When the actual benefits of a venture are less than the projected or estimated benefits, the result is known as a benefit shortfall.
If, for instance, a company is launching a new product or service and projected sales are 40 million dollars per year, whereas actual annual sales turn out to be only 30 million dollars, then the benefit shortfall is said to be 25 percent. Sometimes the terms "demand shortfall" or "revenue shortfall" are used instead of benefit shortfall; see
volume risk.
Public and private enterprises alike fall victim to benefit shortfalls. Prudent planning of new ventures will include the risk of benefit shortfalls in
risk assessment and
risk management.
The discipline of
benefits realisation management seeks to identify any benefits shortfall as early as possible in a project or programmes delivery in order to allow corrective action to be taken, costs to be controlled and benefits realised.
See also
Cost overrun – Unexpected incurred costs in excess of budgeted amounts
Cost-benefit analysis – Systematic approach to estimating the strengths and weaknesses of alternativesPages displaying short descriptions of redirect targets
Downside risk – Risk of the actual return being below the expected return
Efficient contract theory – Hypothesis that if a contract continues to exist it must be efficient due to survivorship bias
Hiding hand principle – How ignorance intersects with rational choice to undertake a project
Underconsumption – theory in economics where inadequate consumer demand exists relative to the amount producedPages displaying wikidata descriptions as a fallback
References
Cost Management: Book: Measuring, Monitoring & Motivating Performance By K. P. Gupta