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About this lesson

Projects have a purpose and that purpose is to provide a benefit for the organization.  Benefits may be financial, but can also take on other attributes.  The metrics of project success should reflect the desired organizational benefits.

Quick reference

Project Benefits and Metrics

From the stakeholder perspective, project success is normally measured by the impact on operational performance caused by the result of the project.  The Project Benefits Management Plan is used to describe how the project will create the business benefit and the Project Business Case is used to establish the validity of the expected benefits.

When to use

A Project Business Case and Project Benefits Management Plan are normally used with large expensive projects.  There is a good deal of work to create these documents, so they normally are only created when senior management wants to be certain that the potential benefit from the project will offset the project costs.

Instructions

Project managers have a tendency to think of project success as on time, on budget, and completing all deliverables.  But stakeholders, particularly senior management and sponsors, are more concerned about the impact that will be caused by the project product, service or result.  Their focus is usually on operational metrics, not project metrics.  The Project Benefits Management Plan and the Business Case capture these operational metrics.

Project Business Case

The PMBOK® Guide defines the Project Business Case as, "A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities."  The Business Case paints a picture of how the operations will be affected by the successful completion of the project.  There is no set format for a business case, but it normally includes a statement of the business need and an analysis of the situation.  This leads to a discussion of options with a recommendation that is usually based upon a financial analysis of the projected project costs and benefits.

This is normally prepared by the business unit or sponsor who has identified the need.  And the business case is used by senior management to select the project and start the project initiation process.  During initiation, the project manager will normally review and update the business case with more accurate information as it becomes available.

Project Benefits Management Plan

The PMBOK® Guide defines the Project Benefits Management Plan as, "The documented explanation defining the processes for creating, maximizing, and sustaining the benefits provided by a project."  This plan is used by the project manager and project team when evaluating options and analyzing risk.  The plan translates the projected project result into operational performance measurements.  It is the impact on these measurements that the business leadership is watching to determine project success.  Depending upon the measurement, it may take months before the business will know if the project is successful.  While it iis convenient for the project team to focus on on-time, on-budget, and deliverable completion.  They need to keep the operational measurements and metrics in-sight.

Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017 Glossary definitions, Pages 699, 700.   PMBOK is a registered mark of the Project Management Institute, Inc.

