Project benefits - who needs them? - CITI
For how long have project pundits been exhorting companies to write better business cases or even any business cases? People have anguished over the lack of rigor in the setting out of benefits from projects: deplored the lack of benefits management, and doubted the veracity and value of business cases.
Project benefits
19619
post-template-default,single,single-post,postid-19619,single-format-standard,mega-menu-top-navigation,ajax_fade,page_not_loaded,,qode-title-hidden,qode-theme-ver-10.1.1,wpb-js-composer js-comp-ver-5.4.7,vc_responsive,mob-menu-slideout-over,yellow-block-header

Project benefits – who needs them?

Project benefits - who needs them?

If you keep getting the wrong answer, you’re asking the wrong question

For how long have project pundits been exhorting companies to write better business cases or even any business cases? People have anguished over the lack of rigor in the setting out of benefits from projects: deplored the lack of benefits management, and doubted the veracity and value of business cases.

Cost-benefit analyses were dusted off in the 1950s in the USA to provide a basis for evaluating publicly funded projects, which in the main cannot wash their face financially – not if you just count the pennies. Of course, the argument goes; there are things of value that cannot be assessed directly in cash. So the business of finding ways of monetarizing utility and other values came into being, as did the flock of economists and other nay-sayers challenging the validity of these approaches.

It’s not that there aren’t a plethora of approaches to use. Most, one has to say, aren’t very well thought through, but does it matter when they are not used to any good purpose?

So, having exhausted myself – again – trying to work with yet another Board to sort out how to prioritize the projects in their portfolio, based on some rational basis, like greatest benefit, best bang-for-the-buck, or something, I was reminded of the saying about asking the wrong question. “You are going about this all wrong”, it seemed to say. “This isn’t the right question to ask these people.”

Use benefits for portfolio selection

Benefits and their categorization are not the right frameworks with which to engage stakeholders. Benefit categories are really only of use when you need to make comparisons between projects – the job of portfolio selection committees and the more sophisticated end of corporate PMOs.

Use changes in performance to motivate for projects

When evaluating an individual project, you need to be discussing what changes in capability the organization will get from it. The most obvious answer to that question is in terms of what impacts, particularly positive impacts, will the project cause to occur.

These changes to performance, behavior, or capability are comfortable and familiar territory for stakeholders. They know what they want, are usually very happy to commit to making them happen, and can often even provide target values and profiles of how these changes should occur.

Many managers are passionate about changing individuals’, or a process’s performance. However, they become distant and disengaged when forced to re-describe these same things in terms of costs avoided, saved or reduced, or indeed in additional revenue earned.

So here’s the dilemma. How do we satisfy the need to evaluate projects for inclusion in the portfolio as well as define and motivate the development of measurable, credible and supported changes in operational performance?

PMO’s role in business cases

When setting out the reasons why a project should be run, the business case should set out as explicitly as possible what the outcomes – changes in the capability of performance, process, staffing – will occur. This should also include, who is responsible for making them happen, why they are thought to be valuable, and, of course, by whom. The sponsor and stakeholders are the only people who can determine this, and the project manager is responsible for documenting it. An additional value of this approach is that this document now can act as the change charter – a bit like the project charter but focused on the delivery of outcomes, not outputs.

The business case is then taken over by the PMO to prepare it for use by the portfolio selection committee. Their fundamental role is to evaluate competing projects and come up with some form of ranking between them that goes beyond choosing your friend’s, or the CEO’s for that matter.

To allow comparison between a project that claims that “to have a printer close to you is valuable”, with one that asserts that “customers will be much happier to buy from fully stocked shelves”; the PMO is going to have to abstract these impacts into benefit categories. It is the only way. If you need to find who is the better athlete between a gold medalist in swimming and a gold medalist in steeple-chasing, you are going to have to retreat to a higher level abstraction about performance – and in so doing lose some sports fans on the way.

There are two significant consequences of an approach that separates project motivation evaluation from portfolio project selection. The first is that the PMO’s role in structuring and managing the portfolio is heavily underlined. The second is that PMOs have to have access to adequate business portfolio analysts – a subject for another blog.

Purposeful business cases

A business case thus has two purposes. The first is to identify whether this project is worth doing. The second purpose is to see if, amongst the pack of competing projects, this project is a better use of investment funds. There is no need to use the same way of assessing value for both.

For the project, the business case sets out what is seen as valuable by its stakeholders, and attempts to cost out viable solutions. The document used by portfolio selection committees uses risk-adjusted benefits, established by trained PMO staff, and compares the results of all the candidate projects.

While they are at it, the analysts may as well review the costs suggested and provide risk-adjusted costs too. They can do this most easily by comparing candidate projects with projects in their lessons learned archives – somebody ought to – as it appears virtually no-one else does. But that’s another story.

The challenge…

What’s your view? Are you satisfied with the business case process being used? Do you make a distinction between impacts, changes, and ‘good’ outcomes, from benefits?

Would it be better for projects and their stakeholders to focus on what they want out of projects and leave it to the PMO to use technical classification schemes to help winnow the wheat from the chaff?

Christopher Worsley

Christopher Worsley

Christopher Worsley is CEO of CITI Limited
If you would like to contact CITI:
Call +44 (0)1908 283600
Email: info@citi.co.uk



DISCOVER HOW WE CAN TRANSFORM YOUR CAPABILITY TO DELIVER


If you’d like to find out how we can help your organisation, contact us today