Establishing The Performance Measurement Baseline (PMB)

Establishing the
Performance Measurement
Baseline (PMB)
The Performance Measurement Baseline is a time

phased schedule of all the work to be performed, the
budgeted cost for this work, and the organizational
elements that produce the deliverables from this work.
Glen B. Alleman
Vice President, Strategy and Performance Management
Lewis & Fowler
8310 South Valley Highway
Suite 300
Englewood, Colorado 80112
www.lewisandfowler.com
galleman@lewisandfowler.com
The Processes Surrounding the

Performance Measurement Baseline
Identify Needed
Business
Capabilities
Business Value
Stream
Business Value
Stream
Establish a
Requirements
Baseline
Capabilities
Based Plan
Technical
Requirements
Establish a
Performance
Measurement
Baseline
Technical
Performance
Measures
Earned Value
Performance
PMI College of Scheduling

PMI is a registered trade and service mark of the Project Management Institute, Inc.
Technical
Performance
Measures
PMB
Execute the
Performance
Measurement
Baseline
2
There are 3 PMBs on Every Project

Technical, Schedule, and Cost Baselines are
needed for success
Building these requires an integrated effort
Perform
Functional
Analysis
Determine
Scope and
Approach
Develop
Technical
Logic
Develop
Technical
Baseline
Estimate
Time
Durations
Sequence
Activities
Approve
PMB
Develop
WBS
Establish Technical Baseline

Define
Activities
Finalize
Apportione
d
Milestones
Identify
Apportione
d
Milestones
Establish Schedule Baseline
Establish Cost Baseline
Finalize
Schedule
Determine
Resource
Requirement
s
Prepare
Cost
Estimate
Resource
Load
Schedule

Determine
Funding
Constraints
The Six Steps to Build the Performance

Measurement Baseline
Decompos
e Scope
Assign
Responsibil
ity
Arrange
Work
Packages
Develop
BCWS
Assign
Performance
Measures
Set
Performance
Baseline
Decompose the Project Scope into a product based

Work Breakdown Structure and then into Work
Packages which describe the production of all
deliverables
Assign Responsibility for Work Packages to named
owners who are accountable for the management of
resource allocation and cost baseline, and technical
performance
Arrange the Work Packages in a well formed network
with explicitly defined deliverables, milestones and
internal and external dependencies
Develop TimePhased Budget (BCWS) from labor
spreads in each Work Package and balance these
BCWS spreads across the Project.
Assign Objective Performance Measures for each
Work Package and summarize these for the Project
as a whole. Use the 0%/100% measurement of
complete whenever possible.
Establish a Performance Measurement Baseline to be
used forecasting Work Package and Project ongoing
and completion metrics.
These Definitions Will Help Clarify What

Were Talking About
Deliverables Based Planning focused on
tangible outcomes
Work Package a unique collection of
deliverables with resources and deliverables
Performance Measurement Baseline forecasts
of future performance come from past
performance
Performance Based Earned Value a means of
measuring progress using cost, schedule and
technical performance

Critical Success Factors For The

Performance Measurement Baseline
Deliverables represent the required business
capabilities and its value as defined by the business
and shared by the development team.
When all deliverables and their Work Packages are
completed, they are not revisited or reopened
They are 100% done
The progression of Work Packages defines the

increasing maturity of the project
The business value of the deliverables to the customer
increases as Work Packages are completed
Completion of Work Packages is represented by the

Physical Percent Completion of the project
Either 0%/100% or Apportioned Milestones are used to
state the completion of each Work Package
Success Of The PMB Depends On

Identifying Measureable Results
1
What gets measured gets done
If2you dont measure results, you cant tell success from failure
3
If you cant see success, you cant reward it
If
4 you cant reward success, youre probably rewarding failure
5
If you cant see success, you cant learn from it
If you cant see failure, you cant correct it
7 If you can demonstrate results, you can remain credible

Decompose The Scope Into A Proper Tree

Business Capability
Process Invoices for
Top Tier Suppliers
1st Level
Electronic Invoice
Submittal
1st Level
Routing to Payables
Department
2nd Level
Material receipt
verification
2nd Level
Payables Account
Verification
2nd Level
On hand balance
Updates
2nd Level
Payment
Scheduling

Use This Tree To Decompose The

Project Scope Into Work Packages
The lowest level of the Work Breakdown
Structure defines the Work Packages which
contain named deliverables
The parents of these Work Packages collect the
business capabilities described in the baseline
requirements
The narrative of each Work Package is the WBS
Dictionary

What Does A Good Work Package

NOT Look Like?
What NOT to do
Instead Think About
Its NOT a laundry list of work Its a decomposition of the

to be done
products, services, and data
generated by those
Its NOT a functional
decomposition
Thats the role of the

Organizational Breakdown
Structure (OBS)
Its NOT a direct map of the

requirements
Requirements produce
products and services, but
are not one for one with the
WBS
Its NOT a reflection of the

This is done later in the
underlying product or service program strategy
partitioning
Its NOT the first structure
you might think of
Build the WBS several times,

10
assess its usefulness in
describing the products and

What Is NOT In A Work Package?

