Companies of all sizes often take on new projects to meet specific objectives. However, these projects often fail to achieve their intended benefits. Your business can ensure projects reach their full potential by incorporating benefits realization into project management processes and other business systems.
In this article, we’ll define benefits realization, explain its importance, and share how to implement it in your business.
What is benefits realization?
Benefits realization is the process of identifying, defining, planning, executing, and monitoring the value of a project. The ultimate goal of benefits realization is to ensure that a specific project fulfills all promised benefits, which are measurable improvements seen as advantages by a stakeholder. Benefits realization also ensures that everyone on your team clearly understands the project and how it impacts the business.
Benefits realization can be confused with return on investment (ROI). ROI focuses on the tangible value of a project, which is often expressed in monetary terms. On the other hand, benefits realization is a much broader process that focuses on capturing a project’s tangible and intangible benefits.
What is benefits realization management?
Like any other business process, benefits realization requires active management at every step of the process. Benefits realization management allows for that. It aligns the expectations of the project and business leaders regarding the project’s potential value.
Benefits realization management helps close the gap between planning and execution to ensure that each project creates long-term value for the company.
Common elements of benefits realization management include
- resource allocation
- visibility
- alignment of project and business goals
- consistent engagement and communication
- budget control
Resource allocation
Benefits realization management puts the project’s leadership in control of all available resources. Leadership determines which resources are accessible, distributes resources to various stakeholders to help them complete their tasks, and creates a framework that discourages overuse.
Visibility
Throughout the project, visibility must be accessible to everyone involved, not just leadership. You also need to avoid oversaturation because stakeholders may be overwhelmed or confused if they have access to too much information. Leadership should know every change, challenge, and success, but each contributor need only see some of the picture. Instead, prioritize what information needs to be known, when, and by whom. This way, every team member has access to the relevant information for their tasks, so they can focus on creating the benefits under their responsibilities.
Alignment of project and business goals
If a project is overly complex or too broad, aligning its intended benefits with the company’s objectives can be challenging. Through benefits realization management, you can ensure that each step of the process aligns with the intended goals. This way, the project team clearly understands how their objectives contribute to the business’s overall goals.
Consistent leadership engagement and communication
Consistent engagement and communication from project and business leadership should be part of every project. Leadership should unite team members around the perceived value of a project while allowing for creative freedom and efficient use of abilities and resources. Consistent communication and engagement by celebrating successes and reviewing various aspects of the project allow for that unification.
Budget control
Budget control is often one of the most complicated elements of benefits realization management, but it’s also one of the most important. It ensures that each project step is within budget to maximize its value.
The importance of benefits realization
Benefits realization is crucial for any new project your small business undertakes.
Closes the gap between project goals and realized benefits
There’s often a gap between the initial project goals and the realization of benefits after completion. Benefits realization closes that gap and allows for more accurate forecasting during the planning phase of a project.
Ensures the project’s success
There are many reasons why projects fail to deliver the expected business benefits, including poor planning and execution.
- Poor planning of a project may occur because either the goal exists independently of business objectives or because the goal needs clarification and definition.
- Projects may have resourcing issues, unmet funding needs, too much stakeholder involvement, or limitations imposed by business rules.
Benefits realization helps you avoid poorly planned and executed projects and increases the likelihood that the project will succeed and fulfill its potential. Moreover, it provides your company with the tools it needs to complete successful projects by ensuring team members understand the project’s goals, preventing delays, avoiding errors, and allowing for efficient use of resources.
Creates long-lasting value
Insights gained through the benefits realization process allow each leader and individual contributor to make adjustments as needed throughout the project. This leads to stronger projects that provide value long after the project has ended. The realized benefits can contribute to financial value (like increased revenue) and intermediate benefits (like improved customer service).
Implementing a benefits realization plan
A benefits realization plan extends past the end of a project. It’s a continuous process that includes analyzing, tracking, and adjusting the project to ensure each benefit is realized.
