Project Performance Management Scorecard

Developed by Bjarke Schjødt Rasmussen

Abstract

With companies pushed to continuous improve in project management, process efficiency and performance management, there is a need to provide processes that can give help and guides to project managers. The project performance management scorecard or PPMSC is used to increase a projects performance and give an overview of potential obstacles. The projects performance can be measured as the outcome of the different project. The PPMSC incorporates theory from the Balanced scorecard, with a slide adjustment, in order to make work in a project point of view. It also uses parts from the Project life cycle theory to provide a process of the project life cycles phases. It can help project managers keep track of the complex inter-dependencies factors like project phases, stakeholders and "cause and-effect" inside the project. It still have some limitation as it is build, as mentioned, on top of the balanced scorecard and project life cycle. This paper will show how a strategics organizations tool, such as the balanced scorecard, can be used in combination with the the project life cycle theory and a specially developed framework, to provide help to the project manager in the different project phases.

Theory

As the PPMSC is a combination of different tools and theories, there is a need to explain these. in order to fully understand the end framework.

Balanced Scorecard

The idea of developing the balanced scorecard came from, according to Robert Kaplan and David Norton, that it is impossible for organizations to effective measure efficiency with a narrow number of indicators. At the same time an organization shouldn't have a to large number- and complex indicators, as it often will lead to a lack of overview and give a high possibility of the indicators either being misused or not be used at all.

The Balanced Scorecard (BSC) is then used to help organizations put their cooperate strategy into a somewhat more comprehensive set of objects and Key Performance Indicators(KPIs). It will also help the organization avoid a short sighted perspective and loose focus on the long term view. It will provide companies a robust measurement and management system for them. There are different editions as it have developed throughout the years but the first edition consisted of these four elements:

• Financial

The focus here are the identification of financial measurement. Is the classic organisations measurement like cash flow, income, return and more like it. Dependent on which phase the organization is in the return is different. Theses phase are the growth phase,consolidation or a phase known as the "Harvesting" phase. these at linked to the strategy of the organization.

• Customer

Here the organization must identify what is important for the customers and their needs. It could be quality, on time delivery or similar. Also measure customer satisfaction, loyalty and new customers.

• Internal business process

A organization should also look at what do it what to excel at. It can the quality, cycle time or low price. Here it is also very important to look at it as the quality ensures for the organization.

• Learning and Growth

This is the most qualitative part where organizations tries to look into the future on where they want to go. Also focus on the employees. If thrive at work and are satisfied. The first 3 elements have the most measurable indicators: Financial, Customer and Internal business. But and at the same time a more soft type of indicators in the ability to learn and Growth.

The first edition was build for a non-divisional organisation and so was hard to implement in a more complex structured company as well as the public sector and a non-profit organisation. This lead to the tool quickly being abandoned by organisations . The next generation gave a new measurement that was based on strategic objective that could be linked together as a cause and-effect chain. This is done be linking the different KPI's, in the different areas, together. A Concept used in the BSC is to define indicators as "lead" and "lack" indicators. "Lag" indicators are the after event indicators like production, accident and more. They are useful for measuring the progress of a project in the company but can't be used to influence the future. The "Lead" indicators are useful in trying to change something or predict the future. It can be described as in-process and predictive indicators. The hard part of the lead indicators is to be able to determine them, as they try to say something about the future, as in comparison to the lag indicators that says something about the present. As the lead indicators tries to predict the future it leaves a chance of being wrong and it is hard to choose the right ones.

Adjusted Balanced Scorecard

As mentioned in the previous section the BSC is a strategic organizational tool. In order to make the BSC more useful for project management perspective, a change in view is needed. So instead of looking at the customers, the Adjusted balanced Scorecard (ABSC) will look at the stakeholders in the project. It will also use the 3 other aspect in a more project orientated way, like financial being used as the projects cost and so on. The new four key points are:

• Financial
• Stakeholders
• Internal Business
• Learning and Growth

To help go away from the strategic point of view, where is uses the "Lag" indicators in focus, the "Lead" indicators will then be in focus. This is to give some warning signals and actions that can help meet the strategy.

Project life cycle

The project life cycle ,also know as the project management life cycle, is a tool that helps project managers narrow the focus, aligning objects and ensure the project finishing on time. The tool consists of the following steps:

• Initiation

During the first phase, called the initiation phase, the projects objectives are fund. It could be in the form of a problem or an opportunity statement. Then to ensure the right action are taken and to fulfill the needs, a business case are planed. It consist of the appropriate solution to the given problem/opportunity. Each option is then considered to find the right solution to the issues at hand, and are tested for feasibility and justification. Ones the best solution have been chosen, a project manager is appointed to start initiating the project. Milestones and group members are fund and shaped into the project team so that they can solve the problem/opportunity. Then the project manager seeks the approval, from the organization, to move the project into the next phase, the Planning phase.

