Benefits Management in Project Management: Definition & Examples

Instructor: Elizabeth Wamicha

Elizabeth teaches undergraduate courses in Business and Information Technology for the last 7 years. She is currently on course to completing a Doctorate in Information Systems

This lesson explores the concept of benefits management. Think of benefits management as a framework that is used by project managers to ensure that focus is placed on the benefits that the project outcomes will have for the organization.

Benefits Management - Definition

Anytime someone mentions project management, we begin to think of budget development and scheduling development activities. These are definitely important aspects of project management. However, more often than not, the benefits management activities tied to project management are often overlooked but should be a critical aspect of successful project management. Alright then, so what exactly is benefits management?

This is when a project manager takes time just to make sure that the final project outcome will provide some value to the organization. Before any project begins, project managers sit together with other important stakeholders such as top management and employees. They discuss important projects that the organization can implement in order to make things better in the organization. The expectation from stakeholders is that once the project manager completes and signs off a project, then the organization should begin to experience some positive impact from the project.

Benefits Management - Example

In order to better illustrate Benefits Management let us use the example of the STU company. STU is an organization that wants to hire a Jack, a project manager to develop a system that tracks product inventory. This system output from the project should enable the organization to accurately manage its outbound and inbound inventory and possibly even reduce cases of product theft. These are also the benefits that STU hopes to achieve from the project that Jack implements. The process by which these benefits are realized and monitored is known as benefits management.

STU can accrue a number of advantages through proper use of Benefits Management. As mentioned, securing benefits from a project is the primary reason why projects are implemented in the first place. Benefits should be positive and measurable attributes that an organization experiences when a project is successfully implemented. These benefits can be tangible such as an increase in the number of cars assembled in a car assembly plant within a day or a decrease in the number of stolen raw materials. Benefits can also be intangible such as improvement in company goodwill and reputation and improvement in customer satisfaction.

Jack, the project manager's task, in this case, is to ensure that all the activities that are carried out during project implementation are tied to that final outcome, where the final outcome should be a positive and measurable attribute. In our case the final outcome should be reduced theft of inventory through better tracking mechanisms. The next section analyzes further how Jack can ensure that he carries out proper benefits management.

Benefits Management activities within project management

In order to successfully ensure that benefits management is actually being incorporated into project management, Jack can carry out a series of activities. These activities are:

  • Developing a benefits management plan

This is a plan that outlines how Jack will measure project benefits. This plan outlines the roles and responsibilities of various stakeholders in achieving these benefits. While developing the benefits management plan, Jack will also develop key performance indicators. These are metrics that are used to determine if certain benefits are actually being achieved. For example, a key performance indicator could be used to measure the total number of lost inventory that the company has faced in the last few months. Anything above this allowable limit is not beneficial to STU.

  • Identifying benefits

The next step is for Jack is to identify the benefits that the organization believes are critical. This is done through consultations with important stakeholders such as employees. All the benefits that are identified can be ranked from the most to least critical. Each benefit can be given a metric. For example, a benefit can be described as reducing theft of inventory by 50%. This description provides information of a measurable benefit that stakeholders can always refer to.

  • Developing a benefits realization plan

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