Benefit Realisation for Defence Capability …...Benefit Realisation for Defence Capability...
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Benefit Realisation for Defence Capability Investment Projects - Delivering Force Design Projects that Make a Difference 1 Research School of Management, ANU College of Business and Economics, Australian National University, Canberra ACT 2601 2 Force Design Research Group, Strategic Capability Analysis Branch, Joint & Operations Analysis Division, Defence Science & Technology Group, Canberra Airport ACT 2609 Ofer Zwikael 1 , Elham Merikhi 1 , Ivan Garanovich 2 , Terence Weir 2 , Kevin Johns 2
Transcript of Benefit Realisation for Defence Capability …...Benefit Realisation for Defence Capability...
Benefit Realisation forDefence Capability Investment Projects -
Delivering Force Design Projects thatMake a Difference
1Research School of Management, ANU College of Business and Economics, Australian National University, Canberra ACT 2601
2Force Design Research Group, Strategic Capability Analysis Branch, Joint & Operations Analysis Division, Defence Science & Technology Group, Canberra Airport ACT 2609
Ofer Zwikael1, Elham Merikhi1, Ivan Garanovich2, Terence Weir2, Kevin Johns2
Outline
• Project benefit realisation
• Project portfolio selection
• Applying benefit and portfolio theories to Force Design
Defence Integrated Investment Program (IIP) is focused on investment projects
DCAP Vision: Delivering an integrated Joint Force by Design that is capable, potent and agile in achieving
the strategic Defence objectives directed by the Government of Australia
Design Force Project Portfolio Selection Questions
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What benefits do we target?How do these benefits support DCAP vision?What capabilities are required to achieve the
target benefits?How do we select project and programs to
achieve the vision?
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Project Benefit Realisation
Implementing Organisational Strategy
Source: Organisational Project Management Maturity Model (OPM3), Project Management Institute (PMI), 2007
• Completed on time and within the budget• Number of drivers using the tunnels (33,000
vehicles per day) is only third of the expectations
The Sydney Cross City Tunnel
Source: Zwikael, O., Smyrk, J. R. (2011). Project Management for the Creation of Organisational Value. Springer-Verlag, London, UK. ISBN 978-1-84996-515-6 (print book); ISBN 978-1-84996-516-3 (ebook).
What is a Project?Building the tunnels is not a projectBuilding the tunnels is a (major) part of a projectThe project is reduced travel time in Sydney
CBD
The Input-Transform-Outcome (ITO) Model
Outputs
Inputs
Process Utilization
Outcomes
OutcomesInputs
Source: Zwikael, O., Smyrk, J. (2012). A general framework for gauging the performance of initiatives to enhance organizational value. British Journal of Management, 23, S6-S22.
Outputs are commonly delivered but project objectives are not met
The UK Office of Government Commerce reported that “30–40% of systems to support business change deliver no benefits whatsoever”
The Problem Definition
The Benefit Management Process
1. Benefit definition (project goal setting, business case appraisal)
2. Benefit management (project governance and leadership)
3. Benefit realization (through project output utilization)
4. Benefit evaluation (measuring project ownership success)
Target Benefits Definition: The NKS Project in Sweden
Project target benefits:• Development of novel treatments through healthcare, research and education• More efficient health care processes• Improve safety, integrity and care of patients
Case Study:
Return
Project Selection Principle
The project
portfolioResources
Benefits to support DCAP
vision
Funds
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Project Portfolio Selection
Project portfolio selection problem (PPSP)
Organizational performance
PPSP is the selection of subset of project proposals to be funded to optimize organizational performance given limited resources
Project portfolio selection framework
Project portfolio’s
attractivenessA2
A1
Project portfolio’s
return
Project portfolio’s
risk
Individual projects’ returnsA3
Technical interdependencies among projects
A4Benefit interdependencies among projects
Resource interdependencies among projects
Threats &
opportunities
Strauss and Stummer (2006), Yu et al. (2012), Sefair et al. (2016), Mutavdzic and Maybee (2015)
Benefit interdependency 1
Resource interdependency 2
Technical interdependency 3
1 Carazo (2015)2 Spradlin & Kutoloski (1999)3 Chien (2002)
Projects’ interdependencies$1000/day $2000/day
Data set
Project portfolio selection framework
Project portfolio’s
attractiveness
Risk interdependencies among projects
Individual projects’ risks
A2
A1
Project portfolio’s
return
Project portfolio’s
risk
A5
Individual projects’ returnsA3
A6
Technical interdependencies among projects
A4Benefit interdependencies among projects
Resource interdependencies among projects
Threats &
opportunities
Strauss and Stummer (2006), Yu et al. (2012), Sefair et al. (2016), Mutavdzic and Maybee (2015)
Risk interdependencies among projectsRisk interdependencies arise over time from overall social and economic changes and can affect multiple projects1. For example, a change in the inflation rate can increase the expected return of a project, as an opportunity, and simultaneously reduce that of another project, as a threat.
Considering risk interdependency in the decision model of PPSP is crucial as it provides the condition to reach a portfolio with lowest level of risk for the same level of return.2
CAL
1 Gear & Cowie (1980)2 )
, Guo, Liang, Zhu, & Hu (2008)Markowitz, H. (1952), Mutavdzic & Maybee (2015
Project portfolio selection framework
Project portfolio’s
attractiveness
Risk interdependencies among projects
Individual projects’ risks
A2
A1
Project portfolio’s
return
Project portfolio’s
risk
A5
Individual projects’ returnsA3
A6
Technical interdependencies among projects
A4Benefit interdependencies among projects
Resource interdependencies among projects
Threats &
opportunities
Strauss and Stummer (2006), Yu et al. (2012), Sefair et al. (2016), Mutavdzic and Maybee (2015)
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Applying Benefit and Portfolio Theories to
Force Design
Support to detailed design of the Defence Capability Assessment Program (DCAP)
Development of criteria and metrics for identification and prioritisation of gaps and opportunities
Consistent application of benefit metrics and portfolio theory throughout DCAP to ensure that capability investment decisions meet Defence and Government strategic objectives:- Benefit metrics and measures- Portfolio design- Prioritisation- Multi-criteria decision analysis
Benefit realisation metrics for ongoing IIP monitoring, evaluation and reporting
Consistent application of the same benefit realisation principles throughout the entire DCAP to ensure end to end alignment between IIP investment and strategic objectives
• Benefit realisation management is the current international best practice in project and portfolio investment (NZ and Norwegian governments, Treasury, NSW local government, industry etc)
• ANU and DST are partnering to develop methods and tools for a consistent application of benefit management and portfolio design principles across the entire DCAP including:
- criteria for identification and analysis of gaps and opportunities
- benefit measures to enable stream and joint prioritisation
- portfolio design principles for options development
- metrics for ongoing IIP monitoring and evaluation
• We aim to apply benefit realisation management principles to ensure cautious alignment between strategic objectives and capability investment throughout the entire Capability Life Cycle
Summary
