In the area of project management, performance measurement techniques are used to assess the magnitude of deviations from the original project plan. As such, they are an important aspect of project schedule control, allowing the project team to determine whether a schedule variance requires corrective action.
There are four basic performance measurement techniques: performance reviews, trend analysis, earned value analysis, and information distribution.
- Performance reviews
Performance reviews are meetings held to assess project status. Most project managers schedule weekly, bi-weekly, or monthly reviews to keep the management team abreast of the project's status. By conducting frequent performance reviews, variances are more readily detected and can be addressed sooner which prevents further deviation from the plan.
- Trend analysis
Trend analysis involves examining project results over several reporting periods to determine if performance is improving or deteriorating. By plotting report results on a graph, management can determine whether schedule performance is progressing or regressing.
Companies use trend analysis for long-term projects, to compare status over several periods. Either a three-month, four-month, or six-month moving average is used to predict project trends. Trending provides management with advance warning of adverse trends, and allows for corrective action to be taken to rectify the situation. Companies also use trend analysis data to plan future projects that are similar in nature.
- Earned value analysis
Earned value analysis is the most commonly used method of performance measurement. It integrates scope, cost, and schedule measures to assist the management team in assessing project performance.
Earned value analysis compares the amount of planned work to what was actually accomplished. This involves calculating three key values for each activity that is performed.
- Information distribution tools and techniques
Information distribution tools and techniques make necessary information available to project stakeholders in a timely manner.
Information regarding a project's performance is essential to bring about project success. Too little or incorrect information could lead to misunderstandings and changes that are not really necessary.
Clear communication and shared information retrieval and distribution methods are the basic tools and techniques for ensuring that important information is distributed.
Communication skills are used to exchange information. Whether communication is written, oral, internal, external, formal, informal, vertical, or horizontal—the sender must ensure that the information is clear and complete while the receiver confirms that it is properly understood.
Information retrieval systems allow information to be shared by project team members and stakeholders. Such systems may include project management software, electronic databases, and manual filing systems.
Information distribution methods ensure that important project information is distributed to the stakeholders. Project meetings, voice mail, electronic mail, fax, videoconferencing, project intranet, hard-copy documentation, and shared databases are all effective distribution methods.
- The planned value in a project is the approved estimate of cost planned to be spent on an activity during a given time period. - The actual cost in a project is the total costs involved in completing the work for an activity in a given time period. - The earned value for a project is the value of the work actually completed during a period of time. These calculations allow project managers to see whether cost and schedule performance is proceeding as planned.