Identifying and structuring programme and project benefits

The identification and structuring of potential or expected benefits associated with a programme or project is an important first step in the benefits management process.

Objectives

The key objectives of the identification and structuring of benefits are:

  • to identify and understand the full range of benefits
  • to identify and involve business area representatives
  • to establish detailed benefit profiles for each key benefit

Early stage benefit identification

One of the first activities in the benefits management process is to identify, at a high level, what the expected benefits and dis-benefits of the particular programme or project are. This will help to clarify the underlying reason for the investment. It will also highlight who will be affected, the level at which the benefits will be realised and early indications of when.

The objectives are to:

  • consider and document the main benefits and dis-benefits expected
  • capture early thinking on measurement, ownership, timing and level of benefit management

This stage is normally instigated and led by the project team. The Senior Responsible Owner and project manager should identify and agree a project benefits manager responsible for co-ordinating and developing benefits management activities. Where appropriate, this role can be combined with that of the project manager.

The programme or project team, led by the benefits manager, should explore and document all potential expected benefits, as well as any potential dis-benefits. How this is actually achieved will depend on the programme or project, but generally the team will analyse the objectives and proposed deliverables to develop a series of high-level strategic benefits.

When considering the benefits of a programme or project, it is useful to think in terms of outcomes - benefits to the business deriving from managed changes. An example may be where a new application processing system is being considered. Instead of a desired outcome being the ability to process an application in one day rather than three, the benefit will be the saving of two days elapsed time, therefore providing better service to the public.

Some suggested areas where benefits may be identified include:

  • policy or legal requirement - benefits that enable an organisation to fulfil policy objectives, or to satisfy legal requirements where the organisation has no choice but to comply
  • quality of service - benefits to customers, such as quicker response to queries or providing information in a way the customer wants
  • internal management - benefits that are internal to the organisation, such as improving the decision-making or management processes
  • process improvement - benefits that allow an organisation to do the same job with less resource, allowing reduction in cost
  • personnel or HR management - the benefits of a better motivated workforce may lead to a number of other benefits such as flexibility or increased productivity
  • risk reduction - benefits that enable an organisation to be better prepared for the future by, for example, not closing off courses of action, or providing new ones
  • flexibility - benefits that allow an organisation to respond to change without incurring additional expenditure
  • economy - benefits that reduce costs whilst maintaining quality, often referred to as cost reduction
  • revenue enhancement or acceleration - benefits that bring increased revenue, or the same revenue in a shorter timeframe, or both
  • strategic fit - benefits that contribute to the desired benefits of other initiatives, or make them achievable

Any early thoughts on benefit descriptions, measurement, ownership or priority should be captured at this stage. Where possible, discussion should be kept at a reasonably high level. Detailed benefit identification and structuring will take place at a later stage. Dis-benefits may not be easily identified at the start of a project but will usually surface later on.

Benefit owner identification

Successful benefits management hinges on a partnership approach between the programme or project team and representatives from affected business areas. It is critical to identify and involve key individuals from the business side who can help develop, shape, implement and manage the benefits of the programme or project. Without the input, knowledge and commitment of these individuals, the team will find it difficult to develop and implement a meaningful or useful benefits framework. Ultimately, these individuals will help determine if the benefits of an investment are fully realised or not.

These key stakeholders are known as benefit owners. As with all programme and project management activity, the various benefits roles described should be considered with commensurate effort in mind and undertaken accordingly.

The objectives are to:

  • identify who the main benefit owners are for the project
  • develop a plan for engaging with and involving key benefit owners

This work will be done primarily by the programme or project SRO and benefit manager with support from the programme or project team as required.

Identification of benefit owners

The project team must determine who should be involved in, and responsible for, the development and management of the programme or project benefits. The two main representative roles from the business side are:

  • senior benefit owner – a senior business representative responsible for ensuring that the benefit is achieved once handover from the project is complete; this should include a specific role and individual’s name within the organisation
  • operational benefit owner – a business representative who is responsible for benefit measurement and the management of any activities required to ensure benefits are realised

While specifics will vary from project to project, it may be useful for the programme or project team to consider the following questions when trying to identify who the main stakeholders are.

Where do the main benefits occur?

The impact of programme or project outcomes on business areas will vary depending on the nature and scope of the change. Some initiatives will cut across the whole organisation, while others will affect only certain areas.

