Wednesday, 29 August 2012 08:42

The Problem with Red, Yellow, Green Project Status

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Many years ago I worked in a Project Management Office at a large financial institution. Once a week I prepared a project status report for executive management and the PMO director. I would calculate how we were tracking to budget, list any major issues or risks, and summarize overall status.

GregAug291

I was also told to mark the project as red, yellow, or green – using the following definitions:

Red: Serious issues and the project will probably be delayed or have significant budget overrun.
Yellow: Potential issues with schedule or budget, but both can probably be saved with corrective actions.
Green: On schedule, on budget, all good.

 

The red/yellow/green approach seems simple and logical. You only worry stakeholders if something goes wrong, so green projects do not need much review or attention.

Related Article: Starting at Red

However, in my experience the color approach has many shortcomings and potential repercussions. Let’s look at few.

Expectations

What happens when a green project turns yellow or red? In my experience there is an emotional conversation with stakeholders. Here are some of comments I frequently hear when a project goes from green to yellow:

“What went wrong?”, “Why didn’t you manage this project better?, “How can we avoid this happening again?”, “Why didn’t you see this coming?”.

As a project manager I often feel great guilt with these conversations and I too question my competency. But if we spend a moment and work our way through the guilt and emotion, we can see this issue from a more analytical perspective.

Not in line with normal project uncertainty

You may be familiar with the cone of uncertainty. The cone of uncertainty tells us that you cannot completely understand all of the tasks and potential issues within a project, at the beginning of a project.

GregAug292

As the project progresses we learn more and there are less risks,  but we can never anticipate everything that could go wrong until the project is 100% complete.
When we label a project as green we are telling the sponsor everything is OK, today.

Sponsors interpret green as everything is OK today and it should be for the entire project. It is human nature to assume the project is under control and should stay under control.

A Different Approach

But since any experienced project manager knows that green does not necessarily mean green forever, we need to speak in verbiage that stakeholders can relate to. To address this issue I have changed my color scheme when working with sponsors and removed green from my status options.

My options are now:

Yellow: The project does not have any known issues but there is still high risk that something could go wrong (as demonstrated by the cone of uncertainty). As with any project in flight, we are managing it cautiously and we are doing our best to deliver successfully.

Orange: An issue has surfaced and the project goals are in jeopardy. We are triaging the issue(s) and at this time we believe we can still be successful
Red: An issue has surfaced and we do not believe 100% project success can be obtained due to the discovery. More than likely we will either miss the desired date, or exceed budget, or not be able to deliver the desired scope by the target date.

Conclusion

What do you think of my approach? I welcome your thoughts. I know many stakeholders will “freak-out” at seeing no greens, but I believe all projects are yellow until they are delivered.  We need to teach stakeholders that this a reality of doing business.  

Don't forget to leave your comments below.

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Greg Smith

Greg Smith is a seasoned Agile coach and the founder of GS Solutions Group. He is a Certified Scrum Master, Certified Agile Project Manager, and a PMI Agile Certified Practitioner.

During his career Greg has held positions as a Product Manager, Program Manager, Development Manager, Scrum Master, and Project Manager.  He has received numerous awards for his work in helping start-ups establish good software practices, and for helping large enterprises overcome bureaucracy and deliver urgent projects.

Greg became an instructor for Agile Project Management at Bellevue College in 2005. 

In 2009 Greg co-authored Becoming Agile in an Imperfect World.  This book has helped a number of companies move to a more effective project management lifecycle, and is on the suggested reading list for the PMI Agile Certified Practitioner exam. 

Greg provides all type of agile training, including preparation for the PMI ACP exam. He also specializes in helping companies move to Agile. 

greg@gssolutionsgroup.com
www.gssolutionsgroup.com

Comments  

+4 # brent walker 2012-08-29 14:28
I agree with your premise and feel that we should be presenting status in some other terms besides R/Y/G. In the Agile world, why do we even use R/Y/G? Where do those indicators map to my stories? If my Product Owner has prioritized my backlog, which includes my risk items, then why isn't simply reporting on my project burn-up sufficient? I was recently convicted that I am not managing my risks well enough and am therefore the cause of any misunderstandin gs. If i accurately manage my risks and report on those risks then managment will see my overall risk values changing and being worked. As it is now, they have very little visibility into the risks I'm managing and use R/Y/G as the only way to understand when risk events occur. I agree that there needs to be a better way to report status but simply removing green and adding orange is really semantical. Could I just not state that Green means that there are inherent risks and they may or may not occur just like your Yellow definition?
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+2 # Sean Ellis 2012-08-29 15:25
I tend to agree with Brent that replacing green with yellow is purely semantic. In my organisation we use vectors as well as the RAG rating to indicate where we expect the project to be heading based on the currently identified risks and issues which tends to add a little more context to the overall rating.
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0 # angie 2012-08-29 19:01
I agree it seems the color change of status is really semantics. However, this approach seems to target people's emotions and thoughts around statuses. It's a subtle enough of a change to foster a change in perception about a project and set people's expectation's differently. This could be a good tool to use when trying to change culture and slowly transition into a different way of reporting status.

