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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.

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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/