Benefits Planning and Realisation

Projects don’t deliver value—outcomes do. In this episode, Seven Consulting Thought Leader, Rob Thomsett explores how benefits planning and realisation should sit at the heart of delivery. From measurable benefits to realisation risk, we unpack how to move beyond outputs and deliver true business value.  

Transcript

SPEAKER_00 0:00

Welcome to Seven Consulting's Delivery Playbook, where we share the powerful concepts that make Seven Consulting Australia's best program delivery company. In this session, we are talking with Rob Thomsett, Seven's thought leader.

SPEAKER_01 0:12

Hi Simone, great to be here. Today we're diving deep into something that frankly causes a lot of headaches in project management, benefits planning and realisation. It's often the most frustrating, sometimes the most controversial, part of delivering change.

SPEAKER_00 0:28

Yeah, absolutely.

SPEAKER_01 0:30

And this framework we're discussing, its core intellectual property we use right here at Seven Consulting, developed over years of practice.

SPEAKER_00 0:40

That's right, helping us be Australia's best program delivery partner.

SPEAKER_01 0:44

What we have learnt, Simone, is that addressing benefits management and realisation changes the whole game for project management and governance.

SPEAKER_00 0:52

Because for decades, benefits, well, they've been treated like an add-on, haven't they?

SPEAKER_01 0:58

Totally. Like something you sort of bolt on at the end or maybe think about later.

SPEAKER_00 1:02

Or delegate to someone junior after the real decisions are made.

SPEAKER_01 1:07

Right? After the scope is locked in. Even the big players like PMI, they've only recently put out a dedicated standard on it.

SPEAKER_00 1:14

Which tells you something, doesn't it? It's been overdue. So today we're going to clarify how we integrate this properly using our framework.

SPEAKER_01 1:23

Making it foundational.

SPEAKER_00 1:24

Exactly, not the footnote.

SPEAKER_01 1:27

Yeah. Our mission today is pretty clear, I think. We want to shift your thinking.

SPEAKER_00 1:31

How so?

SPEAKER_01 1:33

Move away from seeing projects as just, you know, delivering stuff. Scope.

SPEAKER_00 1:37

Yeah. Outputs.

SPEAKER_01 1:40

Right. And towards seeing projects as the entire reason for beneficial change. They're the vehicle for value.

SPEAKER_00 1:45

No benefit and no point to the project.

SPEAKER_01 1:48

Pretty much. Projects are kind of meaningless unless they deliver tangible, measurable value.

SPEAKER_00 1:53

Okay, let's unpack that. Where do we start?

SPEAKER_01 1:56

You mentioned principles.

SPEAKER_00 1:58

Yes, foundational principles, non-negotiable ones.

SPEAKER_01 2:02

Our sources lay out four critical ones, and I have to say I love the first two because they just cut through so much abstract fluff.

SPEAKER_00 2:10

They really do. Principle one is, well, it's incredibly simple, but so often ignored. If you can't measure it, you can't claim it.

SPEAKER_01 2:18

Period. Full stop.

SPEAKER_00 2:20

Exactly, no wiggle room.

SPEAKER_01 2:22

We see this constantly, don't we? Someone claims improved customer satisfaction, but there's no track, no baseline data from before the project, no plan to measure after.

SPEAKER_00 2:32

Then you simply cannot use that to justify spending money. It's wishful thinking, an aspiration.

SPEAKER_01 2:39

Not a benefit, and that flows straight into principle two, which uh sometimes gets a bit of pushback.

SPEAKER_00 2:44

Oh, I know this one. No soft or intangible benefits.

SPEAKER_01 2:48

That's the one. Terms like improved staff morale or better market image still so common in business cases.

SPEAKER_00 2:55

They are, but think about it. Is market image really soft?

SPEAKER_01 2:59

Not when your reputation tanks and the revenue dries up?

SPEAKER_00 3:02

Precisely. Or morale, low morale hits productivity, quality, turnover. Those are hard costs.

SPEAKER_01 3:09

So we need to find the measurable outcome those soft terms are really pointing towards.

SPEAKER_00 3:13

You got it. Find the hard link. A bank analogy is perfect, isn't it?

SPEAKER_01 3:18

It really is. Imagine walking into a bank asking for a million bucks for intangible goodwill improvement.

SPEAKER_00 3:24

They'd laugh you out of the building.

SPEAKER_01 3:27

Of course. Yet that same bank's board might approve a $10 million internal project based purely on those exact kinds of vague soft benefits.

