The document discusses the challenge of implementing productivity improvement projects to fully realize their potential benefits. It notes that around 40% of projects fail to deliver any improvement, and of the remaining 60% that do deliver improvements, 55% fail to fully realize the available business value. This value loss is due to an overfocus on "project delivery" rather than "value delivery". It identifies five key steps to realizing improvement benefits - identifying, targeting, protecting, delivering, and sustaining benefits - and argues that adopting a "value delivery" approach focused on these steps can help ensure maximum value is achieved from productivity improvement investments.

1. THE PRODUCTIVITY IMPLEMENTATION CHALLENGE
A major challenge to productivity improvement is the ability - or rather the inability to implement
productivity improvement projects.
Small, incremental improvements can be implemented, but they deliver small returns. When it comes
to larger, transformational, high-value improvements, firms struggle to implement effectively, if at all.
Research has repeatedly confirmed that around 40% of projects fail to deliver any net improvement.
Some fail altogether, but many just deliver ‘something’ at a cost that exceeds the benefits. Of the
remaining 60% of projects, 55% fail to deliver the available business value in full – often missing this
target by more than 50%. All pretty distressing figures.
The standard response, by both the project industry and management, is ‘better project managers’ to
manage these improvement projects and programs. Herein lies the fundamental problem. Project
managers focus on ‘project delivery’ and business managers expect ‘value delivery’.
There is a major difference between ‘project delivery’ – the ability to deliver the project and
implement the solution (which most firms focus on today), and ‘value delivery’ – the ability to fully
deliver the new, improved business end states, benefits and value. Notice the difference in focus – one
is on the project and the other is on the business value. If you want to obtain the gains and the benefits
of your productivity improvements you need to
1 identify them
2 target them
3 protect them
4 deliver them, and
5 sustain them.
1 Identifying the improvement benefits
When with The Boston Consulting Group I conducted research into the drivers and destroyers of
value on projects. The greatest single destroyer of value was the business case! The way firms
approach and manage business cases encourages value loss. Conventionally, benefits are treated as an
offset to costs so, once you have ‘enough’ benefits to cover your investment costs, you stop looking
for any more. On a recent project we recomputed the business case but this time without the constraint
of only trying to justify the costs – the benefits’ value went from $35 million to over $100 million (we
stopped counting when we passed $100 million). This example demonstrates the potential size of this
‘identification’ problem.
2 Targeting the improvement benefits
The orthodox mental model is that there are projects and there are benefits and somehow they are two
separate streams of activities. Methodologies advocate the establishment of ‘benefits delivery
streams’ to plan and manage the delivery of the expected benefits. The project is somehow separate

2. from this benefits delivery activity. This is ‘project delivery’ thinking triumphing over ‘value
delivery’ thinking. Delivering the project is a major value delivery process. The project should be
measured on the benefits and value it directly enables and delivers during its existence. Many a
project manager rejects the notion that they have any accountability for benefit realization – this is
project delivery thinking. If you want the value you need to ensure everyone is thinking, planning and
aligning what they are doing to the realization of the improvement benefits from day-1. In a utility
implementing a major ERP system, over 20% of the identified benefits had been realized before the
system was implemented as a results of a value delivery mindset and approach.
3 Protecting the improvement benefits
With the obsession on coming in ‘on time and budget’ the scope has become a variable that can be
adjusted to meet the time/cost constraints. However, we don’t commission projects to spend money or
control costs but to implement improvements and realize the benefits. This cost-based obsession is
project delivery thinking again. The scope controls the value. Changes in scope impact the potential
value to be realized. Protecting the scope and thereby the value of the improvement project is the
Sponsor and Steering Committee’s key role – one that most governance teams are blissfully unaware
of today. The governance team should be championing the ‘value delivery’ mindset and approach to
ensure the business realizes the maximum available benefits from each and every project. Instead, too
many governance teams are caught up in the project delivery mindset and see their project as
‘successful’ if it comes in on time and on budget regardless of the improvement benefits actually
realized. We recently witnessed a steering committee adjust the scope to avoid a cost overrun and in
doing so eliminated the top two benefits of the project. This is not an isolated occurrence.
4 Delivering the improvement benefits
Improvement benefits can and should be realized during the project, on its delivery and after. The
notion that “all benefits come after the end of the project” is nonsense and an exercise in abdicating
accountability for benefits to “them” – whoever they are. This benefits delivery step has been
confused by a perception that ‘benefits’ are financials and, therefore, realization of the benefits is the
realization of the financials. However, ‘improvement benefits’ should be seen as three separate
components
1 the new business end states, the improved outcomes and processes to be achieved within
business-as-usual (this is your first measure of improvement realization)
2 the associated benefits realized or enabled as a result of the achievement of these new end
states
3 the financial value of these benefits as ‘banked’.
Chasing just the financials is fraught with problems and unnecessarily difficult. The key is to firstly
focus on delivering the agreed business outcomes, then their associated benefits and then the available
value in full. This is easy, sequential delivery and measurement of benefits. Realization of all three
improvement components should be the primary target and measure of success of both the project and
governance teams. Achievement of these results is why the improvement project was commissioned
in the first place.
5 Sustaining the improvement benefits
It is easy for some benefits to be lost after implementation as practices slide back to the old ways of
doing things or are changed without any awareness of the business value impacts. In a bank, a new
superannuation department was formed and defined all of its operating processes in detail. Two years
later when the actual operating processes were mapped they were unrecognisable by the original
process designer – they had mutated so much in just two years. ‘Process management’ is still an
embryonic concept as it cuts across organizational structures and power bases but is necessary if the
end-to-end value of core processes is to be protected into the future. Professor John Kotter has argued

3. that it takes seven years for a change to become part of the DNA of an organization – so actively
sustaining benefits is a key step in achieving productivity improvement.
Conclusion
Each of the five key productivity improvement realization steps is currently poorly done. These steps
are not the core focus of the orthodox ‘project delivery’ approaches to project delivery – hence the
loss of 50% or more of the available value from improvement projects. These five steps require a shift
in the business mindset to focus on a ‘value delivery’ approach – an approach designed to ensure both
the productivity improvements are fully implemented and the maximum available business value is
realized from each dollar invested.
It is time - and necessary - to shift from the common, orthodox ‘project delivery’ approach to the
‘value delivery’ approach to projects – an approach that consistently delivers the productivity
improvements and benefits desired.
Jed Simms is the founder of TOP – Totally Optimized Projects, the world’s first ‘value delivery’
approach to projects and productivity improvement. TOP has been internationally recognized as the
an innovative ‘game changer’ and outstanding Australian product innovation. TOP’s tools and
techniques are available at www.TotallyOptimizedProjects.com and next month also at www.TOP-
Centers-of-Expertise.com.
Jed can be contacted at Jed@totallyoptimizedprojects.com