Project Benefit Realisation and Project Management. Raymond C. Young

2012–2014 University of Twente (The Netherlands), Department of Construction Management and Engineering 2006–2012 University of Zagreb (Croatia), Faculty of Civil Engineering, Department of Construction Management and Economics

1 Introduction

      The Board, Governance and Projects

      A corporate board’s role is to ‘ensure management is focused on above‐average returns while taking account of risk’ [1, 2]. At a minimum, in our post‐COVID world, the board needs to ensure the survival of an organisation. For most organisations, business‐as‐usual is not an option because the environment has changed so much. Projects have always been important but now they are even more so because projects are the vehicle to take us from where we are now to where we need to be to survive and thrive. Project failure is not an option and projects are more of a boardroom issue than they ever were.

      However, at the board and senior management level, we have tended to think of projects as someone else’s problem. Boards willingly take oversight of a company’s strategy but they seldom follow through on the insight that strategy [3] is implemented through projects. When we pause, reflect, and examine the success rates of strategy and projects, all the evidence suggests there is a very large strategy to performance gap [4]. Fewer than 10% of strategies are fully implemented [5], most large projects fail to live up to expectations [6] and between half to two‐thirds of projects either fail outright or deliver no discernible benefits [7]. There is a major deficiency in practice. Projects are troublesome with high capital costs, long time frames, and difficulties in delivery. Apart from the funding decision, most of us would prefer not to have to deal with projects at all. However, the world has changed and now, unless projects succeed, there may be no business at all. Boards and their advisors need to discuss projects in terms of the strategic benefits to be realised and go beyond the traditional focus on time and cost.

Project results appear to be no better in the public sector where hundreds of billions of dollars are invested annually in projects that contribute little to policy goals [8, 9]. If this pattern were to continue into the post‐COVID‐world: huge sums of money will be wasted, more people will die, and the economy may take decades longer than necessary to recover. At the senior management level, we need to go beyond issues of probity and simply doing it right. We need to learn to focus on the more important issue of realising strategic benefits in the right projects.

      This book has been written to address the needs of the board and senior management. It deals with projects, but it is not a project management book. Instead, it focuses on implementing strategy, policy, and creating value through projects.

      This book has been written because boards and top managers need better guidance. There is a paradox in project management: Project management is a mature discipline but following the standard guidelines does not automatically lead to success [10, 11]. There is widespread confusion [12] between project management success (on‐time on‐budget) and project success (realisation of business benefits) and most project management books incorrectly imply that one will lead to another. The guidelines that exist do not explicitly acknowledge that it is more important to realise strategic benefits than to simply come in on‐time and on‐budget. This notion is particularly important in the world of the new normal where it will be even less important to focus on time and budget criteria of projects and focus on achieving strategic goals of organisations. A classic example occurred during the 2008 Global Financial Crisis when the Australian government spent billions of dollars on school buildings to keep the economy moving. Schools got a new hall whether they needed one or not and the public dialogue was all about time and cost. The expenditure helped the economy, but no one thought to question whether equally important strategic educational goals such as literacy and numeracy had improved because of the projects. We risk repeating the same mistake as we commission projects to overcome the downturn in the economy caused by COVID‐19.

      Projects rarely succeed in realising their expected benefits without the top management support [13, 14] and this is even more the case in the post‐pandemic world. Project management books provide little to no guidance for the senior management and, as a result, top managers are often not sure how to govern their projects to succeed. This insight informed the development of an international standard ISO38500 [15] and is based on HB280 [16]: an Australian Handbook for boards and their senior managers on how to govern ICT projects to succeed. HB280 is a research report distilling the experience of senior managers to identify what they did right and what they did wrong in governing their projects to succeed (or fail). In the words of one senior manager, ‘These big projects are a little like marriage, you don’t do them often enough to get practiced at it [and it is valuable to debrief to identify what you did to cause them to succeed]’.

HB280 presented five cases and distilled the lessons learned into six key questions that boards and their delegates should be asking when governing projects. These six questions were trademarked as 6Q Governance™ to make them more memorable. The 6Q Governance Framework has been tested with an international dataset to prove it works with all types of projects [17]. We see an adaptation of this framework as particularly well suited for the current transition into the new normal where projects need to be constantly revisited and interrogated by their clients and sponsors rather than have their requirements frozen in time and driven to completion with the least disruption. This handbook will show boards and their senior managers how to apply the 6Q Governance Framework by asking just six key questions at different stages in a project lifecycle. This is the first handbook to present projects in the context of the needs of the top manager and is written for board members, their ‘accidental’ project sponsors, the business project manager, and their project advisors.

      A Diagnostic Toolbox for Project Executives

      Our aim in this handbook is to set forward the basic diagnostic toolbox that will help executives understand the strategic health of their project portfolio and to know whether they are on track to realise the benefits that they were originally set out to achieve. We are offering the equivalent of a doctor’s stethoscope and a diagnostic map: six places to check to determine the health of your project. As in any medical check‐up, the general condition will depend on how several forces interact with each other in a systemic way. If a doctor requests a blood test for example, what we will get is a few measurements with values within certain ranges that are deemed as normal for any given parameter. If the blood counts are all within the expected ranges, no action is to be taken. If, however, a certain value is found to be outside the ‘normal’ range, then action needs to be taken to explore the nature of the ‘disease’.

Our method establishes dialogue and questioning as the main mode of engagement to achieve alignment between projects, strategy, and policy and, thus, undertake a project health check. The diagnostics will allow us to probe into different aspects of the project in order to guide reflection on the different options for the project business case and if and how it is going to fulfil its objectives. These questions are the backbone of our thinking in this book and they are the equivalent of the diagnostic map shown in Figure 1.1. Armed with the knowledge of where to look and listen, you are the stethoscope to bring your projects into strategic conversations.

      We next introduce a toolbox grouped by six questions that you can use to make sense of any given number of projects in their organisation and then govern at the right time. These six questions were derived by rigorously looking at both successful and unsuccessful projects and asking what could have been done to improve the business outcome. The 6Q Governance business canvas is given below and each of its areas will be elaborated in more detail in Chapter 2 of this book.