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CHAPTER 1
INTRODUCTION
1.1 PURPOSE
This practice guide describes benefits realization management (BRM) with a focus on products, services, results, or process improvement. BRM covers the day-to-day organization and management of the effort to achieve and sustain potential benefits arising from investments in portfolios, programs, and projects. BRM presents knowledge needed to conduct BRM regardless of the benefit's focus.
This practice guide:
* Provides a practical description of what BRM is;
* Defines the role and life cycle relationships of BRM to portfolios, programs, and projects;
* Describes why BRM is important;
* Identifies the key principles and critical success enablers needed to help an organization achieve the realization of planned benefits they seek as part of its strategic vision;
* Provides general guidance for organizations in establishing their approach to BRM in the context of portfolios, programs, projects, and organizational change management; and
* Identifies a common vocabulary to aid in the discussion of BRM.
In addition, this practice guide is intended to help practitioners to:
* Understand the fundamentals of BRM,
* Consider how to adapt and adjust existing techniques and practices to meet organizational needs, and,
* Support BRM in areas of practice where there may not yet be consensus as to how BRM should be used or changed for the better.
The choice of BRM practices — and how organizations tailor what they choose to implement — is highly dependent on organizational, cultural, and practice norms. This practice guide aims to help practitioners better understand what it means to actively manage benefits as an integral part of portfolio, program, and project management thinking, activities, responsibilities, and accountabilities.
The information and guidelines in this practice guide may be used in whole or in part to develop manual or automated practices with any type of strategic management, including portfolio, program, and project life cycles that the organization uses.
1.2 NEED FOR BRM
Facing rapid change and increasing complexity, organizations struggle to implement the strategies they need to generate and sustain a competitive advantage. There is a greater need now than ever before to ensure that the investments in portfolios, programs, and projects lead to clear, sustainable benefits. A benefit is defined as a gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes.
There is often a gap in the appropriate tracking from planned to actual realization of benefits. BRM is an approach used to close that gap, by aligning portfolios, programs, and projects to the organization's overarching strategy. Good BRM helps correct strategy misalignment, improve initiatives selection, integrate outputs and outcomes, and transition to operations resulting in measurable benefits that deliver more value to the organization. Value is defined as the net result of realized benefits less the cost of achieving these benefits. According to a survey conducted by the Project Management Institute (PMI) in its 2018 Pulse of the Profession® Report: Success in Disruptive Times:
* Fewer than 1 in 10 organizations report having a very high maturity with their value delivery capabilities.
* The average percentage of projects that met original goals/business intent was 78% for mature organizations and 56% for immature organizations.
* Only 31% of organizations are prioritizing the development of a comprehensive value delivery capability.
* Of the champion companies, those making the investment to have high-delivery capabilities, 87% report having achieved high-delivery capabilities versus only 5% for underperformers.
Establishing formal or improving existing BRM processes requires focusing on several priorities:
* Managing portfolios of programs and projects based on planned strategic outcomes and benefits — and, specifically, value creation for the organization;
* Recognizing the extent of organizational change required if planned benefits are to be realized;
* Creating an environment for regular dialogue to secure alignment, assess progress, and course-correct, as needed, right from the start of each initiative among:
* Highest-level executives,
* Organization owners,
* Senior end users, and
* Appropriate portfolio, program, and project managers; and
* Establishing the right conditions for success, including:
* Setting expectations regarding the key principles of BRM,
* Establishing the supporting behaviors for those principles,
* Fostering a value-oriented environment, and
* Having the right portfolio, program, and project managers in place, along with senior-level leadership committed to doing BRM well.
BRM is a continuous journey in which organizations learn by doing and improving their performance over time. Organizations can advance BRM capabilities significantly through incremental steps, for example, launching multiple quick-win measures to build up experience rapidly.
PMI research reinforces the value-add role of portfolio, program, and project management in BRM. However, the research also shows that levels of responsibility and accountability vary in practice, especially for proactively managing BRM with monitoring and reporting metrics and other critical information, such as progress measurement against the benefits realization management plan.
Not surprisingly, fewer than half of the surveyed organizations identify any role for project managers to help ensure that the planned benefits realized through a project's deliverables are aligned and stay aligned, with the strategic goals and objectives associated with the portfolio/program of which the project is a part. Together with portfolio and program managers, project managers can fill a useful role in helping ensure benefits are realized by the intended beneficiary. In a mature BRM environment, the responsibility for the strategic alignment of projects within a given program belongs to the program manager, and the strategic alignment of programs and nonprogram projects resides with the portfolio manager and benefit owner(s).
