Operational persons responsible for delivery
• Objectives supported (From your Map)
• Changes required (Work to do)
• Related outcomes and benefits / dis-benefits
• Stakeholders (Internal and External)
• Measurement: units, method, targets (value and timing) and resources (including KPIs)

Benefits Validation Activity: DOAM Test (From MSP)

Finally, assess each of your Benefit Profiles against the DOAM test. Again, if the answer is no then improve the profiles.

• Description: Is it clear what precisely is the benefit, and who owns it?
• Observation: Are there verifiable differences that should be noticeable between pre- and post-change implementation?
• Attribution: Where will the benefit arise? Can the programme claim the realisation? Are there any other programmes that might also claim this benefit; ownership of the delivery of the change; and outcomes that will enable the benefit. Is this clear and agreed?
• Measurable: how and when will the achievement of the benefit be measured? Is it possible to quantify the benefit in financial terms? Can sensitivity analysis be applied (e.g. best case; most likely; worst case)?

Stage 3: Plan for Benefits Realisation

Benefits Maps work in both directions:

• Links right to left for problem based approach
• Links left to right for innovation / solution based approach

The latter is doing work first and then realising the benefits from it. The former is targeting a result then working back how things will be delivered. Your planning will be informed by which approach and level of risk aversion your business is comfortable with. Smaller more innovative companies will like to be creative and build left to right. Larger and more targeted organisations will need to know the results are up front.

Agile or Waterfall delivery mechanisms are inconsequential here. The key planning factor is dates for achieving milestones, whether they are MVPs (minimal viable products) or final solutions. Your map will include outcomes and objectives that will eventually have to be met (scope) by a certain date (time) within given costs (resource) for the change and ROI to be worthwhile.

Benefits Realisation Plan Activity

Gather together all of the Benefits Profiles and draft together a plan of work (Gantt, timeline, schedule chart) based on the timelines described. There will be a natural sequence from dependencies and from prioritisation based on achieving the biggest benefit first. Other points to consider:

• Risks and issues and impact on benefits realisation. Add risks and issues logs for programmes and/or the organisation
• Reassess assumptions made and plan for mitigation of associated risk
• Collation of forecasts for the result of outcomes and the estimates of resource required
• Review attribution and confidence
• Confirm tolerances and reporting — are milestones fixed? Is KPI measurement in place in time?

Stage 4: Realise the Benefits

Now is the time for delivery, managing the tranches, building the outputs, the operational doing part… and make good on your plans.

• Deliver enablers (work, outcomes and objectives)
• Realise benefits and manage dis-benefits
• Updated plans and peporting

Normal Programme Management rules apply!

Stage 5: Review

This is a continuous activity that runs concurrently with Stage 4. There needs to be governance and analysis to consider if the benefits (as described in the profiles) can still be delivered. As delivery continues it is useful to consider:

• Progress Reports — are the MI on track? are Milestones being met?
• Verified Benefits Realisation — Can benefits be attributed to your changes? Are benefits made actual or estimates?
• Emergent Benefits — Have additional and unexpected benefits been delivered as a result of your changes? Are there new dis-benefits that need to be mitigated?
• Lessons Learned — What lessons can be learned from delivery so far? How can these be applied to later work?

Reporting Activity

It is important to celebrate successes and learn lessons from failure. A culture of openness will in build inclusiveness and cohesion within the organisation and support future delivery. Points to consider for knowledge sharing on Benefits Realisation:

• Use the measurement techniques
• Emergent benefits
• Retired benefits
• Revising forecasts (Not setting new baselines!)
• New projections
• lessons learned and best practice (knowledge management)

Thank you for reading this far, I hope you have found it useful.

I’d like to hear your thoughts in the comments below or via Twitter @MRAJPALMER