SPEAKER_00 3:35

It's a massive double standard. We have to eliminate that hypocrisy.

SPEAKER_01 3:39

Financial discipline. It has to apply internally just as much as externally.

SPEAKER_00 3:44

Absolutely. Which brings us neatly to Principle Three.

SPEAKER_01 3:47

Benefits require the same planning intensity as project planning. So they're not separate, not something done on the side by the benefits person.

SPEAKER_00 3:56

No. They have to be completely integrated. The same rigor you apply to scope, schedule, budget.

SPEAKER_01 4:02

Uh needs to apply to defining, tracking, and measuring the value.

SPEAKER_00 4:06

Exactly the same focus. Okay, makes sense. And number four.

SPEAKER_01 4:09

Principle four tackles that finger pointing that happens when things go wrong.

SPEAKER_00 4:14

Ah, the blame game.

SPEAKER_01 4:17

Right, it states benefits management is a partnership. So it's not just the project manager's responsibility to make sure the benefits happen after the project's finished. That's a common myth, but it's false. The PM delivers the output, the capability. Realizing the outcome requires active partnership.

SPEAKER_00 4:34

Between who?

SPEAKER_01 4:36

The sponsor, the PM, and their team during delivery, and crucially the benefit owners in the business, the people who will actually use the thing the project delivers.

SPEAKER_00 4:45

Got it. Everyone has skin in the game.

SPEAKER_01 4:48

They have to. And that idea of integration and partnership leads directly to how we start identifying these benefits.

SPEAKER_00 4:54

Where does that conversation begin between the sponsor, PM, and the benefit owner?

SPEAKER_01 5:00

It starts with the O3 model. As you remember, we covered the O3 model in our first podcast.

SPEAKER_00 5:05

Objective, output, outcome.

SPEAKER_01 5:08

Exactly. The objective is the why, the reason for the change, which must be beneficial. The output is the thing the project delivers. The outcome is the result, the change achieved by using the output.

SPEAKER_00 5:20

And that O3 linkage forms the basis for finding the benefits.

SPEAKER_01 5:24

It does. It connects the strategic intent to the tangible delivery and then to the ultimate value. It also introduces a fundamental difference between how 7 consulting views planning for and their subsequent realization. Simply there are two benefit streams for any project.

SPEAKER_00 5:43

Okay, so we've got our O3 defined. Now the actual benefit scan, how does that work? You mentioned two streams.

SPEAKER_01 5:50

Yes, always think in terms of two distinct benefit streams for any project, always.

SPEAKER_00 5:56

Okay, what are they?

SPEAKER_01 5:58

First, benefits tied directly to the outputs being delivered. The new system, the new process, the physical thing.

SPEAKER_00 6:06

Things you get pretty much as soon as the project delivers them.

SPEAKER_01 6:09

Generally, yes, and second benefits tied to the overall outcome being achieved, the bigger picture change.

SPEAKER_00 6:15

Which might take longer to materialize, right? Months or even years later.

SPEAKER_01 6:19

Often, yes. And understanding these two streams is vital because it tells you who owns which part of the realization plan, which we'll get to.

SPEAKER_00 6:29

Right. But first, how do we classify what we find in this scan? Just listing benefits isn't enough, is it?

SPEAKER_01 6:35

No, you need structure. We use six distinct benefit classes. This gives clarity for everyone sponsors, auditors, the team.

SPEAKER_00 6:43

Six classes. Okay, let's break them down. Financial ones first. They usually get the most attention.

SPEAKER_01 6:49

There are four financial classes. Number one, increased revenue.

SPEAKER_00 6:53

Pretty straightforward. New product, new customers leads to more money coming in.

SPEAKER_01 6:58

Correct, but crucially it has to be new revenue demonstrably linked to the project, not just the business growing as usual.

SPEAKER_00 7:05

Got it. Number two?

SPEAKER_01 7:07

Retain revenue. This one's often missed, but so important.

SPEAKER_00 7:11

Keeping the money you already have.

SPEAKER_01 7:13

Exactly. Preventing customer churn or revenue loss that would have happened if you'd done nothing. If your old system was driving customers away, fixing it retains that revenue. That's a real financial benefit.

SPEAKER_00 7:27

Makes sense. Okay. Number three?

SPEAKER_01 7:29

Reduce costs. This is usually easier to grasp. Measurable reduction in operational costs.

SPEAKER_00 7:35

Like automating a manual process, needing fewer people, reducing errors.

