Benefits realization – building on (un)safe foundations or planning for success?

Advances in Project Management Series

Stephen Jenner, FAPM, FCMA, MBA, Mst



Research consistently finds that organizations struggle to demonstrate a return on their investments in change – for example, the OGC report that, “Deficiencies in benefits capture bedevils nearly 50% of government projects” i. The issue is not peculiar to the public sector – Nobel prize winner Daniel Kahneman notes that, Most large capital investments come in late and over budget, never living up to expectations. More than 70% of new manufacturing plants in North America, for example, close within their first decade of operation. Approximately three-quarters of mergers and acquisitions never pay-off…And efforts to enter new markets fare no better” ii. Similarly, change management ‘guru’ John Kotter says, “Up to 70% of change initiatives fail to deliver on the benefits that they set out to achieve.” iii

Research also indicates that in many cases the causes of failure can be traced back to the business case, and in hindsight the problems are all too obvious.  Why might this be? Psychologists and other researchers have identified a series of cognitive biases and organizational factors that adversely impact the production of accurate and reliable benefits forecasts and business cases. These cognitive biases are firstly examined, before we consider the organizational factors that can also work against accurate and reliable forecasting.  We then review strategies and techniques that can be used to overcome both factors.

Cognitive biases affecting benefits forecasting

Lovallo and Kahneman argue in the Harvard Business Review that forecasters suffer from, “Delusional optimism: we overemphasise projects’ potential benefits and underestimate likely costs, spinning success scenarios while ignoring the possibility of mistakes.”iv The table below identifies five of the main cognitive biases and how they can impact on benefits forecasting.


To read entire paper (click here)


Stephen Jenner


Steve Jenner, MSt, MBA, BA (Hons), FAPM, FCMA, CGMA is co-author and Chief Examiner for ‘Management of Portfolios’ and was previously Director of CJIT where the approach adopted to portfolio & benefits management won the 2007 Civil Service Financial Management Award.   He is a regular speaker at international conferences, trainer and writer on the subjects of portfolio and benefits management – he is the author of several books in the field, and is a professionally qualified management accountant and a Fellow of the APM.  Steve also holds an MBA and Masters of Studies degree from Cambridge University.  Steve is currently working on new guidance on ‘Managing Benefits’ which will form the basis for accredited examinations from the APMG.  This article is based on extracts from the new Guide – due for publication in September 2012.  Steve can be contacted via www.stephenjenner.com or [email protected].