The Balanced Scorecard Projects Performance Dashboard

Those involved in delivering capital project investments are always faced with the challenge on how to have an objective yet comprehensive and meaningful status of their projects’ performance health. Although there could be many ways to report this performance for which some might agree and many others would disagree with, nevertheless, using a globally recognized approach can help in narrowing those differences. The balanced scorecard (BSC) used by many organizations to report and communicate their business performance can be adopted to monitor, evaluate and communicate the projects portfolio performance.

The Extended Balanced Scorecard

The balanced scorecard assesses the performance of an organization or any of its business units from four perspectives: Customer, Financial, Internal Processes and Learning and Growth. The same perspectives will be used to assess a project’s performance plus two additional perspectives that are needed for capital projects. The first is Health, Safety and Environment (HSE) and the second is Sustainability. For each perspective, Key Performance Indicators (KPI) will be identified to report the most important performance results of each project. Those performance results depend on the data captured from the different processes that are implemented to manage the project execution across its complete life cycle stages.

The Financial Perspective

For example, assessing the project’s performance status from the financial perspective requires a number of KPIs including the cost variance (CV) to assess if the project is currently over or under budget, the schedule variance (SV) to assess if the project’s actual spending is in accordance to the planned budget spending and the anticipated cost variance at completion (VAC) to determine if there will be financial loss when the project is completed. Other KPIs can be also added depending on the organization’s performance reporting requirements and the level of control they need to implement when managing the project from the financial perspective.

The Cost Variance (CV) key performance indicator for a specific project period depends on the actual cost (AC) incurred on the project until that date. Those are the actual costs for work completed against the awarded contracts, subcontracts and purchase orders which are submitted using the monthly progress invoice application. In addition, it includes other non-contract related actual costs which are captured using miscellaneous invoices as well as actual cost for resources, manpower and others, that are spent on the project and usually captured using timesheets. The Cost Variance (CV) also depends on the actual project budget performance achieved to date. This value is calculated using the current approved project budget which is inclusive of all approved budget adjustments and the approved percent complete for the project’s scope of work which is detailed in the project’s execution schedule. It should be noted that this approved percent complete is usually the same percent complete used to quantify the project’s actual cost to date.

Using project management information system (PMIS) like PMWeb is crucial to ensure that that the data needed for reporting the project performance results are captured in the right format, by the right team member at the right time. PMWeb default forms and custom-built forms will enable the project team to have input forms to capture the data for each specific process in the right format. In addition, it allows attaching all supportive documents associated to the reported data. The field security and the highly configurable workflow will ensure that the data is captured by the right and authorized project team member in the right sequence. This will provide the project team with real-time access to trust-worthy data that provides the actual results used to calculate the key performance indicators.

The financial perspective dashboard, and similar to other project performance perspective dashboards, will summarize the transactions that where captured from the relevant project management processes needed to generate the performance results for calculating the KPIs. For example, the dashboard shown below summarizes the current project results which are the revised project budget (BAC) and planned budget spending (PV) which are captured from the budget and budget requests modules, schedule percent complete, earned value (EV) which is a calculated by multiplying the revised budget (BAC) by schedule percent complete, work in place from the progress invoices module, miscellaneous invoices from the miscellaneous invoices module, timesheets from the timesheets module, total cost (AC) which is the sum of invoices, miscellaneous invoices and timesheets. Based on those results, the key performance indicators Schedule Variance (SV), Schedule Performance Index (SPI), Cost Variance (CV), Cost Performance Index (CPI) and Variance at Completion (VAC) are calculated.

Other Balanced Scorecard Perspectives

The same approach will apply for the other five perspectives. At the end of each progress period, each project that is part of the organization’s projects portfolio will have the key performance indicators for the six perspectives. For example, for quality, the organization might use the number of pending Non-Conformance Reports (NCR) as whereas for HSE, the Project Significant Injury Frequency Rate (SIFR) could be used. The Total Float (TF) will be used for the Internal Processes as what matters most for the organization is how the project management processes are ensuring on-time project delivery. For learning and growth perspective, the project risk exposure is one of the KPIs to be reported on, why? Because if the project delivery team knowledge and past experience cannot reduce the project’s risk exposure for failure, then the project and the project team are not meeting the organization’s target performance requirements when it comes to learning and growth. The last perspective is the sustainability for which there will be three KPIs to assess the project’s performance against the environmental, social and economic contributions of the project. It should be noted that organization will add more KPIs for each perspective depending on their strategy for reporting projects’ performance. For example, for HSE, the SIFR could be one of the other KPIs that the organization wants to report on as shown in the HSE Performance Dashboard below. Those include Incident Frequency Rate (Per 100,000 Hours Worked), Lost Time Injury Frequency Rate (LTIFR) (Per 100,000 Hours Worked), otal Incidents, Near Misses & Injuries, Incident Causes among others.

