Benefits: The forgotten stepchild of projects and PPM

OK – so the whole idea of project portfolio management stemmed from the concept of treating projects like an investment portfolio. Since companies invest a lot of money in these projects, we should monitor them as such.  In most PPM practices I’ve come across, this metaphor is applied to project selection (which projects will give us the best returns?) and portfolio monitoring (how are in-flight project performing?). But what about actual returns?

I don’t know about you, but I invest in the stock market, and I want to know the payoff – not just the potential. How much did I really make from that investment? Yet, in a good 80% of the PMO’s I’ve worked with, post-project benefits are not tracked. There are a couple of major culprits for this problem.

First up is the “close the project” mentality. As project managers, we want to have a clean close to the project – usually when the new system is deployed. We’ve delivered the goods, lets do our lessons learned, dismiss the project team, and move on to the next project. But benefits often don’t accrue for months or even years. After an ERP project deploys, productivity actually goes backwards for a good 3-6 months. Those promised productivity improvements don’t get realized until after the adoption period.

Culprit number 2 is the lack of measurement. Remember the old maxim “if you can’t measure it you can’t manage it?”. How often do we start a project with projected benefits (say a 10% improvement in PO processing time) without measuring the metric before the project begins? Which means even if we do measure it after deployment we have no baseline and thus no means of measuring the increase.

Now there is one methodology that measured benefits quite well – Six Sigma. This process improvement method is built on finding the weak link in a process through measurement, improving it, measuring again, and then continuing to improve.  You can’t even start the Six Sigma improvement portion of the project without having measured. And you can’t close it without measuring again – to see if it actually worked. What a concept!

So, a simple proposal for regular project and portfolio managers. First, before selecting a project for the portfolio, make sure the business sponsor has defined not only what the benefits will be, but how to measure them – and the “before” measure. At PeopleSoft IT we had reached a point where we were requiring all project requests to be preceded by a Six Sigma effort to detail the solution and the benefits.

Second, add a phase after “close” called “benefits realization”. The project team can be dismissed, but the portfolio team can record the results of the post-project benefits. And then, we can roll up the actual returns from projects to see how our investments are actually paying off!

I know – there a lot of situations where the benefits are “soft” and hard to measure. And I agree. I’ll deal with that in another blog post

That’s my idea – but how are you dealing with this always challenging subject? The more we hear from each other about what works/doesn’t work, the better! So, please share your ideas and add your comments.