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Every project has a purpose. Determining that purpose, the benefits to the organization and how they will be measured is a fundamental principle for project success.

Quick reference

Project Benefits

There is a purpose for every project.  That purpose is the benefit that will accrue to the organization that conducts the project.  Knowing the nature of that benefit is a foundation of project origination. 

When to use

Prior to planning and executing a project, the organization and project manager must know the reason for the project.

Instructions

The primary project benefit is established by the project sponsor and stakeholders.  They use projects to implement strategy, correct problems, perform upgrades, and to ensure compliance.  Projects implement changes and the change for the better is the benefit.

The anticipated benefits are the justification for conducting the project.  The reason the organization expends resources on the project is to realize the benefits.  This often referred to as the Return on the Investment.  These benefits are often documented in the project Business Case or the Project Charter.

The project manager needs to know and understand the forecasted benefits so that when planning the project, they can protect those benefits to the greatest extent possible.  All projects have risk.  The project manager should structure the project plan and track performance so as to minimize the risk in the area of the primary benefit.  On large formal projects, a Project Benefits Plan may be created due to the fact that there are many benefits that must be managed.   

Large formal projects will often have a business case prepared to aid the stakeholders and decision makers when determining what projects to initiate.  This is very useful when there are multiple organizations performing project work and multiple organizations receiving different benefits from the project. The business case not only captures all the benefits, but it also converts them into a common language (money) for analysis and comparison with other projects.

Project Benefits are also useful when creating the project success metrics.  Most stakeholders are not concerned whether the team creates an elegant and beautiful Gantt chart.  They are measuring success based upon the organization realizing the benefits.  That does not mean that completing all of the project deliverables on-time, on-budget, and with acceptable quality is not important.  It is as a measure of project management efficiency.  But project management efficiency is a fleeting goal.  Projects end.  However, the changes being created by the project will continue on well past the lifecycle of the project.  For project sponsors and stakeholders, success usually means one or more of these:

  • Financial return on investment.
  • Customer satisfaction or adoption.
  • Fulfilling contractual terms and conditions or compliance with regulations and standards.

