Updating Program Benefits Realization Plans

Instructor: Scott Tuning

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.

Nothing lasts forever - including benefits realization plans. This lesson explores the scenarios that often require updates to a program's benefits realization plan in both positive and negative directions.

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 some programs, uncertainty and randomness are more concerning than risk.
Fig1

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.

Risk Identification

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.

Identifying risks and mitigating them is crucial to achieving program goals.
Fig2

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.

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