Program Benefits Management Tutorial

What is Benefit?

Before we start discussing benefits management, let us define benefit. 

• A benefit is that which provides value, utility, or a positive change of some kind to an intended recipient.
• A benefit could be tangible or intangible.

Tangible Benefits

Tangible benefits can be seen, perceived, and easily explained.

Intangible Benefits

Intangible benefits are harder to track as they can only be felt. Also, the payoff from intangible benefits occurs in a different time frame.

Examples of Benefits

• Examples of benefits could be a 20 percent improvement in profit margin, which is a financial benefit, or improvement in customer satisfaction, which is somewhat of an intangible benefit.
• Note that an intangible benefit can be of critical importance because satisfied customers lead to business results.
• Even improvement in team morale is intangible, but we all know that a team with high morale can potentially achieve great results.
• The other point to remember is that the benefits from some programs are not realized until the very end of the program when the outputs of all components come together and are integrated.
• For example, there is no value from a bridge or a railway line until all the pillars, roadworks, signaling systems, etc., are completed.
• In some other programs, it may be possible to realize some value sooner.
• For example, if you are making a software product, you can probably release the first version of the product, which may not contain some of the fancy features, but can still unlock some value for the customers.
• In the next section of the program benefits management tutorial, we will understand the relationship between program life cycle and program benefits management.

Benefits Management

Benefits management involves identifying, planning, measuring and tracking benefits from the start of the programme or project investment until realisation of the last projected benefit. It aims to make sure that the desired benefits are specific, measurable, agreed, realistic and time bounded. The term benefits management is often used interchangeably with the term benefits realisation.

                                                                                            Key stages of the benefits management lifecycle.

Purpose of benefits management

Benefits management is the common thread between programme and project delivery and successful change management. The approach to programme, project and change management needs to be benefit driven to ensure maximum value from the investment in change. Ultimately an organisation’s approach to benefits realisation needs to be integrated within corporate planning to ensure a strong management focus beyond implementation of the programme or project.  

Sources of best practice

In the NI public sector, a much stronger focus on benefits management has emerged over the last number of years. In programme and project management terms, successful delivery is not so much about being on time, on budget and to the expected quality as it is about delivering business benefits.

The best practice methods Managing Successful Programmes 

respectively maintain a significant focus on benefits realisation. In programme management particularly, the realisation of benefits as a result of organisational change is of fundamental importance. The Cranfield School of Management undertook extensive academic research in the benefits management field and their findings and recommendations have had a significant influence on best practice developments. The Association for Project Management also recognises the importance of benefits management and their Body of Knowledge reflects this.

Responsibilities for benefits management

The main roles and responsibilities relevant to benefits management are:

• Senior Responsible Owner – responsible and accountable for programme or project success underpinned by delivery of expected benefits
• programme manager or project manager – responsible for ensuring proper day-to-day management with a strong focus on benefits realisation
• business change agent or benefits manager – oversight and direction of transitional arrangements into business as usual and the embedding of new capability to deliver expected benefits
• programme or project management office – responsible for maintaining a benefit documentation library for the programme or project including version control; the PMO may also be responsible for support and advice on benefits management and for reporting on progress towards benefits realisation
• organisational board – responsible for maintaining strategic oversight of the full range (portfolio) of benefits being projected across the organisation

Relationship Between Program Life Cycle and Program Benefits Management

In this section, we will map the benefits management activities to the program life cycle. In the subsequent sections, we will discuss each of these activities in detail.

Benefits Identification

• During the program definition stage, the first step is benefiting identification. Benefits identification is about identifying and qualifying the benefits that the program intends or is expected, to deliver.
• As seen before, the benefits could be tangible or intangible – that is, anything that is or is perceived to be valuable to the organization. It is very important to understand the expectations regarding benefits at an early stage clearly.

Benefits Analysis and Planning

• The next step is benefiting analysis and planning. Once we know what benefits we intend to deliver as a program, we need to establish how those benefits will be achieved. This has to be tied to the components of the programs and specific activities within those components that will help realize the benefits.
• Therefore, the program manager has to define and prioritize the components in line with the contribution of the components to the planned benefits. At the planning stage, the program manager also has to define appropriate metrics that will help derive the benefits.
• The program manager establishes a benefits realization plan, which specifies how, when, and in what quantities the benefits will be delivered, and how they will be monitored.
• The program manager needs to map the benefits to the overall program management plan.

The next step is the benefits delivery phase.

You might notice arrows that indicate that delivery and planning activities are cyclical.