Diagram showing the benefits resulting in distinct business areas from different programmes and projects.
Benefits occurring as a result of a number of programmes and projects

Analysis of where priority benefits will be realised should help target specific business areas, and individuals, who need to be involved in the process.

At what level will benefits be measured and managed?

As well as analysing where benefits are likely to occur, it is also useful to think in terms of the level at which benefits will be managed and realised. Benefits can impact several tiers of an organisation and recognising this spectrum of potential benefits will help to generate the greatest impact or return for the organisation. It will also help to identify those individuals best placed to oversee their delivery. It is common for a project to have a range of benefits at different levels. Benefits can also be grouped by whether they occur inside or outside the organisation.

What is the type of benefit and who is ultimately responsible for the outcome?

There may be instances where a benefit will be delivered by the operational benefit owner from the business side, but the senior benefit owner will be from a different part of the organisation. For example, the benefit might be operationally delivered by the business but because it is concerned with a cash releasing saving, the senior benefit owner is the organisation’s finance director.

Engagement with benefit owners

Once benefit owner groups, or individuals, have been identified, thought must be given to how these individuals will actually be involved with, and contribute to, the overall benefits process.

Good communications are critical to successfully engaging with, and gaining the commitment of, business areas. Those individuals identified as potential benefit owners may be unfamiliar with benefits management, may have little knowledge of the programme or project or its objectives and aims, and will have their own business priorities and commitments. As such, there must be a clear, structured, communication plan in place to explain what benefits management is, the rationale behind it, the role of business areas and the advantages of contributing to the process. The approach and plan will vary but generally the communication plan should set out key objectives and practical steps for involving affected business areas.

Development of introductory communication material will help explain what benefits management is, what the process involves, its advantages and roles and responsibilities. This should be tailored and customised to reflect specific business area circumstances to increase its relevance and impact.

Securing senior management commitment is a critical step in the benefits management process. Without the sanction, support and drive of senior staff from the business side, the process is unlikely to succeed. It may be useful for the SRO to conduct preliminary meetings to pave the way for subsequent communications and engagement.

Establishing a benefits management working group is an effective means to involve business representatives in benefit development work. This approach will not only harness the knowledge and expertise of the business side, but should also encourage participation, involvement, commitment and ownership of the benefits in the longer term. The programme or project team must decide who will be involved in the group, balancing numbers, grades, influence, expertise and working knowledge. It is important that there is strong business side representation and a sufficient mix of grades to allow for decision making and practical development work.

Diagram illustrating who should be involved in confirming commitment to, and ownership of, identified benefits.
Diagram illustrating who should be involved in confirming commitment to, and ownership of, identified benefits.

The advantages of establishing a working group are:

  • to promote awareness and understanding of the benefits of the programme or project amongst key stakeholders
  • to encourage involvement and promote greater commitment to realising agreed benefits
  • to use stakeholder knowledge of the business to identify benefits that otherwise may be overlooked

A working group may typically comprise:

  • the SRO in the role of chair
  • the project manager or benefit manager
  • senior user representatives
  • user representatives
  • facilitator

Detailed benefit identification

This phase of the benefits management process is aimed at producing a detailed list of the main benefits and dis-benefits of the programme or project and should build on initial high-level benefit identification work.

The objectives of the detailed benefit identification phase are to:

  • identify the main benefits and dis-benefits
  • consider and document different types of benefits

The project benefits manager should organise and co-ordinate this stage of the process with the actual development work done by the programme or project team, benefits working group and any additional business side contributors as required.

All potential benefits should be explored and documented, as well as any potential negative dis-benefits. How this is actually achieved will depend on the programme or project, but one suggested approach is to hold a series of benefit workshops.

Workshops provide an effective means for benefit owner contribution and involvement and allow for the full range of perspectives, experience and knowledge to be considered. The use of an experienced facilitator who isn’t a major stakeholder can be useful to encourage productive discussion and to assist the thinking process by drawing out the underlying business drivers. From this it should be possible to develop a series of detailed benefits and dis-benefits.

As a starting point it may be useful for the working group to repeat the high-level identification of benefits already completed by the programme or project team. This will offer the opportunity to compare the separate list of benefits, to look for similarities or differences and to agree a combined set of high level benefits.

