You can lose money fast on projects by one simple step - not implementing an effective benefits management process. And this is very expensive.

Many organizations don’t bother to measure whether or not they achieved the benefits expected from their projects. Provided the project was completed and the solution works, that is taken as good enough.

But you wouldn’t launch a new product with sales targets and then not measure the actual sales achieved would you? “We got the desired products to market, we made some sales, so that’s fine”?

Now some organizations try to short-circuit the benefits management process by locking business case benefits into future budgets. The fallacy of this as a benefits realization process is covered in depth in our article, “Simplistic Accounting”

So we have a paradox.

Organizations commission projects to improve the business through creating new business end states (outcomes) with their associated benefits. But then don’t track and measure the delivery of these outcomes, benefits or value.

One root cause is the difficulty that most project approaches create in relation to measuring benefits; but more fundamental is senior management’s apparent apathy as to whether or not they get the benefits. This problem has to be solved first.

I’ve met many a CEO who genuinely believes that “If the project is delivered then the benefits will come,” not realizing that this is only true of 20%-30% of the benefits. The other 70%-80% of the benefits have to be focused on and actively realized.

Until this need to focus on and measure benefits is widely understood most projects will continue to miss, lose or destroy more value than they deliver. Yes, they'll lose more than 50% of their potential value.

Non-measurement of benefits is very, very expensive.

It really is that simple.

Topics: Benefits Management

Further Reading



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Revision History

First published: Simms, J. (Feb 2016) as "How To Lose Money, Fast"

Updated: Chapman, A. (March 2020), Revisions and Corrections