Mon. Jan 23rd, 2023

Business Benefits

When we talk about the business benefits, we can look at this from two different perspectives.

  • The business benefit of project managing
  • The benefit to the business of the project

The first is easy: any project sets out to achieve something. It doesn’t matter what it is you are trying to achieve, the key point is you are trying to achieve something. We all have experience of a project that didn’t turn out quite as we hoped: it could be an art project, decorating, baking or organising a tournament.

The failures of these projects ultimately come down to how the project was approached. Either the planning was insufficient, or the resources were. Maybe that decorating project would have worked out better if I had hired professionals to do some of the work?

Whatever the causes, proper project management would have helped: firstly, it would ensure that the correct resources were in place, and secondly, we would have reviewed the project afterwards to see what we could learn from the experience.

Now, this doesn’t guarantee that the project would run smoothly: we have already seen that risk management is part of project management, and by their nature, risks are often unforeseen. For example, I hired a plasterer to re-surface a ceiling, and he did a terrible job. In my review of that project, I made a note never to hire him again…

What project management does do, is maximise the chance of a positive outcome of the project.

Benefit to Business of the Project

Whilst the above is true, it isn’t really the point of this section. This section is all about the benefit to the business.

The success of all businesses ultimately relies upon their income exceeding their outgoings. If they fail to be profitable, they will eventually fold.

For many businesses, instigating a project involves the investment of a significant sum of money. It may even be the case that the business needs to borrow in order to fund the project.

This means that the business must be confident that they will be better off at some point if they make the investment than they would be if they didn’t. This is achieved by modelling how the business will change if the expected benefits of the project are realised.

As with guaranteeing the success of a project, it is impossible to guarantee that the expected benefits will be realised – there is an element of risk. However, the business can make moves to maximise the chance of this by ensuring that the predicted outcomes are well researched and realistic.

Ultimately, the questions that need to be answered are:

  • Will the business be more profitable as a result of the project
  • Will the increase in profitability be able to offset the cost of implementing the project

Types of Benefit

How does a business become more profitable? It depends (unsurprisingly) on the business. Instead of trying to answer the question, here are some suggestions:

  • A new system that will allow a product to be packaged at double the existing rate will allow more of a product to be manufactured and supplied. As long as the demand is there, this equates to more sales and therefore more profit
  • A new system that automates order picking and is estimated to reduce the incidence of errors from 1 in 5 orders to 1 in 20 orders, therefore reducing the number of returns, and reducing the cost of processing the returns and reducing the level of cancelled orders. Although not directly increasing income, it will reduce expenditure and therefore improve profitability
  • A new point of sales system that allows several remote stores to view each other’s stock levels and sell stock remotely from other branches. This means they are able to fulfil orders that they would usually have had to decline and perhaps lost to competitors.

As you can see, there is no single answer, but all of the suggestions contain at least one of:

  • Increasing the value of income
  • Decreasing the value of expenditure