1. Benefits Realization
Haresh Desai
May 2016
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2. Session Objectives
 Foundational elements for Benefits Tracking
 Interlock with Finance
 Sponsor engagement
 Continued monitoring of benefits realized
 A brief look at ROI
 How to course-correct a project which is not delivering business value as
envisioned?
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3. Facts …
 When project benefits are aligned with strategic goals, 80% of projects
meet or exceed forecasted ROI and 57% more meet goals and business
intent
 In addition, 45% more are within budget and 50% more are on time
 In spite of these facts, 83% of organizations lack maturity with these
processes
Source – PMI
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4. Business case considerations
 Always consider the following factors in a business case:
 Net Present Value
 IRR
 ROI
 Payback Periods
 And the somewhat intangibles – RISK
 Mandatory and compliance type projects cannot be measured the same way as
investment type projects. The measures for them could relate more to risk, security
(Physical or Cyber security), Client Satisfaction, Employee Satisfaction, and compliance
amongst other things.
 All these metrics are to be used as tools to “guide” your investments. Decisioning by
senior management could be a bit more subjective based on factors sometimes
unknown to us
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5. Interlock with Finance
 An integral part of Benefits Realization process
 Projected costs for the initiative assist Finance department from a planning
perspective
 Projected benefits should be interlocked as per projections in the P&L to reflect:
 Reduction in cost
 Increased revenues
 Improved EBT etc.
 If the initiative in consideration has only non-tangible benefits, Business Case
should identify “success criterion” which clearly state on what would success look
like for the investment in question. An example of this could be improved cyber-
security posture for an organization
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6. Sponsor Engagement
 Critical for success of project
 Role of sponsor
 Approve changes to business case as it evolves over the period of investment
 Ultimately responsible for the investment
 Has the authority to cancel the project at any time if he/ she feels that investment is
either not in line with business objectives or fails to meet projected benefits
 Supports the project team during the project
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7. Continued monitoring of benefits realized
 The PMO (on behalf of the sponsor) needs to continually monitor the business case
 If the underlying requirements or projected benefits impact the business case by
x% or $y, PMO needs to trigger a business case refresh while working with Finance
and Sponsor
 Benefits tracking should continue for the life of the business case and should not
end with the project/ program
 C-Suite should be informed on benefits realization metrics on a monthly or
quarterly basis
 It is possible that projected benefits from an investment are not met once the
project is completed. Reasons for the same need to understood and captured in
lessons learned.
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8. Return on Investment
 ROI is a key metric in evaluating financial viability of an investment
 ROI simply a performance measure used to assess efficiency of an investment or to
compare ROI’s of different investment opportunities to identify the ones which are
deemed as most profitable. Hence ROI is also a measure of profitability.
 If an investment has a negative ROI or you have other opportunities which have a
better ROI, the investment should not be undertaken unless dictated by other
factors such as regulatory or compliance.
 CAUTION – All these financial metrics such as NPV, IRR and ROI should not alone
dictate the viability of an investment. One needs to consider associated risks as well
in order to make an informed decision.
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Simple ROI = (Gain from Investment – Cost of Investment)
Cost on Investment

9. ROI Considerations
 Evaluate ROI based on total cash inflows and total cash outflows for the investment
in question
 Use comparative periods while comparing different investment ROI’s
 Use ROI with other metrics such as IRR, and NPV to make an informed decision.
 Generally look at a 5 year horizon for investments. Some investments may not
seem profitable in a 1 – 2 year horizon but could yield a totally different result
when considered over five years.
 Looking at time periods beyond 5 years is not recommended since corporate
strategy, business environment, or macro economic environment changes would
be hard to predict that far out
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10. Investment not delivering anticipated business
value
 This can happen for many reasons:
 Increase in costs due to scope changes
 ROI period well beyond acceptable terms
 Change in strategy etc.
 PMO should work with the sponsor(s) to highlight these factors and seek re-
approval on revised business case
 If the investment is no longer delivering the value:
 Review scope and focus on items which can still deliver value
 Course correct to ensure alignment with strategy OR
 Cancel the initiative
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11. To Summarize …
 Key tenet of any PMO
 Allows for tracking of projected benefits vs. actual spend over the life of the
business case
 Benefits realization could go beyond project/program end date
 Continually validates the viability of the business case and the project’s impact to
EBT and non-tangibles
 Enables decision making for future projects
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