This document discusses defining and measuring benefits for major projects. It provides an overview of different types of benefits (e.g. economic, social, environmental) and evaluation methods (e.g. cost-benefit analysis, cost effectiveness analysis). Stakeholder groups are identified that may experience benefits. The document also notes challenges in benefits measurement, such as a lack of clarity in definitions and insufficient empirical research in academic literature. Future trends are discussed, along with the importance of vision for major projects.
2. Hard and Soft
Quantitative Qualitative
Financial Non-Financial
Cash flow
User fees
Customer
Satisfaction
Safety
Dignity
Well-being
Tax revenue
Competitiveness
Sellable data
Brand equity
Pride
Legacy
Direct
Indirect
P Chapman et al, Authoritative Literature Review into the Benefits of Health ICT Investments
3. ‘Literature Review into the
Benefits of Health ICT
Investments’ (DoH)
1,242 articles for Health ICT
1,810 articles for Government ICT investments
5,576 articles for Major Programmes
196 articles for Health ICT
167 articles for Government ICT investments
1,064 articles for Major Programmes
128 articles for Health ICT
126 articles for Government ICT investments
147 articles for Major Programmes
82 articles for Health ICT
57 articles for Government ICT investments
65 articles for Major Programmes
P Chapman et al, Authoritative Literature Review into the Benefits of Health ICT Investments
4. ‘Determining and Delivering the
Benefits of Major Projects’ (MPA,
29 April 2015)
How is benefits realisation currently
being performed?
What knowledge for projects from
one sector can be valuable to
projects from other sectors?
Is there something ‘special’ about
major projects?
Where does UK stand?
What is the relationship between
good sponsorship and benefits?
How can stakeholders be aligned
around benefits?
MPA, The Value of Major Projects
5. ‘Benefits’ Definition from the
Office of Government
Commerce:
The measurement of an outcome,
or part of an outcome
An end benefit is a direct
contribution to a strategic
objective
Describes an advantage accruing
from the outcome
Answers the question of what a
project delivers: why is this
required?
outcome
output
output
output
outcome
output
Benefit
Axelos, Managing Successful Programmes
6. What Do We Measure?
Benefit Categories
economic social environmental learning
7. How Can We Measure?
Evaluation Method Description Use
Transaction costs Uses segmentation methods to calculate use
and benefits to different user groups
Quick and easy way to estimate potential
cost savings from the introduction of
eGovernment
Net present value A straightforward method that examines
monetary values and measures tangible
benefits
Relatively straightforward; use when cash
flows are private and benefits tangible
Cost benefit analysis A flexible method that measures tangible and
intangible benefits and assesses these against
net total cost
Good consideration of all benefits, but can
be expensive and time consuming
Cost effectiveness analysis Focuses on achieving specific goals in relation
to marginal costs
Good for considering incremental benefits
against specific goals
Portfolio analysis A complex method that quantifies aggregate
risks relative to expected returns for a
portfolio of initiatives
Good for consideration of risk, just use a
consistent approach across a portfolio
Value assessment A complex method that captures and measures
benefits unaccounted for in traditional ‘Return
on Investment’ (RoI) calculations
Used by several governments to consider
performance against all policy goals
P Foley & X Alfonso, eGovernment and the Transformation Agenda
8. When Do We Measure?
Project
Output
Business
Change
Intermediate
Benefit
End Benefit
Strategic
Objective
Chain of benefits from output to objective
Axelos, Managing Successful Programmes
10. Builder/Buyer/User Groups
A project is required to build a railway bridge
connecting the finance area of a capital city
with a large housing development recently
constructed on the other side of a river. The
finance area also contains a world leading
university.
What project benefits might you consider
defining and how would you measure them?
D Gray et al, Gamestorming
11. The Affect Heuristic
“The psychologist Paul Slovic has
proposed an affect heuristic in
which people let their likes and
dislikes determine their beliefs
about the world. Your political
preference determines the
arguments that you find
compelling. If you like the current
health policy, you believe its
benefits are substantial and its
costs more manageable than the
costs of alternatives.”
D Kahneman, Thinking Fast and Slow G Morgan, Imaginization
12. Experts rule?
“Risk does not exist ‘out there’,
independent of our minds and
culture, waiting to be measured.
Human beings have invented the
concept of ‘risk’ to help them
understand and cope with the
dangers and uncertainties of life.
Although these dangers are real,
there is no such things as ‘real
risk’ or ‘objective risk’.”
Activity or
Technology
League of
Women
Voters
College
Students
Experts
Nuclear power 1 1 20
Motor vehicles 2 5 1
Handguns 3 2 4
Smoking 4 3 2
Motorcycles 5 6 6
Alcohol 6 7 3
Police work 8 8 17
Surgery 10 11 5
Mountaineering 15 22 29
Swimming 19 30 10
Preservatives 25 12 14
P Slovic, Perception of Risk
16. Academic Findings
Lack of construct
clarity
Insufficient empirical
depth
Normative models
Case studies
Lower rated journals
No reference class
P Chapman et al, Authoritative Literature Review into the Benefits of Health ICT Investments
17. Future Trends fault line
P Chapman et al, Authoritative Literature Review into the Benefits of Health ICT Investments
19. Benedict Pinches
Founder and Director
Oxford Major Programmes
Phone: +44 (0) 7956 677 483
Email: ben.pinches@oxmp.co
Twitter: @oxmp
Web: www.oxmp.co
Facebook: http://on.fb.me/PzavIu
20. Bibliography
P Chapman et al, Authoritative Literature Review into the Benefits of Health ICT Investments
Major Projects Association, The Value of Major Projects
OGC, Managing Successful Programmes
P Foley & X Alfonso, eGovernment and the Transformation Agenda
D Gray et al, Gamestorming
D Kahnehman, Thinking Fast and Slow
G Morgan, Imaginization
P Slovic, Perception of Risk
P Tetlock, Expert Political Judgement: How Good is it? How Can We Know?
CBI, Building Trust, Making the Case for Infrastructure
B Flyvbjerg, What You Should Know About Megaprojects and Why
A King & I Crewe, The Blunders of our Governments