Need a benchmark against which you'll plan your project and control it? Learn how baselining a project works in our complete guide.
It would be great if all our projects ran to plan with minimal input from the project manager. From conceptualizing the project plan with your team and assigning resources, to putting together the deliverables on time and on budget - the clients are happy, you gain their trust, and before you know it you're in for another project you're sure you are going to ace again.
As project managers, we know this perfect project flow is far from reality. Some projects crash in the middle of the timeline, others miss the target and run out of supplies, yet others fall short in producing the project end result. Of all the tasks you take on as PM, one component has the greatest impact on the likelihood of your project's success: project baseline.
So what should you know about baselining a project? And what do you do to ensure you create a feasible project baseline? In this article, we'll cover everything you need to know about baselining a project - and how to avoid the pitfalls that could spell disaster for your project performance.
A project baseline in project management is the yardstick for measuring if the project goals are being achieved, in terms of project costs, schedule, and scope. It is conceptualized during the planning process, and before the start of the project itself.
A baseline project plan is the reference point you will use to compare actual figures as the project progresses, so you can see where your project is ahead or behind the baseline (variances). It helps you analyze project trends so you can steer your project through any changes.
Here is an example. Let’s assume that you have an order to customize a sports car in six weeks, and you have spent $20,000 in the first week. Is that good or bad? If you have a budget of $50,000, that indicates a big problem. However, if the initial budget is $120,000, your project is right on track.
Baselining a project means creating a project baseline plan, by detailing the predicted cost, schedule, and scope of the project during the project planning phase.
Baselining is important in all projects, but is especially crucial in projects where requirements may change along the way, due to requests from clients or stakeholders. Armed with the hard numbers of the existing baseline, the project manager can renegotiate the project budget, deadline, and scope of work with all the stakeholders, if changes are requested. Once the new baseline has stakeholder buy-in, the project has a green light and everyone's expectations are set.
Three types of project baseline help evaluate different aspects of a project. They are:
The three baselines in project management are also referred to as the performance measurement baseline (PMB). Project managers monitor these three components separately to ensure the project is on track and becomes a performance measurement baseline when fully integrated.
A project scope baseline is the approved version of a scope statement, work breakdown structure and work breakdown structure dictionary. A scope statement and work breakdown structure are part of the planning process in project management, while a work breakdown structure (WBS) dictionary is a document that provides detailed information about schedule activities included in the WBS.
A schedule baseline is the project schedule that has been approved by the stakeholders. It includes the start and end dates, roles assigned, and project estimates prior to the beginning of the project. Project managers use schedule baselines to calculate the variance between planned and actuals in a project, also known as schedule variance.
In schedule baselines, if there was an initial plan for a milestone to take one month, but the project took two months to complete, there is a 1-month variance which translates to a 1-month delay in the project schedule.
Cost baseline refers to the approved project budget that determines when and how the money will be spent on the project. The budget is broken down into materials, salaries, equipment, and more.
Every project has its challenges, and that is why every project manager needs a project baseline in place as a compass to navigate any unforeseen changes in the project. However, the process of baselining a project plan is not always plain sailing. Here are the common challenges in baselining a project.
Scope creep is the tendency of projects to grow in scope without corresponding changes to time, budget, or resources. In other words, the deadline remains the same, but the project has more work to be done before it can be completed.
Although most scope creep happens in large-scale projects, it can also occur on a smaller scale, within a single task. For example, if a client asks you to design a flyer based on their own text, but when you send the design for feedback they want you to elaborate or improve on the text, that is scope creep.
While some instances of scope creep can be absorbed into the existing project plan, large-scale or repeated small instances of scope creep throw you further away from your schedule and cost baselines, and put your project team in a stressful position!
A lack of a clear definition of what the project aims to achieve: If everyone involved has a different understanding of what it will deliver, it is easy to add new features to the project.
If you don’t manage scope creep correctly, it can lead to schedule delays, increases in cost, and overall dissatisfaction from stakeholders.
A cost overrun, sometimes called budget overrun, is the unexpected cost increase due to underestimating the actual cost during budgeting. Cost overruns are generally associated with capital projects such as construction or extensive infrastructure and IT projects.
Cost overruns need to be carefully managed throughout their life cycle to avoid spiraling out of control. If not addressed early, they can significantly impact the project cost baseline and the organization’s cash flow and profitability. When the costs are higher than expected, more money is spent than planned, and the profit margin will be smaller. In extreme cases, projects that experience major cost overruns can become loss-making and may even fail altogether.