While this finding further illustrates how many executive leaders do not fully connect portfolio, program, and project management with achieving strategic objectives, it also highlights that BRM is a shared responsibility among portfolio, program, and project managers, benefit owners, organization owners, executive sponsors (sometimes known as senior responsible owners), and other senior leaders.
This practice guide provides a resource to help organizations and practitioners successfully achieve the realization of planned benefits from critical initiatives. However, it is recognized that not all organizations manage temporary work using all three domains of portfolio, program, and project management. Still, these organizations should benefit by adapting the principles and practices of BRM to fit the organization's needs. For example, when an organization does not practice formal portfolio management but only implements initiatives by projects, as in many small-to-medium entities, project managers should interface directly with the senior leaders responsible for the planned benefits that the project outcomes are expected to generate.
1.3 INTENDED AUDIENCE
This practice guide is intended for anyone who is responsible for:
* Identifying and achieving benefits expected from investments in portfolios, programs, and projects;
* Communicating benefits-related issues with executives and/or sponsors;
* Ensuring planned benefits stay aligned with and contribute to an organization's strategic goals and objectives; and
* Ensuring benefits that accrue from the outputs of portfolios, programs, and projects are realized and sustained.
Included in this group are, but not limited to:
* Benefit owners,
* Senior end users,
* Executive management team,
* Executive sponsors,
* Portfolio and program management office (PMO) managers,
* Functional/operations managers,
* Organizational change managers,
* Business analysts, and
* Portfolio, program, and project managers and their respective team members.
This practice guide has been developed to help practitioners obtain improvements in overall competency levels and in the application of BRM in portfolio, program, and project environments.
1.4 OVERVIEW OF CONTENT
This practice guide is organized as follows:
* Section 1 Introduction. This section includes an overview of the purpose and need for publishing PMI's first practice guide on BRM. The rationale and intended audience for this guide are also defined.
* Section 2 BRM and Organizational Context. This section describes where BRM fits in the organization, how strategy relates to benefits, what the core principles and critical success enablers of BRM are, along with a summary of organizational BRM roles and responsibilities.
* Section 3 BRM Framework Overview. This section describes the Identify, Execute, and Sustain life-cycle stages and the supporting activities, practices, and common tools needed to provide a viable BRM system in conjunction with the organization's portfolios, program, and projects.
* Section 4 Guidance for Portfolio, Program, and Project Managers in a BRM Context. This section offers guidance to portfolio, program, and project managers, as well as business analysts, on what actions and practices support and enhance engagement of their respective domains with BRM life-cycle activities.
* Appendix X1 Contributors and Reviewers ofBenefits Realization Management: A Practice Guide.
* Appendix X2 Benefits Realization Management Readiness Survey.
* Appendix X3 BRM Research Summary.
* Glossary. The glossary provides definitions of key BRM terms.
CHAPTER 2
BRM AND ORGANIZATIONAL CONTEXT
This section describes foundational terms, concepts, principles, critical success enablers, and roles and responsibilities. In addition, it gives an overview on the topics of organizational strategy and benefits, benefits and requirements traceability, benefits categorization considerations, and benefits measurement.
2.1 OVERVIEW
BRM encompasses the standard methods and processes that an organization uses for identifying benefits, executing its benefits realization management plans, and sustaining the realized benefits facilitated by portfolio, program, and project initiatives. BRM requires alignment with an organization's strategy, a solid understanding of key principles, and techniques as described in this chapter.
The terms benefit and value are often used interchangeably. However, it is important to understand their differences and the direct relationship between benefits and portfolios, programs, and projects. In this practice guide, a benefit is defined as a gain realized by the organization and beneficiaries through portfolio, program, or project outputs and resulting outcomes. Value, however, is the net result of realized benefits less the cost of achieving these benefits. Value may be tangible or intangible. Figure 2-1 illustrates this equation.
