Establishing the Performance Measurement Baseline

Establishing the Performance

Measurement Baseline (PMB)

The Performance Measurement Baseline is a The Performance Measurement Baseline is a time–phased schedule of all the work to be time–phased schedule of all the work to be performed, the budgeted cost for this work, performed, the budgeted cost for this work,

and the organizational elements that produce and the organizational elements that produce the deliverables from this work. the deliverables from this work.

Glen B. AllemanVice President, Strategy and Performance Management

Lewis & Fowler8310 South Valley Highway

Suite 300Englewood, Colorado 80112

[email protected]

http://www.lewisandfowler.com/

mailto:[email protected]

The Processes Surrounding the Performance Measurement

Baseline

PMI College of Scheduling“PMI” is a registered trade and service mark of the Project Management Institute, Inc.

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Identify Needed Business

Capabilities

Establish a Performance Measurement

Baseline

Execute the Performance Measurement

Baseline

Capabilities Based Plan

Business Value Stream

Earned Value Performance

Technical Performance

Measures

Business Value Stream

TechnicalRequirements

Establish a Requirements

Baseline

Technical Performance

Measures

PMB

There are 3 PMBs on Every Project

Technical, Schedule, and Cost Baselines are needed for success

Building these requires an integrated effort


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Establish Cost Baseline

Establish Schedule Baseline

Establish Technical Baseline

Perform Functional

Analysis

Determine Scope and Approach

Develop Technical Logic

Develop Technical Baseline

Develop WBS

Define Activities

Estimate Time Durations

Sequence Activities

Finalize Schedule

Identify Apportioned Milestones

Determine Resource

Requirements

Prepare Cost Estimate

Resource Load Schedule

Finalize Apportioned Milestones

Determine Funding

Constraints

Approve PMB

The Six Steps to Build the Performance Measurement

Baseline


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Decompose the Project Scope into a product based Work Breakdown Structure and then into Work Packages which describe the production of all deliverables

Decompose Scope

Assign Responsibility for Work Packages to named owners who are accountable for the management of resource allocation and cost baseline, and technical performance

Assign Responsibility

Arrange the Work Packages in a well formed network with explicitly defined deliverables, milestones and internal and external dependencies

Arrange Work Packages

Develop Time–Phased Budget (BCWS) from labor spreads in each Work Package and balance these BCWS spreads across the Project.

Develop BCWS

Assign Objective Performance Measures for each Work Package and summarize these for the Project as a whole. Use the 0%/100% measurement of complete whenever possible.

Assign Performance

Measures

Establish a Performance Measurement Baseline to be used forecasting Work Package and Project ongoing and completion metrics.

Set Performance

Baseline

These Definitions Will Help Clarify What We’re Talking

About Deliverables Based Planning – focused

on tangible outcomes Work Package – a unique collection of

deliverables with resources and deliverables

Performance Measurement Baseline – forecasts of future performance come from past performance

Performance Based Earned Value® – a means of measuring progress using cost, schedule and technical performance


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Critical Success Factors For The Performance Measurement

Baseline Deliverables represent the required business

capabilities and its value as defined by the business and shared by the development team.

When all deliverables and their Work Packages are completed, they are not revisited or reopened– They are 100% done

The progression of Work Packages defines the increasing maturity of the project– The business value of the deliverables to the

customer increases as Work Packages are completed

Completion of Work Packages is represented by the Physical Percent Completion of the project– Either 0%/100% or Apportioned Milestones are used

to state the completion of each Work PackagePMI College of Scheduling

“PMI” is a registered trade and service mark of the Project Management Institute, Inc.