Elements that are not products
Project phases
Rework, retesting, and refurbishing are not
separate elements in the WBS
Nonrecurring and recurring are not classes of
work
Cost saving efforts like TQM and Lean are part of
the Level of Effort Workstream
Cost for meetings, travel, computer support are
part of the level of effort Workstream
11
Some Attributes Of A Good Work Package

All terminal nodes describe some end item in the
project a product or a service
Each physical deliverable is testable in some
manner to demonstrate it is working
The WBS is an increasing fidelity description of
the deliverables produced by the project
The WBS articulates what the customer wants in
terms of deliverables the products or services
produced by the project

12
A Deliverables Focused Work

Breakdown Structure (WBS)
From the requirements Tree construct a list of
Capabilities needed to satisfy the customer
needs
From this list of Capabilities construct a list of
Deliverables that will fulfill the customer needs
Arrange these deliverables into major systems
This has likely already been doneso lets have a
hands on exercise to draw this out

13
The Work Breakdown Structure

Connections With The Work Packages
Product or services oriented
Includes all work in the project
Each element logically aggregates those
elements below it
Reflects the manner in which the work will be
done
The WBS becomes the framework for Cost,
Schedule, and Technical Performance Measurement.
The WBS is the organizational structure for the Work
Packages

14
Connect The WBS To Work Packages And

Then Define The Tasks To Produce The
Deliverables
WBS
A decomposition of the work
needed to fulfill the business
requirements
Business Need
Process Invoices for Top Tier
Suppliers
1st Level
Electronic Invoice Submittal
1st Level
Routing to Payables Department
2nd Level
Material receipt verification
2nd Level
Payables Account Verification
2nd Level
On hand balance Updates
2nd Level
Payment Scheduling
Terminal node of the

WBS defined by a Work
Package
Tasks within the Work
Package produce the
Deliverables
Management of the
Work Package Tasks
is the responsibility of
the WP Manager.
These are not held in
the master plan
Work
Package
Terminal Node in the WBS

defines the products or
services of the project
Deliverables defined in WP
Tasks and Schedule

1
Deliverables
4
100% Completion of deliverables is
the measure of performance for the
Work Package

15
Steps In Building The Work Packages

Step 1 define what is going to be delivered to
produce business value
One or more Deliverables produced within a Work
Package
Step 2 define the effort and duration along with

the confidence levels
Only effort and total duration
Level of confidence for effort and duration

16
Decompose Business Capabilities Into

Deliverables, Then Work Packages, Then
Measurable Outcomes
Increasing Detail of the Planning Outcomes
Deliverable
Number 1.1
Capability
Number 1
Business
Capabilities
Capability
Number 2
Deliverable
Number 1.2
Work Package
Number 1
50% Milestone
50% Milestone
Deliverable
Number 1.3
Work Package
Number 2
100% Milestone
Deliverable
Number 1.4
Work Package
Number 3
100% Milestone
Deliverable
Number 2.1
Work Package
Number 4
100% Milestone
Deliverable
Number 2.1
Deliverable
Number 2.1
Work Package
Number 5
25% Milestone
75% Milestone
Increasing Value to the Customer

17
Step 1: Define The Deliverables And Their

Apportioned Value
Description
Deliverable(s)
Apportioned
Milestones
Transaction
processing
integration test
complete
Test plan compete and

approved
Author 50%
Approval 50%
Define integration
testing environment
Integration Test Plan

complete
Test platform equipment
defined
Test environment defined
Test Plan 25%

Equipment List
50%
Environment
25%
Business processes
defined and
approved
Business process flow

diagram
100%
User acceptance
testing defined
User Acceptance Plan

Developed
100%
User Acceptance
Testing Conducted
Test environment
operational
User Acceptance Testing
performed with 90%
success
Environment
20%
UAT Conducted
18
70%
Errors documented

Step 2: Define The Effort, Duration, And

Confidence Intervals

19
Baseline Contents of a Work Package

Description
Assumptions
Earned Value Method
Basis of Estimate
Predecessors and
successors
Strategy for delivery
Completion criteria
Contents of the
deliverables
Responsibilities
Estimated duration
Estimated effort
Confidence intervals
Resources
In theory there is no
difference between
theory and practice. In
practice there is.

