Establishing the performance measurement baseline (v4)

ESTABLISHING THE PERFORMANCE
MEASUREMENT BASELINE (PMB)
AACE WORKSHOP
DENVER, COLORADO
APRIL 16TH, 2011
Copyright 2011©,
Niwot Ridge, L.L.C.
All Rights Reserved
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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.

Credible ! Capable of being
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credited or believed.

Performance …
Accomplishment of a
given task measured
against preset standards of
accuracy,
completeness, cost,
and speed.
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Measurement …
Values made
meaningful by
quantifying into
specific units.
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Clearly defined starting point
(point of departure) from
where implementation begins,
improvements judged,
or comparison is made.

Today We Will Learn The Steps Needed To …
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Copyright Lewis & Fowler 2011 ©, All Rights Reserved
" Construct the Performance
Measurement Baseline from
the Work Breakdown Structure.
" Assign performance measures
to Work Packages.
" Assign probabilistic measures
of performance to the network
of Work Packages.
" Use this information to make
decisions.

The Overall Context Of Building The Performance
Measurement Baseline has 4+1Major Activities.
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Identify Needed
Business
Capabilities
Establish a
Performance
Measurement
Baseline
Execute the
Performance
Measurement
Baseline
Capabilities
Based Plan
Business Value
Stream
Earned Value
Performance
Technical
Performance
Measures
Business Value
Stream
Technical
Requirements
Establish a
Requirements
Baseline
Technical
Performance
Measures
4

The Performance Measurement Baseline is really
3 baselines – Technical , Schedule, and Cost.
Perform
Functional
Analysis
Technical Baseline
Schedule Baseline
Cost Baseline
Determine
Scope and
Approach
Develop
Technical
Logic
Develop
Technical
Baseline
Develop
WBS
Define
Activities
Estimate
Time
Durations
Sequence
Activities
Finalize
Schedule
Identify
Apportioned
Milestones
Determine
Resource
Requirements
Prepare
Cost
Estimate
Resource
Load
Schedule
Approve
PMB
Finalize
Apportioned
Milestones
Determine
Funding
Constraints
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The core elements of the Performance
Measurement Baseline (PMB) …
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… Are a collection of Work Packages, that define:
! The deliverables that fulfill the needed requirements
and project capabilities,
! The estimated duration and work effort for each Work
Package,
! The resources needed to produce these deliverables
within the needed time period, and
! Any dependencies – internal or external – needed to
start a Work Package.

Let’s Build a BSL
Level 4 Laboratory
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Build a time–phased network of schedule activities describing the work to be performed, the
budgeted cost for this work, the organizational elements that produce the deliverables, and
the performance measures showing this work is proceeding according to plan.
Baseline A Baselined Schedule that Creates the Services or Products to Meet The Requirements
Decompose the Project Scope into a product based Work Breakdown Structure (WBS), then
further into Work Packages describing the production of all deliverables traceable to the
requirements
Establish
3.0
the Performance
Measurement
3.1
Decompose
Scope into Work
Packages
Assign Responsibility to Work Packages (the groupings of deliverables) for the named
owner accountable for the management of resource allocation and cost baseline and
technical delivery
Assign
3.2
Responsibility
for Deliverables
Arrange the Work Packages in a well formed network with defined deliverables,
milestones, internal and external dependencies, appropriate schedule and cost
margin.
Arrange
3.3
Work Packages
in Logical Order
Develop a Time–Phased Budgeted Cost for Work Scheduled (BCWS) from labor and
material costs in each Work Package and the Project as a whole. Assure proper resource
allocations can be met and budget profiles match expectations of the project sponsor
Develop
3.4
BCWS for Work
Packages
Assign object Measure of Performance (MOP) and Measures of Effectiveness (MOE) for
each Work Package and summarize these for the Project as a whole
Assign WP
Measures of
Performance
3.5
Establish a Performance Measurement Baseline (PMB) used to forecast Work Package
and Project ongoing and completion cost and schedule metrics
Set
3.6
Performance
Measurement
Baseline
Deliverables Based Planning Handbook for A&D, Copyright © 2008, 2009, Lewis & Fowler
The information contained in this document is proprietary to Lewis & Fowler
7

1 Decompose
Scope Into
Work Packages
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Capabilities, Requirements, WBS, and Work
Packages are connected to define “Done.”
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Business Capability
Construct BSL Lvl-4
Bio Laboratory
1st Level
BSL Lvl-4 design
basis
1st Level
Bio product process
design basis
2nd Level
Product storage
2nd Level
Product Inventory
2nd Level
Materials Handing
2nd Level
Isolation processes
3.1 Decompose Scope into WPs