SPEAKER_01 7:40

Perfect examples. Going from needing ten staff down to five for a task, clear cost saving.

SPEAKER_00 7:46

Okay, now for the tricky one. Number four.

SPEAKER_01 7:49

Ah yes, avoid cost. This one always sparks debate.

SPEAKER_00 7:53

Preventing future costs like not having to hire those extra five people because the new system made everyone more efficient.

SPEAKER_01 8:00

That's a classic example. In effect, it is monetizing efficiency gains. Another common example is avoiding fines, penalties, because you become compliant thanks to the project.

SPEAKER_00 8:12

But wait a sec, isn't avoid cost? Well, isn't it just a fancy name for those soft benefits we said to avoid? How do you measure something that didn't happen? It sounds a bit vague.

SPEAKER_01 8:22

That's a really fair challenge, and it's why some accountants get twitchy about it. But the difference lies in quantification and the mechanism. When we talk about avoiding hiring five people, that was likely a planned budgeted cost the business expected to incur. By implementing the project, you prevent that expenditure. Now, it doesn't reduce your current operating cost baseline, that's true.

SPEAKER_00 8:48

So it doesn't look like a direct saving on the PL sometimes.

SPEAKER_01 8:51

Not always directly on the OPEX line, but it absolutely changes your return on equity, your ROE.

SPEAKER_00 8:57

How so? Explain that link.

SPEAKER_01 8:59

Well, think about it. You're now generating the same level of output, maybe more serving the same customers, but without increasing your cost base as planned.

SPEAKER_00 9:08

Your efficiency goes up.

SPEAKER_01 9:10

Massively. You're getting a better return on the capital invested in the business because your cost didn't rise as projected. That's a very hard financial metric impacting shareholder value.

SPEAKER_00 9:20

Okay, linking avoided cost to ROE through that efficiency game, that makes it defensible. That's a key takeaway.

SPEAKER_01 9:27

It really is. That's how you make it stick. So those are the four financial classes.

SPEAKER_00 9:32

What about the other two? The non-financial ones?

SPEAKER_01 9:35

Right. Two non-financial classes, but remember principle one still applies. They must be measured.

SPEAKER_00 9:41

No free passes.

SPEAKER_01 9:43

Correct, no free passes. Number five is improvement of service.

SPEAKER_00 9:47

How customers or internal users perceive things are better.

SPEAKER_01 9:51

Exactly. A website is easier to navigate.

SPEAKER_00 10:02

Tangible improvements in the user experience. And the last one, number six.

SPEAKER_01 10:07

Maintain service. Similar logic to retain revenue. This is about preventing a decline, keeping things from getting worse. Precisely. Maybe service levels were acceptable, but were projected to fall below a required standard, regulatory or customer tolerance if you didn't act. The project prevents that degradation.

SPEAKER_00 10:28

Okay, so six clear classes. Increase revenue, retain revenue, reduce cost, avoid cost, improve service, maintain service.

SPEAKER_01 10:36

That's the framework.

SPEAKER_00 10:38

So we've got our O3. We've scanned for benefits using these classes. Now we need a plan, right? The benefit realization plan.

SPEAKER_01 10:45

Yes, and we keep it practical. We ask four key questions for every single benefit we identified.

SPEAKER_00 10:51

Four questions?

SPEAKER_01 10:53

Simple but powerful. Who has to do what by when and how is it going to be measured?

SPEAKER_00 10:58

Who, what, when, how, measured. Repeat for every benefit.

SPEAKER_01 11:01

For every output benefit and for the overall outcome benefit. This structured approach naturally leads to two distinct plans.

SPEAKER_00 11:09

Uh-huh. Aligning with the two benefit streams you mentioned earlier.

SPEAKER_01 11:13

Exactly. This is where that distinction becomes really practical and where the partnership model, principle four, kicks in.

SPEAKER_00 11:22

Okay, plan number one.

SPEAKER_01 11:24

The output-benefit realization plan. This focuses on activities that happen during the project while the project team is still active because the benefits linked to the outputs of the things being delivered should ideally start accruing as soon as they go live.

SPEAKER_00 11:40

So the PM needs to make sure measurement is ready.

SPEAKER_01 11:43

Absolutely. The PM works with the benefit owners during the project to get measurement systems in place before go live. You don't wait and hope for data. You plan to capture it from day one of the output being live.

SPEAKER_00 11:56

Proactive measurement setup. Yeah, got it. And plan two.