20
Use Word Or Excel, It Doesnt Matter

Just Capture The Contents In One Place
No matter what form is used, the function of the Work Package must
communicate to the participants the baseline information described in
the Table of Contents of the previous page.
21
Naming Work Packages May Seem

Simple But Whats In A Name?
The name should convey not only the work activities but
also the delivered result of these activities
The project plan and the list of Work Packages is the
concise statement of the work for the project all held in a
single place the Project Plan
Maturity
Action
Product
Product State
Adjective
Verb
Noun
Verb
Demonstrates
Maturity
A step in the
process
End Item
Final Status
Preliminary
Design
Processes
Complete
Preliminary design of transaction processes complete

22
Work Package Description

A clear and concise description of what the Work
Package produces in terms of deliverables
This is your elevator pitch when someone asks
what does the Work Package youre working on
do when its all done?
Deliverables are meaning to the customer
speak in deliverables terms
If you cant tell the story
between the lobby and the
9th floor, then you haven't
got a clear picture of what
done looks like.
23
Assumptions
Make it clear (and concise) what you expect to be
in place before the Work Package starts
State these in terms of deliverables themselves
What they are
Who youre getting them from
A little bit of why you need them
Have a mitigation plan when the assumption isnt

true
Assumptions
are repulsive,
especially to
gravity.
24
Earned Value Method

Think about how you would measure 100% done.
Done, done
Not, almost done
Not, Ill be done soon
If the Work Package is self contained and 100%

done occurs at the end of the WP then use that
If the Work Package has more than one
deliverable or the deliverable has incremental
functionality then Apportioned Milestones can be
used
Earned Value is how physical progress is measured
in the Performance Measurement Baseline.
Only delivered value to the customer is important.
25
Responsibilities
Each Work Package has one and only one person
Accountable for the successful delivery of the
Work Package
Put that persons name on the Work Package
OBS
WBS
The Work
Packages are
where the work
and the people
come together

26
Assign The Responsibilities And Make A

Single Person Accountable

27
Arrange The Work Packages Into A Well

Formed Network
2nd Level
Material receipt
verification
2nd Level
Payables Account
Verification
2nd Level
Payment
Scheduling
2nd Level
On hand
balance Updates

28
A Well Formed Network Has Specific

Attributes
Arrange Work Packages in a Finish to Start
network
No Leads or Lags
No Constraints only As Soon As Possible
(ASAP)
This network of Work Packages is the flow on
increasing maturity of the deliverables from the
project

29
Arranging the Work Packages Is

Iterative And Incremental
In the example above, the Work Package Managers collectively come to an agreement
on how the sequence of how the work will be performed.
The result is a collective ownership of the outcome. This ownership comes from the
collective development of the project plan.
This process is a Product Development Kaizen (PDK)
30
Develop A TimePhased Budget

2nd Level System
Payables Account
Verification
2nd Level System
Payment
Scheduling
BCWS
2nd Level System

Material receipt
verification
2nd Level System

On hand balance
Updates
Duration of the Work Package
BCWS
BCWS
BCWS

31
Balance All The Work Across The Project

Before Setting The Baseline
Activity
ID
Activity
Description
Orig
Dur
R em
Dur
Actual/
Expected
Start
Actual/
Expected
Finish
Budgeted
Cost
MS
Type
EVM
%
Cmp
1999
2000
2001
AUG
SEP
OCNOV
T DEC
JANFEB
MAR
APR
MAY
JUN
JU LAU S
GEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JULAUG
SEP
OCT
1.2 VACUUM SYSTEM

