Project Benefit Realization
Broadly speaking there are three types of project benefit realization:
Project Quantifiable benefit realization
This is a saving that you could measure in money terms so it is quantifiable, however you probably won’t see the actual money. For example a new procedure that will shave 1 hour off of each day in manufacturing, will often mean that they will have an extra hour each day to do other important things.
An example here is that those other important things may lead to manufacturing extra products and hence improving revenue streams, which is clearly expressed in monetary terms.
Non-quantifiable project benefit realization
You can’t express this in monetary terms even though the benefit may be very worthwhile.
If for example you improve working conditions within manufacturing it may be difficult to prove that staff was retained longer. You could measure productivity by that would be difficult to tie back to improved working conditions, so it’s best to except the benefits as non-quantifiable.
Direct saving project benefit realization
This is where the organization will save real money. For example, investing in new equipment could reduce maintenance costs and this can be measured from the maintenance budget.
Prudent project benefit realization forecasts
It can be tempting, often out of enthusiasm, to be over optimistic when stating forecast benefits.
It is best to err on the safe side. In this way, if the project end-product delivers less benefits when you actually thought then everyone will still believe the project to be a success.
On the other side of the coin, if your project delivers more than you safely forecast, then everyone will agree that the project is a particular success.
Overstating benefits at the beginning of a project can lead to the project being accepted rather than turned down. If this is the case then the project will turn out to be not such a good investment than everyone thought it would be, and by running this particular project, it may be that a better project did not run, or was delayed.
Your organization should put in place processes and documentation to ensure that benefit realization becomes part of your project and organisational culture.
Benefits realization is saying when you’re going to see the benefits, and how you’re going to measure the benefits that you can quantify to demonstrate that they were forthcoming.
Remember that many benefits do not get realized until well after the project is finished. There are three key points when benefits may be realized and you need to put plans in place to measure and report benefits that those points.
Here they are:
Benefit realization during the project
Despite what I said above, there are some projects that may deliver benefits during their life cycle. What this means is the project deliverables are passed into operational use during the project, instead of having all of the deliverables transferring into the operational area at the end of the project.
This type of project can have a huge positive impact on the return on investment laid out within the business case. The reason is simple, and that is the benefits are realized earlier and since money as a time value, then the investment is leveraging higher business value via the benefits.
Such benefits should be measured and reported on directly they occur.
Benefit realization at the end of the project
As part of closing a project, the end-product is signed off as acceptable by the customer and passed into the life environment where it will be used to generate benefits. Again it is important to measure and report on the benefits as they are realized.
Benefits realization after the end of the project
The very moment that the end-products are transferred into the relevant life business area, it is not always the case that the business benefits start to be realized. Introducing a new product or service as an example may take time to settle down. This may be due to the learning to use the new system and become inefficient so the benefits can be measured.
For this reason, benefits realization may take many months, and the measuring and reporting of such benefits will meet operational staff committed to gathering such data and reporting.
False benefit realization
As an example, consider a project and is just delivered a new product or service within an organization. There is a danger that benefits are credited to the project, are really due to something else.
For this reason, it is important to try to isolate benefits and directly link them back to the project
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