Benefits Realization Management for Projects

Let’s say an organization is taking initiative to build a Smart Website for its internal and external stakeholders which employs artificial intelligence (AI). Two project managers are shortlisted to manage the project. During a pre-project discussion meeting with business owners, organizational leaders, and other stakeholders, one project manager informs the group of the following:

• The site will have a multi-layered architecture with hot standby facility.
• It will have ten million data points to train the AI site.
• A chatbot feature will be included to interact automatically with the site visitors.
• It will predict questions from users and hence engage them more.

The other project manager informs that with the Smart Website the following will occur:

• A 50% reduction in response time for prospective buyers.
• An 18% increase in revenues generated.
• A high improvement in customer satisfaction.
• Strategic objectives of digital transformation will be met.

Who do you think explained the prospect of this project to the business owners (sponsors) and other business stakeholders better? Putting it another way, who do you think the business owners are likely to approve as the manager for the project?

As you would have guessed, the second project manager is more likely to get the nod and be assigned to this project. But, why so?

This is because the first project manager focused his points in terms of features, whereas the second project manager focused his pitch on the benefits. As the saying goes, features tell, benefits sell. A feature is something available in a product, whereas a benefit is something you gain from the product. To elaborate further, a chatbot in the Smart Site is a feature, but the 50% reduction in customer response time due to the chatbot is a benefit.

Business owners, business stakeholders, or, for that matter, any prospective customer has this question not far from his or her mind: “What’s in it for me?” A language spoken in terms of benefits meets this intrinsic desire. For example, people don’t buy music players with 32GB storage, rather they want a thousand songs available instantly in their pockets. People don’t buy Microsoft Office software, they buy high productivity. Similarly, in our case, business owners are not buying the Smart Website project, but actually buying the benefits that comes with it.

For project managers, benefits realization management is a new topic, though elementary information is available in the PMBOK Guide, 6^th edition. It will be an important topic to know for the upcoming Project Management Professional (PMP) exam, next year. In this article, I hope to provide you with a deeper understanding of these concepts.

Business Benefits

Out first scenario underscores the importance of benefits and hence, benefits management. Project Management Institute (PMI) defines benefit as:

“A gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes.”

Simply, benefit is the realized gain for the intended stakeholders. Do note that benefits can come from portfolios and programs. However, in this article, our focus will be on projects. Benefits delivered by a project are usually divided into two categories. They are tangible and intangible, although other categories are possible.

Benefits Categorization

Categorizing benefits helps to identify and group the benefits. This, in turn, identifies an appropriate measurement approach.

Considering our previous scenario, I’ve used four quadrants to represent four benefits categories (tangible, intangible, financial, and non-financial). Tangible benefits are measured objectively with evidence, whereas intangible ones can’t be directly measured objectively. Financial benefits can be monetized, whereas non-financial ones generally can’t be.

Other than the above categories of benefits, we can also have other categories such as qualifiable/quantifiable, short term/long term, direct/indirect, and planned/emergent benefits.

Outputs, Outcomes, Benefits, Value

If you look at PMI’s definition of benefit, the projects undertaken by an organization give outputs, rather than giving benefits. As the definition clarifies, theses outputs result in outcomes, which are then translated to benefits. The relationship between outputs, outcomes, benefits, and finally (business) value is one concept which confuses many. These concepts are important, and understanding one of the key components for benefits realization management, the Benefits Dependency Map (BDM), particularly so. We will address the BDM shortly.

Let’s revisit our first example. Our project is building a Smart Website; hence, the output is the website itself, or the product which will be delivered by the project. Outcomes, on the other hand, are results obtained through the outputs or what users can do with the product created. In this case, with the help of the Smart Site, the outcomes are 24/7 availability of the site, communication with the help of chatbots, etc. And, of course, the benefits are a 50% reduction in response time, 18% increase in revenue, etc. The relationship between outputs, outcomes, and benefits is represented in the below figure.

Finally, let’s consider the business value because mature benefits realization management is about delivering more value to the organization. The terms benefit and value are used interchangeably, but they are not the same. Benefits lead to value creation. A benefit is a realized gain, whereas value is the net result of realized benefits minus the cost of achieving these benefits. This is depicted in the below figure.

To summarize, you can say:

• Outputs are products (or solutions or services) created by projects.
• Outcomes are results obtained through the use of outputs.
• Benefits are realized gain for the intended stakeholders.
• Value is the net result of realized benefits minus the cost of achieving such.

Value can be tangible and intangible. Examples of tangible value are monetary assets, equity, or market share. Examples of intangible value are trademarks, goodwill, and brand recognition.

Considering our AI based Smart Site, you could say that the value is the 18% increased revenue minus the cost of implementing the site.

With that foundation, let’s delve a bit deeper into understanding benefits realization management.

Benefits Realization Management (BRM)

PMI defines, Benefits Realization Management (BRM) as:

“The day-to-day organization and management of the effort to achieve and sustain potential benefits arising from the investment in portfolios, programs, and projects.”

In the context of projects, BRM is the management of benefits arising from projects. To understand benefits realization management, three key components must be understood.

Benefits Register

The benefits register records all the benefits. It’s a repository where the profiles of benefits are registered. Each benefit recorded will have the benefit identifier (ID), benefit description, benefit category, benefit owner, associated risks and assumptions, and timing of benefit realization among others. The benefits register assists in the creation of the benefits realization management plan. It’s usually maintained at the program level, though can be scaled to be used at the level of project. If a project operating under a program is delivering the benefits, the name of projects associated with the benefits can also be listed.

A sample benefits register, with some key fields, is shown below.

