Disappearing Benefits

You can’t simply pick and choose your investments!

 

Applying Earned Benefit Management

SERIES ARTICLE

By Crispin (“Kik”) Piney, PgMP, PfMP

Southern France

 



Introduction: Link to the Previous Article

The tagline of the previous article was “If you can’t track the allocations, you can’t understand the situation” and explained how to determine the allocation to the costs of each component project throughout the lifetime of the program. The article showed how to apply that algorithm to the case study and identified that one of the component projects and a number of the intermediate nodes clearly cost more than they contributed to the ultimate benefits. It finished with the warning that more information about the overall program benefits model was needed before any decisions could safely be taken on how the set of components might be modified to provide the optimal business result. The current article will explain the points to take into account when optimizing the portfolio in this way, and will demonstrate the potential issues that could be caused by taking a simplistic approach.

Reminder on Benefits Maps

The first articles [Piney, 2018b; Piney, 2018c; Piney, 2018d] in this series [Piney, 2018a], explained how to build a benefits realization map (BRM), how to evaluate the contribution of each component of this map to forecast the strategic benefits of the total program (the “Benefits Allotment Routine” – BAR), and how to evaluate the corresponding allocation of costs to each element of the realization map by using the Break-Even Everywhere Routine (the BEER). These concepts were illustrated on a simple case study. This introduction provides a brief reminder of these ideas.

A BRM illustrates how to make the benefits happen. It can be constructed as follows.

Once the anticipated benefits have been defined by the strategic sponsor, you need to determine all of the steps that are required to construct this result, thereby allowing you to identify the necessary component projects. The dependencies from each logical step to the next are quantified for each step in the logical chain. The BAR uses the forecast value of the strategic objectives in conjunction with this link information to calculate the contribution of every node in the BRM to the anticipated benefits. In particular, the BAR evaluates the contribution to the anticipated benefits of each component project. This value is known as the “Earned Benefit At Completion” (EBAC) of that component project.

Once the full set of parameters that define the model is known (predicted benefits, estimated cost per initiative, and the structure of the benefits map, including the contribution fractions), no additional assumptions on the model are required in order to use these parameters to evaluate to cost of each intermediate node in the model. The return on investment of any node can then be evaluated from its benefit contribution and its cost allocation.

The Earned Benefit of a component project (initiative) at a given point in time is evaluated from its EBAC in proportion to the its degree of completion at that point – i.e., the Earned Value “percent complete” of this project. As a first approximation, the Earned Benefit of the total program is defined as the sum of all of the project Earned Benefits. This definition of the program Earned Value will be revisited in the next article in this series, taking into account concepts defined later on in the current article.

Clarifications

I received the following comment on an earlier article (Piney, 2018c):

  1. “How can you claim to measure benefits when the project has yet to be completed?  […] Asked another way, how can Activity A produce any measurable benefits until Activities C and D are also finished and the services actually implemented?”

I gave a partial answer in Piney, 2018d and proposed to complete it in the current article. Once I had started work on the full explanation, I came to the conclusion that it was sufficiently interesting and involved to warrant its own article. This additional article will therefore be added to this series as a follow-on to the current article.

The Case Study for the Current Article

The business objective of the program in this example is to increase profits for an organization in the area of customer service. For the purpose of the case study, strategic analysis by senior management has shown that increased customer satisfaction with after-sales support enhances business results and has the potential for delivering additional revenue of €300,000 per annum compared with the current level of business, but that this service will also lead to an increase in operational costs amounting to 25% of the corresponding financial improvement, thereby reducing the net benefit by the corresponding amount.

More…

To read entire article, click here

 

How to cite this article: Piney, C. (2018). Disappearing Benefits, Series on Applying Earned Benefit Management, PM World Journal, Vol. VII, Issue VIII – August.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/08/pmwj73-Aug2018-Piney-Benefits-series-part4-dissapearing-benefits.pdf

 



About the Author


Crispin Piney

South of France

 

 

 

After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is now a freelance project management consultant based in the South of France. At present, his main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package.

Kik has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in France to receive PMI’s PgMP® credential; he was also the first recipient in France of the PfMP® credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of recent PMI conferences and published formal papers.

Kik Piney is the author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2018

Kik Piney can be contacted at [email protected].

To view other works by Kik Piney, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/crispin-kik-piney/

 

 

The Cost of Benefits

If you can’t track the allocations, you can’t understand the situation!