Benefits Delivery

As we start delivering the benefits, we may need to revise the plan. This is natural because the expectations may not always be realized, and therefore there is an iterative process which is activated to fine-tune expectations with reality.

In benefits delivery, the program manager is expected to monitor the components, to ensure that they are contributing to the benefits. The program manager will maintain a benefits register and report on the benefits being delivered.

After the benefits are delivered, the program manager must arrange for benefits transition.

Benefits Transition

Benefits transition is all about consolidating the coordinated benefits and transferring the ongoing responsibility of the benefits to a receiving organization.

Benefits Sustainment

During and after the transition, the program must make arrangements for continued benefits sustainment.

The program manager must make arrangements for active monitoring and measurement of the performance of benefits on a long-term basis. The infrastructure needed for continuous realization of benefits over a long term must be set up by the program itself.  

As you can see, benefits management is a very pervasive theme with touch points at all the stages of the program life cycle. A program manager’s whole purpose is to deliver benefits, and therefore this is a domain that a program will spend a lot of time on.  

Let us understand how a program goes through the activities that were mentioned at a high level.

Benefits Identification

Benefits identification is the starting point of the benefits management life cycle. The more thorough the program manager is with the identification of the benefits, the better will be the experience of managing the benefits life cycle.

As we discussed earlier, benefits identification is all about identifying and qualifying the benefits that the program stakeholders are expecting the program to realize.

The important activities that are included in benefits identification are as follows:

Define High-Level Objectives

First, we need to define the high-level objectives and the Critical Success Factors (CSF) for the program. Without understanding the overall objectives, we cannot come up with the expected benefits.

Identify Business Benefits

Second, we have to identify specific business benefits and quantify them.

Delivery of Objectives

We need to understand how the objectives translate into benefits and in what quantities we need to deliver them.

Develop KPIs

To baseline the expectations regarding benefits realization, we must develop meaningful metrics and Key Performance Indicators (KPI).

Establish Specific Processes

Specific processes need to be established for each of the identified benefits at an early stage. Also, processes to track and communicate around the planned and realized benefits are created.

A good place to start benefits identification is the business case, which contains the list of benefits that the program is trying to realize. Once the benefits are identified, they must be captured in an artifact, called the benefits register.

Benefits Register

• Benefits register is a document that collects and lists the planned benefits from a program.
• It is a very useful artifact for a program manager because the success or failure of a program is determined primarily by the benefits that were planned and actually delivered.
• The benefits register is created during the benefits identification stage and subsequently updated and further refined. It is useful for measurement and communication.

Benefits Analysis and Planning

After benefits identification, an important step in benefits management is the benefits analysis and planning. This is where the benefits realization plan is established, and the metrics and measurement framework for tracking the benefits is created.

The typical activities under benefits analysis and planning are as follows:

Identify Program Components

Benefits analysis and planning essentially establishes the plan to realize the benefits. To create the benefits realization plan, one has to identify the program components that will lead to or produce the benefits.

Define Priorities

According to the expectations regarding the extent and timelines for benefits delivery, the program manager will need to define and establish priorities for the components tied to the benefits delivery.

Define KPI

The next activity is to define the KPIs and establish the process for measurement of the benefits.

Examine Feasibility

The program must examine the feasibility of realizing the expected benefits and through discussion with the stakeholders, establish a performance baseline with regard to the benefits.

Establish a Connection

The program will establish a connection between the benefits realization plan and the roadmap of the program, i.e., at what point in the roadmap the benefits will be realized. It also needs to establish a link between the benefits and the plans of the various components.

Realization of Benefits

As the work of the components is completed, they should contribute to the realization of the benefits.

Create a Plan for Transition

Finally, an important part of this step is to create a plan for transition and sustainment of benefits over a long term.

Benefits management process

Managing the delivery of programme or project benefits can be broken down into four distinct stages. Each high level stage has a number of key objectives, activities and deliverables associated with it. This guidance outlines what is involved in each stage, providing context, practical guidance, useful tools, techniques, templates and examples to demonstrate the theory. The four stages are:

• identifying and structuring benefits
• planning benefits realisation
• realising and tracking benefits
• evaluation of benefits

While this process will offer a structured approach to managing programme and project benefits, it should not imply that benefits management is simply a mechanistic activity, or a one-off paper exercise. Focusing on the ultimate outcomes of any investment, and proactively putting in place a framework to manage and realise benefits, should be at the heart of all programme and project delivery, driving the change and helping to retain focus on the end goals.