SPEAKER_01 11:59

The outcome benefit realization plan. This focuses on what happens after the project is formally closed, after the post-implementation review.

SPEAKER_00 12:09

So this one isn't owned by the PM.

SPEAKER_01 12:11

No, typically this is owned by the benefit owner in the business. Their plan details how they will take the output the project delivered.

SPEAKER_00 12:20

The new system, the new process.

SPEAKER_01 12:23

And actively use it to drive that longer-term outcome and its associated benefits, like the retained revenue or the cost reduction we classified earlier. This plan might run for years.

SPEAKER_00 12:46

Delivering is one thing, but making sure the value sticks, that involves risk, doesn't it?

SPEAKER_01 12:51

Huge risk. We need to explicitly consider benefit realization risk.

SPEAKER_00 12:56

Which is different from normal project delivery risk, like missing a deadline.

SPEAKER_01 13:00

Totally different. It's also different from, say, production support risk, like the system crashing. Benefit realization risk specifically assesses the risk of converting the delivered output into the intended outcome.

SPEAKER_00 13:13

The risk that people won't actually use the new thing correctly, or that using it won't lead to the expected result.

SPEAKER_01 13:20

Precisely. Let's take an example. If you roll out a new system and literally decommission all the old ways of working, forces adoption.

SPEAKER_00 13:30

Like replacing all old desktops, no choice.

SPEAKER_01 13:33

The risk of converting that output new desktops into the outcome everyone using the new system is very low. Adoption is guaranteed.

SPEAKER_00 13:41

Okay. But now imagine launching a complex new sales tool into a thousand branches. You need to train thousands of staff who are already busy and may be resistant to change.

SPEAKER_01 13:51

Dealing with five other initiatives.

SPEAKER_00 13:54

Exactly. The risk that the output, the tool, actually achieves the outcome, say increased sales conversion, could be very high, maybe only 30% likely.

SPEAKER_01 14:03

And the sponsor needs to know that up front, not just the delivery risk, they need to understand the odds of actually getting the financial return they signed up for. Benefit realization risk gives them that visibility.

SPEAKER_00 14:17

That feels like it ties directly into change management.

SPEAKER_01 14:20

It does. This high-risk scenario begs the question: why is change management so critical? And why do benefits often just fade away after launch?

SPEAKER_00 14:30

Fade away? What do you mean?

SPEAKER_01 14:32

Well, most organizations focus change management efforts just before go live and maybe for a short period after. Get everyone trained, handle initial issues.

SPEAKER_00 14:42

Typical hypercare period.

SPEAKER_01 14:44

Right, but the data our sources show indicates that benefits often start to significantly drop off around six months later.

SPEAKER_00 14:52

Six months. Why then?

SPEAKER_01 14:54

We call it the six-month slump. People get overloaded, they forget the training, they revert to old comfortable habits. Maybe key staff leave and new ones aren't trained properly on the new way.

SPEAKER_00 15:05

So the shiny new output isn't being used effectively anymore.

SPEAKER_01 15:09

Exactly. The tool might be great, the process might be sound, but the sustained adoption required to achieve the outcome falters.

SPEAKER_00 15:17

Which means you need ongoing change management, not just a launch campaign.

SPEAKER_01 15:21

You need change sustainment focused on ensuring that output continues to be used correctly to drive the outcome long after the project team is gone.

SPEAKER_00 15:29

Okay, risk and sustained change. What else is key for this strategic view?

SPEAKER_01 15:34

Understanding the time horizon of the benefit. How long will it realistically last? This is crucial for actually monetizing the plan and calculating the project's true worth. We use three benefit curves.

SPEAKER_00 15:49

Three curves. Okay, what's the first type?

SPEAKER_01 15:52

The recurring benefit curve. This is your classic steady benefit. Think operational cost reductions or a consistent gradual increase in efficiency or sales.

SPEAKER_00 16:02

Like a stepped increase that stays fairly level over time.

SPEAKER_01 16:06

Exactly. Because it's stable and ongoing. This type of benefit justifies using longer calculation periods in your financial model, maybe five, even ten years.

SPEAKER_00 16:17

Makes sense? Curve number two?

SPEAKER_01 16:19

The first to market curve. This is really common now, especially in tech or competitive markets.

SPEAKER_00 16:24

You get a big jump initially.

SPEAKER_01 16:27

Massive jump. You launch something innovative, gain a huge advantage, revenue spikes, but then competitors catch up fast.

