Always a delight to hear Steve Jenner (CIO for the Criminal Justice Department, and advisor to the Cabinet Office of UK Government) speak, but I've heard him a number of times and I was afraid there would be nothing new. I was surprised and pleased!
Nobody actually realises benefits
Steve berated us for not realising benefits from projects and programmes. He illustrated the problem: that we overestimate the benefits and underestimate the costs and timescales:
In the UK, HM Treasury concludes that "there is a demonstrated, systematic tendency" to overestimate benefits.
Flyvbjerg goes further - Forecasts are "highly, systematically and significantly misleading (inflated)" (ie people seem to be doing it on purpose)
Whereas Kahneman is a little kinder - describing it as a "delusional optimism". Kahneman does state later in the same paper that this tendency would be described as "lying" in normal society and that those who write business cases should be put in jail!
Steve asked what should be done?
There are plenty of frameworks, including Benefits Management Methodology in USA and the Treasury Green Book and OGC http://www.ogc.gov.uk/ structures in UK. Are they being implemented correctly? Well Steve ran a survey of Project Managers interested in Benefits Management across UK, USA and Australia, and most of the responses indicated that they either never managed benefits properly, or were at an early stage. That left a few who had replied extremely positively so he followed them up with personal interviews. Perhaps predictably, they had been over optimistic in their replies and when he asked to come and visit, the excuses began "well we've only just started and if you could come back in a year..." , "what we meant when we said..." etc.
Only one organisation, DVLA, invited Steve to visit, and they are the same solitary case study that is given on the OGC web site from 2003.
Realising Benefits from Government ICT Investment - a fool's errand? - Steve Jenner 2009 Academic Publishing International Ltd http://academic-publishing.org/Stephen_Jenner.htm
'Transforming Government and Public Services - Realising Benefits through Project Portfolio Management' - Stephen Jenner 2010, Gower, http://www.gowerpublishing.com/isbn/9781409401636
Choosing the right FABRIC - a Framework for Performance Information - HM Treasury 2001 http://archive.treasury.gov.uk/performance_info/fabric.html
Treasury Green Book Appraisal and Evaluation in Central Government 2003 http://www.hm-treasury.gov.uk/data_greenbook_index.htm
Peter Glynne (a P3 Consultant (Portfolio, Programme and Project) with Deliotte seconded into OGC http://www.ogc.gov.uk/ - not representing either in this talk) had a view on how to make benefits work.
Benefits is not Process, Benefits is Behaviour
Peter talked about the Maturity Model for the organisation, especially as it relates to benefits http://www.ogc.gov.uk/introduction_to_programmes_managing_benefits.asp. He reminded us that so many public sector projects suffer from frequent changes of personnel, so the SRO (Senior Responsible Officer) who initially accepts the benefits may be gone before the first review; worse than this, they probably expect to be gone, so they can accept any number of benefits and then blame their successor for not being able to realise them. The incoming SRO usually refuses to accept any but the most easily achievable benefits and blames the first for being optimistic. And neither actually delivers any benefits because that is the responsibility of the Service Delivery or Business as Usual (BAU) team, who often don't know how to deliver benefits when they are so busy delivering the service.
For SRO you could substitute any project officer, including the Benefits Manager - turnover for Benefits Owners (as individuals) is as fast as anybody else.
Peter suggested that the Benefits Owner should always be a Business Manager, though I'm not sure this will solve the problem. We can expect under this new government to see a lot more scrutiny on financial benefits during the planning stage, but the Treasury Green Book exhorts us to learn from the past, and the past tells us that once a project has got past the approvals stage, nobody will bother to review what was actually achieved!
Benefits Management: A strategic business skill for all seasons - Association for Project Management 2009 www.apm.org.uk/download.asp?fileID=1443
Office of Government Commerce - www.ogc.gov.uk
Association of Project Management APM www.apm.org.uk