Establishing Your Progress Reporting System

After project work is under way, you want to make sure that it proceeds according to plan. To do this, you need to establish a reporting system that keeps you informed of the many variables that describe how the project is proceeding as compared to the plan.

A reporting system has the following characteristics:

• Provides timely, complete, and accurate status information
• Doesn't add so much overhead time as to be counterproductive
• Is readily acceptable to the project team and senior management
• Warns of pending problems in time to take action
• Is easily understood by those who have a need to know

To establish this reporting system, you can choose from among the hundreds of reports that are standard fare in project management software packages. Once you decide what you want to track, these software tools offer several suggestions and standard reports to meet your needs. Most project management software tools enable you to customize their standard reports to meet even the most specific needs.

Types of Project Status Reports

There are five types of project status reports: current period, cumulative, exception, stoplight, and variance. Each of these report types is described here.

Current Period Reports

These reports cover only the most recently completed period. They report progress on activities that were open or scheduled for work during the period. Reports might highlight activities completed, as well as the variance between scheduled and actual completion dates. If any activities did not progress according to plan, the report should include the reasons for the variance and the appropriate corrective measures that will be implemented to fix the schedule slippage.

Cumulative Reports

These reports contain the history of the project from the beginning to the end of the current report period. They are more informative than the current period reports because they show trends in project progress. For example, a schedule variance might be tracked over several successive periods to show improvement. Reports can be at the activity or project level.

Exception Reports

Exception reports indicate variances from the plan. These reports are typically designed for senior management to read and interpret quickly. Reports that are produced for senior management merit special consideration. Senior managers do not have a lot of time to read reports that tell them everything is on schedule and there are no problems serious enough to warrant their attention. In such cases, a one-page, high-level summary report that says everything is okay is usually sufficient. It might also be appropriate to include a more detailed report as an attachment for those who might want more information. The same might be true of exception reports. That is, the one-page exception report tells senior managers about variances from the plan that will be of interest to them, and an attachment provides more details for the interested reader.

Stoplight Reports

Stoplight reports are a variation that can be used on any of the previous report types. I believe in parsimony in all reporting. Here is a technique you might want to try: When the project is on schedule and everything seems to be proceeding as planned, put a green sticker on the top-right corner of the first page of the project status report. This sticker will signal to senior managers that everything is progressing according to plan, and they need not even read the attached report.

When the project has encountered a problem — schedule slippage, for example — you might put a yellow sticker on the top-right corner of the first page of the project status report. That is a signal to upper management that the project is not moving along as scheduled but that you have a get-well plan in place. A summary of the problem and the get-well plan may appear on the first page, but they can also refer to the details in the attached report. Those details describe the problem, the corrective steps that have been put in place, and some estimate of when the situation will be rectified.

Red stickers placed on the top-right corner of the first page signal that a project is out of control. Red reports should be avoided at all costs because they indicate that the project has encountered a problem for which you don't have a get-well plan or even a recommendation for upper management. Senior managers will obviously read these reports because they signal a major problem with the project. On a more positive note, the red condition may be beyond your control. Here's an example of when a red condition would be warranted: there is a major power grid failure on the East Coast and a number of companies have lost their computing systems. Your hot site is overburdened with companies looking for computing power. Your company is one of them, and the loss of computing power has put your project seriously behind in final system testing. There is little you can do to avoid such acts of nature.

Variance Reports

Variance reports do exactly what their name suggests — they report differences between what was planned and what actually happened. The report has the following three columns:

• The planned number
• The actual number
• The difference, or variance, between the two

A variance report can be in one of the following two formats:

• The first is a numeric format containing rows that show the actual, planned, and variance values for those variables requiring such calculations. Typical variables that are tracked in a variance report are schedule and cost. For example, the rows might correspond to the activities open for work during the report period, and the columns might be the planned cost to date, the actual cost to date, and the difference between the two. The impact of departures from the plan is signified by larger values of this difference (the variance).
• The second format is a graphical representation of the numeric data. It might be formatted so that plan data is shown for each report period of the project, denoted with a curve of one color, and the actual data is shown for each report period of the project, denoted by a curve of a different color. The variance need not be graphed at all because it is merely the difference between the two curves at some point in time. One advantage of the graphical version of the variance report is that it shows any variance trend over the report periods of the project, whereas the numeric report generally shows data only for the current report period.

Typical variance reports are snapshots in time (the current period) of the status of an entity being tracked. Most variance reports do not include data points that report how the project reached that status. Project variance reports can be used to report project as well as activity variances. For the sake of the managers who will have to read these reports, I recommend that one report format be used regardless of the variable being tracked. Your upper management will quickly become comfortable with a reporting format that is consistent across all projects or activities within a project. It will make life a bit easier for you, as the project manager, too.