 

Applying Earned Benefit Management

SERIES ARTICLE

By Crispin (“Kik”) Piney, PgMP, PfMP

Southern France

 



Introduction: Link to the Previous Article

The tagline of the previous article was “If you can’t track it, you can’t manage it” and explained how to determine the contribution to the benefits of each component project throughout the lifetime of the program. The article finished by pointing out that, although we were now in a position to know the contribution of each component project to the planned benefits, we did not know how to share the estimated project costs between the other components of the model. This article will provide an innovative solution to this challenge and present some of the ways in which this additional knowledge can improve program decision-making.

Reminder on Benefits Maps

The first articles (Piney, 2018b; Piney, 2018c] in this series [Piney, 2018a], explained how to build a benefits realization map (BRM) and how to evaluate the contribution of each component of this map to forecast the strategic benefits of the total program (the “Benefits Allotment Routine” – BAR). These concepts were illustrated on a simple case study. This introduction provides a brief reminder of these ideas.

A BRM illustrates how to make the benefits happen. It can be constructed as follows.

Once the anticipated benefits have been defined by the strategic sponsor, you need to determine all of the steps that are required to construct this result, thereby allowing you to identify the necessary component projects. The dependencies from each logical step to the next are quantified for each dependency in the logical chain. The BAR uses the forecast value of the strategic objectives in conjunction with this link information to calculate the contribution of every node in the BRM to the anticipated benefits. In particular, the BAR evaluates the contribution to the anticipated benefits of each component project. This value is known as the “Earned Benefit At Completion” (EBAC) of that component project.

The Earned Benefit of a component project at a given point in time is evaluated from its EBAC in proportion to the its degree of completion at that point. The Earned Benefit of the total program is defined as the sum of all of the project Earned Benefits.

From this starting position, a more general approach to evaluating various numerical characteristics of the components of benefits maps will be developed in the current article.

Clarifications

I received the following comments on the previous article (Piney, 2018c) and will address them here to remove any misunderstandings it may have produced:

  1. “… [The] only possible ‘benefits’ that I can imagine would come in the form of cost savings.”

Cost saving is not so much a benefit as a project performance indicator. However, I am addressing programs, and I should obviously have provided my definition of a benefit in this context. A program benefit is defined as: “An improvement of one or more strategic or business-related results. Program benefits are normally set as a goal by senior management along with the corresponding, quantified objectives”. For example, an underground mining project (Wibikskana, 2012) would normally be one of the components of a program that also needed to address power generation, storage and distribution of the extracted product, environmental considerations, etc. in order to obtain benefits such as profits, market share etc., while avoiding disbenefits to reputation due to environmental issues caused by the mining operations. These program benefits accrue to the mining company in this case, whereas project cost savings are a main consideration for the mining contractor. For this reason, the program manager should use the Earned Benefit Method (EBM), whereas the project manager would apply the Earned Value Method (EVM).

  1. “I don’t understand how you calculated the Benefits in Figure 1?”

In Figure 1, the overall program benefits as defined by the dollar values of the strategic outcome (node K) are specified as an objective by senior management. The way in which business objectives are set and quantified by senior management is the domain of strategy setting and is outside the immediate scope of the program manager. In general, the problem of valuing non-financial benefits is still the subject of debate (see for example SROI 2012). However, the article described in detail how to evaluate the contribution of each of the other components of the benefits map, including the benefits contributions of each of the component projects, once these quantified strategic objectives had been specified.

  1. “How can you claim to measure benefits when the project has yet to be completed?  […] Asked another way, how can Activity A produce any measurable benefits until Activities C and D are also finished and the services actually implemented?”

My previous article did not address the challenge of measuring benefits. It presented the concept of “Earned Benefit” during program execution as a direct extension of the Earned Value approach to project performance measurement. As such, it measures the potential result of the work completed at each stage. To give a practical example, as a freelance consultant, I know full well that earning my fee and receiving payment are two related, but very separate, events.

I intend to return to this fundamental question of “earned” vs. “delivered” in more detail in the next article in the series, but this will require the additional concepts that will be developed in the current article.

The Case Study

The business objective of the program in this example is to increase profits for an organization in the area of customer service. For the purpose of the case study, strategic analysis by senior management has shown that increased customer satisfaction with after-sales support enhances business results and has the potential for delivering a additional revenue of €300,000 per annum compared with the current level of business, but that this service will also lead to an increase in operational costs amounting to 25% of the corresponding financial improvement, thereby reducing the net benefit by the corresponding amount.