Hints & tips

  • Projects will normally have many benefits, some direct and some indirect.  Determine with your stakeholders the primary benefits – the ones that the project sponsors care about.
  • If the project is being done under contract, the customer may expect a Benefits Management Plan.  This plan will be agreed upon at the beginning of the contract and the project team must demonstrate all the forecasted benefits to close out the project.   
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  • 00:04 Hi, I'm Ray Sheen.
  • 00:06 I'd like to start by looking at the big picture behind projects.
  • 00:09 That is, the project benefits.
  • 00:11 This is the objective measure of project success that is used by the stakeholders.
  • 00:16 When we say benefits, we mean the purpose for doing the project.
  • 00:20 Projects are meant to accomplish something.
  • 00:22 There is a business reason for the project, and
  • 00:25 that is what is of most concern to the project stakeholders.
  • 00:29 In fact, typically, a project is meant to change something.
  • 00:32 Often a project is implementing some aspect of the organization's strategy.
  • 00:37 It might be to create a new product or service.
  • 00:39 It could be a project to open up a new market or
  • 00:42 to address the specific needs of a market segment.
  • 00:46 When the organization encounters problems or issues,
  • 00:49 a project is often created to fix the problem.
  • 00:52 An example could be a project to repair the roof of a building or
  • 00:56 a project to find the cause of an error in the system and correct it.
  • 01:00 We also find projects that are often focused on working with existing
  • 01:04 systems or processes and making them better.
  • 01:07 I recently worked with an organization where we had a project to install a new
  • 01:12 phone system that could be used with the virtual workforce.
  • 01:16 Another example would be to take an existing manual process such as order
  • 01:20 entry and automate it.
  • 01:21 The point we want to highlight is that a project is action-oriented,
  • 01:25 and there's a benefit to completing it.
  • 01:27 So let's dig a little deeper into the idea of benefits.
  • 01:31 Benefits are the reason for the project, so
  • 01:34 they need to stay in clear focus by the project team.
  • 01:37 When the need for a project is recognized,
  • 01:39 it's with the intent of obtaining some benefit.
  • 01:42 In fact, most of the time there are numerous things that could be done by
  • 01:45 an organization.
  • 01:46 But the project that is selected to be worked on,
  • 01:49 is the one with the greatest benefit.
  • 01:51 In order to gain agreement of the stakeholders in the organization,
  • 01:56 this benefit is normally described in project charter or business case.
  • 02:00 More about that in a minute.
  • 02:02 As a project manager, this means that we need to stay focused on that benefit and
  • 02:07 ensure the project plan and
  • 02:09 project control will do their best to achieve that benefit.
  • 02:13 We don't create a perfect GanttChart or
  • 02:15 a scrum board in order to have a pretty project management presentation.
  • 02:19 These are tools to help us achieve the benefit, and
  • 02:22 if they start to interfere with the benefit, drop them.
  • 02:26 Use one that will work for you.
  • 02:28 In some cases, especially when the project is being funded by an outside agency,
  • 02:33 the benefits are spelled out in a project benefit plan so that it is clear how
  • 02:37 the project is achieving the benefits for which it is being funded.
  • 02:42 Let's look now at what we mean by a project business case.
  • 02:45 In fact, in business, it's common for
  • 02:47 the project business case to be created by the project sponsor, not the project team.
  • 02:52 The sponsor is the one who will receive the benefits.
  • 02:55 Their organization or department will realize the sales growth or
  • 02:58 the cost reduction.
  • 03:00 However, if you find yourself in the position of being handed a business case,
  • 03:04 you can probably expect that once you start to create your plan,
  • 03:07 there will need to be some changes.
  • 03:09 The timing may be wrong or the cost estimates are incorrect.
  • 03:12 So don't treat a business case as though it was a perfectly written sacred
  • 03:17 document.
  • 03:17 Expect that there will need to be some updates once you, the professional project
  • 03:21 manager, has had the opportunity to look at the effort required.
  • 03:25 While not as formal as a business case presented on Shark Tank,
  • 03:28 most organizations will have a standard template or
  • 03:31 format that they ask you to follow.
  • 03:33 This will make it easier for senior management to compare and
  • 03:36 contrast different project proposals.
  • 03:39 With that said, the business case normally includes several items.
  • 03:42 A statement of the business need or business benefits.
  • 03:45 Essentially, why we should do it.
  • 03:47 An assessment of the situation that has led to this opportunity or problem.
  • 03:51 This often explains why the project needs to be done now.
  • 03:55 The business case normally,
  • 03:57 has a high-level plan which is full of untested assumptions.
  • 04:00 It provides a rough estimate of time and money based upon the recommended option,
  • 04:04 but that option has not yet been fully evaluated for risk.
  • 04:08 However, with the benefits spelled out and a high-level estimate of cost and
  • 04:12 timing, an analysis can be completed to determine the measure of success or
  • 04:17 return on investment that can be expected.
  • 04:20 Let's finish the session with the discussion of project success metrics.
  • 04:24 It starts with the project benefits management plan.
  • 04:28 This plan is more like an action item list.
  • 04:30 It lists the benefits, the owner of the benefit, and
  • 04:33 when that benefit is likely to be realized during the project and product lifecycle.
  • 04:38 Often, this benefit will have some caveats based upon key assumption or
  • 04:42 risk events happening or not happening.
  • 04:45 Of course, there are also the classic project management metrics of on time,
  • 04:49 on budget, and fully meeting the scope and quality requirements of the project.
  • 04:54 These metrics can be checked throughout the project and
  • 04:57 verified at the end of the project.
  • 04:58 One of the challenges when communicating the project metrics is that different
  • 05:02 stakeholders will have different hot buttons that they care about.
  • 05:05 Normally, the key metrics for different stakeholders are complementary.
  • 05:09 But be careful not to overfocus on just one stakeholder and their metric and
  • 05:14 then miss another one that is important to other stakeholders.
  • 05:18 One may be focused on the speed of the project and
  • 05:21 the other trying to minimize project costs.
  • 05:23 Make sure you understand what success means to each of the major stakeholders.
  • 05:29 A major challenge for
  • 05:30 measuring project success is that many metrics are operational metrics.
  • 05:35 Therefore, you can't truly measure the performance until the project
  • 05:38 results are released operations.
  • 05:40 But by that time, it's often too late to change or fix things.
  • 05:43 This is one of the reasons that the agile methodology is coming to the forefront.
  • 05:48 It allows for rapid iteration of the project results, and lessons learned
  • 05:53 from one release are helping to make the next release even better.
  • 05:57 The world of business and industry is one where winners are rewarded and
  • 06:01 losers are punished.
  • 06:03 And a business with several losses may quickly find itself out of business.
  • 06:07 Therefore, we need to be certain that we understand the meaning of success for
  • 06:12 our projects, and know how that will be measured.

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