I think the question to ask is how can we effectively report in a quick and easy way the things that are important regarding the timeline around a project. I don't know if there a single thing that can effectively convey that. It seems you need a combination of information to get that message across to people.
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0 # Upendra 2012-09-05 09:22
I too agree with you Greg. Nice explanation on how to address the stakeholder feelings and at the same time being transparent
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+3 # Majid 2012-09-05 12:26
I suggest instead of using three color to use 4 colors. Red, Yellow, Orange and Green.

Green: Project is in good shape and no risk at the moment
Yellow: (Warning for upcoming risks)The project does not have any known issues but there is still high risk that something could go wrong (as demonstrated by the cone of uncertainty). As with any project in flight, we are managing it cautiously and we are doing our best to deliver successfully.
Orange: (Risk identified with min damage. Can control the damage with proper measures in hand). An issue has surfaced and the project goals are in jeopardy. We are triaging the issue(s) and at this time we believe we can still be successful
Red: (Same) An issue has surfaced and we do not believe 100% project success can be obtained due to the discovery. More than likely we will either miss the desired date, or exceed budget, or not be able to deliver the desired scope by the target date.
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0 # Bernard Plante 2012-09-06 14:00
No matter the colors, I think the important point is the signification you give to the colors used. My method consists of using standard G/Y/R statuses but for me Y and R not only means that something is going wrong but also points out the level of attention to give to the item in function of its importance in time.

Explainations.

For example, if an under control (green) item is near to deliver (in general two weeks before the delivery date), I change its status from greeen to yellow in order to point out that this particular item will deliver soon. If the item to deliver is a major component of the project, it can turn from green to red (meaning important delivery to come).

This way, stakeholders know that yellow or red do not automatically means "out of control" but can also mean "near to deliver".

From my experience, this way to manage the statuses keep the upper management more relax facing Y or R colors but another important effect is that it keeps them more aware of the progress of the project. It avoids having green items delivering without anyone noting... thinking that it was just normal and not seeing the work behind it.
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0 # Tom 2012-09-07 09:28
I see a couple of possible "options" here. What about matching the color with a point on the cone of uncertainty, e.g., Green with 25% confidence (large uncertainties remain), green with 90% confidence (almost all uncertainties have been removed)? The level of uncertainty could be tracked as a function of the overall percentage of the project which has been completed.

Another option is defining and using a color continuum, from red to green, perhaps, with defined interim shades (this one invites a certain level of ambiguity).

Another option is a "weather report", e.g., green with a 50% chance of yellow by next week. That way, you get out in front of possible issues, and you avoid the "how did this happen" question.

However you do it, it is critical that everyone know and accept what a specific color means.
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0 # Renu Sharma 2012-09-09 13:38
Any project is never free from risk and issues. That is why continuous risk management is part of project planning and control . Any project manager knows that where are we against the plan and whether going to meet the plan or not. Just on the basis of unknown the color should not be changed . As and when it is forseen that there is something that may hamper the plan the color should be changed. It is noticed that normally PM to hide the issue try to depict a green status , which is wrong. Analyse the project status and if there is a manageable or non manageable risk / issue share it with stakeholders honestly and mark the project color accordingly. An honest communication will not keep stakeholders in dark. Having 4 colors may depict the status in better way than getting away with green.
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+4 # BillyBob 2013-05-01 14:01
The colors are only there to show a difference in item 1 from item 2 - pick any colours you want or as many as you want.

What is needed is communication on what the colours mean, then your visual communication tool (colour) will have a consitent meaning to the project team and stakeholders.
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0 # Helen 2013-06-05 23:04
I like the 4 color approach suggest by other responders here. It makes sense to me.

