Managing Benefits

By Steve Jenner

This publication from APMG-International provides comprehensive guidance on how to manage delivery of the benefits used to justify investment in change through portfolios of programmes and projects. It is essential guidance for all involved in successful change delivery, from senior responsible owners and directors through to portfolio, programme and project managers.

• Language: English
• Publisher: TSO (The Stationery Office)
• Release date: Sep 1, 2021
• ISBN: 9780117092785

Book preview

Chapter 1

Chapter 1 – Introduction

1.1 OVERVIEW

This chapter summarizes the purpose of the guide, the main areas covered in the subsequent chapters, and the target audience. It also provides an overview of the main themes.

1.2 PURPOSE OF THIS GUIDE

The main purpose of this guide is to provide managers and practitioners from multiple disciplines, working in a wide variety of organizations, with generally applicable guidance encompassing benefits management principles, practices and techniques. Specifically, this guide provides these managers and practitioners with:

■An overview of benefits management – what it is, the case for doing it, and some common misconceptions that can limit its effectiveness in practice.

■Descriptions of the seven principles upon which successful benefits management practices are built, and examples of how they can be applied in practice.

■Details of the five practices in the benefits management cycle relating to individual change initiatives, and examples of how they can be applied in practice.

■Guidance on how to apply benefits management at a collective or portfolio level encompassing all projects and programmes included in the change portfolio.

■Advice on how to get started in implementing effective benefits management practices, and how to sustain progress.

The guide also provides the basis for accredited examinations from APMG International, based on the Foundation and Practitioner formats used for much of the existing qualification portfolio (see http://www.apmg-international.com). These examinations enable candidates to demonstrate that they possess and can apply the knowledge and understanding to work effectively in a range of benefits management roles.

Besides preparation for the accompanying examinations, the potential benefits from reading (and more importantly applying) this guidance include enhanced professional competence, a sense of achievement and improved returns on investment for the organizations in which these managers and practitioners work. It is also hoped that this will be an enjoyable read – and one which leads to further exploration of the subject, including the resources listed in Chapter 12.

But why develop this guide when aspects of benefits management are addressed in a range of existing publications (many of which are listed in Chapter 12)? The answer is that this guide adds value by:

■Consolidating existing good-practice guidance in one place and making linkages between items in that guidance.

■Expanding on the existing guidance by illustrating the theory with practical applications, examples and case studies from a variety of settings. This is important. The guide emphasizes that benefits management should be based on an understanding of ‘what works’: hence the importance of the research evidence quoted throughout the guide and the examples and case studies from practitioners and academics from around the world including Australia, Canada, Germany, Ireland, Japan, New Zealand, Sweden, the UK and the USA.

■Filling in the gaps in coverage, including the focus on addressing the cognitive biases and behavioural factors that often undermine benefits management, to represent a comprehensive statement of current good-practice guidance.

■Incorporating practices and lessons learned from a variety of disciplines – not only project, programme and portfolio management but also management accounting, economics, behavioural finance , change management, systems thinking and soft skills, psychology and neuroscience.

This publication therefore represents an authoritative guide to effective benefits management, reflecting not only existing guidance but also academic and industry research, and the collective expertise and experience of a wide range of leading practitioners and thought leaders from across the world (including those listed in the Acknowledgements section).

There are many published approaches to benefits management, and although each has its differences, they do share a fair degree of commonality. This guide has sought to capture these areas of agreement, while at the same time providing an overview of the alternative approaches available, along with their advantages, and the situations in which each is most appropriate. Rather than prescribing a single solution, the guide thus provides readers with the insight to enable them to choose the solution most appropriate to their particular circumstances.

There is also one other overriding factor behind the decision to produce this guide. Benefits are not just another dimension of project and programme management (PPM) – rather, they are the rationale for the investment of taxpayers’ and shareholders’ funds in change initiatives. As such, benefits should be the driver behind all change initiatives from initiation through to, and indeed beyond, integration into business as usual (BAU). Yet the reality, as we see in the next chapter, is that many organizations still struggle to demonstrate that benefits are realized in practice. This guide therefore represents a manifesto for change – change in relation to the management and successful realization of benefits from change initiatives. This in turn is dependent on moving:

■From the ‘conspiracy of optimism’ in forecasting; inconsistent initiative-level approaches to benefits management; passive tracking against forecast; and backward-looking accountability.

■To an approach reflecting:

□Realism in planning based on benefits-led change initiatives within the context of clearly articulated but often emergent strategy , consistent portfolio-wide and evidence-based approaches, applied across the business change lifecycle .

□Enthusiasm in delivery based on an active search for benefits and ongoing participative stakeholder engagement, managed with a forward-looking perspective founded on transparency, insight, learning and continuous improvement.