Benefits Map

The benefits map is also sometimes called a Benefits Dependencies Map (BDM), when the dependencies are shown. It’s also known as a Benefits Breakdown Structure (BBS). This map represents relationships among the major elements to realize the benefits, graphically. The elements can be strategic objectives, benefits, outcomes, outputs, and projects. It can also show change or strategic drivers as elements.

A sample BDM, at the level of a program, is shown below. The outputs delivered by the projects in an organization are in turn outcomes resulting in benefits at the level of a program. These, in turn, are driving the strategic objectives of the organization.

The benefits map is also usually maintained at the level of program, though can be scaled to be used at the project level.

Benefits Realization Management Plan

In the context of a project, the Benefits Realization Management Plan tells how and when the benefits of a project will be delivered. It also includes the metrics to measure the benefits. This plan creates, maximizes, and sustains the project benefits. It will have the following elements:

• Target benefits: The project benefits expected to be delivered.
• Strategic alignment: How well the project benefits aligns with the organizational strategy.
• Timeframe for benefits realization: When the benefits will be realized.
• Benefit owner: The person accountable for each project benefit.
• Metrics: Measurements for benefits realization.
• Assumptions: Assumptions taken.
• Risks: Risk assessments for project benefits and probability of having them.
• Tracking and Reporting: Processes to record and report the status of benefits.

Looking at the above content, you can easily see that the contents of the benefits register and the benefits dependency map are flowing in to create the project’s benefits realization management plan.

The PMBOK guide denotes the benefits realization management plan (BRMP) as benefits management plan (BMP). Going forward, I’ll be interchangeably using BRMP and BMP.

Summing up for the three documents/plans we discussed so far, you could say:

• The Benefits Register tells us “what” the benefits are.
• The BMP or BRMP tells us “how and when” benefits will be realized.
• BDM denotes the “relationship” among the components for the purpose of realizing the benefits.

Next, let’s see how these documents created for benefits realization interact with each other before and during a project life cycle. As per the PMBOK guide, a project can have four generic stages in its life cycle. These are starting the project, organizing and preparing it, carrying out the work, and finally completing or closing the project.

Before the start, a PM will conduct a needs assessment resulting in a business case (BC), which basically a documented feasibility study to establish the benefits to be delivered by the project. The projects’ BC influences the creation of the BMP/BRMP and vice-versa.

All of these elements should be in place before the project is started as part of “pre-project” work. The BC acts as input for project chartering and helps in authorizing the project. Once the project charter is approved, work for the next stage can begin. During the “organizing and preparing” stage, the project management plan is prepared, and then, it is executed in the “carry out the work” stage. Finally, the project is closed in the “completing the project” stage.

The interactions among the documents during the pre-project work and project life cycle are shown in the below figure.

Benefits Realization Management Life (BRM) Cycle

Just as a project passes through a life cycle, we also have a life cycle when managing benefits. In fact, the management of benefits from conception to realization and sustainment is done through the benefits realization management life cycle (or BRM life cycle). The BRM life cycle has three generic stages. They are listed below:

• Identify Stage: In this stage, the planned benefits, which are intended to be delivered by a project, are identified and defined. The benefits register is created here, and each benefit is assigned a benefit owner. The BRMP is also prepared.
• Execute Stage: In this stage, the BRMP is executed to deliver the benefits. The benefit owner ensures that the benefits are on track to be delivered and reviews the progress.

Sustain Stage (IES): As noted in the definition of benefits realization management, it’s also about the sustainment of benefits. In this stage, the benefit owner and intended stakeholders realize the planned benefits and sustain them. It is also possible that some benefits may be adapted if/when the planned benefit is not fully achieved.

The BRM life cycle is shown in the below figure.

Now, let’s see how this maps to the project life cycle that we discussed earlier. That way, you can have an integrated view of both BRM and project life cycles.

Project Life Cycle and BRM Life Cycle

When you combine the project life cycle and BRM life cycle, you arrive at the following figure.

As shown above, the project’s business case (BC) and BMP/BRMP are developed in the “Identify” stage of BRM life cycle. The end of “Identify” stage in the BRM life cycle coincides with the end of “Staring the project” stage of project lifecycle. During the next stage of the project’s life cycle, the project management plan is executed to create the outputs (the deliverables of the project). This can lead to the project’s outcomes and finally, the benefits. The project’s life cycle ends at the end of the “Execute” stage of BRM life cycle. The benefit owner ensures the outputs given by the projects are transferred to the right owner. Next, the sustainment of benefits happens with the help of operations.

Current PMP Exam and New PMP Exam

In the current PMP exam, the basic contents of a benefits management plan (and business case) is explained, as well as how it flows across various processes in the project life cycle.

As I said earlier, in the new, upcoming PMP exam, benefits realization management will be an important topic. This is because it’s embedded in one of the new domains for the exam, Business Environment. There are tasks and enablers related to benefits and value delivery as shown in the below figure.

There is a task “Evaluate and deliver project benefits and value” under the Business Environment domain. If you look at the enablers, you will notice a number of things that differ in the current PMBOK Guide and ECO. While some of the enablers can be mapped, unevenly and not exactly accurately, there are completely new enablers such as verify a measurement system is in place to track benefits. Hence, you have to understand how benefits are identified, executed, measured, and finally delivered within the blueprint of domain-task-enablers.

I hope this article gives a foundational understanding of benefits, value, and benefits realization management in the context of projects.

References

[1] PMP Live Lessons – Guaranteed Pass or Your Money Back, by Satya Narayan Dash

[2] Benefits Realization Management, A Practice Guide, by Project Management Institute.

[3] Project Management Body of Knowledge (PMBOK) Guide, 6th Edition, by Project Management Institute.