I attended the Benefits Realisation Summit in Sydney earlier this week which was focused on two significant ‘launches’ – the Australian launch of Managing Benefits, the official reference guide for the APMG qualification of the same name and the launch of the Maximiser benefits management software:
- See more on Managing Benefits
- See more on Maximiser
Managing Benefits will require a couple of posts over the next couple of months to cover the depth of information available to organisations to achieve the best return on their investments in projects and programs, and my contribution to the Benefits Realisation Summit was focused on understanding the links between stakeholders, the overall value chain, and the organisation’s project delivery capability (download the presentation).
The area of discussion I found most interesting at the summit was around the roles and responsibilities of the different managers involved in realising benefits and creating value. As a starting point there was a very good definition of the stages involved in creating value, based on the concept of developing a new retail shop:
- The output from the project to build the shop is a fitted out facility.
- The outcome from the staffing and stocking of the shop is a shop selling goods to customers.
- The benefit realised from the shop is the monthly profits from sales.
- The value created by the new business is its potential ‘sale price’ which is usually calculated as a multiple of the annual earnings (typically somewhere between 5 and 12 times the annual profit).
The realisation of the value outlined above requires a ‘chain’ of decisions and management actions:
- The chain starts with decisions around the type of shop, its location, size, etc. The overall value chain is discussed in The failure of strategic planning and the front end processes in Linking Innovation to Value.
- Once the optimum project has been selected, the organisation then needs to be capable of efficiently delivering the project and creating the required output. Project Delivery Capability (PDC) is discussed in White Paper WP1079.
- Once the project’s outputs are created, the requirement to make efficient use of them within the organisation requires effective organisational change management; this facet of the value chain is discussed in WP1078.
- Then, assuming the original concepts used in the business case were accurate, the intended benefits are realised and value is created.
Within all of these stages, the key to creating the intended value is effective benefits management; this is the focus of the Managing Benefits book and the objective of the Benefits Realisation Summit.
Maximising the benefits realised from a project or program is not a solo effort, it requires the effective cooperation of a number of managers with defined roles and responsibilities operating effectively as a team:
Each of the managers above has a distinct role to play:
- The Senior Management Grouphave ultimate responsibility for generating value from the organisation’s investment in a project:
- The role of senior management and portfolio management in the pre-project phase is ensuring the right projects are selected for the right strategic reasons
- Once the project has transitioned its output into operations, the senior management group responsible for the operation of the organisation’s business-as-usual processes need to make effective use of the deliverable to realise benefits and as a consequence, generate the intended value.
- The Sponsor is the senior manager responsible for taking ownership of the business case, approving the Project Charter once the organisation has agreed to fund and resource the project and ensuring the project’s outputs are effectively transitioned into operations and used effectively. The role of the sponsor is discussed in WP1031. From a benefits realisation perspective, the Sponsor (or Senior Responsible Owner – SRO) is the manager with primary responsibility for ensuring the intended benefits are realised. The sponsor may fulfil the role of benefits owner personally, or liaise with the designated benefits owners to ensure the benefits are realised (the benefits owner is the person responsible for the realisation of a specific benefit).
- The Sponsor is supported by two specialist managers:
- The Project Manager responsible for the efficient delivery of the project and
- The Change Manager responsible for managing the organisational change needed to make use of the new product, process or service.
- The role of the Benefits Manager is partially advisory, and partly an assurance role. The Benefits Manager should be responsible for developing an effective set of metrics supported by a system for identifying and measuring benefits (planned and realised) and should also be responsible for validating the realised benefits (see more below).
The relationship between the project and change managers
Change management and project management are different skills requiring different training and different personality types. Both roles are critical and should support the sponsor in achieving the best possible transition of the project’s outputs into operations.
During the life of the project the project manager is assisted by the change manger to ensure the project delivers the most useful output, the change manger also works on preparing the organisation for the change. The focus is creating the ‘right’ outputs as efficiently as possible and this is primarily a project management function.
During the critical transition phase the focus changes, the project manager’s role should shift to focus on helping the change manger to ensure the projects deliverables ‘work’ in the organisational setting. The project manager will also be working on project closure during this period but this should be secondary to ensuring the planned benefits are capable of being realised.
Throughout the whole process, the change manger is primarily responsible for facilitating the organisational change aspects of the initiative including of all of the processes involved in embedding the new product, process or service within the organisation and supporting its adoption through to the point where it is functioning as a normal part of the organisation’s ‘business-as-usual’ capabilities. This may require some level of support for two or three years after the project has finished.
The effect of programs and program management
Programs are created to manage the work of several projects in a coordinated way, may include some operational work for a period and many are set up specifically created as organisational change agents. The different types of program are outlined in WP1022.
If a project is a component of a program, the program manager is responsible for creating the project and is usually acts as the project’s sponsor. The program is responsible for the change management processes as part of its core integration and coordination functions and the program sponsor has overall responsibility for the return on investment in the program.
The roles and responsibilities of the Benefits Manager
The concept of a Benefits Manager is relatively new. The Benefits Manager provides a benefits realisation support service to sponsors, program managers, change managers and benefits owners. Some of the functions include:
- Develop, maintain and progressively enhance the benefits measurement system used by the organisation.
- Provide scrutiny of each business case to assure the organisation the benefits claimed are realistic and achievable within the proposed timeframes.
- Lead the benefits identification and mapping processes for project and programs.
- Assisting with the development of the benefits realisation strategy and plans for projects and programs.
- Help with the identification and optimisation of additional benefits, dis-benefits and assess the impact of changes from the benefits realisation perspective.
- Tracking and reporting on the actual realisation of benefits by the organisation.
This is an important role both from the facilitation perspective and the assurance perspective. People with a vested interest in the value of benefits proposed or realised should not be the people measuring their value; this is an untenable conflict of interest. The Benefits Manager provides independent assurance that the benefits proposed in the benefits realisation plan have been achieved to the extent defined in the plan, at the time defined in the plan and any variances are identified and explained or understood. For more on assurance see WP1080.
Benefits cannot be managed directly; they are a consequence of other management actions and decisions. An organisation will maximise the benefits actually realised by maintaining a focus on benefits from the early stages of project initiation right through to the point where they are fully realised by the operations of the changed organisation.