Benefits realisation process

Approach

Benefits realisation is a continuous process that runs through the full Infrastructure Investment Lifecycle. A BRP should identify the benefits an investment must deliver to address the problems identified in the project’s Investment Logic Map (ILM), as well as the expected economic costs of the investment. It should describe how the Benefits Manager can measure and monitor the project’s actual benefits and broader economic costs. These should flow from the benefits and economic costs identified initially in the ILM process and also include those identified subsequently. Benefits measurement must be an objective process: if benefits cannot be monitored and measured in a quantifiable manner,⁠ (Footnote: That is, through identified data sources. User satisfaction surveys and similar methods of data collection are considered forms of objective measurement. ) they should not be included in the BRP.

The Sponsoring Agency may also need to implement business changes and/or strategic enablers for the project to realise the expected benefits fully or to minimise the economic costs. For more information, refer to the purple highlight box on business changes and strategic enablers below. The BRP should outline any required business changes and/or strategic enablers, as well as monitoring and reporting on their implementation over time. Where benefits are contingent on business changes or strategic enablers (such as other projects proceeding or changes to processes and policies) that Government has not agreed or funded through a budget process, this should be identified in the BRP. The Project Team should not assume these changes or enablers will be implemented.

Benefits realisation is a flexible process and should be highly tailored for each project. The Project Team should carefully consider the appropriate monitoring, measurement and reporting schedule included in the BRP and ensure that it is appropriate and feasible. In addition, the extent of benefits measurement should be reflective of the scale of the project. If the Project Team for a Tier 2 or Tier 3 project elects to complete a BRP, the benefits realisation measurement, monitoring and reporting can be less extensive than that expected for a Tier 1 project.

The benefits realisation process follows three key steps, as outlined in the Benefits realisation approach diagram below.

Benefits realisation approach

The diagram below shows how the steps of the benefits realisation approach align with the stages of the Infrastructure Investment Lifecycle.

Step 1 begins in Stage 1 – Develop of the Capital Framework and the remainder of Step 1 and Step 2 fall within Stage 2 – Prove of the Capital Framework. The guidance for these steps (Identify and Plan sections below) is designed to explain how the Project Team should develop a BRP.

Step 3 falls across Stage 4 – Implement and  Stage 5 – Measure.⁠ (Footnote: Step 3 may also be relevant to Stage 3 – Procure of the Infrastructure Investment Lifecycle, as the procurement and construction or implementation of a project may also affect benefits realisation. ) The guidance for this step (Report) is designed to explain how the Benefits Manager should implement a BRP.

Alignment of the Infrastructure Investment Lifecycle and the benefits realisation process

Identify

The objectives of this step are to define project success, identify clearly the benefits that the project seeks to achieve and identify the Key Performance Indicators (KPIs) that will measure these benefits. During this step, the Project Team should also identify any business changes and/or strategic enablers that are required to enable the project to realise the benefits fully.

To undertake this step, the Project Team should draw heavily on the ILM process in Stage 1 – Develop of the Capital Framework and the Needs Analysis and Economic Appraisal undertaken for development of the Business Case in Stage 2 – Prove.

Identify benefits and economic costs through an initial Benefits Register

The Project Team should have defined project success in developing the Business Case in Stage 2 – Prove of the Capital Framework. As a key component of this definition, the Project Team should identify the measurable benefits that it expects the project to realise. The Project Team should also clearly identify key stakeholders for each benefit.

The Project Team should list these identified benefits and stakeholders in an initial Benefits Register. The Register should also include details of any economic costs that are expected to occur as a result of the project. This Register can take the form of a table or the Project Team can use a modified form of the final Benefits Register template (see Plan section below).

For more information on identifying benefits, refer to the ILM and ILW Guidelines and Economic Appraisal Guidelines.

Identify ways to measure benefits and economic costs

Benefits and economic costs should be underpinned by KPIs that are measurable to provide meaningful data on the project’s success and to capture accurately the achievement of its benefits (or incurring of economic costs). In this first step of the BRP, the Project Team should determine how they propose to measure the benefits and economic costs they identified in the initial Benefits Register.

