Tuesday, October 27, 2020

C-Suite Advisory

The Magical World Of Project Benefits

With the ongoing fallout of COVID-19 impacting businesses, balance sheets are getting hit, revenue is falling, and any available funds are used to stay afloat rather than invest in something new. For any project to get the nod, it needs to be supported by a solid business case underpinned by achievable benefits. Unfortunately, all too often benefits are like the mythical pot of gold at the end of a rainbow. When you look for them at the end of a project they seem to have disappeared, and you receive quizzical looks when you ask the owners to cough up.

Simple logic dictates that if a project doesn’t achieve tangible benefits, why bother investing your time, energy and dollars? The math for assessing the feasibility of committing to a project, and its inevitable disruption, is really simple – the investment you make in the project must return benefits that outweigh the cost of doing nothing.

In my role as Program Director I have been responsible for delivering many programs of work for the financial services industry, health care, aviation, government and transport. Of course, each of the initiatives have been supported by business cases bulging with benefits, all

which can be put into four key categories:

  1. Increasing revenue – if you can increase your revenue based on a defined set of variables and assumptions, then the project makes good sense.
  2. Cost reduction – all good businesses focus not only on growing their businesses, but also on reducing their day to day operating costs.
  3. Compliance – legislative and regulatory compliance is a must for any business and are usually non-negotiable. Compliance will always make a compelling argument for your business case.
  4. Cost avoidance – these benefits are related to future costs that could be avoided by undertaking the project.

Remember though, no matter how good your benefits look on paper, statistically approximately 80% of projects fail to deliver even 50% of their original benefits. Some strategies I have successfully used to avoid the Business Case Fairy Tale – Benefits Edition, are:

  1. Define the benefits clearly – run business workshops to identify a) the benefits; b) who will deliver them; and c) when they will be realised. Be aware of duplication – ensure that there has been no double counting of benefits across business units or business requirements, and benefits can actually be delivered. As managers eagerly scurry to find benefits to support a business case, they may end up looking at the same benefits, but from different angles.
  2. Link benefits to business requirements – if your response is “What business requirements?” – stop the project immediately and confirm the business requirements. If the business has not yet defined what they want, how can they be sure of the benefits, and where they are going to come from? Creating a traceability matrix that maps business requirements back to the benefits will allow you to tick off the requirements that have been delivered with the business owner. Then, they should be able to confirm that corresponding benefits have been achieved.
  3. Review the benefits for achievability – do a reality check on the benefits because while some seem to add up, further investigation may reveal that the sum does not add up to the parts. For example, you may have identified operational savings of one day in one role and two days in another role (and so on). Then, when you tally up all of these savings you may end up with a magical number that relates to the number of potential full-time equivalents (FTE) that you believe could be realised. While a saving of one day is equivalent to 20% of a full-time role, or 0.2 of an FTE. You also need to consider – that if you deliver the 0.2 FTE – who is going to do the other 0.8 FTE-worth of the role?
  4. Plan how the benefits will be realised – having confirmed the benefits with the business and also independently verified; the next step is to create a Benefits Realisation Plan that outlines how they will be realised and includes a schedule of when they will be realised. If possible, make sure that the Benefits Realisation Plan is signed off by those responsible for delivering the benefits. It can be a very useful tool to have up your sleeve when it comes time for the business to ‘cough up’ its benefits.
  5. Have benefit owners present to the executive team – by having the business owners outline the origin of the benefits, how they were calculated and how they will be delivered leaves little room for confusion. It also shows the executive team that the business has been engaged throughout the entire process and they understand their responsibilities and impacts. It’s a ‘win-win’ strategy.
  6. Transfer the benefits realisation into operations – it is unlikely all benefits will be achieved during the life of the project. Ideally, you should an executive who takes ongoing accountability for ensuring the benefits are realised as per the Benefits Realisation Plan. The effort required to manage the Benefits Realisation Plan can be significantly minimised if you take the initiative to adjust the budgets in line with the plan prior to transitioning it back to the business.

Hopefully by applying the steps above you can avoid your project becoming a statistic and will be able to set it up to be a stellar success. Good luck!

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Gary Waldon
Gary Waldon is the author of Sort Your Sh!t Out (Do Good Sh!t Publishing $29.95). He is a business transformation consultant who works with people at all levels from CEOs, business leaders and professional athletes through to teachers and retirees to help them take back control of the things that matter to them. Gary Waldon is an opinion columnist for the CEOWORLD magazine.