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  • 00:04 Hi, this is Ray Sheen.
  • 00:06 I'd like to talk with you about project metrics and benefits.
  • 00:10 This is the objective measure of project success that is used by the stakeholders.
  • 00:15 Stakeholders are not nearly as in love with project management as we
  • 00:19 practitioners are.
  • 00:21 Quite frankly, they don't care about Gantt charts or RACI matrices nearly as much as
  • 00:25 they care about the business benefit that the project is supposed to deliver.
  • 00:30 You need to keep that in mind when interacting with stakeholders and
  • 00:33 always be prepared to discuss the business impact of your project.
  • 00:37 Normally the business benefit is spelled out in the project business case.
  • 00:41 This is an analysis that is often done before a project manager or
  • 00:45 a project team is selected.
  • 00:47 This is done by the business to decide if they even want to pursue this project.
  • 00:51 The business case is used to build the project charter, which is then used to
  • 00:55 build the project plan, which is what guides us in the execution of the project.
  • 01:00 Project Management Body of Knowledge, the PMBOK Guide,
  • 01:03 gives us some guidance about the business benefits and the business case.
  • 01:07 It defines a business case as a documented economic feasibility study,
  • 01:12 used to establish validity of the benefits of a selected component lacking sufficient
  • 01:17 definition, and that is used as a basis for
  • 01:19 the authorization of further project management activities.
  • 01:23 It provides economic rationale for why we would do this project.
  • 01:27 The PMBOK guide further defines the project benefits management plan
  • 01:32 as the documented explanation defining the processes for
  • 01:35 creating, maximizing, and sustaining the benefits provided by a project.
  • 01:40 So the business case is used during initiation or even prior to that.
  • 01:44 The benefits management plan is used throughout the life of the project.
  • 01:49 Let's take a little more time to discuss the business case.
  • 01:52 As I said, it's often prepared by the sponsor before the project even formally
  • 01:56 begins initiation.
  • 01:58 But when that's the case, the project manager's often expected to review and
  • 02:02 update the business case based upon the results of the initiation processes,
  • 02:06 to see if it still makes sense to go forward with this project.
  • 02:10 Now there's no standard, format, or structure that is used universally for
  • 02:13 creating and preparing a business case.
  • 02:16 Your organization may have a standard template, but
  • 02:18 the next organization is sure to have a different one.
  • 02:21 That is because the key factors to consider vary with the industry and
  • 02:24 the organization's strategy and structure.
  • 02:26 Since no two companies are alike,
  • 02:28 it is no surprise that there is no standard structure for a business case.
  • 02:33 But that doesn't mean there arent' some common elements in most business cases.
  • 02:36 They may be expressed a little differently or in a different order, but
  • 02:39 most business cases will include a list of the business stakeholders' needs,
  • 02:43 essentially the reason why the project should be done.
  • 02:47 Business cases also include an assessment of the current situation.
  • 02:50 This might be in the form of a gap analysis,
  • 02:53 a discussion of strategic options or an assessment of business risks.
  • 02:57 This current situation is often used to introduce options that were considered, or
  • 03:01 should be considered, by the project team.
  • 03:04 Of course, there is a recommendation of which options should be pursued, and
  • 03:08 then there is a discussion of how success will be measured.
  • 03:11 These are accompanied by financial feasibility analysis, but
  • 03:14 of course the format and structure can vary widely.
  • 03:17 Well let's finish this topic with a discussion about metrics,
  • 03:20 in particularly the metrics used by stakeholders to assess project success.
  • 03:25 It starts with the project benefits management plan.
  • 03:28 The plan is more like an action item list.
  • 03:30 It lists the benefits, the owner of each benefit, and
  • 03:34 when the benefit is likely to be realized during the project or product lifecycle.
  • 03:38 Often this benefit will have some caveats based upon key assumptions or
  • 03:42 risk events happening or not happening.
  • 03:45 Of course, there are also the classic project management metrics of on time,
  • 03:50 on budget, fully meeting scope and quality requirements of the project.
  • 03:54 These metrics can be checked throughout the project, and
  • 03:57 of course are easy to check at the end of the project.
  • 04:00 One of the challenges when communicating project metrics is that
  • 04:03 different stakeholders will have different hot buttons that they care about.
  • 04:08 Normally, the key metrics for different stakeholders are complimentary, but
  • 04:11 be careful not to over focus on one stakeholder and their metric, and
  • 04:15 then miss another one that is important to other stakeholders.
  • 04:18 A major challenge for measuring project success is that many metrics
  • 04:22 are operational metrics, therefore you can't truly measure their performance
  • 04:27 until the project result is released to operations.
  • 04:30 But by that time it's often too late to fix things.
  • 04:32 This is one of the reasons that the Agile methodology has come to the forefront.
  • 04:37 They allow for rapid iterations of the project results, and
  • 04:40 lessons learned from one release will help to make the next release better.
  • 04:45 This is especially true when the key metrics
  • 04:48 are operational finance performance.
  • 04:50 It may take months before the impact of the project is fully understood.
  • 04:54 Or if the key metrics are based upon customer satisfaction,
  • 04:57 there may be a lag between when the project completes and
  • 05:00 the customer notices the difference in performance.
  • 05:03 This is especially true when the project is a phase roll-out, because this delays
  • 05:07 the impact reaching some customers, who are in the later phases.
  • 05:10 Finally, if the project is done under contract,
  • 05:12 the project team may think that they have fulfilled the terms and
  • 05:15 conditions of the contract and the statement of work.
  • 05:18 But the end customer may view things differently.
  • 05:20 And depending upon how quickly the customer reviews the results, they may
  • 05:25 come back months later and demand that the project be restarted to complete or
  • 05:29 correct some of the deliverables.
  • 05:31 The world of business and industry is one where winners are rewarded and
  • 05:36 losers are punished and may even quickly find themselves out of business.
  • 05:41 Therefore, we need to be certain that we understand the meaning of success for
  • 05:45 our project and know how it will be measured.

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