What is benefits management?

The reference book Business Analysis defines benefits management as the following:

A process concerned with delivering the predicted business benefits defined in the business case. The process includes managing projects to deliver the predicted benefits and, after the project has been implemented, checking progress on achieving these benefits and taking any actions required to enable their delivery. (4th edition)

A benefit is defined as, “A positive gain to an organization expected to follow from carrying out a business change program or project” (Business Analysis, 4^th edition).

In this article, we:

Explain the importance of benefits management
Provide an overview of the benefits management process
Share hints and tips for effective benefits management

Why is benefits management important?

The Project Management Institute has reported that there is, “a greater need now than ever to ensure that the investments in portfolios, programs, and projects lead to clear, sustainable benefits.”

In addition, Paul and Cadle note in Business Analysis, “The importance of using investment funds wisely and delivering the business benefits predicted for business change initiatives has become increasingly necessary to the survival of organizations.”

As part of our State of Project Management research, only 36 percent reported that they mostly or always deliver the full benefits of their projects.

So when we asked respondents which project management processes added the most value when appropriately undertaken and which were most challenging to embed, it was no surprise that benefits realization was reported as one of the most undervalued and most difficult processes to embed.

PPM Processes: Value vs. Difficulty to Embed – The State of Project Management Research

It is a common misconception that we must list as many anticipated benefits as possible in our business case to convince executives that our investment proposal should be authorized. Often, little thought is put into what the project team and broader organization must do to turn this list of benefits into a reality.

Once an initiative has been approved, it isn’t unusual for people to forget about some of the benefits documented in the business case until the project or program is ready to be closed. By this point, it’s considered too late to take corrective action.

Sometimes, sponsors agree to a change request or an exception report without understanding their decision’s impact on the organization’s ability to achieve its predicted benefits. This can make it challenging to recognize when a business case is no longer viable.

Furthermore, delivery teams can work diligently to produce their outputs only to discover later that no one in the organization has followed through with using them.

Effective benefits management can mitigate these issues. It helps project professionals to:

Remember the reasons why their organization is undertaking a project.
Understand their roles and responsibilities for delivering positive change.
Increase stakeholder buy-in to implement benefits realization activities.

In addition, it helps organizations to:

Improve their prioritization and selection of projects and programs.
Gain a holistic view of planned benefits across different business functions.
Increase the visibility of realized benefits and achievement of strategic objectives.

Successful benefits management relies on a team effort, which involves a joint commitment from the business and the delivery team(s) to identify and realize the benefits. Organizational culture means everything. If your senior management and benefit stakeholders are unaware of what’s in it for them, then you’ll face a serious barrier to success when implementing your process.

Benefits management process

It’s recommended that you manage your project benefits throughout all your defined project lifecycle stages, from concept through to post-project:

Concept Stage (Identify high-level benefits)
Definition Stage (Perform detailed benefits planning)
Delivery Stage (Monitor project progress and update benefits management artefacts)
Handover & Closure Stage (Hand over outputs and benefits realization plan to BAU)
Post-project Stage (Realize, sustain, and report on benefits)

Senior management must provide sponsorship for benefits management within your organization. Doing so means you’ll experience fewer barriers to success and achieve a consistency in approach across your change initiatives.

You can scale your approach when managing projects by following a lifecycle with fewer stages. Then, you can align the appropriate benefits management activities to your defined program and portfolio lifecycle stages, respectively. Wherever your project is within a change program, following a consistent approach to benefits management is essential.

To secure senior management sponsorship and consistency, consider drafting an organization-wide benefits management strategy defining the process, document templates, everyday language, and critical roles and responsibilities.

Below, we’ve listed the lifecycle stages and what’s included in each.

1) Concept Stage (Identify high-level benefits)

Adopting a benefits management approach early will help develop a credible business case and foster future benefit stakeholder engagement. It will also ensure that project planning and design focus on the objectives and benefit outcomes instead of the technology or project deliverables.

