Methods for Evaluating Project Performance

Author Thomas S. Monson said: "When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates."

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.

1. 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.
   
   
2. 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.
   
   
3. 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.
   

- 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.

4. 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.
   

Performance reviews, trend analysis, earned value analysis, and information distribution tools and techniques are important in assessing the magnitude of any project variations. Using these techniques to determine whether a project is performing as planned will help you maintain a concise and controlled project schedule.

Evaluating an IT Project

To ensure your IT project is on track, and to prevent serious performance issues, you should evaluate the project at the end of each of the six project stages. Usually, the end of a stage is identified by the completion of a project deliverable. An evaluation process can help your team determine whether changes need to be made to the process or plan before moving to the next stage.

After working diligently to reach the end of each stage of the project, it is important for all team members to meet to discuss the negative and positive aspects encountered up to this point. The focus of this meeting is to evaluate the activities and variables for each particular stage in the current project's development.

For example, during the evaluation, the team may determine that the project scope has changed, the team has not been as productive as planned, or necessary tasks have been left out. These are all variables that can lead to missed deadlines.

During the evaluation of an IT project's development, it is essential to consider two main business activities. The two business activities that should be the focus of the project evaluation are described below.

1. Estimate schedule performance.
Processes that should work harmoniously together sometimes do not. Your team may find that these unforeseen circumstances can dramatically slow down development. You then have to stop and reevaluate the process. This can sometimes be very time consuming.

Your team can estimate schedule performance by comparing the schedule estimates with the actual work completed. A formula for measuring schedule efficiency is the schedule performance index (SPI).

SPI is the schedule efficiency ratio of earned value (EV) accomplished against planned value (PV). The formula is SPI = EV ÷ PV x 100. In this formula, EV answers the question, "How much work has actually been completed at this point?" PV answers the question, "How much work was scheduled to be completed by now?" To round the SPI, look at the digit to the right of the place to which you are rounding. If that digit is less than 5, round down (6.45 = 6). If that digit is equal to or more than 5, round up (6.51 = 7).

When analyzing SPI for a project, you must consider the results from the calculation. A result equal to 100 indicates that the project is performing as estimated. A result that is greater than 100 indicates that the project is performing ahead of estimates. A result of less than 100 indicates the project is behind estimates.

Managers prefer to see the schedule hit within an acceptable range, where 85 or 90 out of 100 is considered acceptable. When the result varies significantly below 100, risk analysis will be necessary.

2. Evaluate team member performance.
Another business activity to evaluate is team member performance. The wrap-up at each stage of the project is an ideal time to evaluate whether the team has met the goals of the project plan.
It's important to evaluate the performance of team members to ensure they meet completion dates for each task, as documented in the project plan. Valuable time can be lost when even one member of the team does not meet individual goals. With each task set up to flow smoothly into another, a deviance from the established plan can cause major problems.

How can you determine whether team members have met project goals? You can establish a performance expectation for each task prior to beginning the project. The completion time for each task is normally estimated using an average work week of an eight-hour day and 40 hours. The equation you can use to determine completion time for a task is: number of estimated hours for completion ÷ 8-hour day = time allowance in days.

For example, if the task is estimated at 20 hours, then it should be completed in 2.5 days (20 ÷ 8 = 2.5) to be on schedule. If a task is estimated to take 2.5 days and it actually takes three days to complete, then the task has missed the deadline. If the task is completed in less than 2.5 days, it is ahead of schedule.

Do not underestimate the importance of evaluating your project's development. An evaluation at the end of each stage of your project can prevent serious performance issues as the project progresses.

Project Objectives

Project objectives define target status at the end of the project, reaching of which is considered necessary for the achievement of planned benefits. They have to be formulated as S.M.A.R.T.

• Specific, with
• Measurable (or at least evaluable) achievement,
• Achievable (recently Acceptable is used regularly as well),
• Realistic and
• Time terminated(bounded).

The evaluation (measurement) occurs at the project closure. However a continuous guardance on the project progress should be kept by monitoring and evaluating.