The Money Files

What does your PMO track about the projects in your business? It’s often difficult to know where to start, especially when some of the measures you might hear about take a lot of data and relatively mature systems in place to start tracking them.

Here are some simple measures that you can track, and at the end of this article are some that are a little bit harder to put in place but are definitely worth the effort.

Number of projects stopped

You can track how many projects are put on hold, cancelled or otherwise stopped. As a number, it doesn’t give you the whole picture, but with some narrative as well it provides some information about how good you are getting as a business at choosing the right projects to do.

% Increase in projects delivering to time and scope

Hopefully you’ll see this number trend up. It speaks to predictability of delivery: how good you are at making sure projects do what they said they would.

% Increase in projects delivering on budget

Hopefully you’ll also see this number trend up. It speaks to predictability of cost: how good teams are at estimating and managing project budgets as they said they would. You could also look at tracking the % of projects with cost overruns and what these are – with a view that it should be going down as maturity improves.

Customer satisfaction

Whether you work for external clients or internal stakeholders, you can ask them how happy they are with your service! It’s easy to track customer satisfaction and the measures can tell an interesting story.

% of Projects on a Red/Amber Status

Measure the number of projects with a red or amber status at gate reviews, stage reviews or at monthly reporting. Alone, this number doesn’t tell you much, and you certainly don’t want to encourage project teams to under-report problems just so their projects aren’t counted in the monthly numbers. However, combined with other measures it can be an interesting (and easy) number to track. You might also want to add the time period that a project has been on the status of red as this would tell you that the issues are not being resolved, or that the project is hitting multiple issues time and time again – also good to know.

Project management skills

If you have a career path, or defined competencies for project managers, you can track the department’s overall growth in skills maturity. Measure competence at the beginning of the year, do your training programme or whatever, and then measure again at the end of the year. It’s a simple way to show that your staff are getting better and that should have an impact on the success of your project management delivery.

Organisational maturity

As you would for project managers, use one of the PMO maturity models or organisational project management maturity models to measure your business’ maturity when it comes to progress. Then take the measure again in 12 months.

This can be subjective, and it feels like ages before you can do the measure again, but it is certainly interesting to see how things have changed!

Here are some other measures, slightly harder to implement.

• Reduction in benefits loss
• % of actual benefits delivered compared to what was planned in the business case
• Reduction in projects started for the wrong reasons (you’ll have to work out what “wrong” means)
• Reduction in overall resource costs across the delivery portfolio (which is hard to do if you don’t track staff time on projects)

What other measures do you use?

Over the last few articles, I’ve looked at how the Project Cost Management Knowledge Area has been revised in the new PMBOK Guide®-- Sixth Edition. Broadly, it’s been spruced up and clarified, and you’ll need to know the updates if your sitting the exam. As for changing what you do day to day at work – not so much.

If you’ve got your copy of the PMBOK Guide®-- Sixth Edition, you’ll have noticed one major difference in this version. There’s space in each Knowledge Area chapter for a discussion of trends in that area, how you can best tailor the processes to fit your organisation and an overview of what it means to use these processes in an agile or adaptive environment.

I think it’s useful to have this guidance, although it’s only a glancing paragraph or two in each case. Even so, I think it gives people – especially project managers who are perhaps in restrictive or bureaucratic environments, or those who are new to managing projects – permission to do things in the most sensible way, instead of in the way that the book says.

So what does the guidance say about Project Cost Management?

Trends in Cost Management

The big trend covered in the Cost Management section is that of Earned Schedule. There’s a move, apparently, to replacing schedule variance metrics with earned schedule (ES). The difference is in the way schedule variance is calculated:

Schedule Variance = Earned Value - Planned Value

Schedule Variance = Earned Schedule - Actual Time

The aim is to make it easier to get schedule data from the earned value calculations to give you information about time and duration, and to make it easier to forecast accurately.

This idea has been around for a while (there’s an interesting conference paper on it here from 2011 which explains it better than I can).

I’m in two minds about whether the inclusion of earned schedule is useful or not.

On the one hand, it’s a concept that is hardly new to project professionals. If you know much about EV then you have probably come across this idea before. However, I am guessing here. I don’t move in circles where we talk about earned value much, so perhaps the idea hasn’t gained as much ground as I think it should have. (I’d be interested in your take on this – have you come across ES before?)

On the other hand, I’m not aware of any other major trends in handling project finances either, and I get that they had to include something! Frankly, anything that extends the use of earned value to include other measures that project managers can usefully use to deduce information about their project’s performance has to be good. If this brings the concept more to the masses, and helps project sponsors see an extended value from EV, then that’s positive.

Tailoring Cost Management

The guidance given on tailoring Project Cost Management is really quite high level.

As you’d expect, as every project is different you do have to apply a degree of professional judgment to the situation. Things to consider, that are called out in the guidance, include:

• Whether your organisation has formal or informal policies to do with budgeting. Formal policies will probably get picked up anyway, but informal policies are really interesting. This is all to do with the culture of a place, and will be hard to pick up if you haven’t worked there long. Get advice from your manager or a project manager with more tenure.
• Whether your organisation has formal or informal governance processes for financial reporting and management. The informal element is also important here. You may tick all the boxes for formal governance but because of some unwritten rules, miss out a big step that holds up being able to access your budget, for example. Again, you’ll only know this if you are on the alert and open to the idea that such things might exist. Ask around and see what your colleagues suggest. Then take their lead.

There are also some general comments about considering whether you work in an agile/adaptive environment, checking out the lessons learned and knowledge repositories for financial information and so on.