More…

To read entire article, click here

 

How to cite this article: Piney, C. (2018), The Cost of Benefits, PM World Journal, Volume VII, Issue VI – June. Available online at https://pmworldjournal.net/wp-content/uploads/2018/06/pmwj71-Jun2018-Piney-Benefits-series-part3-the-cost-of-benefits.pdf



About the Author


Crispin “Kik” Piney

Southern France

 

 

After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is now a freelance project management consultant based in the South of France. At present, his main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package.

Kik has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in France to receive PMI’s PgMP® credential; he was also the first recipient in France of the PfMP® credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of recent PMI conferences and published formal papers.

Kik Piney is the author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2017

Kik Piney can be contacted at [email protected].

To view other works by Kik Piney, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/crispin-kik-piney/

 

 

The Value of Benefits

If you can’t track it, you can’t manage it!

 

Applying Earned Benefit Management

SERIES ARTICLE

By Crispin ‘Kik’ Piney

Southern France

 



Introduction: Reminder on Benefits Maps

In the first of this series of articles [Piney, 2018a; Piney, 2018b], I presented the basic ideas around program and portfolio. These concepts were illustrated on a simple case study. This introduction provides a brief reminder of these ideas.

Benefits and Benefits Mapping

As stated in the earlier article, whereas, for projects, you need to be able to specify precisely what you want to create, for programs as well as for portfolios, the objective is different. The question to be answered in this case is “how can I achieve a specific business or strategic benefit?” The approach for defining the solution is to create a benefits map. The output of this mapping exercise is a logical network that can be read in two directions.

The map illustrates how to make the benefits happen. Once the required benefits have been defined by the strategic sponsor, you need to determine all of the steps that are required in order to identify the component projects required in order to achieve the strategic objectives. The dependencies between these logical steps are quantified with respect to the size of the contribution of the source node to the required result. In conjunction with the forecast value of the strategic objectives, this link information allows the forecast contribution of every node in the benefits map to be evaluated. Comparing the calculated contribution of each component project with its estimated cost provides a measure of its business value: its forecast benefit-cost ratio.

The Case Study

The business objective of the program in this example is to increase profits for an organization in the area of customer service. For the purpose of the case study, strategic analysis has shown that increased customer satisfaction with after-sales support enhances business results and has the potential for delivering a benefit of €300,000 per annum compared with the current level of business. The steps to achieving this benefit have then been developed from this required strategic outcome all the way across to identifying the projects required. Analysis of this solution indicates that it will also lead to an increase in operational costs amounting to 25% of the corresponding benefit, thereby reducing the net benefit to be achieved by the program. The benefits map for this program, including all of the financial numbers mentioned above is shown in Figure 1. One important point about this case study is that, although the overall figures show a healthy return on investment, one component project (B: Call Handling Tool) costs more to develop than in contributes to the final benefit. The first article, however, explained why its inclusion was justified.

The benefits map provides you with a static view of the forecast result of the completed program. However, the addition of the Earned Benefit concept to benefits mapping provides additional, essential information for tracking the performance of the program during implementation.

More…

To read entire article, click here

 



About the Author


Crispin Piney

South of France

 

 

After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is now a freelance project management consultant based in the South of France. At present, his main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package.

Kik has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in France to receive PMI’s PgMP® credential; he was also the first recipient in France of the PfMP® credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of recent PMI conferences and published formal papers.

Kik Piney is the author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2018

Kik Piney can be contacted at [email protected]

To view other works by Kik Piney, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/crispin-kik-piney/

 

 

Benefits Maps You Can Count On

If you can’t measure it, you can’t manage it!

If you measure it wrong, you can’t control it!

 

Applying Earned Benefit Management

SERIES ARTICLE

By Crispin (“Kik”) Piney, PgMP, PfMP

South of France

 



Introduction: The Limitations of Current Benefits Maps

Whereas, for projects, you need to be able to specify precisely what you want to create, for programs as well as for portfolios, the objective is different. The question to be answered in this case is “how can I achieve a specific business or strategic benefit?” The approach for building the solution is to create a benefits map. There are four principal models for this (Fujitsu’s/Thorp’s ‘Results Chain’ [2007]; Cranfield’s ‘Benefits Dependency Network’ [Peppard et al. 2007]; MSP’s ‘Benefits Map’ [Office of Government Commerce 2011]; and Bradley’s ‘Benefits Dependency Map’ [Bradley 2010]) and they all work on similar principles [White 2015, Jenner 2013, and Jenner 2014]. The output of the mapping exercise is a logical network that can be read in two directions as explained next.

