Managing Benefits: Optimizing the return from investments

Chapter 1

Chapter 1 – Introduction

1.1 OVERVIEW

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

1.2 STRUCTURE OF THE GUIDANCE

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

Table 1.1 Chapter summary of this guide

1.3 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 https://www.apmg-international.com/product/managing-benefits). 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, New Zealand, Canada, Germany, Ireland, Japan, 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.

As noted in the Foreword, one significant development that has occurred since the last edition of this guide was published, has been the publication of benefits guidance by PMI. This includes the global standard, Benefits Realization Management – A Practice Guide (PMI, 2018a). The main elements of this standard (its core principles, critical success enablers and lifecycle stages) are compared to Managing Benefits in Table 1.2.

Table 1.2 Benefits Realization Management and Managing Benefits compared

* For numbered themes and key success characteristics, see section 1.5.

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 , and consistent portfolio-wide and evidence-based approaches, applied across the business change lifecycle

□Enthusiasm in execution 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.

1.4 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.

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 multidisciplinary group includes:

■Change leaders, e.g. sponsors /senior responsible owners/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.

Figure 1.1 The benefits management model

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:

1. 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

2. 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

3. 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. This sounds very much akin to agile delivery and indeed much of the approach advocated in this guide is consistent with the principles of agile. For example, section 3.4 and Table 3.1 highlight the importance of:

□Adopting agile, modular and incremental delivery

□Ongoing participative stakeholder engagement that brings the ‘voice of the customer’ into initiative design and delivery

□Adopting a forward-looking perspective based on learning, feedback and insight across the business change lifecycle

Elsewhere, we emphasize the importance of short summary documentation as an aid to transparency, and a focus on identifying emergent or unplanned benefits. Ultimately, the benefits management approach is highly adaptable and whilst the principles and practices referred to above will apply in most cases, there will be differences in the application of benefits management in agile environments, where the focus is on the iterative development of design, build, test and deploy. The main differences from benefits management in more traditional/formal delivery methodologies will centre on:

□The allocation of roles – for example, the product owner may fill the benefit owner role in agile contexts

□Benefits realization will commence earlier and will inform prioritization of the backlog

□Summary ‘barely sufficient’ documentation will be the norm and they will truly be ‘living’ documents, updated on a continuous basis

□Governance will be more ongoing and ‘go see’ than the traditional periodic board meeting

□The focus of agile gates/decision points will be less on an updated business case and more on delivery of actual products and customer benefit

Whilst benefits management is consistent with the principles of agile, the reverse is also the case. Epics, features and user stories have customer and business value/benefits at their very core. As Terry Cooke Davies, a leading project management thought leader, says, ‘the first principle of the Agile Manifesto states: Our highest priority is to satisfy the customer through early and continuous delivery of valuable software. What is this but a statement of the primal importance of delivering benefits to the customer?’ (PMI, 2016a)

4. It is crucial to 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

5. Benefits and value management are mutually supportive disciplines and are concerned with delivering value for money to ensure 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

6. Whilst 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

7. 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, particularly for qualitative/non-financial benefits (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

8. The governance structures will vary from organization to organization. Different job titles from those shown in this guide may exist, 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 has overall accountability for benefits realization from each change initiative – for example, the senior responsible owner (SRO), a term popularized by Managing Successful Programmes (MSP®) but one no longer included in the seventh edition of the APM Body of Knowledge (APM, 2019); the project executive (a term popularized by PRINCE2®); or the sponsor (the term preferred by PMI). For the sake of brevity, we will refer to this role as the sponsor from this point on, as this is the term most commonly used today

□Benefit owners are identified for each significant benefit – this is crucial as Evans and Cesaro (2014) say that ‘The path to benefits must be defined and owned by the beneficiaries’ (although in some cases the owner will be someone who represents the beneficiaries)

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

9. 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 the 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. The main techniques are shown in Table 1.3.

Table 1.3 Key benefits management techniques

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 execution. It builds on research from a wide variety of disciplines and the experiences of practitioners and thought leaders from around the world.

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?

Benefit 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 objectives – 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 other potential 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.

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 portfolio and portfolio management are from the companion guide, Managing Portfolios (Jenner, 2024):

■Portfolio The collection of initiatives (projects, programmes and other related work) undertaken by an organization to achieve a defined contribution to strategic objectives and business priorities

■Portfolio management The principles, practices and techniques applied in ensuring the organization does the ‘right’ things and does things ‘right’ (including at the ‘right’ time).

For more information on portfolio management, see https://apmg-international.com/product/managing-portfolios.

The definitions for programme and project (and their respective managements) are drawn from the seventh edition of the APM Body of Knowledge (APM, 2019):

■Programme A unique, transient strategic endeavour undertaken to achieve beneficial change and incorporating a group of related projects and business-as-usual (steady-state) activities

■Programme management The coordinated management of projects and business-as-usual (steady-state) activities to achieve beneficial change

■Project A unique, transient endeavour undertaken to bring about change and to achieve planned objectives

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

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

■Projects and programmes are primarily focused on the delivery of objectives and beneficial change. The portfolio, in contrast, is focused on the overall contribution of these objectives and beneficial change to strategic objectives

■The old distinction between projects delivering outputs and programmes focusing on achieving outcomes and realizing benefits from these outputs, has increasingly been superseded by an emphasis on ‘benefits-led projects’. For example:

□The Praxis Framework (Dooley, 2023) emphasizes that, ‘The realisation of benefits is the driving force behind any project, programme or portfolio’

□Guidance from PMI (2018a) states that ‘A benefit is defined as a gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes’

□UK government guidance from the Infrastructure and Projects Authority (2017) states: ‘Traditionally, project management thinking has been that projects deliver outputs/products while programmes combine the outputs delivered by these projects to deliver a desired outcome in business as usual. However, in benefits-led project management, projects should deliver outcomes and realize benefits in their own right. The exception would be for enabling projects which deliver a capability as part of a programme.’

Regarding the last point – how to identify the benefits of such ‘enabling projects’? The answer is in the quote, i.e. don’t; instead concentrate on the benefits at a programme level

■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