Benefits Realization Management: A Practice Guide

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• Publisher: Project Management Institute
• Year: 2019
• ISBN:
  9781628254815
• Edition: 1
• Topic: Business
• Subtopic: Project Management
• Index: Business

Benefits realization is the common thread that runs from organizational strategy through project deliverables that contribute benefits. Yet, according to PMI's 2018 Pulse of the Profession Report: Success in Disruptive Times, only one in three organizations report high benefits realization maturity. This practice guide provides a comprehensive look at the topic of benefits realization in of portfolio, program, and project management. It will help readers tackle this important topic and drive more successful outcomes and better strategic alignment in your organization. Inside this practice guide readers will find: standardized definitions for benefits realization, benefits realization management and associated benefits realization terms; the core principles of benefits realization; the benefits realization management life cycle from organizational mission, vision, and strategy through project deliverables and success measurement, and how it contributes to the expected benefits and value that the organization intends to realize; and a framework and guidance to help practitioners manage benefits realization in organizational project management and portfolio, program, and project management. As with all PMI standards and publications, this practice guide also aligns with our other standards including: A Guide to the Project Management Body of Knowledge (PMBOK Guide)®—Sixth Edition; The Standard for Program Management—Fourth Edition; and The Standard for Portfolio Management—Fourth Edition.

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INTRODUCTION

1.1 PURPOSE

This practice guide describes benefits realization management (BRM) with a focus on products, services, results, or process improvement. BRM covers the day-to-day organization and management of the effort to achieve and sustain potential benefits arising from investments in portfolios, programs, and projects. BRM presents knowledge needed to conduct BRM regardless of the benefit's focus.

This practice guide:

• Provides a practical description of what BRM is;
• Defines the role and life cycle relationships of BRM to portfolios, programs, and projects;
• Describes why BRM is important;
• Identifies the key principles and critical success enablers needed to help an organization achieve the realization of planned benefits they seek as part of its strategic vision;
• Provides general guidance for organizations in establishing their approach to BRM in the context of portfolios, programs, projects, and organizational change management; and
• Identifies a common vocabulary to aid in the discussion of BRM.

In addition, this practice guide is intended to help practitioners to:

• Understand the fundamentals of BRM,
• Consider how to adapt and adjust existing techniques and practices to meet organizational needs, and,
• Support BRM in areas of practice where there may not yet be consensus as to how BRM should be used or changed for the better.

The choice of BRM practices—and how organizations tailor what they choose to implement—is highly dependent on organizational, cultural, and practice norms. This practice guide aims to help practitioners better understand what it means to actively manage benefits as an integral part of portfolio, program, and project management thinking, activities, responsibilities, and accountabilities.

The information and guidelines in this practice guide may be used in whole or in part to develop manual or automated practices with any type of strategic management, including portfolio, program, and project life cycles that the organization uses.

1.2 NEED FOR BRM

Facing rapid change and increasing complexity, organizations struggle to implement the strategies they need to generate and sustain a competitive advantage. There is a greater need now than ever before to ensure that the investments in portfolios, programs, and projects lead to clear, sustainable benefits. A benefit is defined as a gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes.

There is often a gap in the appropriate tracking from planned to actual realization of benefits. BRM is an approach used to close that gap, by aligning portfolios, programs, and projects to the organization's overarching strategy. Good BRM helps correct strategy misalignment, improve initiatives selection, integrate outputs and outcomes, and transition to operations resulting in measurable benefits that deliver more value to the organization. Value is defined as the net result of realized benefits less the cost of achieving these benefits. According to a survey conducted by the Project Management Institute (PMI) in its 2018 Pulse of the Profession® Report: Success in Disruptive Times [1]:¹

• Fewer than 1 in 10 organizations report having a very high maturity with their value delivery capabilities.
• The average percentage of projects that met original goals/business intent was 78% for mature organizations and 56% for immature organizations.
• Only 31% of organizations are prioritizing the development of a comprehensive value delivery capability.
• Of the champion companies, those making the investment to have high-delivery capabilities, 87% report having achieved high-delivery capabilities versus only 5% for underperformers.

Establishing formal or improving existing BRM processes requires focusing on several priorities:

• Managing portfolios of programs and projects based on planned strategic outcomes and benefits—and, specifically, value creation for the organization;
• Recognizing the extent of organizational change required if planned benefits are to be realized;
• Creating an environment for regular dialogue to secure alignment, assess progress, and course-correct, as needed, right from the start of each initiative among:

• Highest-level executives,
• Organization owners,
• Senior end users, and
• Appropriate portfolio, program, and project managers; and

• Establishing the right conditions for success, including:

• Setting expectations regarding the key principles of BRM,
• Establishing the supporting behaviors for those principles,
• Fostering a value-oriented environment, and
• Having the right portfolio, program, and project managers in place, along with senior-level leadership committed to doing BRM well.

BRM is a continuous journey in which organizations learn by doing and improving their performance over time. Organizations can advance BRM capabilities significantly through incremental steps, for example, launching multiple quick-win measures to build up experience rapidly.

PMI research reinforces the value-add role of portfolio, program, and project management in BRM. However, the research also shows that levels of responsibility and accountability vary in practice, especially for proactively managing BRM with monitoring and reporting metrics and other critical information, such as progress measurement against the benefits realization management plan.

