Measuring In-progress Project Performance

Measuring performance is a critical factor in optimizing performance. Optimal performance is sustainably achieving multiple, often conflicting, objectives under changing conditions.

Project performance, on the surface, seems easy to measure; just track time, cost and scope and it’s done. But when we look more deeply we find that it is not that simple.

First, we find that there is confusion about what we actually want to measure. Is it the success of a single project, the success of project performance across many projects, or the success of project management and a project office? If our objective is to measure the success of a single project, are we looking at the project during its life or at the project after it has been completed?

Once we determine what we really want to evaluate we can identify the key performance indicators (KPIs) that will tell us whether we have been or are being successful or not and to what degree. KPIs give managers the most important performance information to enable them to assess the performance of a project or process. Generally we look for from two to five or so indicators. One is not enough for any complex process and project performance is a complex process. Too many KPIs make it difficult to see the big picture clearly. Too few make it difficult to diagnose and correct the issues that get in the way of optimal performance.

Project and Business Objectives

Keep in mind that KPIs are not objectives. They are readings that enable a manager to assess performance towards the achievement of objectives. On a personal level we use KPIs such as weight, blood pressure, and cholesterol level to assess general health. The objective is general health, the measures are indicators that can be used to determine if we are tracking towards the objective, or not.

Project objectives are to deliver goods and services, within time, cost, quality and other constraints, satisfying stakeholder expectations. Project deliverables are used to deliver benefits to satisfy the needs of sponsors and clients.

Note the difference between project and business objectives. Projects deliver goods and services that are generally used after the project has ended to achieve business objectives such as reducing costs and risks, increasing revenues, etc. Projects are initiated to achieve business objectives. Project objectives are a means to that end.

When measuring project success, particularly when the project is on-going, it is necessary to focus on the project objectives and performance against schedule and budget estimates. In most cases, we cannot measure a project’s success in achieving business objectives until well after the project has ended. Further, there are factors that are outside of the control of the project that influence benefits realization. For example, in product development the performance of sales and marketing, market conditions, and other factors impact the degree to which expected benefits are achieved.

Project Performance – Schedule and Budget

Performance measurement during a project is to know how things are going so that we can have early warning of problems that might get in the way of achieving project objectives and so that we can manage expectations. A secondary benefit is information that can be used to improve the planning and performance of future projects.

Typical KPIs are schedule and budget compliance, number of scope changes, number of issues and defects, and stakeholder satisfaction.

There is broad agreement that schedule and budget compliance during the course of the project are essential indicators. Projects must end and completion time is often closely linked to the business objectives that drove the project’s initiation. Tracking to a budget in dollars and/or resource time is a key indicator because it gives us a sense of whether we are performing as we have expected to perform. In most cases, project sponsors and clients are cost conscious. They want to know how much they will spend on the project and they want to know it before the project is over.

Assessing the degree to which the project is tracking to its schedule and budget provides an indication of whether the team is going to meet stakeholder expectations (a critical objective in any project). It highlights the need to look into the causes of variance. Causes may be poor estimating, loss of resources, price changes, underperforming resources, too many changes, errors, omissions and defects, etc. Once the causes are understood a course of action can be decided, either accepting things as they are or making changes to remediate any problem that has been identified.

As in earned value management we need to combine schedule and budget perspectives to get a true sense of overall project health. Do not rely on these measures independent of one another, a project can be under budget because it is behind schedule, because prices have gone down, because performers have used clever means to get their work done less expensively, or for other reasons. A stakeholder who is budget oriented can easily get the wrong idea of project health by looking at stand alone budget data.

Quality Deliverables

To effectively measure performance it is necessary to plan so that tasks are defined in terms of specific deliverables with clearly stated requirements. The availability of an accepted deliverable is the only measure of the successful completion of a task. It is all too easy to deliver something that doesn’t work or meet requirements.

Agile project approaches use Velocity as a KPI to measure the team’s rate of progress. Velocity is the number of features (or use cases, components, deliverables, etc.) delivered versus the number planned. This is clearly measuring against schedule but highlights the need for linking tasks to concrete, useful deliverables. Whether or not you are using an Agile approach, it is a best practice to ensure that task completion is defined as the delivery of a specific and meaningful deliverable.

Effort and Cost Tracking

Whether you use velocity or earned value you need to account for effort and the cost of other resources to monitor budget compliance and to estimate to project completion based on current performance.

Can you measure project performance without tracking effort and cost? Of course you can. It is done all the time. However, without a sense of the effort/cost being expended, any assessment of schedule compliance is overly subjective, it is a guess. Capturing and using effort and cost data is often difficult, requiring appropriate tools and cultural change, but if you want to manage your project effectively, do it.

Project Performance – Other Indicators

Other indicators, aside from schedule and budget performance, monitor the number and types of issues, changes, and/or defects and the degree to which they are quickly addressed.

Issues are questions, disputes or problems that arise during a project and that must be addressed to satisfy stakeholders and ensure that the project is heading in the right direction. Issues vary in priority, complexity and the amount of time and effort they require. Issues are inevitable, plan for them and track the effort required to address them against your estimate.

Scope changes result from requests for change in requirements. Changes require analysis, decision making and execution. Scope changes, particularly those that occur late in project life, are disruptive. When planning the project it is best to estimate time, effort and cost to create a fund for expected changes and then to monitor actuals against this fund.

