Bias Driving Failure
Approximately 70% of projects either fail or are delivered late. This figure is consistent with research by PM-Partners group and international bodies which identified cognitive biases and organisational issues being a key factor adversely impacting the production of accurate and reliable benefits forecasts and business cases.
A cognitive bias is a pattern of deviation in judgment, whereby inferences of other people and situations may be drawn in an illogical fashion and lead to perceptual distortion, inaccurate judgment and irrationality. Organisational factors can also inhibit accurate and reliable forecasting, particularly where benefits are used to justify the costs required and not as a basis for managing their realisation. “Strategic misrepresentation” is the planned, systematic, deliberate misstatement of costs and benefits.
If we don’t know the benefits to be realised from our investments, we can’t make best use of the funds at our disposal. If we don’t know where the benefits are we cannot manage them – and so the benefits management regime is built on unstable foundations with benefits forecasts that are unlikely to ever be realised in practice.
3 Foundations for Understanding the Benefits of a Project
1. Financial benefits
Include not only the monetary cost savings and revenue but cost avoidance as well
2. Efficiency improvements
Use benefit mapping to help assess how time saved can be spent
3. Non-financial benefits
Look at contingent valuation or choice modelling to help determine whether users or clients are willing to pay or use the outcomes of a project or programme.