Benefits Realisation
Four steps to help realise benefits in projects for real estate
Within the public sector, the Infrastructure and Projects Authority (IPA) are driving improved benefits realisation practices. Nick Smallwood, IPA CEO, has stated that they ‘must maintain a strong delivery record that demonstrates real value through benefits realisation’. A benefit is defined as a positive impact made as a direct result of the change a project has brought about. With increasing scrutiny on value for money and environmental impact, it is more important than ever that capital projects can demonstrate how they deliver tangible, measurable impacts in the longer term.
At Deloitte, we have extensive experience in business case development across a variety of capital programmes and estates transformations in both the public and private sectors. Significant investment and change are often justified because of the benefits that a project will accrue over several years. Yet if those benefits are not captured at the end of that period, how can our clients determine whether the project has delivered value for money or establish what lessons can be learned? Benefits are regularly defined within a business case but there is a significant time lag before they are due to be ‘realised’. Adopting a ‘benefits-led’ approach which embeds benefits into wider project management activities – ensuring that they are accurately monitored, reviewed, and delivered – will drive a culture of effective benefits realisation throughout the project lifecycle.
In this blog, we offer four practical steps you can take to help ensure that benefits are realised.
Think about benefits from day one. It is crucial that projects are initiated in a way that encourages effective realisation. This includes securing buy-in from senior leadership on your management approach, and engaging with stakeholders at an early stage to confirm that benefits are aligned with the project outcomes and objectives.
If a benefit cannot be measured, it cannot be said to have been ‘realised’. It is therefore worth investing the time at the beginning of a project to understand how you will measure and quantify expected benefits.
Throughout the project, benefits management should inform other management activities to ensure that action is aligned to deliver the expected benefits. Assigning owners to take responsibility for the long-term realisation of benefits, supported by a robust governance model, is critical.
Example – one expected benefit of a change project is to reduce energy consumption. A baseline is established, a target set, and ownership of monitoring the energy consumption reduction is allocated to the commercial team who receive meter readings and manage utilities bills.
What is it going to cost you? Costs associated with benefits realisation should be captured early in the project and incorporated into the overall project budget. These costs could include purchasing equipment, financing data collection, commissioning surveys, and will vary from project to project.
Project budgets should ringfence funding to allow appropriate baselining, monitoring, and measurement of benefits to take place. It is also important to allow for any benefit realisation activities that will be transferred to operations or business as usual following project closure.
Example – a project is intended to increase customer satisfaction, as measured through annual surveys. The project business case includes the budget for surveys not only during the full project life, but for several years beyond project closure.
Embedding benefits realisation into project progress reviews helps to maintain a focus on the ultimate benefits throughout the project lifecycle. By identifying risks and issues that may impact benefits realisation, decision-making can be ‘benefits-led’, ensuring clear accountability.
Regular reviews provide an opportunity to ensure that benefits are on schedule and, more importantly, that the expected benefits remain strategically aligned and desirable to stakeholders. To ensure that reviews are effective it is important that they are evidence-led. By integrating benefits realisation into project performance management, you can provide accurate and timely information, and align benefits management with forecasting and budgeting.
Example – a building is designed to minimise annual running costs. As that design is amended through the construction stage, and as a result of value engineering, does it still result in the same running cost efficiencies as originally envisaged?
In most cases, the expected benefits of a project will not be realised until after it is completed. So, what do you do when a project closes? Typically, benefits management will be continued by operational functions. Planning for benefits realisation to continue after project closure by facilitating a seamless transition will ensure that benefits continue to be monitored, measured, and realised – and, crucially, that lessons can continue to be learned.
The Senior Responsible Owner is accountable for the delivery of agreed benefits or for ensuring that accountability is formally transferred to an appropriate person within the business following the project’s completion (e.g. the commercial team). It may be helpful to involve operational teams in benefits management discussions from the project’s inception.
Example – savings and improved environmental outcomes are forecast to be delivered because of a new way of delivering services, which are being procured from the market. At the end of the new contract mobilisation period, the project team is stood down. At this point, there is an explicit hand over of benefits tracking and measurement to their BAU owners.
Building a culture of benefits realisation
As a guiding principle, benefit realisation activities should remain proportionate to the scale of the project – a more complex programme will require more complex benefits management arrangements. It is not an easy task. Benefits can be nebulous, difficult to measure, and sometimes will not be delivered until years after the project has closed. None the less, building a culture of benefits realisation across project activities from the outset will drive accountability, encourage open communication, and inform decision making – ensuring that benefits are not only defined in a business case, but fully realised.