Connect the WBS to Work Packages (WP), then define
the Tasks for the Deliverables to produce Value.
Business Need
Build and Manage the
Bio Lab
1st Level
BSL Level 4 Design
Basis
1st Level
Bio product process
design basis
2nd Level
Product Storage
2nd Level
Product Inventory
2nd Level
Materials Handing
2nd Level
Isolation processes
Deliverables
defined in WP
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3.1 Decompose Scope into WPs

2 Assign
Responsibilities
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Assign accountability for each component of the
Work Package.
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# Each Work Package has a single owner who is
accountable for:
! Defining the deliverables
! Assigning resources
! Balancing the resource usage
! Defining the Earned Value measurement criteria
! Identifying any apportioned milestones
! Reporting physical percent complete
# Name this person in the Work Package and the
Master Schedule
3.2 Assign Responsibilities

Assign The Responsibilities And Make A
Single Person Accountable
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3 Arrange
Work Packages
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“Arranging” the Work Packages Is An Iterative
And Incremental Process
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3.3 Arrange WPs with Work Streams

Identify the Predecessors and Successors between
Work Packages to sequence the work effort.
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# Give some thought about the sequence of the
Work Packages,
! What deliverables come first?
! What deliverables come next?
# The reason for this should be obvious.
# Use a Work Authorization (WA) processes to
keep the sequence of work intact.

Start with a “notional” arrangement of the
“Chunks” of work within a Workstream
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# WPs should have No intermediate connections or outcomes.
7w
7w
5w
5w
1w 3w 3w
3w
2w
7w
5w
# Long running WPs
with negative or
positive lags to
maintain
sequencing.
# Break the WP into
separate
deliverables and
sequence Finish to
Start.

4 Develop
Budgets
For Work Packages
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Develop a time–phased budget from the network
of Work Packages based on resource loads
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Duration of the Work Package
Budget
Budget
Budget
Budget
3.4 Develop Budget for the Work

Balance All The Work Packages Across The Project
Before Setting The Baseline
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Cost, Schedule, Technical Model†
WBS
Task 100
Task 101
Task 102
Task 103
Task 104
Task 105
Task 106
Probability
Density Function
† 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.
" 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?
Monte Carlo Simulation
Tool is Mandatory
1.0
.8
.6
.4
.2
0
Cumulative Distribution Function
Days, Facilities, Parts, People
Days, Facilities,
Parts and People
3.4 Develop Budget for the Work

5 Assign
Performance
Measures
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Identify objective measures of performance for
each Work Package
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# Define the Planned Value (BCWS) for each Work
Package completion or apportioned milestone within a
Work Package.
# Only Physical Percent Complete should be used to
measure progress – no “opinions” of progress.
# Answer the question,
! How are we going to recognize that progress is being
made?
! The passage of time and consumption of resources is NEVER
a measure of progress.
3.5 Assign Performance Measures

Assign BOE data for measuring performance of
the Baseline before actually building the schedule
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# The contents of the Work Packages.
# The person accountable for the Work Package.
# The Earned Value method.
# The cross plan dependencies.
# Any value stream attributes.
3.5 Assign Performance Measures

6 Set
Performance
Baseline
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Baseline the schedule to establish the planned
budget spreads for each Work Package
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# Baselining the Performance Measurement Baseline
(PMB) is the first step in successfully of Executing the
project plan.
# Without the baseline and the rigorous change
control over the baseline, the needed credible
performance predictions will be not possible.
3.6 Set Performance Baseline

" Lack
of
predic-ve
variance
analysis.
" Un-mely
and
unrealis-c
Latest
Revised
Es-mates
(LRE).
" Progress
not
monitored
in
a
regular
and
consistent
manner.
" Lack
of
ver-cal
and
horizontal
traceability
cost
and
schedule
data
for
correc-ve
ac-on.
" Lack
of
internal
surveillance
and
controls.
" Managerial
ac-ons
not
demonstrated
using
Earned
Value.
" InaDen-on
to
budgetary
responsibili-es.
" Work
authoriza-ons
that
are
not
always
followed
" Issues
with
Budget
and
data
reconcilia-on.
" Lack
of
an
integrated
management
system.
" Baseline
fluctua-ons
and
frequent
replanning.
" Current
period
and
retroac-ve
changes.
" Improper
use
of
management
reserve.
" EV
techniques
that
do
not
reflect
actual
performance.
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3.6 Set Performance Baseline
The Train Wrecks Starts When There is…
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Glen B. Alleman
Niwot Ridge Consulting
4347 Pebble Beach Drive
Niwot, Colorado 80503
303.241.9633
glen.alleman@niwotridge.com
Performance-Based Project Management®
Integrated Master Plan
Integrated Master Schedule
Earned Value Management Systems
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Establishing the performance measurement baseline (v4)

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