Here are five reasons why you should measure duration and cost variances:

• Catch deviations from the curve early — The cumulative actual cost or actual duration can be plotted against the planned cumulative cost or cumulative duration. As these two curves begin to display a variance from one another, the project manager should put corrective measures in place to bring the two curves together. This reestablishes the agreement between planned and actual performance, as described in detail in the “Earned Value Analysis” section later in this chapter.
• Dampen oscillation — Planned versus actual performance should display a similar pattern over time. Wild fluctuations between the two are symptomatic of a project that is not under control. Such a project will get behind schedule or overspend in one report period, be corrected in the next period, and go out of control in the next period. Variance reports can provide an early warning that such conditions are likely, giving the project manager an opportunity to correct the anomaly before it gets serious. Smaller oscillations are easier to correct than larger oscillations.
• Allow early corrective action — As just suggested, the project manager would prefer to be alerted to a schedule or cost problem early in the development of the problem, rather than later. Early problem detection may offer more opportunities for corrective action than later detection.
• Determine weekly schedule variance — I have found that progress on activities open for work should be reported on a weekly basis. This is a good compromise on report frequency and gives the project manager the best opportunity for corrective action plans before a situation escalates to a point where it will be difficult to recover any schedule slippages.
• Determine weekly effort (person hours/day) variance — The difference between the planned effort and actual effort has a direct impact on both planned cumulative cost and the schedule. If the effort is less than planned, it may suggest potential schedule slippage if the person is not able to increase his or her effort on the activity in the following week. Alternatively, if the weekly effort exceeded the plan and the progress was not proportionately the same, a cost overrun situation may be developing.

Early detection of out-of-control situations is important. The longer you wait to discover a problem, the longer it will take for your solution to bring the project back to a stable condition.

How and What Information to Update

As input to each of these report types, activity managers and the project manager must report the progress made on all activities that were open for work (in other words, those that were to have work completed on them during the report period) during the period of time covered by the status report. Recall that your planning estimates of activity duration and cost were based on little or no information. Now that you have completed some work on the activity, you should be able to provide a better estimate of duration and cost. This is reflected in a re-estimate of the work remaining to complete the activity. That update information should also be provided.

The following list describes what should actually be reported:

Frequency of Gathering and Reporting Project Progress

A logical frequency for reporting project progress is once a week, usually on Friday afternoon. For some projects, such as refurbishing a large jet airliner, progress is recorded after each shift, three times a day. I've seen others that were of such a low priority or long duration that they were updated once a month. For most projects, start gathering the information around noon on Friday. Let people extrapolate to the end of the workday.

Variances

Variances are deviations from plan. Think of a variance as the difference between what was planned and what actually occurred. There are two types of variances: positive variances and negative variances.

Positive Variances

Positive variances are deviations from the plan indicating that an ahead-of-schedule situation has occurred or that an actual cost was less than a planned cost. This type of variance is good news to the project manager, who would rather hear that the project is ahead of schedule or under budget.

Positive variances bring their own set of problems, however, which can be as serious as negative variances. Positive variances can result in rescheduling to bring the project to completion early, under budget, or both. Resources can be reallocated from ahead-of-schedule projects to behind-schedule projects. Positive variances also can result from schedule slippage! Consider budget. Being under budget means that not all dollars were expended, which may be the direct result of not having completed work that was scheduled for completion during the report period.

Conversely, if the ahead-of-schedule situation is the result of the project team finding a better way or a shortcut to complete the work, the project manager will be pleased. This situation may result in a short-lived benefit, however. Getting ahead of schedule is great, but staying ahead of schedule presents another kind of problem. To stay ahead of schedule, the project manager must negotiate changes to the resource schedule. Given the aggressive project portfolios in place in most companies, it is unlikely that resource schedule changes can be made. In the final analysis, being ahead of schedule may be a myth.

Negative Variances

Negative variances are deviations from the plan indicating that a behind-schedule situation has occurred or that an actual cost was greater than a planned cost. Being behind schedule or over budget is not what the project manager or reporting manager wants to hear. Negative variances are not necessarily bad news, however. For example, you might have overspent because you accomplished more work during the report period than was planned. In overspending during this period, you could have accomplished the work at less cost than was originally planned. You can't tell by looking at the variance report. You will need the details available in the EVA reports

In most cases, negative time variances affect project completion only when they are associated with critical-path activities or when the schedule slippage on non–critical-path activities exceeds the activity's slack. Slack is defined in Chapter 5. Minor variances use up the slack time for that activity; more serious ones will cause a change in the critical path.

Negative cost variances can result from uncontrollable factors such as cost increases from suppliers or unexpected equipment malfunctions. Some negative variances can result from inefficiencies or error. I discuss a problem escalation strategy to resolve such situations later in this chapter.