Types of benefits

Depending on the type of programme or project and the expected outcomes on which the business case and investment were justified, there will be an emphasis on realising specific types of benefit. Benefits should be grouped into one of the following categories:

  • direct monetary benefits (tangible) – those benefits that can be quantified and valued in financial terms, for example cost savings, revenue generation, cost reductions
  • direct non-monetary benefits(tangible) – those that can be quantified but are difficult or impossible to value in financial terms, for example fewer customer complaints, productivity gains, greater accuracy, lower staff turnover, increased response times
  • indirect benefits (intangible) - can be identified, but cannot be easily quantified for example end user satisfaction, better access to information, organisational image, customer service, better morale, better perceptions
  • dis-benefits - negative consequences from the intended change

Some guidelines for benefit identification

If a benefit can’t be measured numerically it shouldn’t be claimed. Quantitative benefits can easily be measured numerically; qualitative benefits are normally measured with a questionnaire and the response is measured numerically.

A common mistake is to identify benefits that are loosely defined or too difficult to measure. For example, claiming a benefit that a project improves the efficiency of the whole department is unsustainable.

The identification of benefits will impact all remaining activities in the benefits management lifecycle. If the wrong benefits are identified at this stage it will lead to substantial extra work at a later date.

Avoid double counting of benefits. Try to reach agreement when two programmes or projects are claiming the same benefit.

Benefits Statement

Having identified a list of high level benefits and grouped them by type, this information should be documented and expanded in a benefits statement document. This will outline what the expected benefit outcomes are, where they will occur and who will be affected.

There is value in repeating this exercise periodically to ensure that existing benefits remain valid and to capture any new benefits or dis-benefits.

Benefit modelling

Once all the main benefits have been identified and documented , it is important to clarify the relationship between the different levels of benefit. This structuring, or modelling, can be developed and presented using a graphical representation known as a benefit model, also referred to as a benefits dependency network diagram.

Diagram illustrating the benefits modelling process and three main classifications of benefits in the model.
Diagram illustrating the benefits modelling process and three main classifications of benefits in the model.

The objectives of the benefit modelling phase are to:

  • establish and document the relationships between different benefits
  • capture any additional benefits or dis-benefits emerging from the process

The benefits manager should organise and co-ordinate this stage of the process with the actual development work done by the programme or project team, benefits working group and any additional business side contributors as required.

The main objective of a benefits model is to illustrate the benefits of a programme or project on a one page diagram. It is a route map of how change and new capabilities delivered can lead to benefits to the business. The inter-relationship and dependencies between programme or project outputs and business benefits are represented using a cause and effect model.

The model is usually developed from left to right with three main sections or channels known as:

  • enablers - these can be defined as any new capabilities that are directly attributable to the investment in the programme or project; they are what it is going to build, buy or deliver - if an enabler doesn’t come directly from what the programme or project delivers then it can not be part of its benefits
  • intermediate benefits - these describe the actual operational improvement resulting from the programme or project, for example quicker access to information, improved financial management, faster turnaround times; these functional or operational benefits must be able to be measured and if an intermediate benefit can’t be measured then it isn’t a useful benefit - an individual benefit profile is produced for each intermediate benefit and this is used to record the benefit, allocate responsibility for measuring it and to identify any activities required to manage benefit delivery
  • end benefits - these are strategic or organisational level benefits or benefits linked to the wider NICS and are generally aligned with organisational strategy and corporate plans; end benefits usually describe what the organisation is seeking to achieve as a result of the business changes and measurement is achieved through the measurement of its component intermediate benefits

The programme or project team must decide how best to structure and model the benefits. Often benefit workshops are used as they provide a focused and effective means to consider the interrelationship between benefits. This approach allows for open discussion between the programme or project team and affected parts of the business, and should ensure a comprehensive and fully agreed set of structured benefits are produced. The use of an experienced facilitator who isn’t a major stakeholder can be useful to encourage productive discussion and to assist the development of the benefit model.

Guidelines for developing a benefits model

When developing a benefits model, important points to remember are:

  • enablers must be new tangible capabilities directly attributable to the investment in the programme or project
  • an intermediate or end benefit will always have one or more predecessors and must be traced back to an enabler
  • an intermediate benefit can have another intermediate benefit as its predecessor
  • all intermediate benefits should have a unique identifier, for example A, B, C
  • all intermediate benefits must have a category; examples may include cost, time or satisfaction
  • an end benefit can have another end benefit as its predecessor

It is essential that all benefits identified can be measured, whether quantitatively or qualitatively. If this cannot be done, then the benefit should not be claimed.

an example of benefit modelling for an on-line grant scheme application project
Benefit modelling example

Benefits modelling is an iterative process and may require several workshops to agree a final version. The model should remain flexible and open to new and emerging benefits and dis-benefits. Additionally, during the benefits modelling process it is very likely that the original list of benefits identified in the benefits statement will alter significantly. Some new benefits and dis-benefits will emerge and some existing benefits will cease to be relevant or meaningful. At this developmental stage, benefits should be re-visited, critically evaluated and, where necessary, amended on a regular basis.

