In this video, instructor Claudine Peet introduces the concept of what a benefit is. She also takes you through the link between a project output, outcome and benefit, as well as what a dis-benefit is.
- What is a project benefit? It's essentially a return on the project investment. A project must have a return. Why on earth would a company hand over a huge sum of money for a project if they don't expect some sort of return on their investment? A return, or the benefit, can be anything, reduced costs, increased productivity, or even improve staff morale. Let's use a simple example and see how benefits arise from a project. The project output or deliverable is a new customized software system for the sales department.
It's expected that using the software sales executives will be able to process orders more accurately and quickly. This is the outcome of using the outputs. At some point in time, we should be able to measure these outcomes as benefits, the measurable improvements. So let's say that we have measured an improvement in processing accuracy of 25% from the same time last year. And the number of sales orders being processed has risen by 20%.
This in turn has increased our company's revenue or turnover by 10% since this time last year. That seems like a great benefit, doesn't it? But it's also worth mentioning that there can be consequences which can lead to dis-benefits which arise as a result of the project. Using the earlier example as a result of processing sales orders more quickly and accurately, we won't need as many people in the sales department and therefore there are two posts being made redundant.
To the people working in that department, this project is seen as delivering a dis-benefit. But an interesting result of this dis-benefit is that it will lead to further benefits for the organization in the reduction of overhead costs. The benefits achieved by the project will be linked back and will contribute to the corporate or strategic objectives for the organization. The important thing to remember is that starting with high level strategic objectives will hep us to identify the projects we need to undertake.
The project outputs can then help identify the outcomes we desire and from that, the expected benefits can be identified.
- What is benefits management?
- Linking to corporate business strategy
- Assigning accountability
- Understanding the benefits management cycle
- Identifying and analyzing project benefits
- Realizing benefits
- Measuring and reporting benefits