Not surprisingly, fewer than half of the surveyed organizations identify any role for project managers to help ensure that the planned benefits realized through a project's deliverables are aligned and stay aligned, with the strategic goals and objectives associated with the portfolio/program of which the project is a part. Together with portfolio and program managers, project managers can fill a useful role in helping ensure benefits are realized by the intended beneficiary. In a mature BRM environment, the responsibility for the strategic alignment of projects within a given program belongs to the program manager, and the strategic alignment of programs and nonprogram projects resides with the portfolio manager and benefit owner(s).

While this finding further illustrates how many executive leaders do not fully connect portfolio, program, and project management with achieving strategic objectives, it also highlights that BRM is a shared responsibility among portfolio, program, and project managers, benefit owners, organization owners, executive sponsors (sometimes known as senior responsible owners), and other senior leaders.

This practice guide provides a resource to help organizations and practitioners successfully achieve the realization of planned benefits from critical initiatives. However, it is recognized that not all organizations manage temporary work using all three domains of portfolio, program, and project management. Still, these organizations should benefit by adapting the principles and practices of BRM to fit the organization's needs. For example, when an organization does not practice formal portfolio management but only implements initiatives by projects, as in many small-to-medium entities, project managers should interface directly with the senior leaders responsible for the planned benefits that the project outcomes are expected to generate.

1.3 INTENDED AUDIENCE

This practice guide is intended for anyone who is responsible for:

• Identifying and achieving benefits expected from investments in portfolios, programs, and projects;
• Communicating benefits-related issues with executives and/or sponsors;
• Ensuring planned benefits stay aligned with and contribute to an organization's strategic goals and objectives; and
• Ensuring benefits that accrue from the outputs of portfolios, programs, and projects are realized and sustained.

Included in this group are, but not limited to:

• Benefit owners,
• Senior end users,
• Executive management team,
• Executive sponsors,
• Portfolio and program management office (PMO) managers,
• Functional/operations managers,
• Organizational change managers,
• Business analysts, and
• Portfolio, program, and project managers and their respective team members.

This practice guide has been developed to help practitioners obtain improvements in overall competency levels and in the application of BRM in portfolio, program, and project environments.

1.4 OVERVIEW OF CONTENT

This practice guide is organized as follows:

• Section 1 Introduction. This section includes an overview of the purpose and need for publishing PMI's first practice guide on BRM. The rationale and intended audience for this guide are also defined.
• Section 2 BRM and Organizational Context. This section describes where BRM fits in the organization, how strategy relates to benefits, what the core principles and critical success enablers of BRM are, along with a summary of organizational BRM roles and responsibilities.
• Section 3 BRM Framework Overview. This section describes the Identify, Execute, and Sustain life-cycle stages and the supporting activities, practices, and common tools needed to provide a viable BRM system in conjunction with the organization's portfolios, program, and projects.
• Section 4 Guidance for Portfolio, Program, and Project Managers in a BRM Context. This section offers guidance to portfolio, program, and project managers, as well as business analysts, on what actions and practices support and enhance engagement of their respective domains with BRM life-cycle activities.
• Appendix X1 Contributors and Reviewers of Benefits Realization Management: A Practice Guide.
• Appendix X2 Benefits Realization Management Readiness Survey.
• Appendix X3 BRM Research Summary.
• Glossary. The glossary provides definitions of key BRM terms.

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¹ The numbers in brackets refer to the list of references at the end of this practice guide.

2

BRM AND ORGANIZATIONAL CONTEXT

This section describes foundational terms, concepts, principles, critical success enablers, and roles and responsibilities. In addition, it gives an overview on the topics of organizational strategy and benefits, benefits and requirements traceability, benefits categorization considerations, and benefits measurement.

2.1 OVERVIEW

BRM encompasses the standard methods and processes that an organization uses for identifying benefits, executing its benefits realization management plans, and sustaining the realized benefits facilitated by portfolio, program, and project initiatives. BRM requires alignment with an organization's strategy, a solid understanding of key principles, and techniques as described in this chapter.

The terms benefit and value are often used interchangeably. However, it is important to understand their differences and the direct relationship between benefits and portfolios, programs, and projects. In this practice guide, a benefit is defined as a gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes. Value, however, is the net result of realized benefits less the cost of achieving these benefits. Value may be tangible or intangible. Figure 2-1 illustrates this equation.

Cost management is extensively described in A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) [2] and the Practice Standard for Earned Value Management [3]. The focus on BRM is on the benefits component of Figure 2-1, including tangible and intangible benefits (see Section 3.5.3 for a discussion on tangible and intangible benefits). Quantifying benefits and allocating appropriate costs for attaining these benefits can be difficult in so...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Notice
• Table of Contents
• List of Tables and Figures
• Preface
• 1. Introduction
• 2. BRM and Organizational Context
• 3. BRM Framework
• 4. Guidance for Portfolio, Program, and Project Management in a BRM Context
• Appendix X1. Contributors and Reviewers of Benefits Realization Management: A Practice Guide
• Appendix X2. Benefits Realization Management Readiness Survey
• Appendix X3. BRM Research Summary
• References
• Bibliography
• Glossary