“Outcome: The results obtained through the use of portfolio, program, and project outputs.
Output: The expected deliverable of a portfolio, program, or project.” (PMI, 2020)

One of your first actions should be facilitating a workshop with known key benefit stakeholders to identify the predicted benefits, clarify expectations, and obtain buy-in. Once you have identified the high-level benefits, specify who will receive each benefit by name, role, function, or geographical area. If possible, quantify how many people will benefit, e.g., thirty administrators from Human Resources or the entire organization.

Remember to identify high-level disbenefits, defined as “A consequence of change perceived as negative by one or more stakeholders” (APM Body of Knowledge, 7^th edition). For the business case to be viable, your disbenefits shouldn’t outweigh the benefits. In short, it’s a cost-benefit analysis.

Also, be sure to set SMART project objectives (Specific, Measurable, Achievable, Relevant, and Time-bound) to confirm what your organization wants to achieve.

For benefits that can be measured, identify what key performance indicators (KPIs) make sense to track. Engage with benefit stakeholders to collect baseline measurements so that you have some data for comparison. For example, if you want to reduce overhead costs by 10 percent for the next five years, you should obtain data available for this financial year and a reasonable number of previous years. Alternatively, to increase staff satisfaction, you could consult the most recent employee survey report for key metrics.

“Tangible Benefit: A benefit that can be measured objectively based upon experience.
Intangible Benefit: A benefit that cannot be directly measured objectively and instead relies on a proxy or representative, measure, or evaluation.” (PMI, 2020)

Where appropriate, cite your organization’s strategy documentation to demonstrate how your business case aligns with the long-term vision and goals. In addition, interdependencies with inflight or planned change initiatives should be considered. For example, your project could leverage benefits realized by another program, or your project may create a disbenefit for another change initiative.

In the next stage of the plan, create tasks and target dates for completing detailed benefits planning. Also, identify the support you need to develop the associated artefacts. For example, you may request that a business analyst join your project team.

You can move to the definition stage if your business case is approved.

2) Definition Stage (Perform detailed benefits planning)

Once your project has moved to the definition stage, work with your team to ensure that benefits management is embedded in the heart of the project. One way to do this is to refer to the process in what you document for your project roles and responsibilities. All team members should agree to be responsible for identifying and communicating any emergent benefits or disbenefits, as well as logging any risks that could have a positive or negative impact on the planned outputs.

“Emergent Benefit: An unexpected benefit that arises during or after a program, a project, or within the context of a portfolio. Also known as an unplanned benefit or unanticipated benefit.” (PMI, 2020)

This stage calls for detailed benefits planning. Depending on the size of your change initiative, you might receive support from business analysts to facilitate workshops with benefit stakeholders and document key information in benefits management artefacts, for example, the benefits register.

“Benefits Register: A repository in which benefit profiles are recorded. This may be used in aggregated ways at different levels of the organization to fit its needs.” (PMI, 2020)

Populate your register with the planned benefits and relevant information you documented in the business case, and include any emergent benefits in the future. Once created, you must maintain this document throughout the process. Otherwise, there’s a risk that the register will become out of date very quickly.

Categorize your information by benefit versus disbenefit, tangible versus intangible, financial versus non-financial, planned versus emergent, direct versus indirect, internal versus external, the stakeholder groups impacted, and strategic alignment. These categorizations maintain internal organization and support ongoing communication.

Once you’ve gathered and organized the information, engage with your stakeholders to further analyze and build the benefits profiles.

“Benefit Profile: A description of the benefit, its intended beneficiaries, and criteria for its realization. This is a component of the benefits register.” (PMI, 2020)

In each profile, provide the following:

‘What’ – Describe the benefit your organization will receive once realized.
‘Who’ – Determine who will gain (or lose) from this (dis) realized benefit.
‘How’ – Decide the method for delivering and measuring this benefit’s success.
‘When’ – Declare when the business should expect to measure this benefit.

Agree on roles and responsibilities with your benefit stakeholders so that everyone can understand their duties during the project and post-project. For benefits management to be successful, you must secure a long-term commitment from your stakeholders to undertake enabling activities, take measurements at the agreed frequencies using the appropriate methodology, and provide timely reporting to senior management.

