Benefit realisation in PRINCE2 is user´s responsibility

prince2 benefit realisation

 

PRINCE2 offers an ingenious approach to benefit realisation that converts projects into drivers of growth.

In accordance with the PRINCE2® method, the user is accountable for full benefit realisation. This clear-cut and simple arrangement can make a big difference for the organisation.

The project´s objective from the executive´s perspective is to produce the final project product and ensure its acceptance by the senior user. It is the business case that governs the achievement of this objective.

From the user´s perspective, the objective is rather to put the project´s product to use to realise desired benefits. Accordingly, it is the benefits management approach that serves as the user´s road map for benefit realisation.

The benefits management approach includes both baselines/benefit realisation targets and an appropriate measuring/verification procedure to confirm that benefit realisation progresses as planned.

Now, a non-PRINCE2® project environment will lokely define the responsibility for benefit realisation in only the vaguest of terms. As a consequence, and in the absence of any checks-and-balances system, the formulation of benefits may become open to a contest among all kinds of influences. User´s personal ambitions can come into play here, too.

For a start, the user may be tempted to inflate the project product´s utility by proposing accordingly inflated benefits. It may make the project seemingly more important for the organisation. And as a consequence, give the user more weight and a higher status. Fuzzy lines of responsibility in a non-PRINCE2® project environment tend to fire up user´s ambitions.

I´m saying it out of my own experience. On several occasions in the (already remote) past, I worked as project manager with users who insisted on including in the benefits management approach some outrageously unrealistic promises that they just couldn´t keep. And that was their good right.

The executive owns the business case. The user specifies the benefits. The project manager can offer an opinion but that´s about the extent of their authority concerning benefit specification.

Granted, those were the fat times. They made abundant funding available for risking all kinds of adventures. When a project got hopelessly stuck or didn´t deliver as expected, the chiefs simply wrote off the investment with a shrug. I observed more than once how inflated benefit plans burst like soap bubbles. Each time, I could see it coming with the tedious inevitability of an unloved season. And each time the user got off the hook unscathed by spinning a yarn about how the sixpence fell just a tad short of buying the moon.

Consider this. An organisation is deliberating to commit one million, say, imperial credits, to produce a game-changer product. The objective is to generate more revenue by growing its market share. One department proposes a product that aims for a conservative 5% increase in the market share generating an annual ROI of 200000 credits.

For the same outlay, another department promises a different product aiming for an ambitious 8% growth in the market share and 320000 credits in annual ROI.
Since the organisation is blissfully unaware of the controls brought by the PRINCE2® method, it goes with the more ambitious plan. It bases its strategic growth plan on the promises of 320000 credits in annual revenue.

Promises, however, go sour. In the first year, the product could only realize an annual benefit of just 175000 credits. A 50% shortfall in cash flow demands an operational draw-down. As a result, the second-year benefit shrinks to barely 100000 credits. A vicious circle sets in. The strategic growth plan collapses due to the lack of funding. The culprit department shrugs any accountability for the debacle off. They claom their planning was perfectly viable, it´s just that there occurred an unexpected fall-off in consumer spending.

Now, there is no way this can happen in the PRINCE2® environment.

As the user is responsible for full benefit realisation, a deflated, rather than an inflated, forecast will underpin benefits planning. There is no sense in promising corporate management the sky if you are responsible for delivering it. Or rather, not delivering it. After all, the user is acutely aware that in the latter case it´s their head that will be put onto the chopping block.

It´s not unusual that PRINCE2® organisations display unspectacularly moderate but impressively stable strategic growth curves. Continuing with the above example, the user (after very careful consideration) would decide that a conservative ROI of 100000 credits per annum was viable under the most adverse circumstances. To stay on the safe side of the chopping block, the user may further reduce it to some 90000 credits. And even that starting only from Year 2. If the organisation requires more revenue flow, it may consider setting up another project parallel to the first one.

True, it may look unspectacular. But those revenue flows will in all likelihood be solid as a rock. There would never be any shortfall in the cash flow threatening to stall the organisation´s growth. Quite to the contrary.

Given that the user has consciously pushed down the benefit plan, it is rather likely that they will succeed in realising benefits over and above it. More revenue will then translate into a steeper growth curve. Particularly during lean times and with a crisis looming ahead, this may be the most sensible medium-term strategy.

And by the way, when the cautious user realises more benefits than has been foreseen in the benefits management approach guess what will they get? Instead of the ax, extra kudos for exceeding their promises.

That´s the power of PRINCE2 approach to benefit realisation. It is creative, ingenious and builds on real-life lessons.

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