A carefully blended solution of data collected from disparate project tool sources (Microsoft Excel, Microsoft Project, ERP systems, ticketing systems, etc.) can provide you with the means for leveraging BI solutions by way of key performance indicators and data analysis. It is helpful to examine common ways in which project data from spreadsheets and databases on past projects can be used to provide a comprehensive view into project performance. These techniques can be used to achieve improved control and management of your projects to more consistently reach successful completion.
A good starting point is to consider a key aspect to ensuring that your projects stay on schedule, within budget and scope. That is to employ the best practices of what is commonly referred to as the earned value management (EVM) technique. Although EVM in its purest practice is more common in government and construction projects, there are best practices that can be and should be used from earned value controlled projects that are very useful in IT projects. Instead of turning this article into a treatment or training on EVM, I will leave that to Project Management Institute (PMI), certified project management professionals (PMPs) and the many books and blogs about EVM that can explain it much better than I am able to here. But what we should do to allow BI data collection, metrics and dashboards to drive project performance is practice a few key areas of EVM for our purposes. Starting with measuring and ongoing monitoring of key metrics that come from EVM, you will find these aspects of project control very useful for your projects. These can and should be centrally tracked and dispersed from your project management office or PMO. And while on the topic of PMO, let me also state that the most effective method to put those KPIs to good use is through business performance management from a centralized PMO where you can drive performance through project KPIs, center of excellence guidance and leveraging of common, shared resources across enterprise IT projects that can only be performed from a centralized PMO. A siloed or vertical PMO will have limited scope, control and access to cross-organizational knowledge that can lead to efficiencies, lessons learned and improved project performance.
Before we look at the nuts and bolts of a BI solution to provide performance management for projects, let us start at the very beginning of the process and look at key project metrics. In order to have the data available to drive project performance, you must first set goals and measurements. The four primary measurements that we will focus on are schedule performance index (SPI), cost performance index (CPI), planned value (PV) and earned value (EV). With these measurements, we can then monitor indices that will track variances from what was planned and how we are performing. In order to make any of these possible, from a PMO COE perspective, you must insist that project managers develop a complete schedule project baseline to establish project scope and planned costs. That baseline should not change and will be used to track against the progress of the constantly updated living project schedule. In the IT industry, completed and detailed work breakdown structures (WBS) or properly defined milestones and detailed activities are often lacking when compared against an industry that fully embraces project control mechanisms from the power and utility industries or construction projects. But the tremendous accuracies and efficiencies found in those industry projects provide glimpses into best practices that we will utilize in IT projects.
With our IT projects, there are tasks and activities that do not appear to have direct costs such as contracting hours or an hourly consulting rate. Instead, use a full-time equivalency or the common practice of a fully burdened rate for in-house employees. Blend that approximation with an activity-based costing method to come up with a cost for activities and project roles that into account salaries, benefits, infrastructure, etc. With the project baseline and scheduling in place, you will then begin the process of centralized tracking, controlling and measuring of the project throughout the remainder of project lifecycle. Most project managers will enter schedules, journals, activities and costs. in tools such as Microsoft Excel or Microsoft Project and then use enterprise project management tools for the more advanced scheduling, budgeting and reporting requirements. In addition, it is quite common to also interface with enterprise financial systems to control budgets, ERP for manufacturing control and BI tools for additional reporting that may include data mining, predictive analytics and drill down from program level to project level down to activity level for resources, costs and schedules.
This is where performance management becomes a key BI tool. BI enterprise performance management vendors make it very quick and easy to build these KPIs as measures in scorecards that can be tracked over time. A common good practice is to establish centralized variance thresholds from the PMO for areas such as schedule variance and cost variance. A core strength of a centralized PMO is exploited here by gaining centralized visibility into on going projects as well as projects in the pipeline and project history. Essentially, the PMO acts as a COE. In this capacity, you can advise and enforce the proper watermarks that will be used for these scorecards. A threshold for well-performing or exceptional projects must be determined as well as those that are underperforming or on-track. These levels will be entered into the scorecard builder tool as a manual entry for each KPI. Then to build upon the foundation and strength of a centralized PMO, those scorecards become part of the enterprise data portal so that entire organizations can share in the knowledge gained from this sort of visibility into project performance. While on this topic, let us not forget that evidence has shown that once a project’s cost, as measured by CPI (a key metric in earned value management) has exceeded the baseline budget at just the 15 percent project completion point, you cannot recover those cost overruns. So it is imperative to have these metrics tracked frequently and made available to the project team as well as the project stakeholders because you must create a constant feedback loop through scorecards to the project teams, mainly focused on project managers or project controllers. Realizing that a schedule or budget will slip at the 70 percent complete point, for example, is far too late. This is not to say that you must fully enact EVM control in its strictest form to have successful performance management for IT projects. In fact, most PMOs in the IT world will put emphasis on the tracking of metrics, costs, schedule and resources as the primary areas of focus. The performance management early warning indicators from EVM best practices can be very useful for a project management office, such as those outlined by one of the fathers of earned value, Quentin Fleming. In his 2002 book titled The Earned Value Book of Knowledge, Fleming talks at length about utilizing CPI and SPI metrics in order to forecast estimates at completion. By monitoring these values, you can create an early warning signal when measured against the planned budget at completion. Some of this sounds rather basic, but it does leave out some of the more detailed nuances of EVM such as control account plans or TCPI. Instead, get your three axes of project control (schedule, resources and costs) into a BI tool for good project performance management.