1.2.3
Standard Drifts & Transitions
Straight Section Transitions (14) & Gap Rings

1.2.3.1 ED&I
S20121
Trans ., Conc eptual Des ign
60
0 14OCT99A
S20122
Trans ., Finalize D esign
80
28 19JAN 00A
S20123
Trans , Final Design Rev iew
S20124
Trans ., Drawings
S20125
Trans ., Drawings Complete
S20126
Trans , Sustaining Engineering
S20126A
Trans , Sustaining Engineering Complete
0
100
40,240.00
21JUL00
21JUL00
140 24JUL00
43,113.60
08JUN00
08JUN00
58 02FEB00A
0
140
18JAN00A
16FEB01
16FEB01
0.00EVM
50
37,366.40
0.00EVM
18,107.04
0.00EVM
1.2.3.2 MS&L
S20128
Trans , Order Parts & Material
S20129
Trans , Receiv e Parts & Material
40
40 24JUL00
S20131
Trans ., Machine Parts 1st Lot
S20132
Trans , Receiv e Balance
S20133
Trans , Assemble Braze
70
70 19SEP00
04JAN01
65,920.00
S20134
Trans , Vacuum Process
40
40 30NOV00
02FEB01
37,080.00
S20135
Trans , RFI
0
100
0
100 19SEP00
0
18SEP00
0.00
18SEP00
29,000.00
EVM
16FEB01
18SEP00
02FEB01
103,000.00
0.00EVM
0.00EVM
x 1000
50
40
30
20
10
Resource/Cost Profile Legend

Total of All Resources
Detail scale (left):
X 1000
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JU LAUG
SEP
OCT
NOV
D EC
JAN
FEB
MAR
APR
MAY
JUN
JULAUG
SEP
OCT
1999
2000
2001
Total early cost per Month (Current E stimate)
Start Date
Finish Date
Data Date
Run Date
01JUN99
05MAR02
01MAY00
31MAY00 13:29
Early Bar
Progress Bar
SPR3 - VACM
Sheet 1 of 1
1.2 Vacuum System
Critical Activity
Primavera Systems, Inc.

32
Identify Objective Measures Of

Performance For Each Work Package
Define the Planned Value for each Work Package
completion or apportioned milestone within a
Work Package
Only Physical Percent Complete should be used
to measure progress there can be no personal
opinions of progress
BCWP Physical Percent Complete BCWSCumm

33
Set The Performance Baseline

Baselining the Performance Measurement
Baseline is the beginning of Executing the
project plan
Without the baseline and the change control over
this baseline, the performance predictions will
be difficult
There are two phases of any complex project
Too early to tell and too late to stop

34
Build The Apportioned Milestones And

Assign Physical Percent Complete
Identify each incremental deliverable in the
Work Package
Assign an apportioned value to that deliverable
Document the evidentiary materials for the
incremental deliverable and its assigned
percentage value
Identify the delivery date for the apportioned
milestone in the schedule
1 mile = 1,000 (mille) paces
= 1,640 yards .
Introduced to Britain by the Romans
The passage of a milestone meant progress to the
destination.
But it is critical to pre-assign value to each milestone
PMI College of as
Scheduling
and record
this value
the milestone is passed
35
Assemble The Work Packages Into A

Credible Schedule
Start with Work Packages and their total BCWS
spreads
Total WP duration in the Duration field
Total WP work effort in the Work field
Start dates aligned with the project start date defined
in the Project menu
The result is a Ganttstyle picture of the flow of WP
value
Henry Laurence Gantt, A.B., M.E
18611919

36
Project Maturity Flow Is The Incremental

Delivery Of Business Capabilities
Pilot
Data
Demo conversion process, member reconciliation
Shared group matrix reports and interfaces
Enrollment
Shared member crosswalk and members to ERP
Integrators
Integrators in ERP converted to inventory
Quality Monitor
Status and trigger conversions
Billing
Data Store
Lookup
Data Marts
Internal
Portals and others

Data Warehouse
Data in Marts for ERP
Data Marts
Material Master
Converted from legacy
Router
External
Interfaces
External Vendors
converted to ERP
Finance Loss
TBD
Resale's
Vendors from legacy

Material converted end
toend
Emulations

37
Analyzing And Assessing The Network Of

Work Packages Requires Understanding
Critical path
Accuracy
Integration
Realism
Performance
Variances
Forecasting
WhatIf Analysis
Risk
Resources
A credible schedule
cannot be just a list of
activities. It must be
an accurate model of
the project strategy
and execution that
can be analyzed,
assessed, and used to
answer risk based
questions.

38
A Very Simple Risk Management Process Is

Needed To Establish Credibility
Build the process for managing risk
Allocate responsibilities at the project level
Determine What is to be RiskManaged
Define the DecisionMaking Process
Iterate the analysis to select mitigation
Planning
Identification
Analysis
Handling
Communicatio
n
and
Tracking
Do a comparative analysis of the risks

Assign risk attributes
Assign risk ownership
Evaluate the impact of each risk
A Risk
All Risks
Prepare risk decisionpackages
Keep everyone aware of decisions made
Track progress
Evaluate effectiveness of the risk management processes
Risk Analysis Techniques, Schedule, Cost and Other Aspects, INCOSE Heartland Chapter
October 24, 2001, Futon Corporation

39
Integrating Cost, Schedule, And

Technical Performance
Cost, Schedule, Technical Model
WBS
Task 100
Days, Facilities,
Parts and People
Probability
Density
Function
Task 101
Research the Project

Find Analogies
Ask Endless Questions
Analyze the Results
What can go wrong?

