Managing project benefits: is there a right way to measure value?
How should businesses measure the benefits they hope to realise from project investment?
The starting point for this debate is the idea that purely factual analysis of the anticipated benefits of project investment is inadequate. The experience and judgement of leaders who know the business intimately are equally valid. Decisions about whether to proceed should be based on a mix of these two elements: the rational and the emotional.
From here, there's a range of questions to debate:
What do we understand by project benefits?
Project benefits can extend far beyond the cost savings or productivity gains identified in a typical business case. On IT projects, for example, benefits could include improving decision making, underpinning the brand or increasing agility. Businesses also need to consider the implications of not making an investment.
What should we be rewarding: project delivery or benefits realisation?
If individuals have a vested interest in ensuring a project is delivered, who will take an objective view on whether a project should continue even when external changes mean benefits will no longer be realised or be relevant. Separating metrics for project delivery and benefits’ realisation can help bring clarity and impartiality to these decisions.
Is emotion a bad thing when it comes to investment decisions?
How can we ensure that an individual’s passion for a project doesn’t distort the business case? Should we aim to eliminate emotion completely so that the case is made dispassionately? Or should we value emotion as something that stems from a deeply felt sense of what needs to be done to protect and nurture the business? Bringing together several voices, rather than listening to one passionate individual, is essential to strike the right balance in decision making.
Is measuring project benefits a distraction?
Businesses need to guard against focusing so strongly on measuring benefits that they stop noticing what’s going on around them. For example, banks currently caught up in delivering major regulatory programmes are slow to realise that, all around them, new competitors are moving on in retail banking. Ensuring that their business is compliant is not optional, but banks must also make sure they still have a business to run in five years’ time.
How accurate can formal measures be?
Projects don’t happen in isolation. They are influenced by a wide range of factors: some of them we know about and can plan for, others come as bolts from the blue. When uncertainty is all around, what hope is there of accurately measuring benefits achieved? Using a basket of indicators, including opinion surveys and intangible measures, as well as hard financial targets, is the most pragmatic approach to protect against uncertainty