The UK invests over £110bn pa on change / improvement with only 10-20% of this investment seen as an outright success ….and 40% as outright failure.

Only about 25% of potential benefits are usually achieved ...and this costs the UK over £50bn p.a.

The challenge is to drive up the success rates by

• developing a sound business case
• focusing on benefits realisation!

….enabling all potential benefits and their actions to achieve them

Benefits Realisation enables you to systematically pursue key initiative, implement desirable change, track progress and measure the benefits for all to see. In the process, the organisation will gradually gain confidence that the investment is producing expected benefits”

Benefits Realisation is a continuous process applied from the outset of the change lifecycle. More than project justification – a business case or measurement focused on the actual achievement of the benefits.

Using the project and process KPI’s to continue to drive improvement; those that motivate desired behaviours, and not just monitor £value

It reaches far beyond the traditional investment management cycle to include;

• business case development
• investment decision making
• results tracking
• change management

…and it replaces the traditional focus on costs and delivery deadlines with a broader view of the steps required to deliver business results – well after the project is completed.

Benefits Realisation will;

• Improve identification and quantification of non-financial as well as financial benefits and move away from a business case towards a value case
• Provide a more systematic measurement of benefits: “are we on track to optimise the savings and minimise our costs?”
• Give a transparent and effective means of communicating progress objectively and reliably
• Identify improvement opportunities against KPI’s.
• Increase the alignment of new projects with business objectives
• Facilitate greater commitment and accountability for change
• Create more certainty (less risk) and a greater chance success.
• Replace the traditional project focus on costs and delivery deadlines

A Case for Change: so compelling to convince everyone involved of the need – better for the organisation, its people, customers, and stakeholders

A Project Definition: aligned to standards for presenting and obtaining approval and a clear, reliable mandate with SWOT and risks, measurable objectives that identify achievements, and a scope that defines precisely;

• where, when and how it impacts (people, process, IT and systems)
• phasing and inter-relationship with other projects / programmes
• management controls, roles and priorities

Benefits Realisation: basis for making change decisions, measuring / forecasting savings and future benefits, monitoring and actioning continuous improvement

Sponsorship: a sponsorship cascade responsible for results

Balanced View of Benefits: a purely financial perspective has its limitations

• Financials are often an inaccurate/ unreliable indicator of real benefit
• Timing of financial benefits often occur long after the project is completed
• It is wise to consider all forms of benefit; whether financial or non-financial, measurable or unquantifiable right from the outset
• Consider the Balanced Scorecard approach pioneered by Robert Kaplan and David Norton at Harvard Jan 1992
• The scorecard can be used to classifying opportunities / performance measures aligned to business objectives.
     o Financial, Customers, Internal processes and People/ learning innovation, and
     o Provides a robust framework for modelling benefits
• Moves away from a business case towards a real value case

Use a Scorecard: focus the benefits to the business using a Balanced Scorecard as this classification helps to align vision, strategy and measures across the business

Financial: cash flow, NPV, ROI
How should we appear to our owners/stakeholders?” (financial measures)

Customers: new services, satisfaction, perceived value, speed of response, quality
How should we appear to our customers?” (outcome/output measures)

Internal Processes: productivity, increased value-add, reduced variability
What business processes should we excel at?” (activity measures)

People/Learning Innovation: skills, knowledge, IT/data, staff retention
How will we sustain our ability to learn and improve using the most relevant intelligence and technology?” (input measures)


A few examples:


A project is not completely successful unless it delivers optimum benefit.

A Cost/Benefit Analysis (CBA) assesses the effect on profit (i.e. revenue less expenditure) over a given period of time and compares it with the current situation.

The basic formula is;

    With Project [Revenue/ Benefit – Project Costs – Operational Costs]
    Current [Revenue/ Benefit - Operational Costs]

More important measures are; NPV, ROI, payback, cumulative cash flow and IRR, that assess financial benefits considering investment opportunities and inflation over time and give a more accurate view.

Cumulative Cash flow

The net of all cash flows up to one point in time. The cumulative graph roughly shows where payback occurs


Sometimes viewed as a measure of risk, answers the question;

When does the project pay for itself?

