Benefits Realisation Management for Programmes Earned Benefit Recipe Part 6
1. Introduction
I know that the previous entry said that we had reached the end of the set of articles. However, that is no reason to stop! There is always more to learn or understand.
This document provides a recipe for implementing the Earned Benefit approach explained previously.
2. Cooking steps – from a to z
1 First, definition and planning steps. You need to
a) identify the benefits; number them sequentially for identification.
b) define the measurement systems for quantifying the benefits (initially assume that all stakeholders can agree on a single way of measuring)
c) evaluate the benefits numerically: this provides the “benefits value vector” (bvv)
2 Now we know what we are working towards, so create the measurable plan:
d) decide on the programme components (sub-programmes, projects) required in order to achieve the benefits and number them sequentially for identification.
e) create a component-benefits matrix (CBM) as follows:
f) each cell contains a number indicating the contribution the component makes to the corresponding benefit (since a component can contribute to several or non of the components)
g) normalise this matrix so that each column sums to 1
h) multiplying the bvv by the CBM will give a “component benefit value” vector. This can help prioritise the implementation order of components.
i) develop the component implementation schedule.
j) for each planned review date, calculate the Planned Value of each component (normal project Earned Value method) (“component planned value vector” cpvv)
k) calculate the “planned benefits vector” for each review date as CBM times the cpvv for that date
l) at any date, the value of the Planned Benefit (PB) is the sum of the components of the “planned benefits vector”
m) plot the Planned Benefit values against time: this is the Cumulative Benefit Curve.
3 We have completed the planning; now, for tracking
n) At any point in time, take the earned value of each component to create the “earned value vector”, (evv)
o) calculate the product of CBM times the evv; this is the “earned benefit vector” (ebv)
p) the programme Earned Benefit (EB) is the sum of the values of the ebv.
4 You can now do all of the usual Earned Value calculations on Earned Benefit
q) BSPI = EB/PB
r) % complete = EB/(total planned benefit)
s) I like to calculate Benefit Schedule Variance as ([date on which we had planned to have achieved the EB] – [data date])
5 If you want to do the same with costs
t) For each review date, calculate the Programme Planned Value (PPV) as the sum of the component PVs
u) plot EB against PPV: this gives the Programme Cost-Benefit Curve
v) you have the EB from (p) above. Look up the equivalent PPV (EPPV) on the Programme Cost-Benefit Curve
w) calculate the programme actual cost as of the data date (PAC) as the sum of the component actual costs at that date
x) calculate: BCPI = EEPV/PAC
y) Benefit Cost Variance as (EPPV – PAC)
z) etc.
3. The Proof of the Pudding …
Please try this out on an existing or past programme of your own and send me questions or the results. I will commit to publish the main findings in the blog.
This will help all of us understand better the strengths and weaknesses of this method.
thanks