Clearly identified project benefits are essential to achieving the best return on investment in your project.
So, if you don’t usually work in the world of projects it’s likely you may have heard the expression “on time and on budget”. We sometimes hear this phrase used in relation to project benefits. On time and on budget are useful metrics to decide whether a project has been successfully delivered. Although those metrics will impact ROI, they should not be confused with actual project benefits.
Project benefits are the items of value you expect the initiative will deliver from the project outcomes. For example, if your project outcome is to implement a new IT system, the benefits may be defined as:
• Reduced costs
• Increased profits or revenue
• Improved processes, and the resulting productivity increases
• Reduced organisational risk, often to meet a compliance requirement
• More satisfied customers, resulting in increased retention and sales
• More satisfied staff or suppliers, resulting in higher retention and/or better relationships
Based on the PRINCE2® method for project management, project benefits are agreed during the initiation stage. The Project Manager should clearly document benefits for approval by the Sponsor and other members of the Project Control Board. The Senior User has an important role in the realisation of benefits post-project and should also be involved in identifying and agreeing benefits.
Benefits are often documented in a Benefits Review Plan with the relevant measures and timeline for the review. Some benefits are easier to measure than others and your project may have “direct” and/or “indirect” measures. Return on investment however, can only be calculated against actual dollar value figures and should take into account the costs of running the project.
At the agreed time after closure of the project it is the Sponsor’s task, to lead a benefits review. The review will determine whether the project has delivered on the benefits defined and therefore achieved the expected return on investment.
This is a great opportunity to then publish a success story or, to gain further value from lessons learned after the project has been completed.
Importantly, the results of the benefits review should be considered when decisions regarding future investment in projects are to be made.
Please contact us for assistance with defining your project benefits or conducting the benefits review.