Effective project investment management can dramatically increase the ROI from projects
Projects that warrant formal project governance also warrant formal evaluation by the organization’s executive/project/ IT/ investment committee (or divisional equivalent).
(We have called this the ‘Investment Management Committee’ (IMC).)
The primary approval vehicle is usually a business case, often accompanied by a short presentation by the sponsor and/or project manager. (When the project manager alone presents, this is usually a leading indicator of failure as the sponsor is not championing the project at this stage.)
IMC members frequently admit to not reading the business cases presented (which at times is 80 plus pages long) — even if they are the project’s sponsor! Most relied on someone else to ‘check the detail’.
They usually read the executive summary and any salient bits to understand the proposal and answer any questions they have. However, they prefer ‘private briefings’ by the project sponsor/manager so they could ask any ‘dumb’ questions in private rather than in front of their peers.
Trade-offs are common among IMC members. “I’ll support your project if you’ll support mine.” Rigorous evaluation of many projects worth tens of millions of dollars is thereby largely missing.
Indeed, if the project was in an area that doesn't interest or impact the IMC member, they barely consider the facts and go with the flow.
Most rate the contents of the business cases as ‘barely adequate’ to make multi-million dollar decisions on but this is usually the only basis used. The two key questions asked are, “Is this project relevant?” and “Does it have a positive ROI?”. Other decision-making dimensions — such as strategic priority, delivery capability or capacity to deliver — were ignored.
Benefits Realization Monitoring
Many acknowledge the lack of a benefits management process is a huge loop-hole through which project value escapes. But, while intellectually seeing this as a problem, they also see it as one of their last ‘bolt holes’ through which they could wiggle out of some accountability!
The GM of a large retailer came down hard on all attempts to make his project results measurable, even though he had a multi-million dollar target to deliver. He put his efforts into ensuring the retail outlets bore the accountability for realizing the benefits!”
Many cite the difficulty of measuring benefits and ascribing them to the effects of a project over time as the reason for failing to measure benefits. However, their (apparent) enthusiasm to measure benefits waned when this problem was removed and they saw the (accountability) implications!
So most IMCs are focused on allocating funds rather than focusing on ensuring the promised returns were generated from the funds invested.