Benefit profiling

Once a benefit model has been developed and agreed it is necessary to consider, develop and document additional information for each intermediate benefit in the form of a benefit profile. The benefit profile is a full description of a benefit and includes details on measures, ownership, responsibilities , dependencies and timing.

Generally only intermediate benefits are profiled - end benefits are measured based on the success or failure of the intermediate benefits. Each intermediate benefit and dis-benefit from the benefit model should have a one page benefit profile. Defining benefit profiles is a fundamental step in the overall process as it is at this point that the practical considerations of benefit realisation are considered.

The benefits manager should organise and co-ordinate this stage of the process with the actual development work done by the programme or project team, benefits working group and any additional business side contributors as required.

Development of Benefit Profiles

Once the first draft of the benefits model has been agreed, work should begin on the development and completion of benefit profiles for each of the intermediate benefits. How this is best achieved is for the programme or project team to consider and decide. Benefit workshops can be an effective way to take forward development work and to secure engagement. Where workshops are used, they should have a sufficient balance of grades and experience. It is important to have the right people there to agree content and responsibilities and to make decisions. Depending on the number of benefits, it could take two or three workshops to develop a first draft.

Benefits should always be owned by the business side of the organisation and, if possible, those people identified as being responsible for the management and realisation of a benefit should be involved in the process. Even if they don’t attend the development phase, they should have the opportunity to consider and agree the profiles before they are finalised.

Development of benefit profiles will explore the detail behind the benefits model and it may be necessary to re-visit and re-structure the benefits model based on the new information. Benefit models and profiles are living documents which must be reviewed and updated, as required, throughout the benefits management process. Version control should be established to track and record these changes.

Ownership of benefit profiles

An important aspect of benefit profiling is the identification and allocation of named individuals or roles responsible for managing and realising specific benefits. Individual benefits and benefit profiles will usually be managed by operational benefit owners and overseen by senior benefit owners as defined and agreed in each specific benefit profile.

A senior benefit owner is a senior business representative responsible for ensuring that the benefit is achieved once handover from the programme or project is complete. This should include a specific role and individual’s name within the organisation. An operational benefit owner is a business representative who is responsible for benefit measurement and the management of any activities required to ensure benefits are realised.

These benefit owners (senior and operational) will have been selected based on the assumption that they are best placed and at an appropriate level to manage the successful delivery of particular benefits. This decision is usually based either their location within the organisation or their job role. It should be noted that senior benefit owners, and indeed operational benefit owners, may have responsibility for managing the realisation of more than one benefit.

Prioritisation

Prioritisation is a critical part of benefits profiling. Each benefit should be given an overall benefit ranking based on its total impact and importance to the programme or project. Benefits must be assessed and prioritised based on how critical they are to the success of the programme or project. This stage will not only ensure that the highest priority benefits receive greatest attention, resource and monitoring, but will also help with situations where large numbers of benefits must be reduced to a more manageable set.

Where the project is part of a programme or corporate change initiative, the prioritisation of project benefits must factor in these perspectives and influences when determining what benefits deserve greatest attention and management.

Where a high priority benefit is dependent on another benefit to be realised, this will, in effect, raise the priority of the enabling benefit. Once the full set of benefits have been assigned an overall priority ranking, this should be documented in a benefit priority table. Benefit priorities should be reviewed at regular intervals to ensure that the priority values remain valid.

Baseline Measurements

The baseline can be described as the ‘as is’ measurement of a benefit. Without the baseline measurement it would be impossible to calculate the improved state of the benefit following programme or project implementation. There must be a direct link between what the programme or project has done, put in place or changed, and any improvement. General improvement may not be attributable to a specific programme or project. Baseline measurements are generally taken at the end of the benefits profiling process, and usually before implementation.

Examples of baseline measurement sources include:

  • a financial chart of accounts, for example cost code for a service
  • surveys with a defined sample of population - it is not possible to survey the whole population
  • historical records for examples invoices or timesheets
  • work studies

There must be a robust process in place for capturing baseline measurements. The measurement needs to have an audit trail. The subjective opinion of an individual is not an acceptable form of measurement.

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