Project management - Balance both budget and benefit

Completing tasks, especially difficult ones, is in itself a major achievement – ask Hercules – but should it be the ultimate measure of success?

This has always been the case in project management. A project delivered on-time and to budget was seen as a triumph – but is that the entire story.

Any project deliverable is only as good as the business benefit it brings.

In order to realise these business objectives, programme and project managers must move from task-based management to management through benefits.

The traditional view of programme management has been closely tied to cost and time. You often hear: “The programme was a complete success – it was delivered on time and to budget.” But, doesn’t there seem to be a confusion of means with ends here? For example, it is what an IT system does for the business and not the system itself that is important.

From the consultant’s view, it is easy to see how we could slip into this task-based mindset. Very few clients’ briefs include the delivery of benefits; it is usually a discrete piece of work with the successful delivery of a system as the result. And, for most programme managers, delivering increasingly large and complex systems within budget and timescales is difficult enough without being accountable for something as intangible as business benefits – especially when they will be accepting another risk and no additional return to work on this basis.

But for organisations, managing for benefits realisation is essential.

This starts with the formulation of the business case for any change programme. The case must ensure that the benefits and associated costs and activities for all parts of the programme are clearly understood by all the key players. From this, programme areas with the most strategic value to company can be highlighted and maximum effort concentrated there, benefits that do not deliver maximum return but imply high risk can be rescheduled or removed and the programme can be designed to deliver benefits at the earliest time so investment can start to be repaid and “motivation” is maintained throughout all levels of the company.

From here, it is possible to identify benefit owners and benefit deliverers.

Benefit owners are those people who will receive the benefits and those responsible for delivering those benefits are the benefit deliverers.

Each must know their roles and responsibilities and, for the benefit deliverers especially, there has to be a well-defined motivational scheme to ensure their commitment. How that translates when a consultant is the benefit deliverer may well spark a major change in the industry towards “value-based” pricing, where consultants begin to share the risks and the benefits.

Managing for benefits demands two fundamental and long-overdue changes to the way large-scale programmes are conducted. The first is the move from task-centric to benefit-focused management. This is increasingly important as organisations embark on even larger programmes that cut across functional boundaries and involve every aspect of business-people, process and technology. Task-centric management has meant splitting the overall programme into discrete projects. Benefit-focused management, by its nature, has to be “holistic”, looking at how the organisation as a whole can achieve a business benefit not just complete a task successfully.

Secondly, it requires a new level of confrontation. The programme team, benefit owners and benefit delivers must continually be asking: “Why are we doing this?”, “Are the benefits still achievable and, more importantly, worth achieving?”, “Are there any new benefits which we should now be aiming towards?”. The whole programme must be tightly managed and monitored on costs, time and benefits. Only by this constant challenging of the foundation on which the change programme is based will the real strategic benefits be realised.

The final part of benefit realisation is to understand the full nature of the change of reference that has taken place. The task-based approach to programme management started at the beginning of the programme and ended with delivery. Not so the benefit-focused approach; as this is more closely tied to the business case than the implementation plan, it only finishes when the full benefits have been realised.

Take, for instance, the development of a system to improve management information. With the traditional method, a consultant’s work is finished when the system goes live. However with the benefit-approach, the benefit is established up-front – “to gain a clearer understanding of the buying partners of our customers in order to launch effective micro-marketing campaigns”. Now, the programme is only completed when individualised direct mail pieces have gone to the right customers and the company is seeing a rise in organic sales.

For benefits realisation to work, the imperative is to implement holistic programme management, as it is only through the management of all programme streams across the organisation that the benefits can be successfully delivered.

The most important person in this benefits-focused change programme is the programme manager. Upon their knowledge, experience and ability, the success of the programme is built. Managing, co-ordinating, driving and delivering the programme takes a very specialist and rare set of skills.

The programme manager is aware of the business process, organisational and IT streams that comprise a change programme, the effect of their interactions and how best to manage these streams in a holistic manner.

There are three inter-locking roles for the programme manager. The first is setting and maintaining programme direction, which is the next stage on after the senior decision-makers have created the business case. In this, the programme manager’s overall responsibility is to ensure that the programme objectives are set and delivered. This entails making sure that the programme designed is achievable, and that the roles and responsibilities of the programme team are fully understood and accepted. It is the programme manager that must ensure that everyone in the organisation is heading in the same direction, especially top management whose commitment must be maintained throughout.

The second role can be described as programme implementation. This encompasses the management and co-ordination of the many streams of programme activity, the co-ordination of individual projects within the overall programme, the management of programme risk and ensuring that all potential problems are addressed early. A good programme management consultant will also work to ensure full skills transfer to the client during the programme.

The final programme manager role is people management. He or she has a major part to play in helping an organisation to adapt its culture to meet new business objectives. Key to this is helping to communicate the need for change throughout the organisation, working with senior management and staff to redefine roles and responsibilities while helping to manage and support the organisational aspects of the programme.

With this approach, benefits that have been clearly identified at the beginning of the programme, and understood by everyone involved, can be effectively managed through the lifecycle of the programme and realised at its conclusion. Then programme teams, unlike Hercules, can concentrate on why they are doing something rather than what they are doing.

Harvey Parr is a director of OSI.