I think the things discussed in these sections of the Knowledge Area underpin my comments on the rest of the chapter: Project Cost Management has been tweaked rather than radically overhauled. I imagine if you did this line-by-line analysis of the other Knowledge Areas you would conclude the same thing. PMBOK Guide®-- Sixth Edition is an evolution, not a rethink. It’s handy to have the latest guidance, and to read it through for information to stay up to date, but I haven’t found anything in this Knowledge Area that would make me change how I approached Project Cost Management on a day-to-day basis.

This short video gives you some tips on how to manage the situation when your project funding is reduced. For more detail on what you should do if your project budget is cut, check out this article.

What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.

What’s new in Project Cost Management: Estimate Costs Process – read the second part of this series here.

What’s new in Project Cost Management: Determine Budget Process – read the third part of this series here.

In the last article I looked at what was different about the Determine Budget process in the new PMBOK Guide®-- Sixth Edition. In general, what I’m feeling about the whole knowledge area is that Project Cost Management has been simplified and streamlined, rather than given a total overhaul.  Today, I want to look at what’s different in the next process: Control Costs.

Control Costs Process

The fourth process in this knowledge area is Control Costs, and it has been given a spruce up to bring it in line with other processes. However, while it might look different in places, I’m yet to uncover anything radical about how you should approach managing costs on your project.

We have moved into the monitoring and controlling process group.

Inputs

There were 4 inputs and now there are 5.

The new one is project documents. The lessons learned register specifically gets a mention. I think this reflects an overall understanding in the PMBOK Guide® -- Sixth Edition, that actually we do need to continue to look at what’s working and what’s not throughout the life of the project, not just at the end. I wrote a whole book about this topic, so I’m delighted that it’s finally making it into the mainstream. And, of course, it’s a lot more agile in thinking, than the old way of managing project lesson learned meetings.

Tools and Techniques

The number one T&T from the previous edition was Earned Value Management: now it is Expert Judgment.

I doubt many people will be losing sleep over that!

However, Earned Value is still in there, under the heading of data analysis. Other data analysis techniques that get a mention include:

• Variance analysis (this is schedule variance, cost variance and performance indices)
• Trend analysis (this is your EVM charts and the forecasting you do to show estimate at completion)
• Reserve analysis.

There does seem to be an overlap with expert judgment here, because the expert judgment examples also include earned value analysis, forecasting and variance analysis. You do need to apply expert judgment to use these techniques, so perhaps that’s why. It reads as a duplication though which I think is confusing.

The project management information system gets a mention as a new T&T, only because project management software has dropped off. PMIS is a more inclusive term, I think, and it makes more sense to use this throughout as it can refer to lots of different types of systems that you can use in your day to day work. PM Software just makes me think of scheduling tools.

Outputs

Organisational process asset updates have dropped off the outputs. There aren’t any new ones so it means that at the end of this process you end up with:

• Work performance information
• Cost forecasts (because you are amending these as you go as you control the costs)
• Change requests (again, as a result of tweaking, monitoring and controlling the costs)
• Project management plan updates
• And you update documents (can you see a trend here?)

That’s the last of Project Cost Management process. Overall, I think that the updates have been kind to this knowledge area. The changes have made it a lot easier to adapt the process to your environment because instead of mandating particular inputs or tools, you have the flexibility to use what you need now.

In real life, you’ve always had the ability to use what you need, but the updated standard has given less confident project managers the ‘permission’ to flex their approach as required.

The downside of a more flexible, tailorable approach is that the project manager needs to apply more professional judgment to know what’s acceptable and what is going to work. That’s hard to do if you don’t have much experience. It will be interesting to see how the changes affect people day to day, if they do at all.

What do you think?

What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.

What’s new in Project Cost Management: Estimate Costs Process – read the second part of this series here.

In the last article I looked at what was different about the Estimate Costs process in the new PMBOK Guide®-- Sixth Edition. Overall, I’m finding that the process is more streamlined and easier to tailor because there is more scope to adapt – mainly because the inputs and tools and techniques feel more inclusive. Today, I want to look at what’s different in the next process: Determine Budget.

Determine Budget Process

The third process in this knowledge area is Determine Budget, and while it looks quite different, it’s really just a tidy up and alignment to what’s been happening elsewhere in the standard.

We are still in the planning process group.

Inputs

There were 9 inputs: 7 of them have been thrown out.

This sounds a lot more radical than it actually is. All that’s really happened is that the project management plan and project documents cover a chunk of the paperwork that included files specifically called out by name in the previous version, like the cost estimates created in the previous process.

That’s meant the inputs have dropped down to 6. There is one surprising one: Enterprise Environmental Factors. How was that not in there before? It’s one of those inputs that you get tired of hearing about because it crops up everywhere! Now it’s in this process as well, and exchange rates get a specific mention because of how they can influence your budget.

‘Business documents’ is the other new one worth a mention, and this refers to the business case and benefits management plan. I like how these are considered ‘business’ documents as in they are owned by the business and not the project team. However, the project team are going to have some input into them, I am sure.

Tools and Techniques

Tools and Techniques isn’t that different. Data analysis has been added in, as a catch-all term that includes reserve analysis, if your project is going to get a management reserve.

There’s another new one too: Financing. This is about getting the funding for your project. I’m not sure why this is a technique, when it feels quite process-y to me. It’s all about securing external funds if that’s appropriate for your project, so would include everything covered in the book about writing proposals that I read over the summer.

Read next: How to secure continued funding for your project

Outputs

Nothing has changed in the outputs. You still end up with the same at the end of this process:

• A cost baseline
• The project funding requirements
• And you update documents (there’s a lot of that in project management!)

Next time I’ll look at what’s new in the Control Costs process. There are tweaks to this process (including to the outputs) but I hope you’ll agree that they are all sensible changes that do make the process easier to understand and follow.