What Do I Get for $1,000,000? The Need for Benefits Management
Written By: Adam Tidwell
Budget review meetings were not going well. Despite weeks of preparation and the entire team coming together to make their case, the ask for additional money was not being received well. After the last request for additional funds, an executive exclaimed in exasperation, “Well, what do I get for $1,000,000?”. His frustration was evident to the team. In last year’s budget, he had given them millions above the previous year. From his viewpoint, the team didn’t have anything to show for the money he had authorized previously. The team made a lot of promises but where had last year’s money gone. What did he have to show for his investment?
To be fair, there was a lot of good work happening. The team was getting better and was able to do more work. New projects were started. A PMO was created to promote project management standardization and start a mentoring program. The team was definitely heading in a positive direction — much better than the last couple of years for sure. But when hard pressed, the team couldn’t succinctly explain where the money went and what they had accomplished. They tried to explain their increasing project success rates. They tried to explain how great it was to have a functioning PMO. The stakeholder surveys showed the stakeholders liked working with the team. These were all great things the team was accomplishing.
The problem wasn’t that the team had squandered the organization’s money, or that they were inefficient at managing projects. It wasn’t that nothing had been done. The issue was that the team, though great at managing the project, didn’t know how to manage the benefits and expectations of the project. Benefits management was the missing piece that would show what the results of project efforts were.
When a project is conceived and approved, it is because a problem exists. It is not, or should not, be simply because there are Project Managers and other resources are available to do work. Solving the problem should result in a benefit. A benefit should be quantifiable and specific (see SMART goals if not currently memorized). Sometimes it is hard to differentiate between an indicator and the actual goal.
Project Managers focus on delivery of a project with an agreed upon scope, within a set timeline, and under an authorized budget. Therefore, success can become equated with scope, time, and budget. I once asked my team of Scrum Masters what a “successful project” looked like. Sensing a trap, they hesitated. Finally, one brave soul ventured the obvious answer. “Scope, on time, and under budget”. It was a trap, although one meant to make a coaching point. I responded that while those things are important in managing the project (indicators), the real success of the project is accomplished in meeting the expected benefits of the project.
If projects aren’t focused on the benefits, or the ‘why’ of the project, even though they have the correct scope, are on time, and under budget, they will fail.
So how, as business, project, and PMO leaders can we manage benefits?
The first step to managing benefits is to decide the ‘why’ of the project. What is the pain point that needs to be resolved? What is the desired improvement? This should be a part of the project from the very beginning. Without the why, there should be no project. Do not let a project start without clearly understanding the ‘why’.
Additionally, the “why” must be measurable (the M in SMART if you haven’t memorized it). An example would be to increase sales from $10.1M to $10.2M by March 8. This clearly defines the benefit being sought and the parameters around the expectations.
The PMO is responsible for insisting that the ‘why’ is defined and the objective clearly stated in the early stages of the project.
A great, though often overlooked, tool to help manage benefits is the benefits register. Like a risk register, a benefits register helps the project team keep track of important items. The benefits register keeps track of the expected benefits of a project. It puts the measurable benefits on a timeline to make sure the end benefit is on track. It also forces the team to define how the benefit will be measured. This is important to clear up any confusion about what success means. I once completed a project only to have the Executive Sponsor announce the project was a failure. As we discussed his concerns, it became obvious that we had two different benefits in mind for the project. Luckily, I had documented the expected benefits and he realized the value of the project. The project was a success!
Just like the risk register, the benefits register should be referred to often. It should be the schedule of results. If results are missed, react quickly. The benefits register should have a response plan to guide actions if benefits are missed. Decide what will happen of benefits are missed before they happen. Being prepared will save time and get the project’s benefit’s realization back on track quicker.
Taking the concept of managing benefits through to the end, it becomes obvious that the standard definition of a project, with a specific beginning and a specific end, is not sufficient to describe benefits management. While a Project Manager will help define the why, how to measure, and timeline of benefits realization, the project manager will at some point hand the project off to operations. The handoff may precede the full realization of the benefits.
The PMO can help manage and track benefits beyond the project phase to when the benefits will be realized. For example, a project creates a new product. The project is successful with the creation of the new product. However, the purpose, or ‘why’ of the project was to increase market share of the consumer electronics division from 34% to 55%. This will take years to accomplish. It is important to continue to measure the progress toward the goal, but it would not be efficient to continue operating under the project framework. Benefits management lays on top of project management and connects it and operations to manage the full scope of ‘why’ the project was done.
Managing benefits, rather than just the project, will help answer the million dollar question many executives ask. They will know exactly what they get for $1,000,000, or whatever amount of money they are asked to spend. The value of the project manager, the PMO, and the project work will be obvious because it delivers what they need, a quantifiable and specific understanding of what it took to solve the problem they had.