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Success Of The PMB Depends On Identifying Measureable

Results


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What gets measured gets done1

If you don’t measure results, you can’t tell success from failure2

If you can’t see success, you can’t reward it3

If you can’t reward success, you’re probably rewarding failure4

If you can demonstrate results, you can remain credible7

If you can’t see success, you can’t learn from it5

If you can’t see failure, you can’t correct it6

Decompose The Scope Into A Proper “Tree”


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Business CapabilityProcess Invoices for Top Tier Suppliers

1st LevelElectronic Invoice

Submittal

1st LevelRouting to Payables

Department

2nd LevelPayables Account

Verification

2nd LevelPayment

Scheduling

2nd LevelMaterial receipt

verification

2nd Level “On hand” balance

Updates

Use This “Tree” To Decompose The Project Scope Into Work

Packages The lowest level of the Work Breakdown

Structure defines the Work Packages which contain named deliverables

The parents of these Work Packages collect the business capabilities described in the baseline requirements

The narrative of each Work Package is the WBS Dictionary


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What Does A Good Work Package

“NOT” Look Like?


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What NOT to do Instead Think About

It’s NOT a laundry list of work to be done

It’s a decomposition of the products, services, and data generated by those

It’s NOT a functional decomposition That’s the role of the Organizational Breakdown Structure (OBS)

It’s NOT a direct map of the requirements

Requirements produce products and services, but are not one for one with the WBS

It’s NOT a reflection of the underlying product or service partitioning

This is done later in the program strategy

It’s NOT the first structure you might think of…

Build the WBS several times, assess its usefulness in describing the products and services

What Is “NOT” In A Work Package?

Elements that are not products Project phases Rework, retesting, and refurbishing are

not separate elements in the WBS Non–recurring and recurring are not

classes of work Cost saving efforts like TQM and Lean are

part of the Level of Effort Workstream Cost for meetings, travel, computer

support are part of the level of effort Workstream


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Some Attributes Of A Good Work Package

All terminal nodes describe some end item in the project – a product or a service

Each physical deliverable is testable in some manner to demonstrate it is working

The WBS is an increasing fidelity description of the deliverables produced by the project

The WBS articulates what the customer wants in terms of deliverables – the products or services produced by the project


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A Deliverables Focused Work Breakdown Structure (WBS)

From the requirements Tree construct a list of Capabilities needed to satisfy the customer needs

From this list of Capabilities construct a list of Deliverables that will fulfill the customer needs

Arrange these deliverables into major systems

This has likely already been done…so let’s have a hands on exercise to draw this out


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The Work Breakdown Structure Connections With The Work

Packages Product or services oriented Includes all work in the project Each element logically aggregates

those elements below it Reflects the manner in which the work

will be done


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The WBS becomes the framework for Cost, Schedule, and Technical Performance

Measurement.The WBS is the organizational structure for the Work

Packages

Connect The WBS To Work Packages And Then Define The Tasks To

Produce The Deliverables


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Deliverables

WBS

Tasks and Schedule

Business NeedProcess Invoices for Top Tier

Suppliers

1st LevelElectronic Invoice Submittal

1st LevelRouting to Payables Department

2nd LevelPayables Account Verification

2nd LevelPayment Scheduling

2nd LevelMaterial receipt verification

2nd Level “On hand” balance Updates

Work Package

1 2

3

4

6

5 A

B

Deliverables defined in WP

Terminal Node in the WBS defines the products or services of the project

Terminal node of the WBS defined by a Work

Package

Tasks within the Work Package produce the

Deliverables

100% Completion of deliverables is the measure of performance for the

Work Package

Management of the Work Package Tasks

is the responsibility of the WP Manager.

These are not held in the master plan

A decomposition of the work needed to fulfill the business

requirements

Steps In Building The Work Packages

Step 1 – define what is going to be delivered to produce business value– One or more Deliverables produced within a

Work Package

Step 2 – define the effort and duration along with the confidence levels– Only effort and total duration– Level of confidence for effort and duration


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Decompose Business Capabilities Into Deliverables, Then Work Packages, Then Measurable

Outcomes


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Business Capabilities

CapabilityNumber 1

CapabilityNumber 2

DeliverableNumber 1.1




Work Package Number 1



50% Milestone

50% Milestone

100% Milestone

100% Milestone



100% Milestone




25% Milestone

75% Milestone

Increasing Detail of the Planning Outcomes

Increasing Value to the Customer

Step 1: Define The Deliverables And Their Apportioned Value


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Description Deliverable(s) Apportioned Milestones