That is when the cumulative inflows equal the cumulative outflows.

Net Present Value

Net present value is an excellent way of knowing the time value of money.

It defines the present value in today’s currency of the future net cash flows of a project; allowing comparison with actual investment in a project.


Project costs £7.5m with a benefit of £2m pa for 5 years or £10m and therefore project has a payback of 3.75 years.

However, if the discount rate (taking inflation and returns into account) is 10% then the NPV would be only £7.6m or investing £7.6m today at 10% after 5 yrs would give £10m.

Therefore the project benefit is £0.1m not £2.5m.

The calculation is:

    NPV = CF0 + CF1/(1+r) + CF2/(1+r)2 + ...

Where: CFO is the cash flow first yr etc… r is the Discount rate

Guidelines on Financials

Avoid being spuriously accurate when presenting a business case, although confidence must increase depending on importance and scale of decision.

Costs and benefits should normally be considered over the useful lifetime of the asset, or 5 years for an improvement / change project.

Costs should be expressed in terms of opportunity costs.

Employee time should be estimated in full time equivalent (FTE) and include all earnings related costs.

Only those cheques that can be cashed should be included in savings. Total cost of ownership savings such as IT and rates that are difficult to apportion and ‘cash’ should be excluded.

A baseline is required ……”Where are we now”.

Must compare with a target and a forecast…..”How well are we doing


Get the projects’ customers involved in tracking the benefits.

Track the benefits at the appropriate frequency, remembering that the more check points, the more chances you have to correct variances to forecast.

Tracking mechanism should track actual benefit for that period and cumulative actual benefit ongoing.

Actual benefits for that period (run rate) should be converted into annual benefits and compared to forecast Communicate benefits and take action where there is a variance.


New Processes and Structures

This may require changes to; process, systems, skills, job descriptions and structure, reporting and governance.

Often a quite directive and analytical approach using a range of tools and techniques is required

Specific and explicit project objectives to; “Change the way we do things around here for the better?” is required.


Changes to; how people feel about changes to their work and their beliefs in being able to contribute.

Understanding people’s nervousness about change; managing their resistance – consciously or subconsciously and their fears, no matter how loosely founded they might be.

FEAR: false expectations appearing real….most of the time

Winning the hearts and minds to bring about changed behaviours and culture….often under-estimated or ignored completely!

Behaviours and Attitudes

All the technical knowledge and skill in the world will not deliver sustainable improvement, unless we have;

• a desire to improve by doing work differently
• a change in attitude so that changing what we do becomes the norm and acceptable
• good communication, commitment, empowerment and leadership
• a recognition that it is natural to stay within conform zones, rather than risk embarrassing or costly failure


Resisting New Cultures

By definition; benefits affects people…

A few will comfortably manage but many will have a journey to take.

There is a common and natural emotional response between inactivity and high emotion. People need to be motivated in favour of change with good enabling skills

Transition Co-operation

People may be initially in favour of the change; the risk is that they will be disappointed by the reality of the change or the effort it will take to achieve it.

Transition is the most busy, critical, high-risk period when oceans of co-operation is needed.


Leading and Managing

Effective leaders are people of substance, who have a moral strength, with views, opinions and beliefs that do not change with the wind.

To succeed organisations need many ordinary heroes with character and integrity who can serve as role models.

Leaders show trust, challenge, motivation, influence and confidence that take their people beyond where they believed possible, and still feel safe and assured to perform to their best.

Ensure value is demonstrated and communicated and the right things are measured and tracked.

Continue to develop and support, as well as challenge their staff.

Typical Sustainable Results

New organisational structure - implemented with new processes and significantly reduced non-value added

Effective management reporting system - installed and being used to drive the business, reduce costs and harness the savings

Results plans - continuing to deliver key business improvements

Managers and staff - measuring and acting on key controls and operating conditions

Process capability - understood and challenged constantly

HR and IT technology - efficiency and effectiveness increased substantially

Individual and team - contributions to business success better focused on the customers and costs

Behaviours – closely aligned with desired outcomes


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