Important note

The benefits management principles, practices and techniques discussed in this guide are presented in such a way that where an organization chooses to implement them, it should expect to see significant benefits not only in the medium to longer term but also in the short term – indeed, it should plan to do so. Where an organization is already fairly mature in its use of benefits management, this guide will assist with the attainment of even more efficient and effective practices.

1.3 STRUCTURE OF THE GUIDANCE

Table 1.1 provides a summary of the contents of each chapter.

1.4 TARGET AUDIENCE

This guide is relevant to all jurisdictions, sectors and types of project or programme – or what we refer to in this guide as ‘change initiatives’. The principles, practices and techniques covered will also be of value to those seeking to optimize benefits realization from an organization’s assets and BAU. That said, our central focus in this guide is on the realization of benefits from change initiatives, including those managed by formal project and programme management (PPM) methodologies.

Table 1.1– Chapter summary of this guide

The target audience therefore encompasses all those with an interest in ensuring the best use of taxpayers’ and shareholders’ funds and other scarce resources, by optimizing the benefits realized from change initiatives. This multi-disciplinary group includes:

■Change leaders, e.g. senior responsible owners /sponsors/project executives and portfolio directors.

■Change initiators, e.g. strategic planners and policy leads.

■Change appraisers and evaluators, e.g. business case writers and appraisers.

■Change implementers/ enablers , e.g. portfolio, programme and project managers, as well as change managers.

■Change support staff, e.g. Portfolio, Programme and Project Office staff, including benefits managers.

1.5 OVERVIEW OF THIS GUIDE

Benefits management extends from identification of desired benefits through to benefits realization and application of lessons learned. The scope of benefits management is illustrated in the benefits management model in Figure 1.1.

What this model highlights is that:

■The benefits management cycle consists of the following five practices: Identify and Quantify, Value and Appraise, Plan, Realize, and Review.

■Effective benefits management practices are dependent on the seven principles identified: align benefits with strategy; start with the end in mind; utilize successful delivery methods; integrate benefits with performance management; manage benefits from a portfolio perspective; apply effective governance ; and develop a value culture.

Nine themes run throughout this guide:

■While the approach adopted to meet the seven principles will vary, the principles themselves are integral to effective benefits management. For example, many organizations have adopted formal PPM methodologies. That is appropriate, but whatever methods are adopted, the principle of ‘utilizing successful delivery methods’ is fundamental to effective benefits realization.

■There is no one true way to effective benefits management. Practices should therefore be tailored to the local circumstances, reflecting factors such as the organization’s strategic objectives; scale of investment in change initiatives; the complexity of those initiatives; existing strategic planning, investment appraisal and portfolio prioritization, project and programme, financial, performance and risk management processes; experience and track record in terms of benefits realization; governance structure; and culture. This guide includes examples of how organizations have adapted these practices in a variety of situations, as well as guidance on when relevant techniques are appropriate.

■The five practices in the benefits management cycle are broadly sequential but are characterized by iterative feedback loops, with lessons learned being applied throughout the cycle. The emphasis is on actively managing the journey, where both the route itself and the ultimate destination are subject to change.

Figure 1.1 – The benefits management model

■It is crucial that we avoid creating a parallel industry that treats benefits management as a separate discipline. This is costly and ineffective. Benefits management should be coordinated with, and wherever possible integrated into, the wider organizational context – and in particular the organization’s strategic planning, PPM and performance management systems.

■Benefits and value management are mutually supportive disciplines and are concerned with delivering value for money in relation to ensuring that:

□Each initiative, and the portfolio as a whole, represents the optimum use of available resources.

□The management of benefits is delivered as cost-effectively as possible. In short, the benefits of benefits management should exceed the costs of benefits management.

■While the focus in decision-making should be on realism (to overcome the twin risks of strategic misrepresentation and cognitive bias), the approach to benefits realization should be characterized by enthusiasm, to help overcome the obstacles that can often arise during initiative implementation and delivery.

■Effective management of benefits realization is aided by the selection of appropriate measures – at least one for each benefit, and preferably a suite of measures (including leading and lagging measures, proxy indicators, evidence events, case studies, surveys and stories) to create a ‘rich picture’ providing feedback on benefits realization from multiple perspectives. Other useful techniques include ‘ one version of the truth ’, ‘ management by exception ’ and ‘ clear line of sight ’ reporting.

■The governance structures will vary from organization to organization. Different job titles may exist from those shown in this guide, and the responsibilities may be shared by more than one person. But it is crucial that someone owns the key responsibilities identified, and in particular that:

□Someone is responsible and accountable for delivering each of the enabling products/services/outputs and business changes upon which benefits realization is dependent.

□Benefit owners are identified for each significant benefit.

□Someone has overall accountability for benefits realization from each change initiative – the senior responsible owner, sponsor or project executive.