Cost overruns typically fall into two categories:
There are many reasons why projects experience cost overruns, such as:
Using a sound project software system will enable you to plan and create a project baseline that provides visibility to every team member.
When the scope, cost, and schedule are not set, there will be a related impact on the quality of deliverables. If you want to create a website but the tasks are not assigned properly, time for feedback and revision is not taken into account, or the budget is not yet allocated, then your desired outcome or even the project goal itself will be compromised.
Deciding on the resources required for completing the project is also a challenge to many project managers. A project manager has to organize resources such as workforce, equipment, and materials to avoid any problems during the project’s execution phase.
Deciding on the timeframe for executing and completing a particular task and ensuring it is completed within a set time frame also proves a big challenge. A project manager has to ensure that all tasks are completed within their specified time frame so that there is no delay in achieving the main objective of the project.
To establish a baseline, you first need to create a detailed project plan. This plan will be the foundation of your baseline. Some of the most common elements that go into making a baseline include:
With that in mind, here are steps you can take to create a baseline for your next project successfully:
There is a lot to manage in any project, from product development to the progress of team members and project managers. This means that there is much information to be captured, shared, and discussed.
Your project scope baseline helps document deliverables, project outcome, project needs, key milestones, project resources, challenges, and how to deliver the project. To ensure that every aspect of your project is running smoothly, you need a project management tool that can provide you with the correct data at the right time.
A realistic budget or project cost baseline is another crucial element for each successful project. It is essential to determine how much you will spend tackling each step of your scope without breaking any contracts or agreements that you may have signed.
Develop cost baselines by estimating the cost and time to complete the project. Make sure that you leave room for error in your cost estimates and any changes that might happen during the project.
Creating a project schedule baseline is a practical step towards managing the project, and depends on the cost and scope baselines. It serves as a benchmark against which you can measure project progress. It is also used to address changes in the scope of work. The schedule is generated after all activities, milestones, and deliverables were identified during the project planning phase.
The schedule baseline consists of a start date, an end date, and a list of activities or tasks that need to be completed by their planned due dates. The schedule of activities is generally represented as a Gantt chart on a computerized software program for project or resource management. Try developing a schedule using Runn for easier monitoring.
Project software will help you assign resources more appropriately as it will show who is available and who is doing what, so you can monitor not only each individual's capacity, but all project teams involved as well. You need to ensure that you have enough resources available in terms of time, money, and people with the right skill sets to complete the project successfully.
The WBS will help the team understand small milestones that need to be accomplished for a successful project. When baselining a project, make sure that you have defined the scope properly, with a detailed description of the work, tasks, and deliverables required to complete the project.
A kick-off meeting with stakeholders is helpful as you explain the plan to them and other team members. They will understand the project, know what to expect, and approve it.
Now that your baseline plan is complete, the next step is to execute it. Assign tasks to team members and track their progress in terms of time and money spent.
Organizations that build a workable project baseline and utilize appropriate tools like project management software are already one step ahead of delivering success to their project.
Numerous software tools help teams organize, communicate, and plan. One of the main benefits is the ability to create a project baseline and monitor the project’s progress against this baseline. As work progresses, you should update the tool regularly so that you can identify trends that may affect your ability to finish on time and within budget.
Why is it important for project managers to resist changes to the project baseline? Resisting change is vital because that is the only way to manage a project successfully. Frequent changes impact the project performance and are likely to push you over the original budget or schedule.
Here are five reasons why you should resist change in your projects:
Despite resistance, there are two instances where a PM needs to change a project baseline:
To ensure that changes are handled professionally, follow a Change Management Plan. Changes should be recorded on a change request form which documents every detail that comes along with it. Read more about dealing with project changes HERE.
Projects are dynamic and always in motion, making it difficult to measure progress. A project baseline can be used as a benchmark to compare the project with its actual performance. Here are some of the benefits of having a project baseline:
Baselining is essential for every new project that every project manager should use. A project baseline will help ensure the project goes according to plan. Project managers can refer to their original baseline plan to see its progress and handle any deviations.
Using a resource management tool will not only help you set up the project scope, cost, and schedule, but monitor and track changes with your team's time and all budget movements across the entire project as well. You will also be able to evaluate project reports and analyze forecasts to see if there should be a change for the best project deliverables.
Ensuring you plan a project baseline properly. A resource management software tool allows you to stay organized and make the best use of your time. Book a demo with Runn now or start a free trial!
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