Three common mistakes businesses make when managing project benefits
25 Nov 2021 03:01 PM
Blog posted by: James Elliott, 25 Nov 2021.
It’s easy for project professionals to get caught up in schedules or budgets and forget about the actual benefits delivery. Whether that’s more money hitting the bottom line, a boost in customer satisfaction, or complying with new legal standards, studies show that only 40 per cent of projects mostly or always deliver on their forecasted benefits.
Let that sink in. That means the majority of projects aren’t truly delivering what they set out to achieve. But that’s not necessarily a surprise. Given the benefits management process spans both project and business-as-usual (BAU) teams, it’s easy for things to fall through the cracks.
Here are three common benefits management mistakes to look out for on your next project.
Mistake #1 – A tendency to overestimate
Human beings are hardwired to look on the bright side. In any other walk of life, that’s a great attribute to have, but not always for benefits management.
One of the biggest mistakes businesses make actually happens during the project planning phase, with benefit owners wildly overestimating what’s achievable.
Often this comes down to a blend of three things:
- Optimism bias: A natural tendency to favour the best possible result rather than take a balanced view of all possible outcomes.
- Poor data: A lack of reliable data to forecast benefits leads to a lot of guessing (the perfect breeding ground for optimism bias to strike once again).
- Corporate pressure: The pressure business leaders feel to inflate their delivery to impress others. This sets everyone an unachievable target that is doomed to fail.
From personal experience, overestimation is especially rife in well-performing businesses. There’s a risk that benefit owners become gung-ho in their estimations because the rest of the balance sheet looks so strong.
To combat these unrealistic targets, incorporate different estimation methods into your planning process. The three-point estimating technique is a great way to balance the best case, worst case and most likely delivery scenarios to ensure you’re forecasting against a pragmatic view.
Additionally, bring other stakeholders into the process to challenge your thinking. For example, if your benefits are financial, leverage the expertise of a finance or accounting colleague to stress-test the numbers.
Mistake #2 – Poor tracking governance
Many businesses fail to put end-to-end governance in place to track the benefits of their projects.
While it sounds simple, tracking governance needs dedicated planning and execution; it doesn’t just happen naturally. This type of governance also provides everyone with accountability, ensuring benefits management doesn’t get overlooked when the project gets busy.
Lean on those in your project team, and the wider business, who specialise in monitoring business performance. Whether that’s working directly with your PMO or engaging with data and insight specialists, utilise the expertise of those around you.
I’ve had first-hand experience of the difference a robust benefits-tracking process can make. In a previous project, I managed a procurement optimisation workstream designed to deliver bottom-line savings. As a project team, we incorporated a benefits sign-off and tracking process, which started with our procurement officers and ended with our CFO.
While it required dedicated effort from a number of people, it gave us complete visibility of our benefits delivery, alongside providing the information we needed to make key decisions and shape the direction of our project.
Mistake #3 – No BAU ownership
For many projects, benefits only start to be realised once the change has been implemented. This means that the responsibility for benefits management has to transition effectively from the project team to the business.
As the project team disbands, ensure that the responsibility for benefits tracking finds a new home. In most situations, the senior sponsorship will remain the same, so it’s likely to be the middle management taking responsibility for tracking and upwards reporting.
For project professionals, ensure benefit tracking responsibilities make their way into your transition and closure process. If you’re working in a PMO role, check this handover has all been recorded in a project’s closure document, with the sponsor providing ultimate sign-off to rubber-stamp the change of ownership.
Managing and realising project benefits is a tough discipline to get right. As the responsibility for benefits delivery moves between the project team and the business, it’s easy for the tracking to get lost in translation.
While many projects fail to deliver their forecasted benefits, there are simple pitfalls you can overcome to boost your chances of success. Start by acknowledging and challenging benefit overestimation before implementing a robust benefits governance structure that cuts across both the project team and the business operations.
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About the Author
James Elliott is a project manager and writer from London, UK. When not working to deliver projects, James writes on a variety of business and project management topics with a focus on content that enables readers to take action and improve their ways of working. You can check out James’ work on his website or by connecting on LinkedIn. All opinions, comments and content represent James’ own personal views and not those of any other organisations he’s associated with.