One of the biggest issues we find when entities engage contractors and consultants, particularly for long-term contracts, is it’s often unclear if the contract delivered all that was intended. Sure, it can be easy to say we contracted for a train or a road to be built and point to the end product, but, was it:
- within budget?
- made to specification?
- fulfilling the identified service need?
- meeting expectations of executive management, parliament, and the public?
- and, most importantly – adding real, tangible value?
Often entities don’t allow time before renewing, or at the completion of a contract, to stop and consider if what they delivered was what they intended.
Why do we forget about assessing the benefits?
It sounds easy enough in theory. Once you complete a project or contract, you assess the benefits. But why don’t many entities do this? Some contributing factors include:
- time and cost pressures – it can be hard enough to deliver a project on time and within budget, let alone allowing time to debrief and assess benefits. Many will either not take the time to assess the derived benefits, or will consider it, but rush the execution. This compromises quality of the assessment and it ends up just being a compliance exercise. In our report on Contract management for new infrastructure (Report 16: 2021–22) we concluded effective contract management, which includes managing costs, was necessary to deliver benefits
- confusion about what a benefits realisation entails – more often than not, most entities don’t understand what a benefits realisation is, and will confuse output with outcomes. Too often entities are focused on budget and what was delivered, as opposed to the outcome and if it delivered ‘real’ value
- tone at the top – a project team might have the best intentions to conduct a benefits realisation. But, if it’s not supported at the top, then the results of the assessment become meaningless. Those at the executive level need to drive the importance of benefits realisation. They must show support for their teams undertaking these assessments and act in response to the results, no matter how bad the news may be. Equally as important, the project or contract manager needs to feel empowered to conduct the review. They also should feel supported when reporting up and knowing that their assessment will be taken seriously
- inconsistent approach – an entity needs to ensure benefits realisations are performed consistently, not just in some teams, but all teams. It also can’t just be performed on an ad hoc basis. This again relies on the leaders of the entity to set a clear expectation and framework to follow.
Why is it important to consider the benefits?
If you don’t take time to stop and assess what you have achieved, it can be difficult to conclude if the project or contract was successful. You will only be able to conclude this if you take the time to conduct a benefits realisation. It will not only help you answer this question, but can ensure you don’t repeat mistakes. It can also give invaluable insight when considering contract renewal.
Our report on Strategic procurement (Report 1: 2016–17) recommended the department collaborates with entities to develop a benefits realisation framework. This was to ensure that entities consistently establish, measure, report, and validate benefits. Our report observed that the absence of a whole-of-government approach at the time, and lack of capability and data to assess benefits, could obscure results.
In our report Provision of court recording and transcription services (Report 9: 2015–16) we found a department did not enforce a performance clause under the contract with its provider. It also had not allowed sufficient time to assess the provider’s performance before the contract renewal was due. This meant there was no time to seek a suitable alternative provider, and it was limited to extending the provider’s contract, despite issues with performance.
What does a ‘good’ benefits realisation look like?
It’s one thing to schedule a team debrief to assess the benefits realised by a project, but what does this really look like? How do we maximise the value of the reflection?
Key considerations to ensure a successful benefits realisation are:
- specific and measurable goals – if we set clear goals from the start, then it’s easier to determine if a benefit(s) has been derived. Where deliverables are vague and non-specific, benefits realisation is more challenging, and it’s harder to conclude the success of a project or contract
- project measures are aligned to entity’s business outcomes – our report on Delivering successful technology projects (Report 7: 2020–21) found a higher likelihood of benefits when a project’s measures were aligned to an entity’s objectives
- key governance committees are informed – benefits realisation should not be performed and reported in isolation to an entity’s key governance committees. Audit and risk committees and boards should have benefits realisation included as a key responsibility in their charter. These bodies should be actively seeking oversight of their entity’s key projects and contracts throughout the project life cycle, particularly if updates are ad hoc and they don’t feel there’s full oversight
- the right people involved – this exercise should include the project team, while considering key stakeholders who can provide invaluable insight into identified benefits, risks, or issues stemming from the project. If we don’t involve the right people that are best placed to make an assessment, we may not reach an accurate conclusion.
This blog represents the final instalment in a suite we have been publishing on contract management. We hope you found these useful.
We will continue to identify areas where we can share learnings from our audits to help our clients continuously improve. We are now running blog series on asset management and performance monitoring and reporting. We will take a similar staged approach to releasing future blog series, aligning to audit committee meetings throughout the year, where possible, and considering the best timing for our clients.
- A contract register is more than a list
- If you don’t set clear measures, you can’t effectively monitor performance
- For a successful contract – planning is key!
- Managing contract costs to minimise risk
- Contract management for new infrastructure (Report 16: 2021–22)
- Strategic procurement (Report 1: 2016–17)
- Provision of court recording and transcription services (Report 9: 2015–16)
- Delivering successful technology projects (Report 7: 2020–21).