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Based on your organization needs, you can define it. Anything over the stated budget is red for us and if there is a potential to go red- then yellow. Green is normal. These are all from a financial standpoint. You can have other takes on project management also. It is kind of subjectibe. But, over a period of time you can establish with your groups who report with this dashboard, what each color stands for so that all project reporting is on par.
sang - to add to Bipins comments which are all an accurate reflection of your position. each of the categories you mention below are very different in nature. Cost and schedule are driven by a series of events and constraints but in most cases predefined levels of contingencies are built into project estimations/costs. Your tolerences should take those contingencies into account when establishing thresholds with your stakeholders. Schedule on the other hand is all too often dictated by external forces and can best be managed based on critical path analyis. Again, stakeholders all need to be in sync and definition and thresholds documented in the initiation stages of all projects. There are several basic formulas you can get frm the PMI or CMMI resources that lay out conditional compenents such as priority, risk, complexity etc... that can be used as a starting point for you.
For your third point, scope, the amount of variance is in direct correlation to the accuracy of your needs/requirements. Change management processes need to come into play and be clearly defined and communciated during the initaion phase. Any "scope creep" ultimately will impact both cost and schedule and should be on a much faster path to red that the other two areas. These processes can be simple in nature and still efficient. Again, many templates and controls are available at many PM websites as a start point but you will have trial and error as you go. Good news is I have found out the process rom infancy to maturity is not that long :)
I believe a 10% variance and still green is vastly too liberal. That means on a $10mm project a $1mm variance is considered okay. Perhaps I tend to the other side, but an earned value of .98 or more deserves green, .94-.98 yellow, anything else is red.
As well as earned value there are other measurements - for example - future analysis of potential status - for this I use:
Establish three major categories for scoring what a Track or Team is doing in terms of execution of Project Activities. The three categories are:
Accuracy of Status input, use of the plan, understanding and knowledge of tasks and subtasks required to accomplish planned work.
Identification of Needs, Barriers, Dependencies and Project Issues
Level of Confidence of the based on observation, documented deliverables and status meeting interaction.
The three categories will be named and ranked on a 100% point scale delineated below:
Plan / Status 40%
Yes confidence is subjective ..... just another point of view
I have implemented a couple of PMOs and seen a few cases. The usual is to have both a %age target, as well as a number.
So, you may choose>
1) GREEN: Up to 5% variation or US$1M (what comes first)
2) YELLOW: Between 5% and 15% or US$2M (What comes first)
3) RED: Above 15% or US$2M
The targets may vary depending on the average cost of your projects, the deviation your client is ok to accept and how complex and inovative your project is.
I am afraid there´s no cake recipee to define the targets
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