value destruction: why most projects fail to realise the benefits used to make the business case for...
DESCRIPTION
Matt Williams' presentation will explore methods and techniques for linking the business case, project output delivery and realising business benefits and value from project investments. A project business case would (should) ordinarily include a comprehensive, analytically derived cost/benefit analysis. The basis for approval of a business case is that the capital investment required to deliver the project will be outweighed by the financial and/or non-financial benefits that will be delivered. There are three major factors that contribute to the expected business value from project investments not being achieved: 1. Value exaggeration - an overly optimistic cost/benefit analysis, 2. Value destruction - delays in project and programme delivery, and 3. Value decay - not transferring the value to the business. This workshop will explore methods and techniques for linking the business case with project output delivery to realise business benefits and value from project investments.TRANSCRIPT
Value destruction: why most projects fail to realize the benefits used to make the business case for
change (and how to address it)
Matt WilliamsManaging DirectorConnexion Systems
Provider of enterprise systems designed to improveproject success rates and maximize business value
Connexion Systems practice areas:
• Benefits Realisation Management
• Project Portfolio Management
• Project Investment Management
• Best Practices (PRINCE2, MSP, P3O)
• Project Controls (Schedule, Earned Value)
Enterprise Systems = People + Process + Tools
ABOUT CONNEXION SYSTEMS
SOME OF OUR CUSTOMERS
“A measurable improvement resulting from an outcome perceived as an advantage by one or more stakeholders”.
-UK Government Cabinet Office
“A business outcome that delivers value to the organisation.”
-NSW Department of Finance & Services
BENEFITS DEFINED
“The identification, definition, tracking, realisation and optimisation of benefits at initiative and portfolio level.”
- Steve Jenner, Managing Benefits (APMG)
“The benefits realisation approach is used to determine whether a program has produced the value claimed in the business case. It is an approach that enables key stakeholders to clearly measure the effectiveness of the program by focussing on business metrics, rather than just program/project metrics.”
- Deloitte
BENEFITS MANAGEMENT DEFINED
WHY NOW?
Benefits Realisation is not a new concept
So why is there so much interest right now?
Uncertain economic times
Shrinking Budgets
Demanding Customers
Globalisation
Mean we need to get projects right the first time
WHAT’S WRONG WITHTHE STATUS QUO?
WHAT THE ANALYSTS SAY
“The 2014 Global PPM Survey illustrates that there is often a disconnect between the Executive Team and PMs” – PwC
PROGRAM MANAGEMENT LIFECYCLE
Planning Delivery Realisation
Program Management
Value Exaggeration Value DecayValue
Destruction
Value exaggeration
VALUE EXAGGERATION
Cost Matching
Optimistic assumptions
Valuing Non-financial benefits (eg time saved per transaction)
Double Counting
Cost of Money
Risk weighting
Difficult to measure whether outcomes have been achieved
Value Destruction
VALUE DESTRUCTION
• Focus on schedule and cost not value
• Not linking delivery to value creation
• Measuring and tracking assumptions
• Not confirming hypothesis made
• Decision makers need to know ALL impacts of decisions
Value Decay
VALUE DECAY
• Not transferring the value to the business
• Once program is complete, stop measuring
• Who measures?
• Double-double counting (future programs steal value)
• Corrective actions may be required
Project Benefits
PROJECT TRANSITION PROCESS
WHAT IS THE PROBLEM?
Traditional approach is: Define the business case, Get approval and funding, Hand over to the project delivery team Monitor progress Receive the finished product
SO WHO IS RESPONSIBLEFOR DELIVERING VALUE?
Either:a) the project/programme is made responsible for benefit realisation, orb) No-one is!
Project and Programme managers are focussed on delivery, not business benefitsTime/Cost/Quality are their measures of success
SO HOW DO WE MAXIMISE VALUE?
PEOPLE - Create an appropriate organisational structure
PROCESS - Develop and apply a consistent approach across all projects/programmes in the organisation
TOOLS - Implement supporting tools appropriate for the size and maturity of the organisation
BRM PROCESSES
There are many different process descriptions available
All have one thing in common:
It’s a feedback loop;
not a ‘one-off’ step (after project delivery)
BRM PROCESS: MANAGING BENEFITS
BRM PROCESS: CRANFIELD
BRM PROCESS: CONNEXION
Stakeholders
Benefits
Sizing
Timing
Value (NPV)
Deliver
Measure
Report
Corrective
Action
Benefits Identify Plan Monitor Evaluate Monitor
Programme Definition Delivery
Project Initiation Delivery
Realisation
CONNEXION PROCESS IN CONTEXT
CONCLUSION
Planning Delivery Realisation
Program Management
• Engage with all stakeholders
• Create realistic, measurable business case
• Plan ALL work, not just project work
• Transfer responsibility (VMO?)
• Have mechanism to take corrective actions when required
• Continue measuring until stabilised
• Start measuring as soon as possible
• Report benefit progress and forecasts in status reports
• Change requests must include the benefit impact
Matt Williams PMP, MAIPM
Managing Director
Connexion Systems Pty Ltd
M: +61 414 847 040
www.connexion.com.au
QUESTIONS?