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Topics: Consulting, PMO, Using PMI Standards
PMI Methodology for Traffic Light Reporting?
Hi colleagues,

I need your help/expertise: Within my current SAP project we use a traffic light reporting for time, budget, quality, scope and resources as part of the weekly status reporting by the sub-streams.

We have the challenge that there is no clear methodology set for this and that traffic lights are chosen based "on subjective gut feeling' by the different stream leads instead of using an objective, scientific approach that is commonly used across all sub-streams. Main drivers for discussions in our project are currently time and resources, so this is where the focus of the project sponsors is on at the moment.

Does anyone have a recommendation (e.g. PMI based) for a methodology to be used for traffic light reporting in our project?

Thanks in advance for your support and ideas!!!
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Have not seen this for traffic lights, but in Risk Management for definitions of probability and impact - see, table 11-1.

It says basically, that it has to be defined specific to the project context.
Tim -

This is part of the standards which are normally set within a project management policy but if your organization has not done that, I'd suggest working with senior stakeholders including the sponsor and customer to identify appropriate, quantitative thresholds.

For example: Negative cost variances 5% and under $1000 = green, 5-15% or $1001-$10000 yellow, 15% or $10000 red

This is a problem I've encountered many times so I know the frustration well.

There are a couple ways to do this. The simplest is Green = on plan, Yellow = off plan with recovery plan in place, Red = no plan. Personally I dislike this method because one item late with no current ECD will turn everything red even if it's not significant and hide the real problems. You really need to establish how big a problem changes the colors.

The solution to that is risk based like Thomas describes and Kiron's example. This requires quantifiable thresholds for different risk levels. That will always be subjective because what is red on my project team would not even appear on the radar of the executive suite so you must work with management to assign the appropriate thresholds. I find that conversation is very valuable to understand your stakeholder risk tolerance.

If you want to follow PMI guidance, this EVM article includes some broadly used guidance for */- 5% = green, 5-10% = yellow and beyond 10% = red.

See the sections on Variance Graph and Confidence in Contract Value Chart, about 1/2 of the way down. Using those type of thresholds, you can at least say, "I didn't just make these up out of the blue."
Is not a method because the traffic lights are selected focused on those items taking from the business strategy which are the core reasons for investing in the initiative. The values to put them in a color is taken from the strategy too. I have the opportunity to create some of the schemas to publish and decide about traffic lights. Most of them use overall, financial, schedule, resource, scope and risks traffic lights. Colors are decided based on the threshold percentage. For example, if schedule is behind planned by 20% then is red. Percentage are taking from strategy. I mean, company strategy determines that 20% schedule is read.
We usually design the values and the guidance with the strategy team and the customer.
Depends on the project and the industry.

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