Benefits

e Baseline benefits - the project's intended benefits as stated in the business case.

e Forecast benefits - the project's benefits as currently envisaged, taking account of any actual or forecast variances.

e Variance - the difference between the baseline benefits and the forecast benefits.

e Escalation conditions % - the amount against which variance is compared to determine whether it should be referred to the portfolio management team.

e Within escalation conditions? - a yes/no response. Business case e Baseline profit - the project's intended profit (the difference between project/operational costs and benefits over a defined period) as agreed in the business case.

e Forecast profit - the profit as identified in the current business case, taking account of any actual or forecast variances of costs and/or benefits.

e Variance - the difference between the baseline profit and the forecast profit.

e Escalation conditions % - the amount against which variance is compared to determine whether it should be referred to the portfolio management team.

e Within escalation conditions? - a yes/no response.

Table 9.1 on page 172 shows that project 1 seems in good condition with no variances, but project 2 is forecasting variances for both time and cost that will breach the escalation conditions. Although the benefits remain unchanged, the forecast variance for the forecast budget indicates that the intended profit may not be achievable. These multiple forecast variances provide the portfolio management team with the alerts they need to intervene.

The detail in the project register can be summarised further for those organisations undertaking several projects at the same time, giving the portfolio management team an overview of the portfolio on a "corporate dashboard" (see Figure 9.2). It is essential, however, that any report clearly indicates where and what corrective action must be taken. Thus the corporate dashboard also indicates where escalation conditions have been breached so that further detail can be obtained from the project register.

A corporate dashboard

Project costs

Baseline budget

$2,128,894

No. of projects

2

Forecast budget

$2,141,971

Breaching TIME escalation conditions

1

Variance

-£13,077

Breaching COST escalation conditions

1

Project benefits

Baseline benefits

$2,903,937

Breaching BENEFIT escalation conditions

0

Forecast benefits

$2,903,937

Breaching PROFIT escalation conditions

1

Variance

$0

Business case

Baseline profit

$775,043

Forecast profit

$761,966

Variance

-$13,077

This view has the added advantage of showing how the portfolio is contributing to the organisation's strategic imperatives. The bar chart in Figure 9.3 overleaf illustrates how the projects measure up to the balanced scorecard of targets. The vertical axis identifies the percentage contribution being made by the sum of all projects to each of the four parts of the balanced scorecard. Therefore, the four bars should add up to 100. Ideally, they will be balanced, demonstrating that the projects are contributing evenly across the four measures. In the example, a greater proportion of projects are focused on the financial quartile. Although this is not a particular problem, success may be at the expense of investment in developing customer satisfaction, processes and intellectual growth. This portfolio contribution is usually considered quarterly.

Project steering group

Each project steering group directs an individual project. To do so, it needs a control cycle that regularly tells its participants the status of the project. The project steering group members must also be able to assure themselves that if something exceptional happens to breach the forecast targets, the project manager will alert them immediately.

To maintain a level of control that both supports and gives the project manager his own degree of authority, the project steering group can intervene through:

e project initiation and closure;

e holding meetings at the different stages of the project; e holding unscheduled meetings; e holding scheduled meetings; e project forecast reports.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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