The map illustrates how to make the benefits happen. Once the required benefits have been defined by the strategic sponsor, the following steps allow you to build the map. You need to determine, in order: the changes to the environment that are required in order allow the benefit to occur (“outcomes”); what we need to be able to do if we want to change the environment in this way (“capabilities”); what tools we need in order to create these capabilities (“deliverables”); and, finally, what we need to do to create the tools (“component projects”).

This chain can be read in the reverse direction to explain why each step is necessary: from project to deliverables, to the capabilities of these deliverables, to the outcomes of applying the capabilities, to the benefits associated with the outcomes.

The diagrams associated with the development of the case study explained below provide examples of benefits maps (figures 1 to 5).

In the same way that the London Underground map gives no indication of cost or distance, current benefits maps do not provide a complete set of numbers to allow you to plan every aspect of your journey. I have found some tools that go part of the way to quantifying the map – such as P3M [P3M] and the tool from Amplify [Amplify]. However, even these tools do not provide a credible view of the allocations and contributions for every node in the map.

Without these numbers, business justification and modelling are incomplete. The same holds for performance planning, optimization, tracking, and review with respect to the required benefits.

This article explains how to fill this gap and evaluate some of the missing numbers. It is explained based on the following case study.

More…

To read entire article, click here


Editor’s note: This series is by Crispin “Kik” Piney, author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2018. Merging treatment of program management, benefits realization management and earned value management, Kik’s book breaks important new ground in the program/project management field. In this series of articles, Kik introduces some earned benefit management concepts in simple and practical terms.



About the Author


Crispin (Kik) Piney

Author, Business Advisor
South of France

 

 

After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is now a freelance project management consultant based in the South of France. At present, his main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package.

Kik has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in France to receive PMI’s PgMP® credential; he was also the first recipient in France of the PfMP® credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of recent PMI conferences and published formal papers.

Kik Piney is the author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2018

Kik Piney can be contacted at [email protected].

To view other works by Kik Piney, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/crispin-kik-piney/

 

 

Applying Earned Benefit

Introduction to a new Series

By Crispin (“Kik”) Piney, PgMP, PfMP

France

 



PM World Journal has kindly agreed to publish a series of articles based on my recent book ”Earned Benefit Program Management”. These articles will appear on a monthly or bi-monthly schedule and are planned to cover the following topics:

  1. “Benefits Maps You Can Count On” will explain how to develop and quantify a model to describe the steps required in order to deliver the strategic benefits from a program or portfolio of projects.
  1. “Introduction to Earned Benefit” will provide an initial introduction to this novel performance measurement technique that builds on the Earned Value Method to focus on achievement of the planned beneficial outcomes.
  1. “Completing the Benefits Map” will develop the benefits map quantification further to provide intermediate cost/benefit values for all components of the benefits map.
  1. “Enhanced Earned Benefit” will address the challenges raised by “essential dependencies” between components and their effect on realistic earned benefit calculations.
  1. “Using the Benefits Map to Understand Stakeholder Attitudes” will demonstrate how the fully-quantified benefits map can be used for advanced stakeholder analysis.
  1. “Benefits Map Risk Analysis” will present an original concept that goes beyond the ideas in the book to address analysis of the risks associated with the assumptions in the benefits map.

Reference

Piney, C. Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy. CRC Press, 2018

Editor’s note: We are excited to announce this new series of articles by Kik Piney, based on his book recently published by CRC Press, Taylor and Francis Group. Merging treatment of program management, benefits realization management and earned value management, Kik’s book breaks important new ground in the program/project management field.  What could be more important to program and project stakeholders than realizing and accounting for benefits as they occur?



About the Author


Crispin (“Kik”) Piney

France




After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is now a freelance project management consultant based in the South of France. At present, his main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package.

Kik has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in France to receive PMI’s PgMP® credential; he was also the first recipient in France of the PfMP® credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of recent PMI conferences and published formal papers.

Kik Piney can be contacted at [email protected].

To view other works by Kik Piney, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/crispin-kik-piney/