Are Universities Missing Out on Half the Benefits of Their Capital Projects?
A recent study conducted in partnership with the APPA Center for Facilities Research (CFaR) suggests that universities investing millions into new campus buildings may realize only half of the anticipated benefits. This significant gap between projected and actual outcomes indicates that many institutions are not fully capturing the value of their capital projects. This significant gap between projected and actual outcomes raises a crucial question: How can universities maximize the return on investment for these high-stakes ventures?
How Do Universities Determine Return on Investment?
Various financial and strategic methods have been developed to address this question. Financial tools like simple payback and net present value are commonly used to evaluate projects. The Project Management Institute (PMI) and others have expanded these methods to include strategic appraisals such as market analysis and strategic alignment (see additional resources below). Most recently, PMI and others have introduced a project management methodology called Benefits Realization Management (BRM), which systematically identifies and tracks the strategic value of capital projects.
Benefits Realization Management (BRM)
Benefits Realization Management (BRM) is a collective set of processes and practices for identifying benefits and aligning them with formal strategy, ensuring benefits are realized as project implementation progresses and finishes, and that the benefits are sustainable—and sustained—after project implementation is complete. —Benefits Realization Management Framework, 2016, PMI.
Benefits Realization Management (BRM) is a structured approach to deliver the project’s expected benefits in alignment with an organization’s strategic goals. BRM involves identifying benefits, aligning them with formal strategy, realizing them throughout project execution, and sustaining them after project completion (See BRM Project Life cycle in additional resources below).
BRM helps project leaders:
- Define the intended benefits clearly.
- Measure these benefits systematically.
- Realize the benefits throughout the project’s life.
- Align the project with the university’s strategic objectives.
- Enhance decision-making by focusing on tangible outcomes.
- Increase accountability by tracking who is responsible for each outcome.
Applying BRM at Universities: A Research Study
Recent research conducted by the author has aimed to explore the application of BRM at universities in Canada and the United States. A preliminary survey explored two key questions: whether universities are employing BRM methods in their capital construction projects and whether they are facing challenges in realizing the strategic benefits from these projects. The study sought to provide preliminary observations that could inform further research and the development of best practices for BRM in the university context.
Data for the study was collected through an anonymous survey conducted at the 2023 ERAPPA (Eastern Region of APPA: Leadership in Educational Facilities) Conference. The survey targeted experts involved in university capital projects, gathering insights into their awareness and application of BRM methods. The anonymous nature of the survey allowed participants to provide candid responses, contributing to a clearer understanding of current practices and obstacles in BRM adoption within the higher education sector.
Key Findings:
- Limited Awareness and Use of BRM: The results of the study suggest that universities have a low awareness of and limited use of BRM methods in their capital construction projects. A significant number of respondents (74 percent) were unaware of BRM, and only five percent consistently conducted project appraisals with stakeholder input. Although 86 percent of respondents commonly use strategic alignment in appraisals, other BRM-related practices—such as establishing metrics and conducting follow-up measurements—are rare.
- Infrequent Measurement of Benefits: Only about 21 percent of projects have metrics, and progress is infrequently measured during or after project completion. The use of change management processes is similar, with only 21 percent of projects incorporating them. These findings indicate a general lack of BRM implementation in university capital projects.
- Challenges to Realizing Benefits: There is also evidence from the study that universities are facing challenges in obtaining strategic benefits from their capital construction projects. The data shows, on average, these projects achieve only 55 percent of their projected benefits, with just 14 percent of participants reporting that more than 80 percent of the intended benefits are realized. This suggests a significant issue may exist for universities realizing the strategic goals of their capital projects.
- Positive Impact of Measurement: The study also performed a regression analysis of the results. This analysis found that projects that regularly measure benefits are more likely to achieve their goals. Continuous measurement helps keep the project on track and allows adjustments to enhance outcomes.
- Negative Impact of Deferred Maintenance and Strategic Alignment Assessments: The analysis found that focusing on deferred maintenance (DM) benefits—while necessary for maintaining university facilities—can divert resources and attention from achieving larger strategic goals. Similarly, using strategic alignment to evaluate projects appears to negatively affect the realization of benefits.
Conclusion
The study highlights a significant gap in the use of Benefits Realization Management in university capital projects, potentially leading to underrealized benefits. This gap raises an important question: How can universities maximize the return on investment for these high-stakes ventures? By adopting BRM practices—such as clearly defining benefits, establishing metrics, and regularly measuring progress—universities can enhance the success of their capital projects. However, more research is needed to understand the factors and best practices that help these projects achieve their strategic goals.
Change Management is Essential
Implementing BRM isn’t just about completing a construction project—it is about embracing the necessary organizational changes to realize the full benefits. This might involve hiring new staff, providing training, updating processes, and evolving the organizational culture. Without these changes, the new facilities may not achieve their intended impact. These changes should be planned and managed alongside the building’s construction.
BRM Project Management Life Cycle
The process of BRM can be integrated into the PMI project management life cycle:
- Initiation: Identify and define the project’s expected benefits. Determine how to measure these benefits and assign responsibility to specific stakeholders.
- Planning: Develop a detailed plan outlining how to achieve the benefits. This includes specifying necessary organizational changes (see “Change Management is Essential”) and setting metrics for progress.
- Execution: Manage the project to ensure planned benefits are realized. This includes continuously monitoring activities and making adjustments as needed.
- Monitoring and Controlling: Measure benefits throughout the project. Address any deviations and take corrective actions to stay on track.
- Closing: After project completion, assess the actual benefits achieved. Document lessons learned and identify opportunities for further improvement.
Examples of BRM Project Management Tools
Benefits Register
A comprehensive list that details all the project’s expected benefits, along with their associated metrics, owners, and timelines. The register serves as a central reference for tracking progress and accountability.
Figure 3-4. Benefits Register(“Benefits Realization Management Practice Guide | PMI”
Benefits Dependency Network
This tool maps out the relationships between project activities, changes, and the desired benefits. It helps identify how specific actions lead to the realization of benefits, ensuring that every part of the project contributes to strategic goals.
(Ward and Daniel, 2012, p. 14)
Ian Wagschal is the Director of Facilities Management at the University of King’s College in Halifax, Nova Scotia, Canada. He can be reached at [email protected].