The Project Team must develop KPIs using the SMART principles. That is, KPIs should be:

• Specific—KPIs must be well defined and must be sufficiently narrow in scope to ensure that the reported benefits and economic costs are comparable across time and are robust and defensible. These should be based on data that are reasonably attainable and, ideally, already exist
• Measurable—The KPI needs to be measured/quantified easily and in a cost-effective manner; otherwise, reporting will become too challenging to provide meaningful feedback in an acceptable timeframe. Initially, the Project Team should identify a starting point or baseline that indicates the current state of each KPI in the Base Case, as well as the projected future state of each KPI under the Base Case. Then, the Project Team should identify clearly a target future level for each KPI that is consistent with the Economic Appraisal upon which Government makes its investment decision. The Project Team should establish the starting point and target future level for each KPI at the earliest opportunity
• Achievable—The reporting processes should be achievable and realistic given current and expected conditions. The Project Team should use existing performance measures where possible and consider available data. However, the Project Team may need to obtain new data or information tools to allow for the measurement of benefits or economic costs. Possible datasets that the Project Team could use are shown below
• Relevant—Reported KPIs must share a direct link with the intended benefits or potential economic costs of the investment. They must help Government understand if the project generates value, through the uptake and use of each new benefit and the extent to which economic costs occur
• Timely—All KPIs should have a clearly defined timeline, including a start date, recurrent reporting frequency (e.g. annually) and a target date for a more comprehensive analysis and/or review (e.g. one-year post-implementation).

There must be a baseline measure against which the Project Team can compare KPIs. KPIs cannot usually be measured in the Base Case; however, the baseline KPI measures may be forecast based on the assumptions under the Base Case, or they may be measured at the time at which the BRP is written. An example of this is an increase in land value, based on market rates.

Some example datasets that could be used by the Project Team in identifying KPIs include:

• ABS Census
• ACT Government Open Data Portal
• Usage data
• User satisfaction surveys.

The table below lists some example benefits and related KPIs for each of the types of benefits. This illustrates the distinction between identified benefits and KPIs. Benefits describe the overall positive impacts of the project on the community and generally align to the list of benefits outlined in the project’s Business Case. KPIs provide a way for the Project Team to measure the project’s benefits and understand the extent to which these benefits are being realised. These benefits relate to a variety of project types.

Identify business changes and strategic enablers

The Project Team should consider whether Government needs to implement any business changes and/or strategic enablers to realise the benefits of the project and avoid or minimise economic costs.  To identify these changes or enablers, the Project Team should consult with key stakeholders.

Business changes may include:

• Changes to organisational and governance structures that may be required to manage the project’s construction and operational phases
• Ongoing resourcing changes required (including the upskilling of staff) to enable the operations and maintenance of the project
• Changes to data collection processes to enable benefits to be tracked.

Strategic enablers may include:

• Changes to land use or planning controls required to deliver the project or in line with planning approvals (e.g. re-zoning of land)
• Changes to policies required to enable the project to function efficiently and realise the possible benefits across community groups.

Plan

The objectives of this step are to develop a robust BRP that outlines:

• Key stakeholders
• The final Benefits Register
• The expected benefit profiles, baselines and target measures within the Project Case
• Key risks
• The benefit realisation reporting process
• The required business changes and/or strategic enablers
• Governance arrangements.

The BRP will help the Project Team to understand and keep track of the activities required to enable benefits realisation.

The Project Team should use the BRP template provided to prepare a Benefits Register and explain how the Project Team and other stakeholders will monitor, report and evaluate the benefits and track the economic costs. The Plan will evolve throughout the project’s Infrastructure Investment Lifecycle.

The Project Team is required to undertake the following activities to develop the BRP, through discussions with the relevant stakeholders identified in Step 1.

Develop the final Benefits Register based on the benefits and economic costs identified

• Finalise the benefits and economic costs and their KPIs with key stakeholders
• Categorise benefits and economic costs within the domains of the Wellbeing Framework
• Present the value of the benefits and economic costs in the Base Case
• Identify the values and baseline measures for the benefits and economic costs expected in the Project Case according to the Business Case
• Determine the timeframe and milestones (including for data collection and reporting) for each benefit and economic cost
• Develop the final Benefits Register alongside the other activities required in this step. The Register will be a live document that is periodically updated in the BRP as part of Step 3. It should include the following:
  • Name and description of each identified benefit or economic cost
  • KPI measure
  • Data source
  • Calculation method
  • Expected and target forecasts
  • Timeframe for realisation and key milestones
  • Any business changes and/or strategic enablers required for the benefits to accrue
  • Benefit Owner.

