According to research, 70% of digital transformation projects fail to deliver the projected benefits. A key problem, considering that benefit delivery is the main reason why businesses undertake change initiatives! The thing is, Benefits Realization Management best practices are not always understood clearly and implemented effectively by PPM professionals. This article aims to bridge that gap by helping PMOs integrate benefits realization across all their projects and initiatives, for more value focused PPM.
Understanding PMO Benefits Realization and its Impact
Benefits realization — sometimes referred to as outcome management — is of utmost importance in project management. It is about ensuring that projects do create value for the organization.
Benefits realization takes the form of a set of best practices designed to help PMOs:
- Identify project benefits
- Align them with the overarching strategy and objectives
- Ensure they are realized at delivery
- Ensure the benefits are sustainable after project completion
A caveat: while some benefits create immediate business value (for example a boost in revenue), others (e.g., better corporate reputation) may have a less direct impact and be harder to quantify in financial terms. For instance, improving customer service will doubtless have positive business outcomes. But assessing the initiative’s contribution to the bottom line might prove a challenge. Hence the importance of adjusting the approach.
It is usually up to the PMO to ensure the proper execution of benefits plans.
Key Benefits for the PMO
Better alignment with business goals
Benefits management ensures that projects and programs align with the strategic objectives of the organization. This alignment helps PMOs select and prioritize projects that contribute directly to the achievement of their company’s strategic goals. When critical resources are focused on these high-value projects, PPM leaders can more efficiently utilize resources and budget allocation.
By focusing on benefits, the PMO can make more informed decisions throughout the project lifecycle. This includes making adjustments as needed to ensure benefits are realized.
Benefits realization requires clear ownership of the benefits and accountability for their delivery. The PMO can establish and monitor accountability mechanisms, ensuring that project teams are responsible for delivering the benefits they promised.
Improved risk management
Benefits management involves identifying and managing risks that could potentially hinder the achievement of benefits. The PMO can proactively address these risks, minimizing the chances of benefits not being realized.
Demonstrated PMO value
Successful benefits realization demonstrates the value of the PMO within the organization. When the PMO consistently delivers projects that realize their intended benefits, it reinforces its importance as a strategic asset.
To quote from our eBook Prove Your PMO’s Worth, “Value should be a key concern for PMOs. The reason why many PMOs are not as successful as they could be often boils down to their inability to communicate and demonstrate their value to the organization. Or even to assess and understand it themselves.”
Challenges and Requirements of Benefits Realization for the PMO
Benefits management is about measuring performance. The PMO should establish key performance indicators (KPIs) to track the progress of projects and the realization of benefits. This data-driven approach empowers PMOs to make timely interventions and adjustments. Software tools, such as Enterprise PPM platforms, can help ensure reliable and accurate performance tracking.
Another requirement for effective benefits realization is stakeholder engagement. The day-to-day responsibility for realizing benefits usually lies with several people and teams. The PMO can facilitate engagement to ensure that stakeholders understand the expected benefits and their role in achieving them.
Finally, benefits realization is an iterative process that involves learning from past projects. PMOs can use insights from previous projects to refine selection criteria and processes, for better outcomes in the future. Also, benefits-driven initiatives require proactive management throughout the whole project life cycle.
PMO Benefits Realization Frameworks
There are many methods of formalizing and mapping benefits. However, most standard benefits realization frameworks will include processes to:
- Identify and understand benefits: Based on project and stakeholder requirements, PMOs should map the benefits expected from the achievement of outcomes. It is a good idea to document benefits, including information about priority, value, and ownership.
- Define a roadmap: Measuring the current performance and setting objectives enables PMOs to draft a clear plan for realizing benefits.
- Implement the plan and realize benefits: Upon completion, PMOs should ensure that the benefits are sustained and sustainable.
To Wrap it Up
In summary, benefits realization is a strategic approach that helps the PMO ensure that projects and programs contribute to the organization’s success by delivering tangible benefits. By focusing on benefits delivery, the PMO can drive better decision-making, resource allocation, risk management, and stakeholder engagement, ultimately demonstrating its worth to the organization through more value focused PPM.