Transaction processing integration test complete

Test plan compete and approved

Author – 50%Approval – 50%

Define integration testing environment

Integration Test Plan complete Test platform equipment

defined Test environment defined

Test Plan – 25% Equipment List – 50% Environment – 25%

Business processes defined and approved

Business process flow diagram 100%

User acceptance testing defined

User Acceptance Plan Developed

100%

User Acceptance Testing Conducted

Test environment operationalUser Acceptance Testing

performed with 90% successUAT errors documented and

allocated for repair in next release

Environment – 20%UAT Conducted – 70% Errors documented –

10%

Step 2: Define The Effort, Duration, And Confidence

Intervals


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Baseline Contents of a Work Package

Description Assumptions Earned Value

Method Basis of Estimate Predecessors and

successors Strategy for

delivery Completion criteria Contents of the

deliverables

Responsibilities Estimated

duration Estimated effort Confidence

intervals Resources


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In theory there is no difference between theory and practice. In practice there is.

Use Word Or Excel, It Doesn’t Matter

Just Capture The Contents In One Place


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No matter what form is used, the function of the Work Package must communicate to the participants the baseline information described in the Table of Contents of the previous page.

Naming Work Packages May Seem Simple – But What’s In A

Name? The name should convey not only the work

activities but also the delivered result of these activities

The project plan and the list of Work Packages is the concise statement of the work for the project – all held in a single place – the Project Plan


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Maturity Action Product Product State

Adjective Verb Noun Verb

Demonstrates Maturity

A step in the process

End Item Final Status

Preliminary Design Processes Complete

Preliminary design of transaction processes complete

Work Package Description

A clear and concise description of what the Work Package produces in terms of deliverables

This is your elevator pitch when someone asks “what does the Work Package you’re working on do when its all done?”

Deliverables are meaning to the customer – speak in deliverables terms


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If you can’t tell the story between the lobby and the 9th floor, then you haven't got a clear picture of what “done” looks like.

Assumptions

Make it clear (and concise) what you expect to be in place before the Work Package starts

State these in terms of deliverables themselves– What they are– Who you’re getting them from– A little bit of why you need them

Have a mitigation plan when the assumption isn’t true


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Assumptions are repulsive, especially to gravity.

Earned Value Method

Think about how you would measure 100% done.– Done, done– Not, almost done– Not, “I’ll be done soon”

If the Work Package is self contained and 100% done occurs at the end of the WP then use that

If the Work Package has more than one deliverable or the deliverable has incremental functionality then Apportioned Milestones can be used


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Earned Value is how physical progress is measured in the Performance Measurement Baseline.

Only delivered value to the customer is important.

Responsibilities

Each Work Package has one and only one person Accountable for the successful delivery of the Work Package– Put that person’s name on the Work Package


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WBS

OB

S

The Work Packages are where the work and the people come together

Assign The Responsibilities And Make A Single Person

Accountable


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Arrange The Work Packages Into A “Well Formed” Network


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2nd LevelPayables Account

Verification

2nd LevelPayment

Scheduling

2nd LevelMaterial receipt

verification

2nd Level“On hand”

balance Updates

A “Well Formed” Network Has Specific Attributes

Arrange Work Packages in a “Finish to Start” network

No Leads or Lags No Constraints – only “As Soon As

Possible” (ASAP) This network of Work Packages is the

flow on increasing maturity of the deliverables from the project


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“Arranging” the Work Packages Is Iterative And Incremental


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In the example above, the Work Package Managers collectively come to an agreement on how the sequence of how the work will be performed.

The result is a collective ownership of the outcome. This ownership comes from the collective development of the project plan.

