What is Performance Measurement Baseline or Planned Value?
Performance Measurement Baseline (PMB) refers to the integration of the physical work schedule and the approved budget to accomplish the scheduled work. Together they result in an important value i.e. Planned Value (PV), Hence.
Planned Value = Physical Work Scheduled + Budgeted Cost
PV is additionally referred to as the Budgeted cost of work scheduled (BCWS). It will be checked out in 2 ways in which
- Cumulative Planned Value – It is the sum of the budget for activities scheduled to be performed to date.
- Current Planned Value – It is the sum of the budget for activities scheduled to be performed during a given period.
Performance Measurement Baseline (PMB) is established at the planning stage and comprises of various components that when integrated are designed to objectively evaluate the work plan. This includes :
- Work Breakdown structure – Decomposition of the work scope into a hierarchical representation that describes the production of all deliverables.
- Baseline Schedule – Start and finish for each task.
PMB acts as a benchmark against which the time and cost progress of the project is measured against. It also allows to development of the planned value (PV) or BCWS.
Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS) is a top-down hierarchical description and decomposition of all the work required to complete the project scope. In other words, according to the Project Management Body of Knowledge (PMBOK) defined as the work breakdown structures as a deliverable oriented hierarchical decomposition of the work to be executed by the team.
It is also referred to as Project Breakdown Structure (PBS).
The WBS is a DYNAMIC tool and can be revised and updated.
Establishing the WBS is the first step in defining the project and establishing the Performance Measurement Baseline.
The Work Breakdown Structure visually defines the scope of the project.
For example, As shown in the above fig. Each descending level represents an increasingly detailed description of the project elements and provides further definition to the project components.
The highest level, identified as Level 1, is the project. Level 2 represents the major subdivisions of the projects. Each level is broken down further to form the subsequent level.
Repeat the process until you reach the desired level at which the performance measurement will be determined.
According to Fig. 01, Level 2 based on the best way to organize the work for the project given the project complexity, how the work is spread across your organization, and how the work will be tracked and managed.
Two main criteria to consider when developing a WBS include :
- Must contain approved project scope.
- Must reflect how the project is intended to be managed.
Moreover, other criteria to consider when developing a WBS include :
- Size and complexity of the project.
- Reporting requirement (to owner and others)
- Contractual requirements
- Clear measurable deliverables.
- Resources executing the work – are you self performing the work or is the work performed by others (Sub-contractors)?
Why is Work Breakdown Structure is needed?
- It provides a framework for defining, organizing and managing project scope, thus allows for decomposing the work scope into measurable units.
- Ensures that the scope is completely defined and the project team has not forgotten any items of work.
- Provides a framework for planning and controlling cost and schedule – defining measurable units allows for easier and more accurate duration estimated, required resources, determining dates and distributing costs.
- Provides the basis for developing the schedule and the i=time phased cost graph, necessary for establishing the Performance Measurement Baseline (PMB).
Development of WBS
WBS developed based on scope only will yield a different breakdown from that if managing the project is considered as a factor. It is very critical to involve the core project team to analyze and break down the work to create the WBS.
This is a team process and should not be done by a single individual. Here is a suggested process:
- The project manager can propose what the top level of the WBS should be.
- Call a core team meeting to review the suggested top level of the WBS and define the next level of detail.
- In the meeting, agree on the top level of the WBS and brainstorm a list of items to include at level 2.
- Work collaboratively to identify subsequent levels of WBS detail, by drafting WBS activities and tasks onto a whiteboard or flipchart paper on the walls, or by writing deliverables, activities and tasks on sticky notes and sticking them to the whiteboard or wall underneath the appropriate top-level section of the WBS.
- Publish the draft WBS to team members and others to check the contents, and identify additional work.
- Get the feedback and incorporate it into the WBS.
- Review the updated WBS with the team and determine whether you’re ready to proceed to the next step of planning: assigning resources to the tasks in the WBS.
- Review and refine the WBS until the stakeholders agree with the level of project planning and reporting.
As each project is different, thus each WBS will be different. WBS from previous projects can be used as templates, but remember that the management philosophy and the level of details may be different from project to project.
Based on the project resources, work packages are used to define the tasks or activities that are scheduled to establish the Baseline schedule.
For example, from the above fig. activities were scheduled according to the available resources like machinery, Manpower and in consideration of time factor.
The contract baseline price or Budget is comprised of the following key elements
- Direct Cost
- Indirect Cost
A first step towards establishing the cost baseline is to develop the contract price for each work and allocate it to the work in the WBS.
Depending on how activity value is presented in the schedule of values:
Activity total cost is performed over the bar or the activity of direct cost is projected over the bar and the indirect cost or profit is projected on basis of project duration.
In conclusion, based on the project scope and available resources, the project price is allocated across the scheduled activities and across time. The time-phased allocation of cost established the Performance Measurement Baseline (PMB).
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