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Add Trend Analysis to Your Project Portfolio Reporting

Executing projects is a time-related activity. Well managed projects will have regular review dates where project progress data is gathered, collated and reported.

These periodic snapshots show how well each project is doing and, with the passage of time, their performance trends can be used to predict the eventual project outcome.

It starts with project estimates being quantified and then profiled over time. On approval, these task-level estimates become the project’s time-phased baseline and the yardstick for measuring subsequent progress.

The prudent project manager will be keen to identify deviation from the plan early on; are we likely to hit the first milestone? (schedule variance), are we spending more than we should? (cost variance). Early warning gives more time for corrective action to be taken.

The results from reporting periods over time provide useful data for analyzing performance trends. Are the forecast milestone dates continuing to drift? Is the early cost overrun being recovered? This article looks at two aspects of trend analysis:

  1. How project performance measurement can show trends on individual projects, so that likely outcomes become much more visible. 
  2. The usefulness of trend analysis across the project portfolio is then discussed, particularly in tracking the resource utilization levels attained by different teams.

Performance Measurement for Individual Projects

In many cases, project progress is assessed simply by comparing the project baseline with the effort booked on timesheets. But this can give very misleading results. Without an independent assessment of what has actually been achieved, there is little chance of meaningful measurement such as earned value.

The chart below shows the ingredients needed for effective measurement of progress:

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The three curves are:

  1. Project baseline, which shows the cumulative curve of the anticipated effort.
  2. Actual effort to date is the hours booked to project tasks using timesheets.
  3. Earned value (EV) is a measure of what’s been achieved, for the effort spent to date. This could be referenced as Budgeted Cost of Work Performed or BCWP. EV and BCWP are the budgeted cost of work that has been performed in carrying out a scheduled task during a specific period.

For a project to be on track, each curve should overlap. When gaps emerge, as in the above example, there are a couple of useful variance calculations:

  • Schedule Variance = Earned Value – Actual effort
  • Cost Variance = Earned Value – Project Baseline

The schedule variance shows how well you are doing against the project timeline, and cost variance against the project budget. Negative numbers are bad, and this project is in serious trouble. Whether the situation is improving can be seen by tracking the changes in the two variances over time, as shown below:

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Both variances are getting progressively worse, with a steepening rate of decline., Any argument by the project manager that the project is getting back on track is open to challenge, with this view being strong supporting data for the case against.

Trend Analysis for The Project Portfolio

Managing a portfolio of projects with a fixed pool of resources can be a lively ride. You’ve just got the skills capacity in balance with the demand when a project change causes new bottlenecks or periods of spare capacity. The challenge is to maintain high levels of utilization of your project resources when each project has its own skills requirements, priority and timeline.

Maintaining the right balance is not simple. Whilst there must be sufficient spare resource to reinforce a project if a key date is in jeopardy, too many just hanging around will erode utilization percentages and can severely impact overall profitability.

Getting it right can bring a rich reward. The UK Association of Consulting Engineers, in a member’s survey of 2011, concluded that a 2% increase in billable time (i.e. staff utilization) could increase member’s profits by up to a third. For such a modest improvement, this is a rich reward.

Consistently achieving these utilization levels requires:

  • Meaningful reports that inform re-training, hiring and firing decisions
  • The underlying data being current, complete and accurate.
  • Effective demand management and resource allocation processes, which are consistently adhered too.

These three aspects will be addressed in a separate article. This one concentrates on trend analysis, and tracking the trends in team utilization is very beneficial. As the example below shows, such views will question staffing levels in some teams and highlight threatening bottlenecks in others. Striking the right balance is not easy, but trend analysis is a good way of seeing how well individual teams are doing, and whether their utilization levels are improving or not.

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This view shows the utilization levels achieved by various departments over the preceding 12 months. You can see that the headcount for HSE Design has been reduced part way through the year to get closer to the target.

For both individual projects and the entire portfolio, performance measurement requires regular project reviews. Charting these individual snapshots over time highlights trends and indicates the eventual outcome. Analyzing these trends will substantially improve the effectiveness of both project and portfolio managers.

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