The project baseline is an “instant photo” of the project taken at its initial moment.
The goal of the project baseline is to see how far actual results have deviated from the initial reference plan.
TABLE OF CONTENT
- Project Manager and project baseline
- Why is the project baseline important?
- How to check the status of the baseline
- Practices to follow for optimal calculation and good control of the project baseline
- 1. Setting of the original baseline
- 2. Keep track of previous baselines
- 3. Maintenance of a baseline
In project management, it is essential to establish a baseline with clearly defined requirements, an accurate cost structure, and planning estimates, before the project execution and monitoring start.
All this must be completely defined and documented before the actual activities of the project begin.
In the baseline, the following elements of a project are included:
Project Manager and project baseline
The project manager must examine the deviations from the project baseline when the work is done and throughout the project life cycle.
After the planning process is completed, this plan is agreed by all stakeholders and everyone expects the actual results to match the planned ones.
The role of the project manager is to verify during the execution of the project, if there is any variation from the baseline, in any element mentioned above.
If an event occurs that causes the project budget to be exceeded, for example, or if there is a risk that will cause the project to be delayed, corrective and preventive actions must be taken.
The project baseline can be changed, but it is not an easy process.
In fact, the baseline should allow to verify how much the project is in line with the initial planning.
If a baseline changes too frequently and there are too many deviations from it, this can be considered misleading.
Therefore, in the real world, the baseline of the project is generally modified only if an important request for modification is approved and only with the recognition of the sponsor of the project.
These changes are considered and approved through a specific process, in which the impacts on the project are assessed.
If a change is approved by the control committee, first its impacts are reported in the project plan and, next, the modification can be implemented.
Deviations from the project baseline are often due to incomplete or incorrect risk identification.
Why is the project baseline important?
Establishing a baseline allows the project manager to evaluate performance for the duration of a project.
If a project is behind schedule or above budget, it is time to make changes to the baseline or add more resources.
A technique often used by project managers to measure and compare the performance of a project with its baseline, is the following calculation:
Planned Value (PV) = The estimated cost of the planned work
Actual Value (AV) = Actual cost of work done up to the current date
Effective Value (EV) = Planned Value (PV) x % of project completion
Schedule Performance Index (SPI) = EV / PV , measures progress made up to the current date with respect to the initially planned progress.
When SPI <1, less work than expected has been done.
When SPI> 1, more work than expected has been done.
Cost Performance Index (CPI) = EV / AV , measures the value of completed work compared to the planned labor cost.
Finally, baseline determination helps with the accuracy of future estimations. This allows the project manager to get a better idea of how long it will take to complete the project and at what costs.
Estimated at Completion (EAC) = (total project budget) / CPI
EAC is a forecast of how much the overall project will cost, so that it is possible to approximate the correct allocation of resources.
How to check the status of the baseline
The check of the progress of the project with respect to the baseline, must follow specific procedures that are established even before starting the execution of the project.
Effective control is possible when these elements are defined:
- Performance assessment standards and criteria
- Data collection system
- Frequency of monitoring, ie. when the checks must be carried out
- Frequency of reporting
- Approval process for the new programming
- Stakholders communication plan.
Practices to follow for optimal calculation and good control of the project baseline
1. Setting of the original baseline
At the beginning of any project, it is very important to set a baseline that represents the starting point of the work. This is a useful method to document the change of various parameters of a project. The goal of setting a baseline is to avoid rewriting its parameters, but eventually just adding new ones. The experience of the project manager in this operation has a very important role.
2. Keep track of previous baselines
As the project progresses, surely the project manager will have to make changes. However, before any change, it is important to save a history of the previous baselines so that it is possible to access the previous baselines for comparisons and restore changes, if necessary.
3. Maintenance of a baseline
Once a change has been approved, it is time to update the forecast by adding the new scope, deadlines, and approved changes. Keeping an accurate record of updates and changes to the baseline allows the project manager to keep the project in line with the new requirements.
In order for the project to be successful, a structured control system becomes fundamental, as well as a good initial planning.
In addition, a project manager must be able to manage contingencies and any changes that may occur during the life cycle of a project.
The control must not only be limited to reporting the changes and rescheduling the activities planned for the future. Instead, control must be a proactive process in which project managers try to anticipate problems.
The project manager must therefore have a continuous and detailed view of the project and must communicate continuously with the project team and with stakeholders.
For this reason, a project manager can refer to different baselines and it is important that he has an adequate control system available.