Project Benefit Realization – Why It Matters?
Benefits realization is a highly considered and well-practiced methodology that elucidates and measures precisely how projects and programs add true value to an enterprise. Organizations that have been effective in enforcing benefits realization programs are more likely to understand this value, as they are seizing firm evidences required to highlight the return on their project management investments.
So far, very few organizations have been successful in implementing benefits realization programs. In fact, majority of the firms are lacking an opportunity to comprehend the factors that would help them increase the project success rates. In this article, let’s explore the reasons behind this lack of understanding and the factors that can contribute to the fruitful realization of project benefits.
Benefits Realization Maturity Model
The Pulse 2015 research specifies that:
- Only 1 in 5 organizations own a high level of benefits realization maturity
- However, this figure still represents an increase of 63% since 2013, signifying a high level of interest in this field from organizations that are still struggling to become adept at it
- High performers are over four times more likely to report high benefits realization maturity (39% compared to 9% of low performers), as they identify it as a business imperative
A typical benefits realization maturity model comprises 4 layers of increasing maturity with specific set of characteristics. This model is utilized as a tool to assess how well established an organization is in terms of realizing benefits or value from the projects they execute or the investments they make. Here is a representation of the same.
Organizations with mature benefits realization processes are likely to capitalize on:
- Clear identification of the strategic rewards prior to starting a project
- Effective assessment and monitoring of risks to project success
- Proactive planning for making necessary changes in the organization
- Explicit definition of accountability for project success
- Extended responsibility for integration to the project team
Benefits Realization Agenda
There are three major building blocks of benefits realization process which help an organization to judge a project’s value and its success feasibility.
- Project Success Criteria
- Key Performance Indicators
- Acceptance Criteria
Project Success Criteria (PSC)
Commonly referred to as the qualitative or quantitative criteria by which the success of a project is judged, project success criteria may have different definitions like:
- Delivered within time and budget tolerances
- Delivered to specifications
- Customer satisfaction rating achieved
- Health and safety adherence
- Realization of business benefits
- Increased market share
- Improved productivity
Yet, we cannot consider a successful project to deliver exceptional business benefits. For instance, every Project Manager considers success to be a combination of timely delivery, cost-effectiveness and scope adherence. However, other stakeholders might be more concerned with business benefits that were probably unknown at the time of project completion. It is perfectly possible for a project to be deemed a delivery success but fail to produce its business benefits. On the other hand, many projects that have been delivered late and over budget have nevertheless delivered considerable business benefits.
Project Success Factors (PSF)
Project success factors are additional elements within the structure and context of the project that are conducive to success. Their presence may or may not guarantee success but their absence will distinctly increase the probability of failure. Some examples of these factors are:
- Clear project mission
- Top management support
- Client consultation
- Committed project personnel
- Monitoring and feedback mechanisms
- Clear communications
- Adequate resources
Key Performance Indicators (KPI)
Key Performance Indicators are used to capture and assess the trend toward accomplishing the desired benefits. Every project needs key performance indicators (KPI) in order to continuously measure the life of a project and anticipate any project deviations from specification, time, and cost requirements. KPIs directly measure the project performance against project success criteria. Although success criteria can be qualitative or quantitative, ideally KPIs should be SMART (Specific, Measurable, Accountable, Realistic and Timely).
Acceptance Criteria
Acceptance criteria is usually set for deliverables, project phases, and milestones. This criteria can be treated as a formal statement of needs, rules, tests, requirements and standards that must be used in reviewing project outcome and coming to agreement with the customer on the point that the project has produced the deliverables that meet the initial expectations of the customer.
Conclusion
Benefits realization is a challenging, yet, lucrative process. Once executed well, it helps to ensure that the outcome of a project produces the desired benefits, as expected in the business case. This desired benefit is achieved by establishing, measuring, and communicating the results of an organization’s initiatives. Such insight into performance is conceived as an essential planning tool for future projects and resource allocation, including talent. Though, there has been a significant increase in the number of organizations that are highly mature with this competency, there are still a lower percentage of organizations investing in benefits realization, considering the return.