Upside Down View

Yet despite growing awareness of the importance of such an approach we can see how little this thinking has meaningfully penetrated most organizations right here at home. For the past two years Australian consultancy Capability Management has been probing the attitudes of 27 of Australia's top companies and their success with project benefits management.

"Companies have an upside down view of benefits," Capability Management executive chairman Jed Simms announced when introducing the findings. "Rather than seeing benefits realization as the core focus of their projects, they tend to see it as either an assumed by-product or as an optional, hoped-for extra. However, they still accept that realization of benefits is why they authorize projects in the first place."

The research identified four root causes of poor benefits realization:

1. Projects are not set up to deliver the available benefits

2. The business uses dollar realization as a proxy for benefits realization, and then hopes they will be delivered

3. There is no end-to-end process for benefits tracking and measurement

4. The common, conventional approaches used to deliver projects and their benefits inadvertently destroy more value than they deliver.

"We were surprised that none of the 59 projects we reviewed in depth were found to be set up to deliver the expected benefits," notes Alex Chapman, CEO of Capability Management. "All sponsors and project managers interviewed really believed that their project would deliver the promised projects, but when analyzed, the connection between the business case and the project was completely non-existent."

"But the situation is worse than just not delivering the expected benefits, as the business cases were found to miss many benefits," Simms adds. "Just redoing the business cases on several projects doubled the expected benefits — and all of this value is currently being missed. Add up the missed, lost and destroyed project value and you get to over 50 percent of a project's potential value lost. This represents billions of dollars a year."

"One common reaction we got was that it was all too hard to track benefits with so many projects going on," Chapman says, "So we used a simple and proven benefits management process to show it could be done. You can identify, quantify, track and measure benefits both during and after the project's completion. This is not rocket science, it just takes the right approach."