I've seen too many games played. Some people try to make everything "green" to avoid shining the spotlight on the project, and to avoid a huge debate and analysis about the issues.
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0 # Kevin 2013-07-03 13:13
We are trying to stay somewhat away from single color status for all the reasons listed above. Instead, we are focusing in on a simple set of metrics that everyone gets combined with color. As an example we report metrics on budget, internal labor hours, schedule. 3 columns that are "variance budget", "variance on labor", "variance on schedule". We have given it thresholds to mark each column color such as if you are +/1 1-5% within budget its green, 6-10% is yellow, and +/- 10% is red. Similar schools of thought on internal labor and schedule. We simply add a column to note any particular risk worthwhile mentioning. This type of reporting allows the user to scan for the yellows/reds within context of how it requires their attention, in order for them to ask deeper questions on what's going on or to read the notes.
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+1 # Marcos Ferrer 2013-07-03 14:43
Good article. Truth in project reporting! Lets add green back in as follows: We are done and all that finally, actually mattered is finished :-)
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0 # Michael Wittke 2013-07-03 17:29
I love the fact that I am not the only one in the world that believes all projects are yellow until delivered (to satisfied customers!)
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0 # Tony Carter 2014-03-12 15:42
Some very interesting comments. I quite like Majid's idea of adding a fourth colour.
But I am going to stay with Green Yellow and Red.
The trick has to be changing from Green to Yellow in time. I can explain that to my sponsors and stakeholders.
It is going from Green to Red that gets you into trouble
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-1 # Rob 2014-03-13 11:18
Changing the colors merely means you have a problem that you have not solved for. The same effort could be put into a minor key that describes a green square with your "yellow" comments. Removing stakeholder confusion is the priority and I have found that switching colors or meanings behind H,M,L or S,M,L,XL or any other standard definitions only adds confusion. The problem is identified in your article... Stakeholders need a firm understanding of G,Y,R status.
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+1 # Palmer 2015-01-25 15:40
Why red amber green, why not three numbers. There is a danger that red is being seen as bad. Or illegal like traffic lights which is nonsense.
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0 # Tomarm 2015-05-09 11:30
The problem here might not lie with the status report style but with the management style and company culture that essentially punishes honesty. Training should be given to management on how to communicate with their directs regarding their reports. The guilty feeling one gets when reporting amber or red status is a symptom of a flaw in managerial culture. Fix that flaw and you might see reporting methods becoming more efficient and effective.
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0 # Kevin Lonergan 2015-08-20 04:44
I agree with Greg's article - in the UK Dashbaords have reached the point where they are driving exactly the wrong behaviuors around projects. Thresholds are key to causing this behaviuor so if you can't solve that challenge, we are using a tool that hurts, not helps.
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+3 # Bobbi Bilnoski 2015-11-20 11:56
I work with nonprofit organizations primarily, and they LOVE having a dashboard on their high level performance outcomes. And they need read it at a glance and want to know they are making progress! I train them to acknowledge the work if green and spend most of their time on yellows and reds. And since I use this on 5 yr. strategic plans - they want to know which objectives are intentionally not launched yet. So I keep it simple and this formula seems to work for everyone. I occasionally have a CEO who does NOT want their board to see any reds!

Red: Halt! Objective is off the track and will impact timeline and budget.

Yellow: Proceed with caution or change strategy.

Green: Objective is in good shape, no risks at the moment.

Blue: Objective is accomplished, track and monitor outcomes.

Gray: Objective intentionally not started yet.
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0 # Mark Ramsay, P.E., 2016-04-10 08:24
"The article well reasons that when management sees colored status markers, they expect green to stay green, and yellow and red to get better. When green turns sour, the PM is put on the defensive.

What's the shortcoming here? No risk log! A large or complicated project requires a risk log be reviewed with management periodically. The other is a fascination with colors. Some software offer charts that look like jelly bean jars! Now, a risk log looks boring by comparison, however, it's the best way for management to judge the quality of project management going on.

Program Leader allows risks to be listed as tasks, assigned a cost, and a probability of occurrence. Risks appear as line items in Financial Reports, in red, so that ALL of them get the attention they deserve.

A risk log in a task management system is one reason to buy software written by those who have been in your industry/profes sion. That's the case with Effective Project Solution's products. They know what your risks are and provide tools to manage them."
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-2 # Drithal 2016-04-27 12:47
I still have a challenge in identifying a project in yellow or red when we know there is a potential issue with the Scope (e.g. addition of scope), but do not have all the piece to identify the actual risk to the timelines and budget from the customer. How do u highlight this in a status report with the unknowns?
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0 # Biswajit Dash 2016-08-04 20:43
I just joined a project with red status. I am planning to work on the Risk identification and Issue Identification, to understand why the project is going as red. After getting the right data will draw the path of recovery. The recovery path might consists of training the team members, scope understanding etc.
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0 # David 2016-08-23 20:04
Traffic lights? There are only two things that are worth knowing about a project: estimated completion time, and estimated completion cost (EAC in EVM terms). A board might also want to know the forecast NPV of the project. They might go a little further and want uncertainty bands around the forecasts (which should include for the assessed risk probabilities). Done.
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-1 # David 2016-08-23 20:08
A further note: nothing about project performance or quality? Not necessary. The project itself is to deliver a defined capability. Completion is when it is delivered (including dealing with risks). That's what a board wants to know. If it gets too far out or too expensive, they might want a report on options to cancel.
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0 # Rex 2017-02-23 20:42
If you are worried about the color on the chart then you are missing the point of the chart. Also it seems that you may not be as effective as you could be in managing the stakeholder though effective communication.T he chart is a static moment in time when you present it. It is for triage, a green project is on budget, time and schedule. No need to worry at this time. a Yellow project has experienced an "issue" it needs stakeholder attention, root cause analysis, a plan to get it back on track, input from stakeholders. Red means serious issue, going to not meet some part of the time, budget, schedule, scope. Immediate attention is needed. stakeholder analysis of all risks, and an go/or kill decision needs to be made. If a go order is issued then something major needs to happen. re-adjusted, scope, additional budget, a new timeline etc. Project managers need to spend more time managing people and expectations using effective communications up and down the project ladder rather than managing colors on a chart. this has always worked for me EVERY TIME. Hope that helps someone.
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