A guide to using a benefits management framework

Association for Project Management (APM)

• Publisher: Association for Project Management (APM)
• Year: 2019
• Print ISBN: 9781903494882
• eBook ISBN: 9781913305000
• Topic: Business
• Subtopic: Project Management
• Index: Business

"Very few people have experience of creating benefits management frameworks at an organisational level from scratch. This guide is written by people who do..."Dr Hugo Minney and Sarah Parris, with the APM Benefits and Value SIG, explain the process of creating and embedding a benefits framework in an organisation. In doing so they show how a framework will standardise how benefits are managed across projects, programmes and portfolios, and how you can align project benefits to strategic objectives and KPIs. They also provide valuable insights, including the best tools, templates and techniques, the likely challenges and obstacles to success and examples of frameworks that work.Instructive and insightful, this guide puts benefits at the heart of your organisation."The guide develops an understanding of the need for benefits realisation, offering a framework for addressing contextual factors and developing the capability to realise benefits."

1

Why do we want a benefits management framework?

Although there is plenty of information now on how to conduct benefits management on individual projects and programmes, there is very little on how to manage benefits at an organisational level. We saw that this would require the creation of a benefits management framework, which will standardise the way in which benefits should be managed on projects and programmes and portfolios.

A benefits management framework aligns business unit and project benefits with the key performance indicators (KPIs) or strategic objectives of the organisation, so that projects and activities can be prioritised for investment. The framework is supported by a set of processes, techniques and instruments so that benefits are clearly defined, optimised and harvested.

An organisation (or even a group of organisations) has strategic objectives, which are often aspirational. The organisation measures progress towards these strategic objectives using KPIs. Organisation KPIs are also used to measure the performance of the existing business, and the strategic objectives need to build on the organisation’s existing business if the organisation is going to be successful. For this reason, we’ve used the term strategic objectives to mean the sum total of organisational aims in their most definitive and measurable rendition.

Benefits mapping is often used to illustrate how projects or initiatives contribute to strategic objectives. A straightforward logic chain is illustrated in Figure 1.1 showing one initiative, delivering one intermediate benefit, resulting in one final benefit, which contributes to one strategic objective, although in practice the contributions are much more complicated. A single initiative may deliver multiple intermediate benefits some of which are also dependent on other projects for their realisation. Multiple intermediate benefits may contribute to each final benefit, and typically hundreds of benefits across the portfolio will contribute to between 5 and 20 strategic objectives.

Figure 1.1 Benefits mapping process

1.1 What a benefits management framework is not

A benefits management framework provides a structure for categorising the benefits of projects, so that their contribution to the organisation’s strategic objectives and KPIs can be understood.

The overview in this chapter gives a brief description of benefits management in individual projects, and how a benefits management framework approach will differ.

It may be helpful to explain what a benefits management framework is not:

■A benefits management framework is not a benefits register. A benefits register records information about each benefit which can include the category, and how that benefit contributes to the organisation’s strategic objectives. The framework describes the structure of a benefits register (amongst other things). It provides the categories (based on the organisation’s strategic objectives) and sub-categories (which contribute to the categories and therefore the strategic objectives), sub-sub categories and so on. The framework dictates the organisation’s policy on how benefits will be measured (and by whom), calculated and reported; how benefits will be attributed to different projects, combined or calculated; and whether they will all be expressed in financial equivalent or what units will be used for which benefits. A benefit profile for each benefit, and by extension the benefits profile, will specify for each individual benefit how that benefit will be measured and calculated, and indicate how they will be combined for dashboard reporting.

■A benefits management framework is not a portfolio. The framework defines and describes how the outcomes of projects and programmes within the portfolio relate to the organisation’s strategic objectives, and provides the evidence which is used, within the portfolio, to prioritise projects or dis-invest.

■A benefits management framework is not simply a toolbox. A practitioner would expect to find standard operating procedures and tools described within the framework, but the framework is more than this. The framework forecasts the impact of project success on the success of the organisation, to ensure that decisions are made based on correct information. It provides a framework for assembling information for making decisions within individual projects, and it describes the process for collating actual success or otherwise of projects which allow better decisions in the future.