■Effective benefits management is characterized by the following six ‘key success characteristics’. Benefits management should be:

□Active Rather than passive tracking against forecast. The focus is on an active search for benefits via ongoing participative stakeholder engagement. This should encompass realizing planned benefits, leveraging emergent benefits , and mitigating the impact of dis-benefits .

□Evidence-based Forecasts and practices are driven by evidence about what works rather than assumptions and advocacy.

□Transparent Activities are based on open and honest forecasting and reporting, with a ‘clear line of sight’ from strategic objectives to benefits forecast and realized.

□Benefits-led Just as we expect change initiatives and the portfolio to be benefits-led, so too should benefits management be focused on what difference it is making.

□Forward-looking The emphasis is on learning and continuous improvement, rather than backward-looking attribution of blame.

□Managed across the full business change lifecycle Benefits management extends from benefits identification through to realization and applying lessons learned.

Various techniques are discussed throughout the guide; they represent ways in which the benefits management practices can be applied, and examples of their use in practice are included throughout the guide. The main techniques are shown in Table 1.2.

1.6 CHAPTER SUMMARY

■This guide builds on existing guidance by including research findings and case studies to illustrate how the relevant principles, practices and techniques have been successfully applied in practice.

■Furthermore, it represents a manifesto for change – calling for an approach that is realistic in planning and enthusiastic in delivery. In so doing, it builds on research from a wide variety of disciplines and the experiences of practitioners and thought leaders from around the world.

Table 1.2– Key benefits management techniques

Chapter 2

Chapter 2 – What is benefits management?

2.1 OVERVIEW

We start this chapter by defining what we mean by benefits and benefits management, and showing how they are integral to the successful management of projects, programmes and portfolios. We then review the track record of change initiatives in terms of benefits realization, before considering the objectives of benefits management.

2.2 DEFINITIONS – WHAT ARE WE TALKING ABOUT?

Benefits and benefits management can be defined as follows:

■Benefit The measurable improvement from change, which is perceived as positive by one or more stakeholders, and which contributes to organizational (including strategic) objectives.

■Benefits management The identification, quantification, analysis, planning, tracking, realization and optimization of benefits.

The following points arise from these definitions:

■Benefits are measurable improvements – in terms of, for example, money saved, improved customer satisfaction, increased revenue, reduced risk etc.

■Benefits contribute to organizational/strategic objective(s) – consequently:

□The logic and assumptions underpinning the organizational/strategic objectives need to be clearly articulated so that the contribution of benefits from change initiatives to these objectives can be determined reliably and consistently.

□Benefits from individual change initiatives should be identified and quantified consistently and in terms that link to the drivers of the organizational/strategic objectives.

□Change initiatives should be designed to realize the benefits that enable achievement of the organization’s strategic objectives and business priorities.

■Benefits are advantageous to stakeholders, both within and outside the organization; for example, the latter include customers and shareholders (private sector), citizens, and other departments and agencies (public sector). An active approach to stakeholder engagement is a key success characteristic of effective benefits management.

■Benefits management extends from identification of desired benefits through to benefits realization and application of lessons learned. While the practices are broadly sequential, they are characterized by iterative feedback loops, with lessons learned being applied throughout the cycle.

■Benefits management is concerned with informing investment decisions and optimization of benefits realization. Consequently, it extends beyond passive reporting against forecast to active approaches that engage stakeholders in an ongoing search for benefits.

■Benefits management seeks to optimize rather than maximize benefits realization. The difference is that while maximization seeks the most benefits irrespective of constraints, optimization is about doing the best that can be achieved within constraints (most usually costs but also other constrained resources) and potential other uses of the funds available. Thus, realizing 80% of the potential benefits but for only 60% of the cost may be preferred where the savings can be used to fund other initiatives. So just as we expect change initiatives to deliver value for money, so too with benefits management itself.

Benefits are derived from change initiatives, which include formally constituted projects and programmes. Collectively these initiatives form the organization’s change portfolio. The following definitions for portfolios, programmes and projects are drawn from APM Body of Knowledge, 6th edition (APM, 2013).

2.2.1 Portfolio/portfolio management

■Portfolio A grouping of an organization’s projects and programmes. Portfolios can be managed at an organizational or functional level.

■Portfolio management The selection, prioritization and control of an organization’s projects and programmes in line with its strategic objectives and capacity to deliver.

2.2.2 Programme/programme management

■Programme A group of related projects and change management activities that together achieve beneficial change for an organization.

■Programme management The coordinated management of projects and change management activities to achieve beneficial change.

2.2.3 Project/project management

■Project A unique, transient endeavour undertaken to achieve planned objectives.

■Project management The application of processes, methods, knowledge, skills and experience to achieve the project objectives.

2.2.3.1 Key points to note

In relation to benefits, the key points to note are that:

■Projects and programmes are primarily focused on delivery of objectives (including products/outputs/deliverables) and outcomes/benefits respectively. The portfolio, in contrast, is focused on the overall contribution of these objectives and benefits to strategic objectives.