This process is a Product Development Kaizen (PDK)

Develop A Time–Phased Budget


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2nd Level SystemPayables Account

Verification

2nd Level SystemPayment

Scheduling

2nd Level SystemMaterial receipt

verification

2nd Level System“On hand” balance

Updates Duration of the Work Package

BC

WS

Duration of the Work Package

BC

WS


BC

WS


BC

WS

Balance All The Work Across The Project Before Setting The

Baseline


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ActivityID

ActivityDescription

OrigDur

RemDur

Actual/Expected

Start

Actual/Expected

Finish

BudgetedCost

MSType

EVM%

Cmp

1.2 VACUUM SYSTEM1.2.3 Standard Drifts & TransitionsStraight Section Transitions (14) & Gap Rings1.2.3.1 ED&I

S20121 Trans., Conceptual Design 60 0 14OCT99A 18JAN00A 43,113.60

S20122 Trans., Finalize Design 80 2819JAN00A 08JUN00 40,240.00

S20123 Trans, Final Design Review 0 0 08JUN00 0.00EVM 50

S20124 Trans., Drawings 100 5802FEB00A 21JUL00 37,366.40

S20125 Trans., Drawings Complete 0 0 21JUL00 0.00EVM

S20126 Trans, Sustaining Engineering 140 14024JUL00 16FEB01 18,107.04

S20126A Trans, Sustaining Engineering Complete 0 0 16FEB01 0.00EVM

1.2.3.2 MS&L

S20128 Trans, Order Parts & Material 40 4024JUL00 18SEP00 0.00

S20129 Trans, Receive Parts & Material 0 0 18SEP00 29,000.00EVM

S20131 Trans., Machine Parts 1st Lot 100 10019SEP00 16FEB01 103,000.00

S20132 Trans, Receive Balance 0 0 18SEP00 0.00EVM

S20133 Trans, Assemble Braze 70 7019SEP00 04JAN01 65,920.00

S20134 Trans, Vacuum Process 40 4030NOV00 02FEB01 37,080.00

S20135 Trans, RFI 0 0 02FEB01 0.00EVM

1999 2000 2001

AUGSEPOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPOCT

Resource/Cost Profile Legend

Total early cost per Month (Current Estimate)

Total of All Resources Detail scale (left): X 1000AUGSEPOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPOCT

1999 2000 2001

10

20

30

40

50

x 1000

© Primavera Systems, Inc.

Start Date 01JUN99

Finish Date 05MAR02

Data Date 01MAY00

Run Date 31MAY00 13:29

Early Bar

Progress Bar

Critical Activity

SPR3 - VACM

1.2 Vacuum System

Sheet 1 of 1

Identify Objective Measures Of Performance For Each Work

Package Define the Planned Value for each Work

Package completion or apportioned milestone within a Work Package

Only Physical Percent Complete should be used to measure progress – there can be no personal “opinions” of progress


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Physical Percent Complete CummBCWP BCWS

Set The Performance Baseline

Baselining the Performance Measurement Baseline is the beginning of Executing the project plan

Without the baseline and the change control over this baseline, the performance predictions will be difficult


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There are two phases of any complex project …

Too early to tell and too late to stop

Build The Apportioned Milestones And Assign Physical

Percent Complete Identify each incremental deliverable in

the Work Package Assign an apportioned value to that

deliverable Document the evidentiary materials for

the incremental deliverable and its assigned percentage value

Identify the delivery date for the apportioned milestone in the schedule


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1 mile = 1,000 (mille) paces = 1,640 yards .

Introduced to Britain by the Romans

The passage of a milestone meant progress to the destination.But it is critical to pre-assign value to each milestone and record this value as the milestone is passed

Assemble The Work Packages Into A Credible Schedule

Start with Work Packages and their total BCWS spreads– Total WP duration – in the Duration field– Total WP work effort – in the Work field– Start dates aligned with the project start

date defined in the Project menu– The result is a Gantt–style picture of the flow

of WP value


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Henry Laurence Gantt, A.B., M.E1861–1919