SPEAKER_00 16:36

So the benefit peaks quickly and then drops off.

SPEAKER_01 16:40

That advantage might only last a year or two before the market adjusts. So for this curve, calculating the value over five years would be totally misleading. The value is heavily front-loaded.

SPEAKER_00 16:51

You need a shorter time horizon in the business case.

SPEAKER_01 16:55

Absolutely. Be realistic about how long that peak lasts.

SPEAKER_00 16:58

And the third curve?

SPEAKER_01 17:00

The strategic curve. This one takes real guts from a sponsor.

SPEAKER_00 17:04

Why is that?

SPEAKER_01 17:05

Because the benefit curve might be flat or even slightly negative for several years, maybe three, four years minimum.

SPEAKER_00 17:12

No immediate payoff?

SPEAKER_01 17:14

None, or very little. But then if the strategy works, it spikes dramatically later on.

SPEAKER_00 17:20

Can you give an example?

SPEAKER_01 17:22

The classic one is Amazon under Jeff Bezos in the early days. For years, almost a decade, they reinvested practically all revenue back into infrastructure, logistics, growth.

SPEAKER_00 17:36

Showing little or no profit?

SPEAKER_01 17:38

Right. The benefit curve was flat from a profit perspective, but they were making a huge strategic bet that this investment would lead to massive exponential benefits later, which it clearly did.

SPEAKER_00 17:51

So that requires real long-term vision and tolerance for delayed gratification.

SPEAKER_01 17:56

Immense courage and conviction in the strategy.

SPEAKER_00 17:59

Okay, three curves. Recurring, first to market, strategic. Understanding which applies is key to valuing the project correctly. It's fundamental to an honest business case. And speaking of fundamentals, we have to loop back to principle one, one last time.

SPEAKER_01 18:16

Measurement.

SPEAKER_00 18:17

Baselining up front. The absolute worst time to figure out how you're going to measure success is when the output is already live.

SPEAKER_01 18:25

Scrambling for data after the fact.

SPEAKER_00 18:27

It never works well. You must collect that baseline data before the project changes anything.

SPEAKER_01 18:33

So you have a concrete starting point to compare against.

SPEAKER_00 18:37

Exactly. Know that customer satisfaction was a 3 out of 5 before you launched the new product. So you can definitively prove you reached the target of 5 out of 5.

SPEAKER_01 18:47

Measure before, measure after seems obvious, but easily missed, critically missed, and that measurement needs to be institutionalized.

SPEAKER_00 18:55

Meaning?

SPEAKER_01 18:57

Benefits tracking needs the same discipline as tracking time, cost, and scope. It shouldn't be an afterthought in reporting.

SPEAKER_00 19:04

So steering committee reports should include benefit status?

SPEAKER_01 19:09

Absolutely. Are the assumptions still valid? Has a key benefit owner left the company? Have market conditions changed, making the original benefit calculation obsolete?

SPEAKER_00 19:20

You need to know if the promised value is evaporating during the project, not just find out afterwards.

SPEAKER_01 19:26

Precisely. Tracking benefits is the only way to prove that the huge investment in program delivery is actually achieving its purpose.

SPEAKER_00 19:34

Which is?

SPEAKER_01 19:36

Beneficial change, real measurable value.

SPEAKER_00 19:38

Fantastic. This has been a really thorough look at benefits planning and realization, drawing directly from the IP and methods we've refined here at Seven Consulting.

SPEAKER_01 19:48

It's core to how we approach delivery.

SPEAKER_00 19:50

Key takeaways for me are integrate the planning, baseline everything up front, get rid of those vague soft benefits, understand the two plans for outputs and outcomes, and manage that realization risk.

SPEAKER_01 20:02

And the partnership. Definitely. And look, if these concepts resonate with you, if you're thinking about your own program delivery, PMO or change management challenges, we really encourage you to get in touch with us here at Seven Consulting. You can find us easily via our website, sevenconsulting.com or on LinkedIn.

SPEAKER_00 20:26

Please do reach out. We are committed to sharing our unique, innovative ideas like these, techniques that go beyond the standard project or change management textbooks. We're releasing a new podcast like this every two weeks, so please make sure you subscribe so you don't miss out.

SPEAKER_01 20:42

And in our very next one, we'll be tackling a topic that came up right here today building a change management function that can actually tackle that six month slump and sustain value. Really important follow on from this.

SPEAKER_00 20:55

Definitely one not to miss. We look forward to having you join us again soon.