■A benefits management framework will typically include a dashboard which shows the contribution of all projects towards the organisation’s strategic objectives, and which a user can drill down into more detail.

Some projects may deliver benefits that fall outside the benefits management framework (i.e. benefits that don’t contribute to the strategic objectives of the organisation). These should be in addition to the benefits that contribute to the strategic objectives. Every project needs to deliver sufficient benefits to justify its investment, and the benefits to justify investment should all be within the framework. In other words, if projects are not contributing sufficiently within the framework then they do not justify their investment and should be terminated. More details are given in subsequent chapters.

Before we get into the detail of how to create and utilise a benefits management framework, it is worth spending some time looking at common definitions that will help put the framework into context.

1.2 What are benefits?

Ultimately, organisations invest in change in order to achieve some sort of return on their investment. That return could be tangible (perhaps financial), or less tangible, such as customer experience or a greater intellectual property portfolio. The return on investment is often quantified using the techniques of benefits management and value management.

Benefits may take many forms. Cash-releasing benefits are relatively easy to quantify, but financial benefits that do not immediately release cash may be disputed. Non-financial benefits may need to be converted into financial equivalents in order to quantify the total benefits and produce a ratio. However, this conversion process is sometimes controversial (Nicholls et al., 2012; Minney, 2016), and the databases that are often used to make estimates for conversion to financial equivalent only contain a limited number of examples.

1.3 Benefits management

Benefits management provides the information needed to prioritise allocation of resources, and to decide between different options during delivery of projects. Prioritising allocation of resources is typically managed within a portfolio.

Benefits management is the identification, definition, planning, tracking and realisation of benefits (APM, 2019, p. 209). Stakeholders include those who invest directly in the project, such as the organisation itself, but include others affected and impacted by the project such as customers, staff, the environment and the wider public. Benefits can be positive or negative (sometimes termed dis-benefits), and progress from forecast to actual although there are also emergent benefits which may only be discovered after a project has been delivered.

Projects represent both investment of resources (a cost) and risk. Many organisations use a phase gate approach (which may be called something else in your organisation – stage gate or waterfall are popular names) which has set points in the project lifecycle where its progression to the next phase has to be approved by a project board or portfolio board.

Benefits management contributes by providing a basis for the assessment at each phase gate. A framework, with standards and consistency across all projects, can make benefits and value the key criteria for passing a stage gate.

Organisations undertake change in order to create and realise benefits, or to overcome dis-benefits. Launching a new product to increase sales is an example of a project to achieve a benefit (increased sales). Instituting new health and safety procedures in order to comply with legislation and continue trading is an example of a project to overcome a dis-benefit (restriction from trading).

A benefit is the improvement achieved (whether higher income, lower cost, improved customer retention, higher quality, stronger intellectual property portfolio, or many others); on the converse, a dis-benefit is a negative result of change (additional cost, restriction on activity, increase in support staff). Most projects will deliver some benefits and some dis-benefits – few will deliver only benefits. The aim is to maximise benefits and minimise dis-benefits, within the constraints of the resources for investment and the competing demands for these resources.

Benefits management is a process, often managed by a specific role. In some organisations, different approaches may be taken by individual benefits managers which means that the results are not always comparable.

Having information that isn’t comparable can cause difficulties when prioritising investment. In response to this problem, many organisations have standardised the process of benefits management and the way in which benefits are identified, defined, planned, tracked and realised, so that project performance can be compared, and investment decisions made.

Good benefits management supports decisions that increase the benefits realised, and this can apply equally in waterfall and agile project management processes:

■With waterfall project management, benefits are usually realised after delivery of capability, and the focus of project management is often about delivering the capability (or outcome) through an output.

■Agile project management reviews the benefits which are delivered by each sprint, and designs the ...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright
• Contents
• Figures
• Tables
• Acknowledgements and thanks
• Introduction
• 1 Why do we want a benefits management framework?
• 2 Purpose of a benefits management framework
• 3 The components of a benefits management framework
• 4 Implementing a benefits management framework
• 5 The benefits framework: embedding and making it BAU
• 6 Conclusion
• Appendix 1: Glossary
• Appendix 2: Tools
• Appendix 3: Documents cited