Measuring for project success

Pro

1 April 2005

Project success has been formally defined as meeting or exceeding stakeholders needs and expectations. What is meant by stakeholders? Once again a formal definition is that a stakeholder is anybody directly impacted by the project. Using these criteria, one can ask, is the LUAS light-rail project in Dublin a success? Despite the fact that it has exceeded both its budget and schedule, many stakeholders (the travelling public) would probably deem it to be a success, even though as taxpayers a considerable proportion of their tax contribution went to fund budget overruns.

Perception of project success can often depend on whom one is talking to. The Harcourt Street business community and a number of prominent economists would probably not consider the project a success whereas the government and the travelling public probably
would.

Project Metrics
Project managers need to understand the true impact of the project success in the entire organisation and see interdependencies to success between the project, the corporate project portfolio and the organisation.

Project metrics (Fig. 1) have to address the needs of three audiences:

• Executives charged with project benefits realisation via the Balance Scorecard
• Executives charged with project portfolio oversight via the Dashboard
• Project managers responsible for the successful completion of the project via Performance Reporting.

If we are in fact to predict and affect the direction of our projects, we must know where to correct, what to correct, and how much to correct. For metrics to be of any use they need to be responsive to fundamental questions at the highest level of the organisation.

Balance scorecard
Historically the measure of the success of a project has focused on the project outputs of time, cost and quality—sometimes referred to as the ‘iron triangle’. However, whereas the project may be measured as being a success if its outputs meet these three criteria, it still may not be a true success if the planned business outcomes from the project are not obtained or measured. For example, delivering a new fully equipped acute hospital on time
and within budget could not be deemed to be a success if it subsequently lies idle, say for financial or industrial-relations reasons, and therefore does not become operational. The concept of benefits realisation should be an integral part of any project measurement metric.

The balance scorecard looks at measuring the four key business aspects as set out in Fig. 2 with a view to enable the organisation to do more—better, faster and with less.

Oversight via the dashboard
To enable executives to focus and communicate on projects’ progress in a clear and straightforward manner, many organisations employ a simple, software based graphical overlay, commonly called a dashboard—sometimes called a traffic light system (see Fig. 3).
Typically, but not exclusively, each project’s on time, on budget, scope and quality status are represented by coloured icons on a computer screen.

• Red requires senior management intervention;
• Yellow calls upon project manager to make a course correction;
• Green indicates smooth sailing.

The success of any dashboard depends on looking at the right things. Managers must determine both what the customer wants out of the project, and which metrics will materially advance the project towards success. The dashboard is not going to be a success
if there is not agreement among the executives about what the project is supposed to accomplish.

The benefit of the dashboard is that it enables busy executives to quickly review a multiplicity of projects in the corporate portfolio and to drill down into the areas of concern. This drill-down process can only take place if the next level of project management methods (performance reporting metrics) is in place.

Reporting metrics
As the project moves through its natural lifecycle, the project manager needs to have established and deploy performance reporting metrics to monitor and control the project’s outcome. To determine the original baseline project plan, the project manager will need to measure and monitor the project’s scope, time, cost, quality, risks and procurement plans. Frequently used performance measurement metrics are: variance analysis; trend analysis
and earned value analysis.

Variance analysis involves comparing actual project results to planned or expected results. Cost and schedule variances are the most frequently analysed, but variances from plan in the areas of scope, resource, quality, and risk are often equal or greater importance. Trend analysis involves examining project results over time to determine if performance is improving or deteriorating. Finally, earned value analysis in its various forms is the most
powerful method of performance measurement. It integrates scope, cost (or resource) and schedule measures to help the project management team assess project performance. Earned value (EV) involves calculating three key values for each activity. 

Metrics implementation
Metrics used properly are essential management tools. Too often, metrics programs are developed in a vacuum or become so detailed that they get in the way of productivity. It is important to design your metrics program for success.

To be successful, metrics programs need to be holistic and developed from the top of the organisation, through to deployment. Metrics, though useful, can often bog down an organisation, taking too much time to generate, and creating information overload. It is
critical to examine precisely what information is needed to spot critical problems.

Keep the metrics simple, and manage by exception. Despite your attempt at simplicity, gathering all of the data necessary to measure, manage and control projects often requires the use of automated tools. Carefully evaluate the tools available—be sure the focus is on the information generated, and not the technology.

An integrated metrics programme linking performance reporting to dashboard summaries and ultimately the balance scorecards can help get organisations the results that they want, provide opportunities for strategic improvements, and help to gain competitive advantage.

The author is director general of the Project Management Institute of Ireland (www.projectmanagement.ie) which spearheads project management education, certification and research in Ireland.

30/08/04

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