IPMA International Project Management Association
17 January 2018 / 8:29

Benefits breakdown structure (BBS): Different types and how to create them?

Benefit realization has recently become one of the top priority areas in the development of project management knowledge activities. Global project management bodies are making concerted efforts to develop guidelines and tools for planning, baselining and measuring benefits.

One of the keys to such efforts is to clearly identify the possible benefits and to summarize them through creation of a Benefits Breakdown Structure. Once Benefits Breakdown Structure is constructed, a Benefits Traceability Matrix (BTM) can then be developed to link identified benefits to actual realization efforts. As such, a Benefits Breakdown Structure could serve as a road map or a platform for potentially realizing the identified benefits.

A Benefits Breakdown Structure (BBS) is a visual representation of the breakdown of benefits (related to functions, stakeholders, corporate organs and portfolio), which is created to baseline benefits and develop relevant plans to achieve them.

A Benefits Breakdown Structure should be considered in at least in four streams. For each stream we have shown list of benefits which are for illustration purposes only and should not be considered comprehensive or exhaustive in any way.

  1. Functional view BBS (benefits to different functional divisions within an organization)

A functional view BBS is created to show benefits that various functions within an organization would possibly receive as an outcome of successful completion of the project work. A hierarchical or indented BBS can be created to show each of the various business functions with the relevant benefits listed underneath.

For example: Implementation of an integrated information system project could potentially entail a variety of benefits for several functions within an organization. The following shows an illustration for two different functions.

A. Operations function oriented
Operations can achieve benefits such as
a) Flexibility of production to meet varying demands,
b) Reduction in costs through cutting waste, and through process improvements
c) Enhanced speed of production
d) Improved transformation processes
e) Increased variety of production

B. Sales and Business Development function oriented
An integrated information system can entail benefits for this function such as:
a) Capture and analytics of customer demands, complaints and concerns about products and services
b) Improved feedback to R&D for new product development activities
c) Improved customer services due to better information collection
d) Enhanced sales pitch and marketing messaging
e) Increased revenues and ROIs

  1. Stakeholders’ view BBS

A stakeholders’ view BBS is the decomposition of benefits from stakeholders’ perspective showing the names of the stakeholders or entities (in cases where stakeholders are organizations), with benefits listed underneath. A hierarchical or indented BBS construction will clearly picture who will receive what type of benefits. The stakeholders’ names can be picked from Stakeholder register to construct a Stakeholders’ view BBS.

For example: Following list illustrates some of the potential benefits for the two stakeholders for the Implementation of an integrated information system project.

A. Project sponsor oriented
a) Improved control over organizational matters
b) Improved decision-making capabilities
c) Enhanced capacities in business planning and expansion
d) Improved cost control
e) Developing future outlook for the organization

B. Managers and organizational staff (Using the system post-implementation) oriented
a) Improved Information currency
b) Transparency of information
c) Improved availability and accuracy of information
d) Seamless connectivity across the value chain
e) Improved communication

  1. Corporate view BBS (benefits to parent organization, subsidiaries and allies)

A corporate view BBS pictures the benefits to parent organization, subsidiaries and key value chain partners. It could be constructed as a hierarchical diagram or an indented list showing the various entities’ names with the potential benefits to them listed beneath their names.

For example: A list of potential benefits to two corporate organs for the Implementation of an integrated information system project is given below for the illustration purposes.

A. Parent organization oriented
a) Enhanced and timely communication with other corporate organs
b) Improved bi-lateral information flow
c) Improved control over corporate organs
d) Improved capabilities to develop and deploy a coordinated response to emergencies and crises
e)Improved compliance capabilities

B. Subsidiary oriented
a) Provide and get updates from senior management in an enhanced manner
b) Improved coordination with other subsidiaries
c) Enhanced capabilities to project a more unified view of the organization
d) Consistent marketing and branding
e) Improved commonalities for shared values and growth orientation

  1. Portfolio view BBS

A portfolio view BBS portrays benefits that help in achieving, supporting or contributing towards accomplishment of benefits from other projects within the portfolio and ultimately achieving portfolio objectives. A hierarchical or indented BBS can show the benefits of several projects within a portfolio which when combined achieve the benefits proposition from the portfolio.

