Introduction:
In the realm of programme and portfolio management, the initiation of these initiatives should always be guided by specific objectives. Stakeholders invest in various portfolios with the aim of creating value and ensuring the realization and proper management of benefits. Benefits realization management (BRM) has emerged as a pivotal aspect that integrates other scientific management procedures.
Solving the Benefits Puzzles:
To ensure the effective realization of benefits, organizations should focus on value creation and benefits realization from the very inception of a portfolio’s lifecycle. Capturing required values and benefits enhances the success of investment realization. Proper mapping and strategy during the early stages of a project portfolio, programmes, and project management offices (PMOs) can facilitate an iterative process that aligns project strategies with the derived values upon project completion. However, it is essential to not solely prioritize profit maximization but also address environmental and social issues, as suggested by Elkington (1998).
Benefits realization entails striking a balance between strategic requirements and the resources expended to achieve projected benefits. This can be achieved through cross-referencing effort-centric or performance-based approaches with burn-rate formulas and traditional earned value analysis (EVA) for better benefits quantification.
Implementing benefits realization methods (BRM) can present challenges without a clear understanding of the underlying practical issues that need to be addressed. Darwin et al. (2002) proposed a scientific approach consisting of seven supporting themes, such as robust logic application during decision-making, critical qualification processes, and cause-and-effect analysis between achieved benefits and executed activities. These elements contribute to the effective management and realization of value from programmes and portfolios, as emphasized by Breese (2012) and Jenner (2009).
Management of Value Creation:
Peppard, Ward, Daniel, and colleagues (2007) advocate for a shift from merely tracking benefits to proactively managing value creation. They introduced the Benefits Dependency Network (BDN), a cause-effect network that helps identify three essential aspects of investments: the ends (performance improvement targets), the way (differences in business strategy execution), and the means (capabilities enabling change). By employing BDN as a tool for problem-based intervention, organizations can identify the most cost-effective and low-risk investments to achieve desired ends.
Conclusion:
Proactive management and the implementation of the Benefits Dependency Network (BDN) can significantly impact programme and portfolio management. It fosters clear planning by outlining expected benefits, improves relationships among stakeholders working towards desired results, encourages wiser investments by avoiding portfolios that fail to deliver benefits, and enhances benefits realization through prudent reinvestment.
References:
Breese, R. (2012) ‘Benefits realization management: panacea or false dawn?’, International Journal of Project Management.
Ohara S, (2005) P2M. A Guidebook for Project and Program Management for Enterprise Innovation.
Elkington, J. (1998). Cannibals with Forks. The Triple Bottom Line of the 21st Century. Capstone Publishing, Oxford.
Flynn, T. A. (2000). Burn rate vs. earned value. Paper presented at Project Management Institute Annual Seminars & Symposium, Houston, TX. Newtown Square, PA: Project Management Institute.
Enterprise Portfolio Management Council (2009) Project portfolio management: a view from the management trenches. Hoboken, NJ: John Wiley & Sons.
Jenner, S., (2009). Realising Benefits from Government ICT Investment—A Fool’s Errand? Academic Publishing, Reading.
Peppard, J., Ward, J. & Daniel, E. (2007) ‘Managing the realization of business benefits from IT investments’, MIS Quarterly Executive.
