Thursday, June 5, 2008

Performance Reports and Project Costs

Have you ever had that nagging feeling that something's not quite right with a project? Accurate and timely performance reports can help you control project costs, so you can calm that uneasiness.

The time you spend reviewing performance reports and analyzing the data they contain is never wasted. Written performance reports, which are inputs to project cost control, can actually save you the time it would otherwise take to meet face-to-face with team members and other stakeholders. Performance reports are an important input for cost control because they:
  • provide a summary of how a project is progressing
  • compare actual versus planned results
  • provide feedback to management, planners, and team members
  • contain the early warning signs of future problems.
You can use performance reports to analyze variances from the cost baseline, plot the trends that will help you to forecast your total costs, and watch for events that could increase expenses in later stages of the project.

Good project managers take corrective action early on to ensure their project costs hit the mark. However, you need sufficient and accurate information in order to forecast costs properly. There are four main types of charts that summarize and report project information.
  • Histograms. A histogram is a simple graph that quickly shows the over- or underrun of project costs. It indicates both the budgeted and actual cost of performing each project task.
  • Tables. Tables can display data clearly and concisely. Tables can also be used to show costs, activities, project milestones, actual versus planned results, and any other information about project status. Tables can provide summaries or they can contain specific details about a project.
  • Gantt charts. A Gantt chart is the combination of a table and a bar chart. Gantts summarize cost- and schedule-related information. More elaborate charts can include the duration of each activity in hours or days, the estimated start and finish dates of each activity, critical time frames, and milestones.
  • Cumulative cost curves. A cumulative cost curve is a commonly used report that shows project costs plotted against time. The line usually takes the form of an S-curve, since costs are typically low early in the project, increase during the peak production period, and then trail off in the closing phases. You can use a graph to plot the cost baseline and the actual cumulative costs together for comparison. The difference between the two curves represents a cost variance.
The performance reports discussed above are just a sample of those available to project management teams. There is not a set list of performance reports because no two projects have the same reporting requirements. Choose the performance reports that work best for you, and use them to better control costs for your project.

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