Risk and Project Benefits

Posted on 25th April, by JimYoung in Uncategorized. No Comments

Many projects declared successful, never deliver all the benefits predicted by their enthusiastic champions. Benefits may have been oversold to get projects approved. Such projects waste resources and deny better propositions the light of day. Sometimes too, different projects claim the same benefits. And some projects chug on with no prospect of realising any benefits, ‘justified’ by sunk costs or the wish to avoid the embarrassment of cancellation. But mostly, post-project product or service benefits are not formally assessed. Yet benefits are the rationale for undertaking any project. Thus, project managers may need to take closer interest in anticipated project benefits and risks to these benefits.

While it is generally accepted that the prime role of project managers is to deliver their projects to ensure scope, time, cost and quality objectives are satisfied and that risks to these objectives are properly managed, there is an argument for project managers to also assume greater responsibility for benefit delivery. This would include proactively managing risks to those benefits specified in the business case.

Such a responsibility would require that project managers fully understand the reasons for their projects, be more involved at project conception, and appreciate the explicit linkages between project objectives, outputs, outcomes and benefits, where:

• Objectives are parameters or constraints of scope, time, cost and quality within which us project managers must navigate and build our creations.

• Outputs are deliverables – products or services that remain at our project’s completion. They may be tangible or intangible.

• Outcomes are results or changes caused by using project outputs. Such changes need to be managed to ensure that planned benefits result.

• Benefits add value through improvements that result from outcomes and may be quantifiable or defy quantification, direct or indirect, anticipated or sometimes unanticipated, one-time or recurring, and are not necessarily assured – they possess uncertainty for us to manage.

We would need to actively track benefit risk, both threats and opportunities, throughout the project life cycle and beyond. Our project plans would not only include clear responsibilities and methods for benefit mapping, scheduling, tracking, measuring, harvesting and post-project benefit reviewing and reporting, but also provide for benefit risk management.

Our project risk registers would document risks to benefits – not just risks to project management performance, but also risks to post-project product or service performance that for most projects has even more uncertainty. This is a particular challenge when deliverable uptake and added value may be at the mercy of changing factors beyond our control or influence – political, economic, social, technological, legislative, environmental factors and the vagaries of marketplace supply and demand.

A consequence of this expanded job description would be the need for project managers to assume a broader view of project success. We would need to anticipate changing influences and continuously assess and reassess their likely impact on the delivery of project benefits and respond accordingly. External changes plus internal changes to project scope, time, cost and quality objectives could affect business case validity, whereby anticipated benefits might be enhanced, reduced or invalidated. In order that the business case remains ‘desirable, achievable and viable’ (PRINCE2 mantra), changes to this document and to project objectives would be recommended by the project manager in order to safeguard anticipated benefits and perhaps generate new benefits, but not merely to ensure on time and on budget project completion. Routine status reports would also address benefits and their risks.

Conversely, the impact of any proposed changes to project objectives, in order to keep projects on track, would need to be assessed against business case benefits. The project manager would be permitted some tolerance regarding projected benefits, and estimated impacts to benefits outside those limits would require the sponsor’s involvement as is usual practice with proposed risk responses and variation requests.

Project managers’ active involvement on projects may also intrude into the early operational life of the new products or services when initial benefits are to be achieved. They may play a greater role in user-training, preparation of marketing materials, product demonstrations and launches, change management, and so on, in the interests of benefit achievement.

Nevertheless, some organisations will doubtlessly prefer the more traditional division of responsibilities whereby project managers focus on producing the deliverables and sponsors focus on the on-going validity of the business investment and its promotion. Perhaps it is sufficient that the project manager is simply mindful of the project business rationale and the need to protect anticipated benefits when they plan, solve problems and make decisions throughout the project life cycle. They will advise their sponsors if benefits appear to be threatened. Hopefully no sponsors abdicate their responsibility for benefits and let their project managers take the blame when new products and services under-perform or fail. Perhaps those same sponsors would be up front for the accolades should results be positive. Given that a project manager is often deemed to be as good as his or her last project, the added effort, stress and career risk associated with benefit responsibility might warrant improved remuneration, particularly for higher risk endeavours? Yeah right!

To conclude, if the measure of project management performance is to include benefit preservation and achievement, then project managers would need to manage risks to benefits as well as risks to project objectives. Importantly, responsibilities for benefits would need to be clearly specified in the charter for each project, otherwise we can expect even more ‘benefit leakage.’ Effective post-project benefit management reviews should make for more realistic and robust business cases and improved project selection procedures. Too-risky project propositions would be recognised and eliminated earlier.


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