Develop a benefits realization plan
Part of benefits realization management is developing the benefits realization plan for each project. The plan will look different for each project, but in general, it will contain the following elements:
- Intended benefits: Start by elaborating on the project’s purpose and strategic alignment with the business’s goals. This will help you identify the intended benefits of the project. If you’re unsure of the intended benefits, consider stakeholder expectations and review custom feedback to learn what improvements are expected.
- Benefits analysis and planning: Determine the project’s various components and map them to the intended benefits to ensure efficiency. By doing this, you can choose the appropriate measurements and acceptance criteria to determine when a benefit is realized.
- Benefits delivery: Create a timeline for delivering various aspects of the project, including target dates and milestones. Additionally, develop a risk assessment that includes the probability of realizing each benefit.
- Benefits transition and sustainment: Determine who will be responsible for tracking and sustaining benefits after the project’s deliverables are complete. This ensures that the business continues to see the project’s actual value.
Identify metrics and KPIs to measure success
For each defined benefit, it’s crucial that you determine which metrics and key performance indicators (KPIs) to measure and track. You can choose the appropriate metrics and KPIs by defining what success looks like for the project. The project’s success may be based on a review of your competitors, an analysis of previous projects, or the utilization of existing metrics and data.
Once you’ve determined metrics and KPIs, obtain baseline metrics by measuring the current performance. You can estimate the target value of each metric by recording how you took the measure, your findings, risks and dependencies, and assumptions.
Then, regularly review the metrics of the project to ensure it’s on track to fulfill its intended value. If it’s not, benefits realization management provides you with the tools needed to course-correct while avoiding significant delays.
To learn more about KPIs, read our article “What is a key performance indicator (KPI)?”
How to integrate benefits realization into project management?
Once you’ve defined the intended value of a project and developed a benefits realization plan, your business must incorporate the project’s benefits into every step of the project management process. You should use the intended value to determine which deliverables to create, who is involved in the project, and at which stages you’ll track metrics and KPIs.
Project management software can help you track your projects and plans better. To learn more, read our article about project management software.
Regularly review and update your benefits realization plan
Throughout the project’s lifecycle, collaborate with key stakeholders to identify areas where the project may be at risk of failing and to pinpoint any potential issues that could hinder the realization of benefits. Even after the project deliverables are complete, continue to ask what could be improved so that you can sustain the value achieved. This will help you determine whether you should continue, increase, reduce, or stop your investment in the project.
Common challenges and how to overcome them
As with any new business process, incorporating benefits realization comes with a few challenges.
Defining value
One of the biggest challenges small businesses face when implementing benefits realization is not understanding what is valuable to their company. If you and your leadership team cannot agree on your company’s overall objectives, it will be challenging to establish a benefits realization process. Why? Because you will not know which benefits are worth pursuing.
You can overcome this challenge by setting strategic goals for the business and ensuring that any new project you undertake will help achieve those goals. You may prefer monetary benefits (such as positive ROI, increased revenue, or decreased expenses), but intangible benefits (like improved customer service) can also be extremely valuable.
Monitoring benefits
When you start a new project, it may be several months (or longer) before the deliverables are complete and you begin to see the benefits. You do not want to wait until the end of the project to see if it has added value to your business. Instead, set milestones in your plan so that you can monitor progress throughout the project’s lifecycle. This will give you time to take appropriate action if the project is off track or at risk of not achieving its intended benefits.
Measuring value
Many businesses undertake multiple projects and feel relieved when they complete one. When the team finishes a project, they celebrate and move on to the next one. Unfortunately, this means many companies fail to continue to measure and analyze the project’s benefits, so they will not know if the benefits are realized.
To overcome this challenge, assign a specific person to continue tracking the benefits after the project deliverables are complete. This will help ensure the project reaches its full potential and your investment added value to the business.
Final Thoughts
Benefits realization is crucial for organizations that want to make the most of their projects and investments. It helps organizations keep track of the expected benefits and ensures that they use resources effectively. By focusing on benefits realization, teams can learn from past projects and improve their approaches, leading to a stronger organization with a better chance for long-term success.