Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.
Changes To A Benefits Realization Plan Is Inevitable
The great Leo Tolstoy said, ''Everyone thinks of changing the world, but no one thinks of changing himself.'' Truer words were never spoken when it comes to updating the benefits realization plan within a project or program. At its outset, a program's benefits realization plan is the roadmap from investment to value. It's a blueprint that describes what an organization must do in order to reap the rewards of investing in their program. These plans are built during the decision-making phase, but changes in the business environment mean that the plan will have to be updated periodically. As Tolstoy observed, when the world around a program changes, the program itself must change in order to continue to provide value to the organization.
Volatility, Uncertainty, and Risk
Volatility is a term we can use to describe the fact that some programs are more prone to change than others. In the U.S., the former President Barack Obama passed sweeping healthcare legislation that greatly impacted every corner of the industry. Insurance companies, physicians, hospitals, pharmaceutical companies, and consumers were all subject to a radically new business environment. These changes were instrumental in thousands of organizations launching huge programs to accommodate this new climate and to benefit from the new rules.
But when the balance of power in Washington changed, the industry became engulfed in uncertainty. Uncertainty is one of many influences that can require the update of benefits realization plans. In many cases, uncertainty is even worse than risk because risk can often be foreseen - at least in a generic sense. Uncertainty makes it difficult for a program manager to commit to any particular course since it's not clear whether that will be a good direction.
In the healthcare example, one of the biggest elements of uncertainty that changed benefits realization was that of what was known as the ''individual mandate.'' This phrase referred to the Obama-era policy that everyone, even the young and healthy, would be required to purchase health insurance. As a result, many large insurance companies launched programs designed to reap the benefits of adding healthy people (who would pay into a plan but consume very little of it) to their roles. However, when political winds changed, the future of the individual mandate became uncertain. This uncertainty means that insurers with benefits realization plans from projects related to the mandate will be forced to update those plans to accommodate this new uncertainty.
We've already established that benefits realization plans will need to be updated when uncertainty increases, but even when the fog of uncertainty begins to clear, most programs are then left with new risks. (And new opportunities, too!) When these new risks come into view and are ready to be addressed, the important function of risk identification has begun.
The changes in the healthcare industry called for major changes to the benefits realization plans of both insurance companies and healthcare providers. Health insurers had committed to programs that projected millions in high-quality revenue from customers who would purchase insurance as a result of the mandate. However, as the campaign rhetoric heated up before the November 2016 election, some candidates were vocal about their intentions to reverse much of the Affordable Care Act - including the requirement that everyone must have health insurance. Before candidates who wanted to dismantle this were elected, the program was plagued by uncertainty. Once the election was over and politicians opposing the mandate were in office, the uncertainty transformed and became an identifiable risk.
Risk Mitigation & Risk Opportunity
A benefits realization plan must also be updated when identified risks require a program manager to assign additional resources to mitigate the risks. This is especially true when there is a risk that a program's projected benefits will be reduced or eliminated should the risk become a reality. This is when a risk/probability matrix becomes valuable. The risk/probability matrix is a tool that program managers can use in order to quantify the criticality and likelihood of a risk impacting the program.
Risk opportunity can be defined as a possible action that results from an event that 'forces' a change. When a program manager evaluates risk opportunity, there are always at least four ways a benefits realization plan could be updated to account for the opportunity.
- Do nothing. If the benefits realization plan will not be greatly affected, or the probability of the threat is low, program managers may elect to make only minor adjustments to the plan.
- Take advantage. In some cases, opportunities will provide benefits so positive that the benefits realization plan should be updated to account for the positive change.
- Coordinate, ally, or align. Some opportunities won't change the projected benefits on their own, but they will exponentially increase if a partnership can be established with others who can help create synergy. Like the take advantage option, alliances may result in the need to document a new benefits realization plan resulting from the cooperation.
- Make it bigger, better, or more likely. Program managers are sometimes able to increase benefits realization by taking steps to make a positive impact more likely or more beneficial. If this opportunity is realized, the benefits plan should be revised accordingly.
Change is constant. A benefits realization plan (a roadmap to capturing a program's rewards) should be updated regularly to account for program volatility (the propensity for rapid change), uncertainty (an unknown future), and risk (a known issue or potential issue that may change things). Uncertainty is often worse than risk because mitigation cannot start until the nature of the risk is known. When an organization creates a list of risks, it has completed the risk identification process. Taking steps to avoid the risk, or to minimize its impact or likelihood, is risk mitigation.
If mitigating a risk requires new resources (and it usually does), the plan must be updated to account for any loss of benefits. A risk/probability matrix is a document that can be used to assess the potential scenarios that arise from risk. Benefits realization plans should also be updated in a positive direction when opportunity (the ability to change a program's course) allows a program to perform better than originally predicted.
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