• Planning

In this phase of the project, the goal is to investigate project in as much detail as possible. Finding the necessary action required to meet the projects objective is identified and planned. It consistent of three main parts. The needed project task and resources are fund and steps is identified in order to meet them. This can also be called "scope management". Project plan is then created that contains the activities, tasks, dependencies and time frames of the project. With that part complete, the project manager must now identify the risk within the project. This part is also known as "risk management". Here the project manager must identify potential "high-treat" problems and what actions there must be taking in order to counteract them. It can be done by either lowering the risk of the problems ever happening or lower the impact it could have on the project itself. The stakeholders must also be identified and a plan to communicate with the different stakeholders is created. The stakeholder map is a good tool that could be used here. At the end a quality plan is made. Here the quality targets, control measurement and a list of customer requirement for the project in order for them to accept it. With all these parts done the project manager is now ready to move the project into the Execution phase.

• Execution

The execution phase or also known as the implementation phase, is where the project plan is put into action. The main idea here is for the project manager to monitor and adjust the project if it varies from the plan. Team meetings is a good way for a project manager to keep a finger on the pulse and be able to quickly adjust. If a project starts to deviate from the project plan, the project manager need to take action in order to move to project back on the right path. If that is not possible, the project team should record the change and modify the plan to fit the new path. Key stakeholders and project sponsors should be informed throughout the process. As the project moves along, each of the agreed milestone must be reviewed to check for quality and make sure the measurement meets to demands. With all the milestone complete and the customer having approved the solution, the project can move into the final phase of closing.

• Closure

The finale phase is the closure of the project. All products and documents must be handed over to the customer and communicated to all the different stakeholders. The last part is for the project manager to make a lessons-learned round in order to see what went well and not so well. This is to improve the process for future projects. This is both for the individual project manager but also to help the project organization improve for future projects.

Framework

To help ensure the success of using the framework, a series of implementations steps are required. These steps are also used to enhance the learning process form the framework.

1. Make the Project objectives and the link to Project life cycle(PLC) if possible.
2. Establish the project management KPI's as defined as "Lag" indicators
3. Develop KPIs and PLC objects for "Lead" indicators
4. Use cause and effect when implementing the KPIs and specify the impact analysis framework
5. Keep watch to improve the project management process

It can all in all be described as "Project performance management scorecard". It tries to achieve success by going after at set of objectives:

• Project strategy and objectives
• Project life cycle(PLC) objectives
• Project Management objectives
• Balanced Scorecard practices

Applications procedure

Step 1: Make the Project objectives and the link to Project life cycle(PLC) if possible

Here the objectives of the project must be stated. The list of objects should be high level qualitative statements but can be in some cases quantitative. After the list of objects have been identified the project manager must now find the key stakeholders using various tool. It could be stakeholder maps or other. Then make the objects into more specific KPIs that can be used throughout the project phases.

A simple table is used to keep track of object and the indicators throughout the different phase of the project

Trace ability matrix

Objectives	Requirements gathering	Design and development	Phase
Increase penetration into market	Market requirements agreed on	Multiple language webpage	Implantation phase
Objective n	List of indicators

Note that not all objects can be directly linked to a specific phase. This could be a enterprise resource planning system or ERP system. With just installing the system won't guarantee a result to the object of increase sales for example. To then to help identify the phase, the fish bone diagram could be used.

Step 2: Establish the project management KPIs as defined as "Lag" indicators

With the objects fund, the "Lag" indicators is identified and put into the ABSC model.

Then to make keep an overview of the "Lag" indicators and the target measurement, a table is constucted:

Trace ability matrix

Project management knowledge areas	Objectives	Indicators	Target measurement
Risk	Minimize risk impact on the project	Monitor high risk problem	Don't exceed agreed number of high risk items during the project time
Cost	lower cost overrun	Consumer price index (CPI)	Don't let the CPI get over 1.10 during project life cycle
Area n	Objective	List of indicators	Measures

Step 3: Develop KPIs and PLC objects for "Lead" indicators

Here the main point to identify the "Lead" indicators in the project. The target objectives and who has the responsibility of making these targets. There are three point that can be seen as a series of steps done by the Project Manager, along side with the team members of the project and key stakeholders.

