Another idea for managing project benefit estimates

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I don’t know a company that doesn’t have more demand for IT projects than the IT organization can fulfill, whether it is due to lack of money or resources. Most IT organizations are very challenged to create a process and define criteria for project approval and prioritization. Philosophically, everyone agrees that companies should prioritize these projects based on business value, but defining what business value is within each enterprise and then accurately estimating costs and benefits to define that business value using that company’s favorite “formula” is the hard part. Further complicating the equation are the incentive structures that often drive people to over or underestimate both costs and benefits to game the system and get their projects approved.

So I’m always interested to hear how different companies manage the demand challenge. I just heard a new one, one I haven’t run across before. I was speaking with a company the other day that actually adds any expected project benefits to the performance targets of the requesting executive. Obviously, this incents them to underestimate their benefits, but I still like the idea. So often, executives come up with these ridiculous benefit cases that everyone knows are grossly exaggerated. While this solution still doesn’t get to the ultimate solution of tying expected benefits directly back to actual benefits achieved, this proxy should minimize the crazy exaggerations.

Please weigh in if you’ve seen other creative solutions to the business value equation!

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