“Benefit Owner: The individual or group accountable for direction, related decisions, realization, and sustainment of benefits throughout the organization’s benefits realization management life cycle.” (PMI, 2020)

Therefore, each benefit should be assigned an owner to take accountability for these activities, and their names should be included in the benefits profiles. Typically, a benefit’s owner will come from an area of the business impacting the benefit. That way, the owner is invested in the change. Once you’ve assigned an owner to all benefits, ensure that you obtain their sign-off for the contents in the benefits register and its supporting profiles so that you can establish ownership and avoid any later confusion about items such as the measurement methodology or target and forecast values.

Once your benefit owners have validated the contents in the benefits register and accompanying profiles, you should prepare a benefits realization management plan.

“Benefits Realization Management Plan: The planned activities, timeframes, and criteria for achieving one or more planned benefits or group of related benefits.” (PMI, 2020)

In this plan, supply a list of all your project’s benefits. For each benefit, consult your project management plan for the tasks to produce the planned outputs and enable the desired outcomes for the realization of benefits. In doing so, you’ll incorporate your project plan with the benefits realization management plan. Consider creating a benefits traceability matrix to help with mapping your benefits to your outputs. Don’t forget to include key dates and names of assigned resources.

“Benefits Traceability Matrix: A grid that maps the planned benefits to portfolio, program, and project outputs. This is a component of a benefits realization management plan and may supplement the benefits register.” (PMI, 2020)

Identifying the dependencies between benefits, changes, and enablers can help the benefit owners and the project board make informed decisions about prioritization and scope in the future.

In addition, refer to your benefits register and profiles to prepare a benefits realization schedule, demonstrating that you have thought about what will happen after the project has been closed. Include key dates and quantify the resources required to support the benefits monitoring, realization, and sustainment activities. That way, there shouldn’t be any surprises later.

Share your benefits realization management plan with the benefit owners and stakeholders so that they can validate it and provide their support. You’ll be handing this plan over to the benefit owners at project closure, so they must be on board.

Together with your benefits register and benefit profiles, take your validated benefits realization management plan to the project board for approval. If the business case is still viable, you’ll be ready to move to the delivery stage.

3) Delivery Stage (Monitor project delivery and update benefits management artefacts)

Once your project has moved to the delivery stage, your team will be ready to develop the project’s outputs and manage change. Continue to engage with benefit owners so that you can update them on progress and retain focus on the intended uses for the outputs being delivered.

Consult your benefits register regularly, especially when you are identifying/raising new:

Risks
Issues
Dependencies
Emergent (dis)benefits
Change requests
Exception reports

Benefit owners and the project board must be informed of any impact on benefits before they can prioritize the scope, accept changes to the benefits profiles, and agree on a way forward. If the benefit owners and project board determine that the benefits no longer outweigh the costs, the project may be terminated early.

Whenever the business accepts any changes to the benefits, you must update the living benefits management documentation accordingly. Do this immediately; otherwise, there is a risk that you may misinform key project stakeholders in the future.

As and when you produce more outputs, compare them with the agreed success criteria. Typically, this involves some testing. Meeting success criteria will increase the chances of the project’s benefits being realized. Identifying missed criteria as early as possible may allow the project team to change the outputs before the outputs are due. However, the project team must alert the benefit owners when one or more outputs are at risk of not delivering the desired benefits.

Once all outputs in scope have been produced, prepare for the handover and closure stage by ensuring that all your benefits management documentation reflects the present day.

4) Handover & Closure Stage (Hand over outputs and benefits realization plan to BAU)

Before you close your project, arrange a meeting with your project team, benefit owners, and other appropriate business stakeholders to hand over your project’s outputs. It’s essential that you ask your stakeholders to confirm that the outputs received meet their expectations.

During this meeting, hand over the project’s finalized benefits management documentation to your benefits realization team, including the sponsor, benefit owners, and key stakeholders. They should reaffirm their commitment to carry out the post-project activities detailed in the plan. It’s important that you also present this documentation to the project board so that they can provide a sign-off on the final project version.

Before your project team disbands, ensure that you collect and document all lessons learned. These lessons could be helpful to other projects and program in your organization when facing similar benefits management challenges.