Step 3.1: Identify the different indicators

The team must now find the different performance "Lead" indicators, that will be useful in the project. It could be view from a project life cycle point of view as the "Requirement gathering" phase.

Step 3.2: Set targets for measuring

As the indicators are fund, there is a need to make target measurement for the indicators to meet in order to measure the success of them.

Step 3.3: Assign responsibilities

For each of the different target measurement, a team member must be assigned the responsibility. This team member then have the responsibility of keeping track of the performance and monitor the progress. This is especially important during the implementation/execution phase of a project as there is a need of monitor the progress status throughout the project to control the process. To give and overview of theses 3 step the "Lead" indicators, target and the responsibilities is combine in a table:

Trace ability matrix

Project Phase	Indicators	Target measurement	Responsibility
Execution phase	All stakeholders informed	100% informed	Project manager
	High influence stakeholders sign off on project process	100% Papers signed	Project manager
Phase n	List of indicators	Measures	Responsibility owner

Step 3.4: Add the "Lead" indicators in ABSC

With the "Lead" indicators identified, they can now be put into the ABSC. This is done to later create the cause and-effect properties.

Step 4:Use cause and effect when implementing the KPIs and specify the impact analysis framework

Now the project manager must identify the cause and effect relationship between the two types of indicators.

Step 4.1: Combine

With the "Lead" and "Lag" indicators identified, they must then be combined into a single ABSC.

Step 4.2: identify Cause and effect

The project manager must now take one indicator at the time, see what is the cause and effect it will have on the other indicators and their measurement as shown in the previous section.

Step 4.3: High impact, High risk

Different "Lead" indicators have a different level of important. A way to see which are the most important, is to make a diagram with high-low impact on one axis and high-low risk on the other similar to the stakeholder map. When the most high risk high indicators(cause) have been fund the "Lag" indicators that will be impacted(effect) must be fund as well. This leads back to the object that therefore also will be impacted. Summarized in this table:

Trace ability matrix

"Lead" indicators(cause)	Impacted "Lag" indicators(effect)	Impacted objects
On time high influence Stakeholder sign off	Time overrun	Need to make change move the time schedule
Cause	Effect	Objects

Step 5: Keep watch to improve the project management process

Now the whole process is complete and the project manager can use the ABSC to keep track of the projects performance. Here it is important the the Project manager plans project review meetings to make sure he/she gets the right status of the project to monitor possible problems.

This process helps the project manager identify key projects measurement and KPIs and the link between them. With this a projects chance of succeeding will increase and keep track of stakeholders and their interest in the project.

Limitations

As the PPMS consists of different tools and frameworks, the limitations can be divided into the different subjects.

Balanced scorecard

The BSC is a successful tool used by many companies, but is has the limitations. One is it can be quiet costly and time consuming as it requires at thorough understand of the entire process and might need the help of outside consultation if not used before. Also that it is dependent on the information given to the tool. if wrong information gets in the wrong info comes out. The last part is useing the BSC in a project management case where as mentioned earlier it is a strategic tool and therefore not design originally to work in this way.

Project life cycle

The project life cycle has its limitation in project with high uncertainty. Because the based on a well defined requirement and has a hard time making many changes throughout the project process.

Framework

This Framework is new and not very wildly used so there is a leak of test and understanding. This leads to uncertainty as there not experience in the field. Some problems with this process is linked to the "Lead" indicators as the determination of these are critical and hard to get right. If the wrong "Lead" indicators are chosen a project manager will loose focus on potentially problems for the project.

Key References

Balanced Scorecard This is the article where David Norton and Robert S. Kaplan described the roots of the original Balanced scorecard and new innovations that linked it into lager management literature. It shows how the idea of making a performance measurement tool that companies can to measure in according to there strategy had been used an evolved.

Project Life Cycle phases To give and overview of the project life cycle this is a part from the project management book by Merrie Barron and Andrew Barron. It shows the tool and the importans of having the full overview of the whole life cycle a project is going through. Form the initiation to the closer.

Project performance mangement using balanced scorecard(BSC) approach This is what the main artical is mostly based open. It is written by Ilango Vasudevan. It is made to give project manager to opportunity of using part of the Balanced scorecard and project life cycle and link it together with objectives for the project, project management and project life cycle.

Conclusion

The whole framework is a new way of looking at project management. It has some limitations and demands, but at the same time has good potential, as it can be used to link the more strategic view, from the balanced scorecard, onto the project management and giving both the project manager and strategic management at way of seeing benefits and where process can be improved even more.