In this blog, Alexei Kuvshinnikov, an accredited PRINCE2® 6th edition trainer with 20+ years of international project management experience, explains how to include intangible benefits in the Benefits Management Approach.
Project benefits can be tangible or intangible. But in either case, they must be measurable.
Intangible benefits can come in different guises and project managers tend to find dealing with them a bit baffling as they can’t be quantified.
A common intangible benefit is an increase in positive public perception of a company or corporation.
This is often important for businesses operating in sectors where the work is linked to environmental protection regulations or similar sensitive topics. Proactive image-building is achieved through an ongoing succession of PR projects. And in case of an environmental issue, urgent action following a dive in public approval becomes a pressing necessity. Here again, a project can offer a quick and cost-effective response.
Another example of an intangible benefit is an increase in the level of job satisfaction felt by corporate employees. Periodic monitoring of “staff happiness” levels and taking measures to increase them are often conducted in the project format, too.
Realization of this benefit becomes particularly important in situations of internal restructuring in response to “black swan” type of disasters. As asserted by Nassim Nicholas Taleb, “what we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.
The Covid-19 pandemic and the resulting global economic downturn is the most recent example.
The Benefits Management Approach
The Benefits Management Approach (BMA) is developed alongside the business case in the initiation stage of a project and forms part of the Project Initiation Documentation. The BMA should always include both measurable baselines/benefit realization targets and an appropriate measuring/verification procedure to confirm that benefits are being realized as planned.
The BMA is the only document of the Project Initiation Documentation that survives project closure. This is because very often the bulk of project benefits is realized post-project – even though some of project benefits can be realized during project lifetime.
Thus, methods of quantification of intangible benefits become relevant for:
- the project manager who prepares the BMA based on inputs from the Senior User;
- and the Executive who approves it and accepts accountability for benefit realization until the project´s end.
Measuring success at the beginning of the first management stage, an initial measuring of public perception or job satisfaction is necessary to establish a baseline. Later on, measurements using the same technique need to be repeated at intervals determined in the BMA. In managing a stage boundary process, any progress in the benefit realization will feed into the assessment of continued business justification. In closing a project process, another measurement will create a baseline for transition to post-project benefit realization. And further periodic measurements will provide a control to ensure the full realization of benefits included in the BMA.
True enough, methods of measuring intangible benefits can occasionally become fairly intricate. But that doesn´t always have to be the case. As a matter of fact, benefit measurement techniques should be tailored to match the structural complexity of benefits. For example, measuring an increase in brand equity may demand complex indicators such as price premium over competition or customer lifetime value. But achieving better anti-corruption compliance levels can be a fairly straightforward benefit measured by a reduction in penalties and cost of litigation.
But even with a complex project, benefits can often be expressed in reasonably simple terms. One basic technique used for measuring intangible benefits is a poll. Even a very simple one can be set up to offer a statistically valid method of quantification of perceptions. And a widespread format of a poll is a questionnaire. That is now familiar ground, isn’t it?
Little wonder then that there is more than sufficient open-source information available to help project managers pick a fitting sampling method and put together a questionnaire based on it. These need to satisfy Senior User stipulations documented in the BMA as well as provide the Executive with necessary controls to enable them to be accountable for a project´s success.
The inclusion of intangible benefits in the BMA should be underpinned by a brief description of the chosen sampling approach and a questionnaire template to serve as a benefit measurement and progress verification tool. But none of this is rocket science, really.