Benefits realization and value management in project management

But as Dr. Harold Kerzner of IIL revealed in a recent Axelos webinar, 70% of companies fail to achieve the benefits they want from investing in project management. But as project management evolves from 1.0 to 2.0 and now 3.0, project managers are becoming increasingly focused on benefits realization.

As uncomfortable as it might be to hear, Dr. Kerzner stresses that the historical failure of benefits realization is not – as boards might believe – about poor estimating; it’s about poor project management.

We’re in changing times and project management needs to improve its performance in delivering benefits and value - but this requires a change in the role and responsibilities of project managers.

In the traditional project management 1.0 approach, project managers are brought in after project approval, given a budget, a target end date and told to execute the project regardless of whether the project manager thinks it’s possible. Meanwhile, functional managers retain the best resources for projects that affect their annual bonuses, leaving longer-term strategic projects to suffer.

In addition, 1.0 is typified by rigid, one-size-fits all methodologies created for project managers that they were obliged to follow.

With the move to project management 2.0, the various factors involved in project management have had to change:

Transitioning to project management 2.0 means converting project management into business management, i.e. you should view yourself as managing part of a business, not just a project.

In project management 2.0, stakeholders need to make more informed and timely decisions based on meaningful metrics that are shared rapidly, for example through a dashboard reporting system. This means having more metrics than time/cost and scope and understanding that projects evolve and are flexible, reflecting the concepts of Agile and Scrum.

Project management 2.0 is based on “distributed collaboration”. Instead of the 1.0 approach in which project managers communicate only with the project sponsor, not the stakeholders or customer, today project managers need to talk to almost everybody within the business.

And so, the cell phone/tablet computer, social media software and project-specific apps become the most important tools for project managers in transmitting project information, managing and validating performance from any location in the world. Project status is at your fingertips and real-time data enables rapid decisions based on evidence and facts.

Introducing project management 3.0

The shift, now, to project management 3.0 signals a change of project management emphasis: from planning, measuring and controlling (in 2.0) to benefits realization and value management (3.0).

Becoming more aligned to strategic business objectives is not a magical quick-fix, but a cultural change in the way benefits realization management must work.

Where a benefit is an outcome or deliverable considered important to people or organizations and benefits realization management is a way of managing what organizations invest to achieve those benefits, value is what the benefits are worth.

The ultimate goal of a project is not merely to achieve benefits; the goal is to sustain those benefits over the long term and increase value.

So this requires a change in the definition of project success. Where the traditional definition focuses on the “completion of the projects within the triple constraints of time, cost and scope” the future definition needs to be “achieving the desired business value within the competing constraints”.

Someone has to take deliverables and outcomes and extract value from them, and it is the project manager who is best positioned to do that. The problem is, at present, project managers aren’t paid to do that!

To hear more of Harold Kerzner’s insight into benefit harvesting, benefit metrics, understanding value, value analysis, the investment lifecycle, measurement of business value and matching projects to strategic objectives LISTEN AGAIN to the Axelos webinar.