Project Maturity Flow Is The Incremental Delivery Of Business Capabilities


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Pilot

Data

Enrollment

Integrators

Quality Monitor

Internal

Router

External Interfaces

Finance Loss

Data Store Lookup

Data Warehouse

Data Marts

Data Marts

Portals and others

Billing

Resale's

Emulations

Demo conversion process, member reconciliation

Shared group matrix reports and interfaces

Shared member crosswalk and members to ERP

Integrators in ERP converted to inventory

Status and trigger conversions

Data in Marts for ERP

Material Master Converted from legacy

External Vendors converted to ERP

TBD

Vendors from legacy

Material converted end–to–end

Analyzing And Assessing The Network Of Work Packages

Requires Understanding Critical path Accuracy Integration Realism Performance Variances Forecasting What–If Analysis Risk Resources


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A credible schedule cannot be just a list of activities. It must be an accurate model of the project strategy and execution that can be analyzed, assessed, and used to answer risk based questions.

A “Very” Simple Risk Management Process Is Needed To Establish

Credibility


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Planning Identification Analysis HandlingCommunicatio

nand

Tracking

Build the process for managing risk Allocate responsibilities at the project level Determine What is to be Risk–Managed

Do a comparative analysis of the risks Assign risk attributes Assign risk ownership

Evaluate the impact of each risk “A” Risk “All” Risks

Prepare risk decision–packages

Define the Decision–Making Process Iterate the analysis to select mitigation

Keep everyone aware of decisions made Track progress Evaluate effectiveness of the risk management processes

“Risk Analysis Techniques, Schedule, Cost and Other Aspects, INCOSE Heartland Chapter October 24, 2001, Futon Corporation

Integrating Cost, Schedule, And Technical Performance


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Cost, Schedule, Technical Model†

WBS

Task 100

Task 101

Task 102

Task 103

Task 104

Task 105

Task 106† This is a Key concept. This is the part of the process that

integrates the cost and schedule risk impacts to provide the basis of a credible schedule.

Probability Density

Function

Research the Project Find Analogies Ask Endless Questions Analyze the Results

What can go wrong? How likely is it to go wrong? What is the cause? What is the consequence?

Monte Carlo Simulation Tool is Mandatory

1.0

.8

.6

.4

.2

0 Days, Facilities, Parts, People

Cumulative Distribution Function

Days, Facilities, Parts and People

There Is Technical And Programmatic Risk – Both Must

Be Addressed• There are two types of

“uncertainty” on any sufficiently complex project:

– Technical – uncertainty about the functional and performance aspects of the project's technology that impacts the produceability of the product or creates delays in the schedule

– Programmatic – uncertainty about the duration and cost of the activities that deliver the functional and performance elements of the project, independent of the technical risk


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So much for our strategy of winning through technical dominance

Wrap Up


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A good plan, violently executed now is better than a perfect plan executed next week– General George S. Patton

In The End Its All About The Schedule

• A slipping schedule is simply unacceptable• “Attack” the schedule as soon as possible

and never stop attacking• Update schedules monthly or more

frequently, look at it everyday• Earned Value really works if – and this is a

big if – you are ruthless about following the EV process. This can’t be said strong enough – use EV in the way it was designed to be used.

• Keep all the data “clean” and use it to make management decisions


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Troubled Projects Always Have A Common Set Of Attributes

Inattention to budgetary responsibilities Work authorization not always followed Budget and data reconciliation issues Lack of an integrated management system Baseline fluctuations &frequent replanning Current period and retroactive changes Improper use of management reserve Earned Value techniques not reflecting actual accomplishments Untimely and unrealistic Latest Revised Estimates (LRE) Progress not monitored in a regular and consistent manner Lack of vertical and horizontal traceability (critical path) Not capturing and using cost and schedule data for corrective

action Lack of predictive variance analysis Lack of internal surveillance and controls Managerial actions not demonstrated using Earned Value


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A ship on the beach is a lighthouse to the sea – Dutch Proverb

Establishing the Performance Measurement Baseline

Technology

performance baseline

past performance performance

technical baseline

project technical

schedule baseline

project management institute

completion of work packages

project scope