For example: A list of potential benefits of various projects within a portfolio for the Implementation of an integrated information system project is given below for the illustration purposes.

For the Portfolio objective of change management within the organization, the installation of integrated information system will have benefits for restructuring the processes (hence supporting business process re-engineering project).

Similarly, the implementation of information system will contribute towards other projects within the portfolio such as training the staff in new compliance procedures, developing a culture of transparency and coordinated working, and so forth.

Concluding thoughts:

Projects are capital intensive investments and organizational growth could be hindered if the organization is unable to realize the expected benefits. Hence, developing knowledge on benefit planning, baselining and realization is essential for the growth of the project management profession. Constructing a BBS could provide a useful start to achieving goals – which are often elusive – of actually realizing benefits of project investments.

The construction of BBS will serve as the platform for creating a Benefits Traceability Matrix which will show the identified benefits id, the benefit owner(s) and how benefits are manifested in BBS, among other details. 

Acknowledgement: 

Special thanks to post-write-up contributions by Roger Tagg.

© 2018 Jiwat Ram, All Rights Reserved.

3 Comments

  • I don’t know, Dr. Jiwat, but by moving in this direction (which I agree all the major professional organizations are doing) aren’t we getting closer to supporting Peter Drucker’s view that “management is management is management” and that project management is but one possible “delivery system” to “acquire, update, expand upon, enhance and eventually dispose of organizational assets”, along with operations and “agile”

    Seriously in most organizations, how much influence does a PROJECT MANAGER really have on whether the PRODUCT of the project can or will deliver the benefits for which it was undertaken?

    As least in my world of construction project management, I have yet to see any OWNERS project manager empowered to make the kinds of STRATEGIC or in many cases, even the most basic TACTICAL decisions.

    At least i my world, these decisions are either made by outside consultants (Architects/Engineers) or are made by some sort of “steering committee”.

    Bottom line- I just don’t see how project managers, working in an OWNER (as opposed to CONTRACTORS) organization, has much if any direct impact on whether or not the project delivers the benefits it was undertaken to achieve.

    BR,
    Dr. PDG, Jakarta, Indonesia

  • jiwat jiwat says:

    Dear Dr. Giammalvo. Thank you for the excellent inputs. Much appreciated sharing your thouhts.
    I am with on you on the operational limitations that you have noted.
    But, at the end of the day, projects are investments (time, effort, money etc.). If investment is not linked to return, then there will always be issues.
    The reality is, every investor has some understanding of why s/he is investing in a project. That understanding may be well considered or simply crude, but there will always be some thought why I am putting money on something.
    So creating a simple or a detailed BBS will help in two ways broadly: (1) project team to make possible efforts to integrate the benefit proposition at design stage of the project’s product (in features / functionalities etc), and (2) leave a BBS document with the client organization for them to have a some sort of starting point to try and achieve the benefits.
    In majority of the cases, it does not fall under project managers’ remit to follow-up on benefit realization efforts, so having a BBS can help client organisation to assign someone if they wish to make systematic efforts to realise benefits.
    Gist of the matter is doing BBS exercise seems a worthwhile effort, given all the limitations you have noted.

  • fesseha worku says:

    Thank you.

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Jiwat

Author of this post

Jiwat is a Professor in Project Management. He has considerable experience of working internationally in diverse cultures and business environments such as Hong Kong, China, Singapore, and Australia, among others. Over his career, he has provided leadership in establishing, designing, and delivering Executive education / Master’s, Training, and Research programs.

Jiwat is currently serving on the Editorial Board of International Journal of Project Management.

Jiwat actively contributes to project management community by speaking at various events and writing on emerging issues. His work has been published in top scientific journals and Four of his published papers have remained in Top25 most downloaded papers. Additionally, two of his papers have been ranked as the Most Cited article published since 2012, one in the International Journal of Production Economics and the other in Journal of Engineering and Technology Management. More recently, he has published a number of articles on some of the issues confronting project management in various industry based outlets.

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