The most useful projects are approved on the promise that they will bring some measurable benefit to the organization.
Creating Business Benefits
Many projects stop short at delivering the project outputs, and this is fine so long as the project was never expected to deliver benefits to the organization. However, this is not so for most projects. If a project is not expected to bring some benefit to the organization, then what is the point of running the project? In most cases, the benefit to the organization will be documented in the Business Case and transcribed into the Project Plan. However, even when the proposed business benefits are agreed and demonstrated, many projects fail to deliver on the promises.
Realizing the agreed business benefits requires two key and inter-related activities. Firstly, the person responsible for ensuring that the project's outputs are used to generate the business benefits needs to be identified. Secondly, the plan for realizing the benefits needs to be documented, agreed and monitored through to conclusion. Realizing the benefit to the organization often requires substantial changes in the way the business operates day-to-day. The Project Manager is responsible for producing the project outputs, however, they have no authority or control over how those outputs are used once handed over to the business.
To illustrate how project outputs are used by the business to generate business benefits, consider the ABC Accounting System Project. This project delivered a fully functional accounting system, with installed software, upgraded hardware, new procedures and employee training on the new system. The projected benefit to the organization was reduced transaction costs. However, just relying on the project outputs did not deliver the benefits expected. Yet this is where many organizations stop. It was not until employees working in the Finance Department followed the new procedures and applied their training in using the new accounting system software that the transaction costs actually diminished.
Planning for Business Benefits
Why do so many projects stop at delivering outputs and fail to realize the expected benefits? Getting actual business benefits requires people (managers, employees, customers, suppliers) to change their behavior in some way. In reality, changing people's behavior is not easy. There is people's natural resistance to change. They may feel overwhelmed with the rate of change. They may have something to lose (promotion, respect, authority, job). They may be too busy or lack confidence in their ability to adapt, or they may dislike the change leaders, and so on and so on. There exists a whole body of literature on how to successfully manage change in organizations. You can see why it is just so much easier to stop at producing outputs. Refer to our guide, Managing Change in the Workplace, for more information on strategies for managing change.
Managing the change required to bring about the benefits will require planning and action in these areas:
- agreeing and setting measurable goals
- clarifying roles and responsibilities
- adopting a communication plan for all major stakeholders
- winning the visible and ongoing support of the executive leadership
- designing and implementing a system of rewards
- putting in place systems of support
- developing a strategy to deal with resisters
Starting with the End in Mind
Some of these areas will come within the scope of your project. Where they do not, you will need to ensure that they are managed in an overall Change Management Plan. Let's look at how your project could plan for the realization of business benefits through planning and managing the organizational change required.
In planning for realizing the business benefits for your project, start with the end in mind, the business outcomes you want, and then work backwards. In scoping your project, first agree the organizational outcomes you want in measurable terms. Next, decide the organizational processes and systems required to achieve these outcomes. Then think about the actual outputs that the project will need to deliver to the business for it to achieve these outcomes. Note that the planning process works in reverse to the actual implementation. This is an important concept in fully realizing the outcomes you want. The diagram below illustrates this idea.
Now that you have scoped the project with the business benefits as the central purpose, the next step is creating the Benefits Realization Plan. For clear accountability, the Benefits Realization Plan should identify the Business Owner responsible for realizing the business benefits by name. As the diagram above indicates, the Project Manager is accountable for turning the project inputs (materials, budget, and human effort) into the project's outputs. It is the Business Owner who is usually responsible for then transforming the project's outputs into organizational outcomes. The Business Owner is the manager of that part of the organization that will use operationally the project's outputs to achieve the expected business outcomes.
The Benefits Realization Plan is written by the Business Owner, perhaps with assistance from the Project Manager, and approved by the Steering Committee and/or Project Sponsor. In addition to specifying accountabilities, the plan should detail the timeframe for achieving the outcomes and how they will be realized and measured. Smaller projects can incorporate the plan for realizing organizational outcomes in the Project Plan. The important point here is that the project's scope will define what the Project Manager is responsible for delivering and what the Business Owner is responsible for achieving.
Planning for Transition
In addition, the Benefits Realization Plan will identify the organizational processes and systems needed for the transformation, the changes required to the processes and systems and how and when the transition to the new arrangements will occur. Transition planning involves reviewing the current state of the organization and planning for the transition to the new state. Changes to processes and systems to consider in the Benefits Realization Plan include:
- organizational structure
- roles and responsibilities
- job design
- employee performance feedback and reward systems
- business performance measurement systems
- frontline employee job skills
- manager and supervisor skills
- policies and procedures
- information systems
- physical infrastructure and environment
- records management
- preventative and emergency maintenance
- system upgrades
- service level agreements
- industrial relations agreements
The Benefits Realization Plan also needs to take account of new on-going costs that will be extracted from future operational budgets. On-going operational costs to plan for and allocate include:
- system administration and support
- training of new recruits to the organization
- maintenance contracts and maintenance costs
- license renewals and other annual fees
- system upgrade costs
- record keeping and archiving
Many projects fail to deliver benefits because insufficient thought was given to how the new systems and processes were to be operationalized and resourced on a continuing basis. Considering the above in your Benefits Realization Plan will ensure that nothing comes in under the radar as you roll out your project.
Segmenting Large Projects
If your project is large and complex, encompassing a number of systems or departments, consider segmenting the project into a number of smaller sub-projects. For example, your project may be the design, implementation and institutionalization of a new employee performance management system. Separate sub-projects under this overall project may deliver:
- software and hardware systems and processes
- revised policies, procedures and role descriptions
- training courses and training schedules
- revised rewards system
- renegotiated union agreements
The various sub-projects will be interdependent, with a sharing of some organizational outcomes. Also, some project outputs will form the inputs of other projects. Where a project is segmented, appoint an overall Program Manager and Program Sponsor to coordinate the various sub-projects and to ensure overall executive support through to final completion.
Where substantial change to the organization is envisaged, include as much of the transitional and organizational support work within a project as possible. For example, define deliverables for the design and rollout of training, revisions to procedures and role descriptions, the negotiation of maintenance contracts, setting up of help desks and modifications to systems of reward and remuneration. Doing so ensures that budgets and human resources are actually allocated to these tasks and that control and monitoring systems are applied for their proper execution. Above all else, for each task that is required for realizing a business benefit and that is not included as a deliverable from a project, make absolutely certain that the responsibility for its completion is attributed unambiguously to the appropriate Business Owner and followed through.
Learn effective principles and strategies for realizing the expected business benefits from your project. Our practical guide features a variety of tools, techniques and tips for ensuring that your project delivers on its promises.