The Balanced Scorecard Projects Performance Dashboard

The performance metrics that the organization selects as the KPIs needed to report their projects portfolio performance will become part of their balanced scorecard projects performance dashboard. At the end of each performance period, the dashboard will detail the KPI performance value for each project highlighting whether this performance was favorable or not. In addition, it will provide an overall status of the projects portfolio which will be automatically adjusted depending on the projects or programs selected to be part of the report. Assuming that the organization might have their projects spread over the country or the world, a map will show the location of those projects with the option to display those projects KPIs from the map directly.

Action Management

Getting real-time single version of the truth performance status of your projects portfolio will not eliminate the reasons and causes that caused the unfavorable KPIs performance results. Project executives need to take the actions needed to turnaround non-performing projects back on-track. Having a PMIS like PMWeb provides those executives with the insight to make better and faster informed decisions on not only what have caused those unfavorable results but also what actions must be taken to achieve the desired recovery. With the immediate access to the complete projects’ data, those executives can analyze the causes to what has happened and what options they have to come up with actions to be implemented by their project team to achieve the desired recovery.

PMWeb Action Management Module

PMWeb Action Management module will be used to capture all actions taken by project executives. The action should be linked to the KPI it is associated with. The form should specifically state the action taken so all those who will be involved in this action resolution have no misunderstanding or misinterpretation of the purpose of the action. The action management form will detail the different tasks required from the project team members to resolve the issues associated with this action and by when those tasks need to be performed.

Links to relevant project records like change orders, progress invoices among others need to be provided. In addition, all documents that are related to this action need to be attached. In a nutshell, all records, emails and documents that are part of this action, needs to be associated with the action form. Those documents and records will continue to be uploaded or linked until the action is concluded.

Unlike a project management process where there could be a workflow that will detail the sequence of steps for submitting, reviewing and approving the process record, in action management, it is all about collaborative team effort to successfully complete the action. Accordingly, the project executive who is the action owner needs to invite the needed project team members to be involved in bringing this action into a successful conclusion. The team input will be captured and shared in real-time format among the action resolution participants.

Of course, there could be a need sometimes to involve other parties in the action resolution that might not be part of the PMWeb users. In this case, the project team member can use the Notification option where emails can be sent to other PMWeb users and non-PMWeb users asking their input on the action. The email could include attachments to provide better understanding on the action being resolved. PMWeb notification tab maintains a log of all notifications sent keep track of all notification messages issued by the project team.

Action Management Dashboard

The projects action report provides the organization with a real-time status of all actions identified by the projects’ executives to resolve projects’ performance shortcomings. The dashboard has metrics to monitor how many actions still need to be closed, actions by priority, actions by balanced scorecard perspective and actions by KPI measure. In addition, for achieving the purpose of having a real-time monitor and control on implementing identified actions, the dashboard encourages knowledge sharing among the different projects executives by selecting actions taken to resolve specific project KPI performance measure.

Each action entry in the action management dashboard, will have a link to the Action Management form generated for each action. The form, which can be customized and designed in the desired format to match the organization’s branding and reporting requirement will provide the reviewer with the complete details of that action in a format that can be easily understood as well as shared with others if needed.

Conclusion

Having PMWeb as a single platform that is capable of capturing everyday data from the different processes needed to manage a project, enables the organization to have real-time project performance metrics. To have objective yet comprehensive and meaningful status of the overall projects performance, it is recommended to use the best practice of Balanced Scorecard. Due to the specific particulars of projects, the balanced scorecard four perspectives Client, Financial, Internal Processes and Learning and Growth need to be extended to six perspectives to include Health, Safety and Environment (HSE) and Sustainability.

The value of having PMWeb is not limited for providing the organization with real-time single version of the truth projects performance and status reporting, but the ability to couple this with an action management to enforce the capturing of all decisions and actions to bring projects back on track. The PMWeb action module allows project executives to document actions made, tasks needed to implement those actions and providing a collaborative platform for the project team to provide their input and feedback when implementing the tasks to bring the taken action into successful closure.