A project baseline serves as the basis against which you are going to deliver your project and measure its success. It is a critical document essential to successfully deliver a project on schedule and within budget. Without, a project has no plan, vision or execution strategy needed for a team deliver a successful project to its clients. Similar to a start-up company business plan, the baseline documentation helps the project team organize who, what where and how they plan to successfully execute the project.

The benefits to establishing a project baseline can be summarized as:

  • A point in time to assess project progress & performance against
  • A point in time to management cost and schedule change against
  • A requirement for earned calculations
  • Improved estimating

Define the Baseline

This step is typically completed in the early days of the project life cycle. As the project progresses the team must revisit the original baseline documents and evaluate the potential need for new documents. For example, the baseline documentation required during the engineering phase may not be the same as needed during the construction phase. The management team must always have the right tools in place that are required to manage the job.

A baseline can comprise of any number of different documents, each establishing a well defined metric by which the execution team will track, measure and deviate against (via the change management process). These documents can include but not limited to:

  • The prime contract
  • Project execution plan (PEP)
  • Project scope document
  • Project schedules
  • Project estimate
  • Project staffing plans
  • Project work breakdown structure
  • Additional internal metrics could contain
    • As-sold margins
    • Internal management risk assessments

Establish the baseline

When the project initially kicks off there is typically a handover from the sales and estimating team to the project execution team. The level of detail found in the estimate is usually at a higher level than what is required to effectively control the project. During this phase, the execution team will develop the project WBS, CBS and Project Execution Plan.

To begin, all active stakeholders involved in the execution side will meet to develop the baseline, key assumptions, clarifications and any key exclusion. This process is normally facilitated by the project controls team. During the process, the project management organization and respective department leads provide input and perspective in order to develop such documents as staffing plans, schedules, risk registers and cost break down basis. The end product should be a baseline that the entire organization can stand behind and realistically execute the project to.

When the baseline documentation has been finalized, reviewed, and agreed upon, appropriate team members are provided a copy for use to track, measure, forecast and report against. Often times a baseline summary document is generated by the project controls team that includes key dates, milestones, cost figures and notable mentions.

Track, Measure, Forecast & Report Against

What is the status of the project? Where is it going?

Reporting can vary depending on the needs of a project and client expectations and requirements. Reports may range from hourly, daily, weekly, monthly and even quarterly. One constant however, is reporting the project metrics actual positions against the baseline (“where is the project”). Also, it is necessary to provide an accurate forecast using the data you have generated throughout the life of the project (“where is it going?”).

Project controls professionals have a responsibility to report all information, the good and bad, to the key stakeholders of the project. This includes tracking and monitoring against the original scope that was part of the baseline in addition to the changes that have occurred since defining the baseline.

Furthermore, the team is responsible for identifying and reporting where the project is headed and any major risks that may act as obstacles for meeting said goals and forecasts. Project management methodologies such as earned value, commodity unit rate analysis, and critical path method are just a few of the tools used by project managers to try and forecast where and how the project will finish.

Refine / Update Baseline

The baseline is a plan that is established at a point in time. But like all plans, a project will always deviate from the original plan. These deviations are handled through the change management (link to hubbard) process. All projects have some form of an established change management processes, which will include, but may not be limited to, three types of changes:

  • Budget shift: a redistribution of budget cost, hours, or quantities between accounts. Net impact to the bottom line is always zero with no impact to revenue.
  • Change orders or Scope changes: formal documentation that identifies a change that is not included in the project baseline. This can be a positive value (additional work) or negative (de-scoping work).
  • Deviations or Trends: formal documentation that indentifies a change that is included in the project baseline. This can be a positive value or a negative value.

For a project team to effectively execute to the plan, senior management must ensure their team has a positive culture throughout the change management process. The team must be willing and able to identify, evaluate, and track change in accordance with the change management procedures. This will include the appropriate signature approvals as well as required systems in place. The key to a successful change management program is active and effective communication while staying ahead of the rapidly evolving project.

When there are very large deviations to the original plan (I have been told any deviation >12-15% however this has varied in my experience), the project team must consider going through a re-baseline effort, otherwise the basis for the progress plans, schedule and cost can be so separated from the reality of execution that it provides little to no value to maintain the current baseline positions. Other reasons for a re-baseline include a planned staged estimate upgrade (Class I, II, III IV), or major event such as a contractor going bankrupt.