■Project and programme management (PPM) seeks to ensure successful delivery at the individual programme or project level. In contrast, portfolio management is concerned with ensuring that:

□The programmes and projects undertaken are the right ones in the context of the organization’s objectives and overall risk exposure

□Delivery is managed efficiently and effectively at a collective level

□Strategic contribution is optimized

□Lessons learned are captured, shared and applied.

While some benefits are automatic (e.g. where a new contract provides the same service but at lower cost), benefits realization is dependent in many cases on deliberate management action. For example, the outcome of a change initiative to implement a new IT system and business process redesign might be a reduction in required headcount. The benefits then depend on what management action is taken to redeploy or re-use the resulting spare capacity – for example, in reduced budgets, reduced unit costs or being able to undertake some other value-adding activity. One of the objectives of benefits management is to ensure that this management action happens in practice.

Important note

The description of portfolios, programmes and projects provides a useful logical framework within which to consider benefits and benefits management. It should, however, be recognized that the situation in the real world is not always as clear cut – for example, programmes may be more akin to the description of portfolios, and the management of complex projects shares many similarities with portfolio management. That does not devalue the use of a common and consistent framework, but it does emphasize the importance of tailoring solutions to suit the specific circumstances.

2.2.4 Dis-benefits

As well as realizing intended benefits, initiatives can result in dis-benefits (or what some term detriments). The issue of unintended consequences is considered further in section 7.6.6. For the time being we content ourselves with defining dis-benefits as follows: the measurable result of a change, perceived as negative by one or more stakeholders, which detracts from one or more organizational (including strategic) objectives. Note that a benefit to one stakeholder may be perceived as a dis-benefit by others. One objective of benefits management is to minimize the impact of dis-benefits.

One other thing – management of dis-benefits can be aided by explicitly including them in the benefits categorization framework (see Example 10.1). Alternatively they can be included in the cost base if they are reasonably certain, or treated as a risk if uncertain.

2.2.5 Other relevant terms

■Emergent benefits Not all positive benefits will be planned from the outset – many will be ‘emergent’. These are benefits that are unanticipated, but which emerge as the initiative is developed and, most often, as it is deployed or implemented.

■Intermediate and end benefits There is often a chain of benefits, with intermediate benefits linked to final or end benefits (i.e. the benefits that demonstrate achievement of the initiative’s investment objectives). For example, we might have an initiative that enables earlier invoicing (an intermediate benefit), which results in earlier receipt of income (the end benefit) and so contributes to the objective of reducing working capital. Other intermediate benefits include improved employee morale, more accurate management information and space/accommodation savings. The point to note is that in many cases these intermediate benefits don’t automatically lead to the end benefit – that depends on business change or some other management intervention (training, staff re-allocation, process redesign, building sales etc.). Benefits maps are a useful technique for visualizing this chain, as a basis for tracking benefits realization through to the ultimate end benefit, and for identifying the required enabling and business changes and allocating accountability for ensuring they happen. This is considered further in section 5.2.2 .

■Tangible and intangible benefits Some organizations distinguish between tangible benefits (those which are relatively easy to measure) and intangible benefits (those that are not so easy to measure reliably). It should be noted that the definition of benefits given at the beginning of section 2.2 refers to measurable improvement, so it can be argued that if a benefit can’t be measured it’s not a benefit. For example, a report by the US National Electronic Commerce Coordinating Council (NECCC) IT Governance Work Group in 2005 concluded that, ‘Justifications for projects usually include a long, predictable list of ‘intangible benefits’. The problem here is that there is no such thing … To call a benefit ‘intangible’ simply means that nobody has been able – or has done enough analysis – to develop a quantifiable measure.’ The paper goes on to cite the example of ‘user friendliness’ where training costs and error rates should be lower, while productivity should be higher. So even with benefits such as improved staff morale and decision-making that might be described as intangible, measurement is often possible via qualitative measures and proxy indicators.

■Measurable and observable benefits The former implies attainment on a scale or by degrees, whereas the latter might be demonstrated by a ‘yes/no’ observation using a key milestone or evidence event – for instance, the benefit of achieving regulatory compliance is observable, with the evidence event being receipt of a confirmation certificate from the relevant regulatory body.

2.3 VALUE AND VALUE MANAGEMENT

The relationship between benefits and value is also worthy of consideration. We’ve defined benefits above, but what is ‘value’ and, more specifically, how does the discipline of value management relate to that of benefits management? The relationship between benefits and value can be approached from two linked perspectives: the value management perspective and the economics perspective.

2.3.1 Improving value – the value management perspective

The Institute of Value Management (IVM) describes value as follows:

‘The concept of Value is based on the relationship between satisfying needs and expectations and the resources required to