This post is co-written with Bryan Taylor, a consultant in Slalom’s Business Operations Management Practice. Bryan has 20+ years of experience helping companies use technology to become more strategic, productive, and cost-efficient.
With many calculations, one can win; with few one cannot. How much less chance of victory has one who makes none at all! By this means, I examine the situation and the outcome will be clearly apparent. —Sun Tzu
After months of hard work, the users are trained, the system is live, the bugs are fixed, and the system has been transitioned to support. The project is over, right? Well, almost. But for some companies that our company works with, project tracking does not end after project closure. Successful companies continue to make calculations after their projects have been implemented using a benefits realization framework. With this approach, they feel they have an even greater chance of victory for their next project.
Many companies include a business case as part of their pre-project planning work to evaluate competing project opportunities. The business case is also one basis for prioritizing the portfolio of projects. However, we have found that few companies revisit those business cases during the project or as part of a post go-live review in order to validate original assumptions. An effective benefits realization strategy looks at a project’s original business case and tests initial project estimates and assumptions over the course of the project lifecycle… and beyond.
The specifics of the approach can vary between institutions; however, these companies all tend to share an understanding that:
- A project is not complete at “go live”
- Benefits must be planned for and measured
- Benefits need an owner
- Post-project audits yield valuable lessons learned
- Benefits realization is a prime opportunity to demonstrate the value of effective delivery
A project is not over at launch
Our company has found that healthy companies avoid the temptation to declare victory at “go live.” There is an appreciation that a project’s finish line is crossed only when forecasted benefits are realized (or at least are trending in the right direction). We have found that an effective benefits realization process re-examines the business case at the end of each major project phase in order to validate that forecasted costs and benefits are still realistic. “Are project costs tracking in line with what we thought? We’ve had a few change orders since project kick-off, are we still ‘on course’ to yield the upside we thought? Will we be able to reduce costs as we anticipated? Are project assumptions, risks, and dependencies appropriate?”
Although this does take additional effort, leading companies are willing to stop projects if costs overshoot and/or benefits undershoot too far from the original forecasts.
Like everything else on a project, benefits need a plan if they are to be realized. It is insufficient to lace a business case with ambiguous soft benefits or hard-dollar benefits that cannot be fully tracked or measured. Many cost benefit analyses are created with unrealistic payback periods, internal rates of return, or present value calculations. We have found that not enough executives are being skeptical to ask, “How are you going to realize a 42% rate of return on a basic infrastructure program?” Maybe, if the answers were good enough, the company could take its money out of the bank where rates are lucky to be in the high single digits.
Benefits need an owner
Business operations and project delivery teams can jointly drive the project, but the business must sign up for the benefits. Successful projects enable change to the business, which in turn allow the business to be more efficient. If the output of the project changes the way business works, a business owner must be identified to ensure those changes happen. If the business case dictates that a specific line item in next year’s budget will be reduced, leadership for that cost center should be comfortable with that reduction and accountable for that benefit. Benefits that are orphaned without an accountable executive are often not realized.
Post project audits are a learning opportunity
The post-project audit is one of the key elements that helps improve subsequent project business cases. Stakeholders have the opportunity to ask if the team was too conservative or optimistic when estimating benefits or if they over- or under-estimated costs. While sometimes difficult to facilitate, as project delivery teams often disperse after a project has gone live, a solid post implementation review method can be the best way to examine the project and ensure that the outcomes are clear.
Benefits realization is an opportunity to demonstrate value
Large projects and technology investments can represent major costs to the company. Executives are under pressure to prove value to the business. By including benefits realization as a routine part of a project, leaders are better able to demonstrate value. But tailoring the approach is necessary.
Not all projects have clear and easy to quantify hard-dollar benefits (e.g., IT infrastructure projects tend to fall into this category). As organizations look to implement a framework, they should focus on those projects that do have quantifiable benefits in order to showcase the value (or the projects and the process).
Companies employing a benefits realization strategy that include the themes above are more likely to realize the full potential from their investments, make real and beneficial changes to their business operations, and learn from their project hits and misses. Savings should be realistic and measurable. Consider the words of H. James Harrington, process improvement guru, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”
Carl Manello is a Solution Lead for Slalom’s Program & Project Management practice based in Chicago who enjoys exploring how to tightly couple the art and science of project delivery with business operations. You can read from Carl on his blog.
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