Outline the process and requirements for reporting and tracking benefits and economic costs over time

• Include the data required, timelines and Benefit Owner’s responsibilities
• Identify the frequency of benefit and economic cost reporting. This should be quarterly where feasible, noting that not all benefits and economic costs can be measured with the same frequency due to variations in how often data are collected and any data lags. However, these periods can vary depending on the complexity and scale of each project. An indicative process for reporting benefits and economic costs is shown in Indicative benefits reporting process undertaken in each period diagram below
• For each of the benefits and economic costs identified, stipulate the datasets for measuring benefits and economic costs (as identified in Step 1) and the process for collating data. Where new data or information tools are required, summarise the new dataset and collection techniques
• Develop the reporting template for benefits realisation.

Establish governance and resourcing arrangements (see Governance section)

• Consider the budget required and proposed funding arrangements for the ongoing benefits realisation reporting
• Determine who will be responsible for benefits monitoring and reporting and the governance structures, processes, resources and information needs required. Review responsibilities with the respective Benefit Owners and obtain their agreement.

Document risks, business changes and/or strategic enablers and assumptions

• Determine risks, uncertainties or issues that may affect benefits realisation and identify any mitigating strategies (see Risk section)
• Describe any business changes and/or strategic enablers that need to occur to ensure the project realises the expected benefits in full and minimises the economic costs. This section should focus on organisational changes and should not include any additional infrastructure works or unrelated projects not described in the project’s Business Case
• Document opportunities for synergies with other projects / benefits monitoring processes
• Document the assumptions made in the preparation of the BRP (including availability of baseline data).

Finalise Benefits Realisation Plan

• Consolidate findings, including the benefit measures, processes, governance requirements, risks and assumptions into the BRP, with the Benefits Register in an appendix
• Use the template provided to present the BRP.

Review and agreement

• Review the BRP and supporting Benefits Register with stakeholders and obtain Project Sponsor and Benefits Manager approval.

Report

The objectives of this step are to monitor, report and evaluate the benefits and economic costs regularly against the BRP once the project is delivered. This allows the Benefits Manager to identify whether the project achieved its intended benefits during delivery (including design and construction) and operations and to monitor the extent to which the project resulted in economic costs.

The Benefits Manager should undertake this step according to the process detailed in the BRP. This step should occur periodically for up to 10 years⁠ (Footnote: There may be rare instances when benefits take longer than 10 years to be realised. If so, a longer reporting period is appropriate. ) after the delivery of the project. Generally, it is expected that the Project Team⁠ (Footnote: Given the length of the reporting period, it is expected that the composition of the Project Team will evolve over time as the project progresses through various stages of the Infrastructure Investment Lifecycle and enters its operational phase. The BRP will provide a mechanism through which some degree of continuity can be maintained despite changes in responsibility within the Project Team. ) will have a clear idea of whether the project has realised its expected benefits within five to 10 years after the commencement of operations, so reporting is likely to decrease in frequency over time.

In each period, the Benefits Manager should update the Benefits Register within the BRP to include the findings of how the actual benefits and economic costs compare to the expected benefits and economic costs, and highlight any external factors that are likely to have affected the achievement of the benefits or the impact of economic costs. For example, during the design and construction phase of a project, the Project Team should highlight the impact any design changes or construction modifications have on benefits. The findings from this step will inform whether the Benefits Manager needs to take corrective actions.

An indicative outline of this step in each period is shown in the diagram below. However, this should align with the process stipulated in the BRP.

Indicative benefits reporting process undertaken in each period

For more information on the governance entities, see Governance section.

Final period

Once the appraisal period set out in the Economic Appraisal is complete, the Benefits Manager should finalise and facilitate a review (by the chosen governance entity) of the Benefits Register and the BRP, including a final analysis of whether the project achieved its expected benefits and the extent to which economic costs occurred.