Benefit identification

Objectives

Identifying and structuring benefits will enable the programme/project:

• to identify and understand the full range of benefits
• to identify who from the business area should be involved
• to establish detailed benefit profiles for each key benefit

Early-stage benefit identification

One of the first activities in the benefits management process is to identify, at a high level, what the expected benefits and disbenefits of the programme or project are. This clarifies the underlying reason for the investment. It will also highlight who will be affected, the level at which the benefits will be realised, and when.

The objectives are to:

• consider and document the main benefits and dis-benefits expected
• capture early thinking on measurement, ownership, timing and level of benefit management

This stage is normally instigated and led by the project team. The Senior Responsible Owner (SRO) and project manager should identify and agree a project benefits manager responsible for co-ordinating and developing benefits management activities. Where appropriate, this role can be combined with that of the project manager.

When considering the benefits of a programme or project, it is useful to think in terms of outcomes - benefits to the business deriving from managed changes.

Some suggested areas where benefits may be identified include:

• policy or legal requirement - benefits that enable an organisation to fulfil policy objectives, or to satisfy legal requirements
• quality of service - benefits to customers, such as quicker response to queries or improving quality of information provided to customer
• business improvement - benefits that are internal to the organisation, such as improving decision-making or management processes
• efficiency - benefits that allow an organisation to do the same job with less resource, allowing reduction in cost
• personnel or HR management - the benefits of a better motivated workforce may lead to a number of other benefits such as flexibility or increased productivity
• risk reduction - benefits that enable an organisation to be better prepared for the future
• flexibility - benefits that allow an organisation to respond to change without incurring additional expenditure
• financial - benefits that reduce costs whilst maintaining quality, often referred to as cost reduction
• revenue enhancement or acceleration - benefits that bring increased revenue, and/or the same revenue in a shorter timeframe,
• strategic fit - benefits that contribute to the desired benefits of other initiatives, or make them achievable

Detailed benefit identification and structuring will take place later in a programme/project lifecycle. Disbenefits may not be easily identified at the start of a project but may surface later.

Detailed benefit identification

This phase should build on initial high-level benefit identification work.

The objectives are to:

• identify the main benefits and disbenefits
• consider and document different types of benefits

The Benefits Manager should organise and co-ordinate this stage of the process with the actual development work done by the programme/project team, benefits working group, and any additional business side contributors as required.

All potential benefits should be explored and documented, as well as any potential negative disbenefits. A suggested approach is to hold a series of benefit workshops. These workshops provide an effective means for benefit owner contribution and involvement, and allow for the full range of perspectives, experience and knowledge to be considered.

Consideration should be given to the use of an experienced facilitator who is not a major stakeholder to assist the process by identifying the underlying business drivers.

As a starting point it may be useful for the working group to repeat the high-level identification of benefits already completed.. This will offer the opportunity to compare the separate list of benefits, to look for similarities or differences and to agree a combined set of high level benefits.

Types of benefits

Benefits should be grouped into one of the following categories:

• direct monetary benefits (tangible) – those benefits that can be quantified and valued in financial terms, for example cost savings, revenue generation, cost reductions
• direct non-monetary benefits(tangible) – those that can be quantified but are difficult or impossible to value in financial terms, for example fewer customer complaints, productivity gains, greater accuracy, lower staff turnover, increased response times
• indirect benefits (intangible) - can be identified, but cannot be easily quantified for example end user satisfaction, better access to information, organisational image, customer service, better morale, better perceptions
• disbenefits - negative consequences from the intended change

Guidelines for benefit identification

Some guidelines to keep in mind when identifying benefits are detailed below:

• If a benefit cannot be measured numerically it should not be claimed. Quantitative benefits are measured numerically; qualitative benefits can be measured with a questionnaire and the responses converted to a quantitative form.
• Benefits that are loosely defined or too difficult to measure should be avoided. For example, claiming a benefit of a project improves the efficiency of the whole department is unsustainable.
• The identification of benefits impacts the benefits management lifecycle. If the wrong benefits are identified at this early stage it will lead to substantial extra work at a later date.
• Avoid double counting of benefits. Try to reach agreement when two programmes or projects are claiming the same benefit.

Benefits Statement

A list of high level benefits grouped by type, should be expanded on in a benefits statement document. This will outline what the expected benefit outcomes are, where they will occur, and who will be affected.

There is value in repeating this exercise periodically to ensure that existing benefits remain valid and to capture any new benefits or disbenefits.