How likely is it to go wrong?
What is the cause?
What is the consequence?
Task 102
Monte Carlo Simulation

Tool is Mandatory
Task 103
Task 104
Task 105
Task 106
This is a Key concept. This is the part of the process that
integrates the cost and schedule risk impacts to provide the
basis of a credible schedule.
Cumulative Distribution Function

1.0
.8
.6
.4
.2
0 Days, Facilities, Parts, People

40
There Is Technical And Programmatic

Risk Both Must Be Addressed
There are two types of uncertainty
on any sufficiently complex project:
Technical uncertainty about the
functional and performance
aspects of the project's technology
that impacts the produceability of
the product or creates delays in the
schedule
Programmatic uncertainty about
the duration and cost of the
activities that deliver the functional
and performance elements of the
project, independent of the
technical risk
So much for our strategy of winning

through technical dominance

41
Wrap Up
A good plan, violently executed

now is better than a perfect plan
executed next week
General George S. Patton

42
In The End Its All About The Schedule

A slipping schedule is simply unacceptable
Attack the schedule as soon as possible and
never stop attacking
Update schedules monthly or more frequently,
look at it everyday
Earned Value really works if and this is a big if
you are ruthless about following the EV process.
This cant be said strong enough use EV in the
way it was designed to be used.
Keep all the data clean and use it to make
management decisions
43
Troubled Projects Always Have A

Common Set Of Attributes
Inattention to budgetary responsibilities

Work authorization not always followed
Budget and data reconciliation issues
Lack of an integrated management system
Baseline fluctuations &frequent replanning
A ship on the beach is a
Current period and retroactive changes
lighthouse to the sea Dutch
Proverb
Improper use of management reserve
Earned Value techniques not reflecting actual accomplishments
Untimely and unrealistic Latest Revised Estimates (LRE)
Progress not monitored in a regular and consistent manner
Lack of vertical and horizontal traceability (critical path)
Not capturing and using cost and schedule data for corrective action
Lack of predictive variance analysis
Lack of internal surveillance and controls
Managerial actions not demonstrated using Earned Value
44

Establishing The Performance Measurement Baseline (PMB)

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Establishing the

The Performance Measurement Baseline is a time

The Processes Surrounding the

PMI College of Scheduling

There are 3 PMBs on Every Project

Establish Technical Baseline

Establish Schedule Baseline

Establish Cost Baseline

PMI College of Scheduling

The Six Steps to Build the Performance

Decompose the Project Scope into a product based

These Definitions Will Help Clarify What

PMI College of Scheduling

Critical Success Factors For The

The progression of Work Packages defines the

Completion of Work Packages is represented by the

Success Of The PMB Depends On

What gets measured gets done

If you cant see success, you cant reward it

If you cant see success, you cant learn from it

If you cant see failure, you cant correct it

7 If you can demonstrate results, you can remain credible

PMI College of Scheduling

Decompose The Scope Into A Proper Tree

PMI College of Scheduling

Use This Tree To Decompose The

PMI College of Scheduling

What Does A Good Work Package

Instead Think About

Its NOT a laundry list of work Its a decomposition of the

Thats the role of the

Its NOT a direct map of the

Its NOT a reflection of the

Build the WBS several times,

PMI College of Scheduling

What Is NOT In A Work Package?

Some Attributes Of A Good Work Package

PMI College of Scheduling

A Deliverables Focused Work

PMI College of Scheduling

The Work Breakdown Structure

PMI College of Scheduling

Connect The WBS To Work Packages And

Terminal node of the

Terminal Node in the WBS

Tasks and Schedule

PMI College of Scheduling

Steps In Building The Work Packages

Step 2 define the effort and duration along with

PMI College of Scheduling

Decompose Business Capabilities Into

Increasing Value to the Customer

PMI College of Scheduling

Step 1: Define The Deliverables And Their

Test plan compete and

Integration Test Plan

Test Plan 25%

Business process flow

User Acceptance Plan

PMI College of Scheduling

Step 2: Define The Effort, Duration, And

PMI College of Scheduling

Baseline Contents of a Work Package