As the Project Management Office (PMO) manager it is your responsibility to ensure that project performance is being captured and reported. It is also your responsibility to ensure that the level of reporting is achievable and doesn’t unnecessarily overburden or distract the project managers.
Your PMO should define the size of the work packages in your work breakdown structure (WBS). There are two typical standards; 4 to 40 hours and 8 to 80 hours. You should decide which size best fits your organization based on typical project size and level of management detail. I personally prefer the 4 to 40 as a work package cannot exceed the work of one person over a week.
Additionally your PMO should have a standard for applying credit for work performed.
The third option is to give 50% credit when work on a work package is started and 100% when the work is completed. This is the rule I typically follow as it gives credit for earned value management and is easy to apply in the field.
Next, you should determine what earned value metrics you want to track and present to management.
I track the Schedule Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI) and Cost Performance Index (CPI). These four values provide a reliable measurement of the project’s performance.
Schedule Variance (SV): If SV is zero, then the project is perfectly on schedule. If SV is greater than zero, the project is earning more value than planned thus it’s ahead of schedule. If SV is less than zero, the project is earning less value than planned thus it’s behind schedule.
Cost Variance (CV): If CV is zero, then the project is perfectly on budget. If CV is greater than zero, the project is earning more value than planned thus it’s under budget. If CV is less than zero, the project is earning less value than planned thus it’s over budget.
Schedule Performance Index (SPI): If SPI is one, then the project is perfectly on schedule. If SPI is less than 1 then the project is behind schedule. If SPI is greater than one then the project is ahead of schedule. A well performing project should have its SPI as close to one as possible.
Cost Performance Index (CPI): If CPI is one, then the project is perfectly on budget. If CPI is less than 1 then the project is over budget. If CPI is greater than one then the project is under budget. A well performing project should have its SPI as close to one as possible.
You should set thresholds for these values at which their status will change to an alert. For example, if the SPI falls below 0.9 then the project’s schedule should change to a yellow status. If the SPI falls further and dips below 0.8 then the project’s schedule should change to a red status. Additional earned value calculations can be performed if there is a problem with the project’s cost or schedule – this will give the project manager a better understanding of the problem and determining a path for correction.
Measuring project performance is an important part of project and program management. It allows the PMO and project manager to identify cost and schedule problems early and take steps for remediation quickly. It starts with setting the standards for the size of work packages, applying credit for work performed, and which earned value metrics to track, which should be included in the project’s Cost Management Plan. Measuring project performance provides the organization with a clear picture of the health of its projects and can instill confidence in the project teams. Additionally, these performance measures can help the PMO establish continuous improvement initiatives in areas where projects commonly perform at lower levels. The usefulness of measuring project performance is evident and as long as organizations do not become overwhelmed with them, these measures will remain important contributors to organizational success.
Your PMO should define the size of the work packages in your work breakdown structure (WBS). There are two typical standards; 4 to 40 hours and 8 to 80 hours. You should decide which size best fits your organization based on typical project size and level of management detail. I personally prefer the 4 to 40 as a work package cannot exceed the work of one person over a week.
Additionally your PMO should have a standard for applying credit for work performed.
The third option is to give 50% credit when work on a work package is started and 100% when the work is completed. This is the rule I typically follow as it gives credit for earned value management and is easy to apply in the field.
Next, you should determine what earned value metrics you want to track and present to management.
I track the Schedule Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI) and Cost Performance Index (CPI). These four values provide a reliable measurement of the project’s performance.
Schedule Variance (SV): If SV is zero, then the project is perfectly on schedule. If SV is greater than zero, the project is earning more value than planned thus it’s ahead of schedule. If SV is less than zero, the project is earning less value than planned thus it’s behind schedule.
Cost Variance (CV): If CV is zero, then the project is perfectly on budget. If CV is greater than zero, the project is earning more value than planned thus it’s under budget. If CV is less than zero, the project is earning less value than planned thus it’s over budget.
Schedule Performance Index (SPI): If SPI is one, then the project is perfectly on schedule. If SPI is less than 1 then the project is behind schedule. If SPI is greater than one then the project is ahead of schedule. A well performing project should have its SPI as close to one as possible.
Cost Performance Index (CPI): If CPI is one, then the project is perfectly on budget. If CPI is less than 1 then the project is over budget. If CPI is greater than one then the project is under budget. A well performing project should have its SPI as close to one as possible.
You should set thresholds for these values at which their status will change to an alert. For example, if the SPI falls below 0.9 then the project’s schedule should change to a yellow status. If the SPI falls further and dips below 0.8 then the project’s schedule should change to a red status. Additional earned value calculations can be performed if there is a problem with the project’s cost or schedule – this will give the project manager a better understanding of the problem and determining a path for correction.
Measuring project performance is an important part of project and program management. It allows the PMO and project manager to identify cost and schedule problems early and take steps for remediation quickly. It starts with setting the standards for the size of work packages, applying credit for work performed, and which earned value metrics to track, which should be included in the project’s Cost Management Plan. Measuring project performance provides the organization with a clear picture of the health of its projects and can instill confidence in the project teams. Additionally, these performance measures can help the PMO establish continuous improvement initiatives in areas where projects commonly perform at lower levels. The usefulness of measuring project performance is evident and as long as organizations do not become overwhelmed with them, these measures will remain important contributors to organizational success.
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