Cost management is extensively described in A Guide to the Project Management Body of Knowledge (PMBOK® Guide) and the Practice Standard for Earned Value Management. The focus on BRM is on the benefits component of Figure 2-1, including tangible and intangible benefits (see Section 3.5.3 for a discussion on tangible and intangible benefits). Quantifying benefits and allocating appropriate costs for attaining these benefits can be difficult in some cases due to the degree of subjectivity involved. This can be especially true when quantifying intangible benefits, although there are methods that aid in quantifying intangible benefits such as the use of proxy or representative measures.
For example, the value of a better customer experience (an intangible benefit) achieved through a new website with an artificial intelligence (AI) engine (a project output) can be valued in monetary terms through increased sales through the website (a representative or substitute tangible measure) less the cost of implementing the AI project.
Benefits realization is the intended beneficiaries' integration of gains resulting from the use of outputs of portfolios, programs, and projects. The need for the integration of these gains and the resulting value to the organization serves to drive organizations to pursue more effective BRM practices. Time and measurement horizons are important factors in the assessment, planning, realization, and measurement of benefits, costs, and resulting value as they vary over time. Benefits realization management is the day-to-day organization and management of the effort to achieve and sustain planned benefits arising from investment in portfolios, programs, and projects.
Since benefits are "gains realized by the organization and beneficiaries," this implies that benefits are the positive outcomes or the results of an organizational investment. When organizations set their strategic goals and organizational objectives, each are coupled with planned benefits. These benefits have a beginning and sustainment period and are managed throughout their respective life cycles. (Section 3 describes the BRM framework, life cycle, and related practices.)
Executives are responsible for driving organizations forward, by setting goals and objectives by means of an organizational strategic plan. The objectives of the organizational strategy are then decomposed into initiatives (portfolios, programs, and projects), which deliver outputs that collectively become outcomes and, ultimately, realize benefits.
The primary purpose of managing portfolios is to choose the appropriate set of programs and projects and execute them to realize the planned benefits and optimize organizational value. For organizations that do not engage in portfolio or program management but carryout initiatives by using project management practices, the challenge is still the same — the organization chooses the appropriate set of projects and executes them effectively to realize the planned benefits.
The process of managing benefits spans the time before an initiative officially starts, during the time in which it is executed, and after the initiative has been completed carrying through the benefits sustainment period during which benefits accumulate and are being realized. It is important that roles and responsibilities (see Section 2.5) are declared once the strategy has been agreed upon. It is equally important that the characteristics of goals, objectives, and related benefits are clearly understood and agreed by the business stakeholders. Techniques such as the use of RACI charts are a common approach used to ensure clarity around roles and responsibilities for benefits realization.
2.2 ORGANIZATIONAL STRATEGY AND BENEFITS
Organizations develop visions, missions, and strategies to guide their direction. Those strategies are tied to larger, overarching goals that have associated benefits. For example, a city may have a strategic objective to improve the local economy. Some associated benefits of that strategic objective could be increased revenue from tourism, more jobs, and more attractions/facilities. Goals are then decomposed into organizational objectives that are executed via portfolio, program, and project management initiatives to deliver outputs, which result in outcomes. The outcomes then yield planned benefits that ultimately deliver the value sought by the organization. Figure 2-2 provides an overview of how strategy is linked to the initiatives of portfolios, programs, and projects to deliver outputs. The outputs result in outcomes, which yield benefits and, ultimately, organizational value.
Portfolios, programs, and projects are created to achieve strategic goals and realize the associated benefits being sought as part of organizational strategy. The management of benefits occurs throughout the organization's strategic life cycle.
Similar to enterprise environmental factors outlined in the PMBOK® Guide, external drivers are factors outside of the organization's control that influence or dictate the strategy or direction of an organization. In the context of BRM, external drivers can influence which goals are seen as relevant to the organization's overall strategy as it pertains to delivering the planned intended benefits. External drivers are a necessary consideration for developing organizational strategies, which ultimately may determine the probability of realizing the planned benefits.
Some examples of external drivers that influence goals and, therefore, benefits realization include:
* Competitive landscape, for example, goals to maintain or create a competitive advantage;
* Innovation, for example, the need to advance technologically to encourage relevance;
* Political influences, for example, changes to the political landscape that impact the way the organization operates or competes;
* Customer needs, for example, the need for more efficient or automated ways of doing things;
* Economic, for example, a sudden change in the price of a commodity that the organization uses;
* Regulatory decisions, for example, reflections of legislative policy and intent that significantly alter ways of doing business; and
* Cultural preferences of external stakeholders and beneficiaries.
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