Defects are discovered when testing is performed to validate deliverables. Defects require effort to determine their cause and correct or accept them. Again, it is best to estimate defects and their impact in duration and cost and to track against this estimate.

Each of these is a KPI. High instances of each indicate that there will be project schedule and budget slippage. Issues, changes and defects should be tracked and aged to give management a sense of what is happening outside of the schedule and budget.

One of the most important and underutilized project performance indicators is stakeholder satisfaction. During the course of a project assess the degree to which clients, sponsors and performers are satisfied with responsiveness to their issues, the sense that progress is being made, the degree to which they are involved, the health of relationships and their general feeling regarding the project’s performance.

Performance Reports in Project Management

By Fahad Usmani 14 Comments

I wrote this blog post on Performance Reports a few years back based on the fourth edition of the PMBOK Guide. Now the fifth edition of the PMBOK Guide has arrived, and there are many changes in this new version of the guide.

The concept of Performance Reports is also not untouched by these changes. Therefore, to keep this blog post relevant, I am updating and aligning it with the current version of the PMBOK Guide.

If you go through the fourth edition of the PMBOK Guide, you will see that in this edition Report Performance was a process itself, and Performance Reports were an output of this process.

If you dig further, you will find that the Report Performance process was input to the following processes:

Manage Project Team Distribute Information Monitor and Control Project Work Monitor and Control Risks Administrative Procurement

And now in the fifth edition of the PMBOK Guide, there is no more Report Performance Process; Performance Reports are now an output of the Monitor & Control Project Work process, and input to the following processes:

Perform Integrated Change Control Manage Project Team Manage Communication Control Risks Control Procurement

I hope you now understand the changes in Performance Reports between both editions of the PMBOK Guide.

Okay, now we come to the topic.

However, before you start reading further, I strongly suggest you go through my other blog post on Work Performance Data and Work Performance Information, because Performance Reports are based on these two elements.

Visit: Work Performance Data and Work Performance Information

Performance Reports

From the previous discussion you have seen that Performance Reports are an output of the Monitor & Control Project Work process, and input to various managing and controlling processes.

As the name suggests, Performance Reports have various information pertaining to project parameters, and updates on the project’s progress.

The fifth edition of the PMBOK Guide defines the Performance Reports as follows:

“The physical or electronic representation of work performance information compiled in project documents, intended to generate decision or raise issues, actions or awareness.”

In other words, you can say that the Performance Reports organize and summarize the information collected through work performance data and work performance information, and represent it to the stakeholders in such a way that they can understand the direction the project is going.

Performance Reports show the stakeholders the current status of the project and its performance against the planned baselines.

If the stakeholders see that the project is not progressing as planned, they may decide to take any corrective action, such as if any extra funds or resources are required, or any time extension is needed to complete the project, etc.

Performance Reports can be given to stakeholders in a format desired by them and decided in the communication management plan. They can be a detailed report or just a summary.

The content of the Performance Reports includes, but is not limited to:

Percentage of the work completed during the reporting period Balance of the work to be completed Cost incurred during the reporting period Balance of funds available Balance of time available Major risks that have occurred, or passed without occurring Major remaining identified risks Results of variance analysis: e.g. schedule variance and cost variance Performance indexes: e.g. schedule performance index and cost performance index Forecasted fund required to complete the remaining work (if the project cost is overrun or

underrun) Forecasted time required to complete the remaining work (if the project is delayed or ahead

of schedule)

Summary of major approved change requests during the reporting period etc.

The format of the Performance Reports may be any combination of these formats:

Burndown Chart S-Curve Bar Charts Histograms Tables Run Charts.

With this information on hand, stakeholders are very well aware of the project health, and can make a decision based on these objective data and analysis.

So you see how important the Performance Reports are to project management. This is a very important communication tool for the project manager to keep all stakeholders on board.

Before I conclude this blog post, let’s summarize all the concepts for the last time.

Summary

Work performance data is a collection of raw information of the project’s status. On the other hand, work performance information is a comparison of various performances, like cost and schedule, etc. Work performance data and work performance information are the basis for the Performance Reports.

The Performance Reports are the reports given to project stakeholders to make them aware of the current status and the forecasted progress of the project.

The Performance Reports show stakeholders how the project is going, the forecast analysis of what they should expect if the project is allowed to keep going in the same way, or what additional funds or resources may be required to complete the project if there is any deviation from any baselines (e.g. cost and schedule baselines).

What is Monitoring?

Monitoring is the regular observation and recording of activities taking place in a project or programme. It is a process of routinely gathering information on all aspects of the project.

To monitor is to check on how project activities are progressing. It is observation; ─ systematic and purposeful observation.

Monitoring also involves giving feedback about the progress of the project to the donors, implementors and beneficiaries of the project.

Reporting enables the gathered information to be used in making decisions for improving project performance.

Purpose of Monitoring:

Monitoring is very important in project planning and implementation.

It is like watching where you are going while riding a bicycle; you can adjust as you go along and ensure that you are on the right track.

Monitoring provides information that will be useful in:

Analysing the situation in the community and its project; Determining whether the inputs in the project are well utilized; Identifying problems facing the community or project and finding solutions; Ensuring all activities are carried out properly by the right people and in time; Using lessons from one project experience on to another; and Determining whether the way the project was planned is the most appropriate way of

solving the problem at hand.