Linear version of the benefits management lifecycle

Illustration of how an organisation may consider Benefits Management

Five benefits of Programme Management are:

• Achieving the overall strategic goals of an organization.
• Improve management of projects interdependencies and impact on the business as usual.
• Effectively managing resources among projects within a programme.
• Manage risks, issues and changes across the programme efficiently.
• Focus on definition and management of strategic benefits.

Further research into benefits management

Programmes and projects are initiated to achieve change and to deliver financial and non-financial benefits. However, research conducted by the former Office of Government Commerce estimated that between 30 and 40 percent of public sector change projects can provide no evidence that any business benefits have actually been delivered. The reasons behind this failure to achieve meaningful business change are, in large part, due to an overemphasis on the programme and project management process and a failure to consider wider organisational change.

Increasingly, organisations are moving towards more holistic business change models, where programme and project management provides the structure for a broader approach to business transformation. This approach places emphasis on how the business will actually benefit from the changes being put in place and how these benefits will be measured, realised and assessed – known as benefits management.

Benefits management and business cases

A business case provides the formal justification for the existence of a programme or project. The SRO owns the business case and is responsible for its development, maintenance and progress –  reporting to the relevant programme board or project board. In developing a business case an SRO is also responsible for ensuring that the programme or project objectives, costs and benefits are correctly aligned with the business strategy or direction. Of particular importance, even at an early stage, is the identification of benefits and how these will be realised.

The business case should:

• assess or estimate the benefits that the programme or project should deliver
• document the process for identifying, monitoring and realising the benefits
• ensure plans and processes are in place to achieve the benefits
• define the baseline benefits position to allow comparison with projected benefits
• define the boundaries with other programmes and projects to ensure benefits are not double counted

Some of these may be worked into an early version of the benefits realisation plan. If a business case is being submitted to DoF Supply for approval, evidence of plans for managing and realising projected benefits will be requested.

Common pitfalls which may arise in relation to benefits management and business case development include:

• the initial work of identifying strategic benefits has not been expanded or developed
• a lack of early engagement with, or commitment from, key stakeholders to realise the benefits
• a lack of clear ownership of benefits beyond the business case
• the lack of robust processes to manage, monitor and realise benefits
• failure to update the business case due to changes in circumstances

Including a structured set of benefits with as much detail as possible in the business case will help clarify the underlying reason for investment and provide a firm foundation for initiating a project. Early stage benefits identification and quantification can help identify a preferred option for investment (i.e. selecting the one which has the potential to deliver best against expected benefits). As benefits are developed and defined further, it is important to keep the business case updated.

Advantages to project management certification

• There are several advantages to getting your PMP certification. First and foremost is salary. Generally if you have your PMP certificate, you can expect to see about a $5,000 to $10,000 salary advantage over those who do not have their certificate. For employers, candidates who get the certificate show additional commitment to the project management career path. Therefore PMP certification enhances your resume and can open doors for you when you are seeking a project management position.
• Another advantage to getting the PMP certificate is that it automatically shows employers that you have project management experience. To be eligible to receive a PMP certificate, you need both a four-year degree in addition to at least three years of project management experience. The additional education you receive will also expand your network as you engage with peers that are in the project management field.

Drawbacks

Despite several advantages, there are some disadvantages to consider if you are thinking about pursuing your PMP credentials. Time and money are a huge factor when it comes to the possible disadvantages. The cost of the exam and the courses you have to take before the exam can be pricey, in addition to applying and studying for the exam which can be time-consuming considering you have to document your education and project management experience down to the process level.

• Another disadvantage can be that passing the exam does not automatically deem you a project management expert. It simply means that you passed the test and understood the framework of the project management process. This does not mean that your projects are successful; it merely indicates that you have the education, not necessarily project management skills. Finally, to keep your PMP certification, you have to earn credits every three years which have associated costs with attending classes and costs to renew your certification every year.
• After considering the advantages and disadvantages of PMP certification, is it worth pursuing to further your project management career? The answer to this depends on your ultimate goals in the project management field. Of course, if you are pursuing a career in project management, the PMP certificate can help you. It is an easy way for you to enter new countries, markets, and industries because your basic project management qualifications and expertise have been validated in a universal way.
• However, if you are pursuing this certification solely for salary growth and not to further your education in project management, it truly isn’t worth the time and money you will need to put into it. You need to view the PMP certification process as an investment that will further your project management career and not purely as a way to earn a salary bump.