In your project closure documentation, ensure that you detail all the outputs your project has delivered, partially or not. This will help your organization identify and communicate the benefits it can and can’t achieve post-project.

Provide an evaluation of all the benefits in your benefits register. Determine if they’re likely to be achieved post-project. Share the rationale for partially delivering and not delivering specific outputs. Use your project’s decision log to reference changes in scope, time, cost, etc.

Also, identify appropriate remediation actions. For example, some partially delivered outputs could be developed further as part of further investment.

Once a project is approved for closure, the project manager and their delivery team may move on to other projects and not remain involved for the final stage in the process: post-project. However, the project sponsor should remain involved because they’re accountable for the realization of benefits.

5. Post-project Stage (Realize, sustain, and report on benefits)

Otherwise known as the extended project lifecycle, the post-project stage requires the benefits realization team to carry out all the benefits monitoring, realization, and sustainment activities outlined in the benefits realization management plan.

During this stage, benefit owners shall take full business ownership of the outputs delivered by the project. They play a key role in enabling benefits to be realized, primarily by encouraging their teams to put the outputs to operational use for their intended outcomes.

Benefit owners are likely to be senior people in the organization, so they may delegate and oversee some of their responsibilities, such as measurement capture. They will need to closely monitor their teams’ progress so that they can ensure that measurements are being recorded promptly in the benefits register.

“Benefits Realization: “The practice of ensuring that benefits are derived from outputs and outcomes.” (APM Body of Knowledge, 7th edition)

The benefits realization management plan should indicate when the benefits should be formally reviewed, typically after the outputs have been used for a reasonable period. Sometimes multiple reviews are required to reflect the number of years that benefits have been forecasted.

An independent facilitator should conduct this review. Your organization may dedicate an assurance function to conducting these reviews, such as a business assurance team, project management office (PMO), or business analysis team. The organizer and facilitator should ensure that the review is in the benefits realization team’s agenda and that all benefit owners have had adequate time to record and share measurements needed before the meeting is scheduled to take place.

The benefits realization team will come prepared for the review meeting to provide progress updates and share lessons learned. The facilitator will ask the team questions to understand why there are variances between the actual measurements and those forecasted in the benefits management documentation.

After the review, the facilitator will produce a benefits realization review report, which evaluates the benefits realization team’s effectiveness and performance, records lessons learned, highlights benefits not realized by the plan, and recommends actions for the team to take for recovery. This report will be circulated to the benefits realization team and senior management for broader review and discussion.

The benefit owners will manage any recommended actions moving forward. Subsequent benefits realization reviews may be used to assess the team’s performance in following through with these actions.

Where benefits are forecasted to be realized over a series of years, the benefits realization team’s performance mustn’t dip at any point during the post-project stage. Otherwise, there’s a risk that benefits may not be fully maximized.

“Benefits Sustainment: The ongoing activities performed by the benefit owners and beneficiaries to ensure the continuation of outcomes and benefits achieved through portfolio, program, and project outputs.” (PMI, 2020)

The benefits realization team can analyze its performance through monitoring and measuring appropriately, identifying opportunities to sustain its benefits, and identifying more emergent benefits. Dashboard reporting can help the business visualize the benefits register and determine which benefits are at risk.

Once the post-project stage has ended, all tasks in the benefits realization management plan should be completed. All benefits measurements should have been captured, analyzed, and reviewed. Where multiple benefits realization reviews have been conducted, a post-benefits realization management report should be written to summarize findings and lessons learned and to recommend any further action.

What can I do to improve my benefits management?

Join the Wellingtone Community LinkedIn group
Network with your peers at the FuturePMO Conference

References:

Bradbury, P., Jamil, T., Mills. C, Shermon, D. (2019) APM Body of Knowledge, 7^th edition, Buckinghamshire, Association for Project Management.
Paul, D. and Cadle J. (2020) Business Analysis, 4^th edition, Swindon, BCS, The Chartered Institute for IT.
Project Management Institute (2019) Benefits Realization Management: A Practice Guide, 1^st edition, Pennsylvania, Project Management Institute.