Baselines in Project Management

04 September, 2014

A question we are sometimes asked in our PMP® exam preparation classes is: What is a baseline? This is understandable, because the word appears all over the place – there are project baselines, scope baselines, schedule baselines and budget baselines. The intuitive feeling is that the baseline is the original, signed-off version of a plan that allows the project to proceed beyond the planning phase. Or, as computer people would put it, Version 1.0.

Unfortunately, baselines are not as simple as that. The baseline is what we are working off right now. So, after our initial planning, when we develop an acceptable scope statement, schedule and budget, these are signed off and designated the baseline plan. However, as the project progresses, we might notice a variance between the actual times taken to do activities and the estimated times. We might identify an inherent under- or over-estimate in our figures. So it would make sense to develop a new schedule based on our experiences to date. We might, for instance, decide to increase the estimates on all future activities by 10%. If we get approval for this, the new schedule (Version 2.0) becomes the new baseline schedule.

However, the Project Management Professionals (PMPs)® among you will be quick to point out that a change to the schedule cannot happen in isolation. If the schedule is increased, as in this example, the project team will have to stay on the project for longer, thus costing more – so the budget will have to be updated. Thus we have to re-baseline the budget too – making this Version 2.0 as well. In fact, presenting the schedule and budget together to senior management for approval shows the consequences of the schedule change and these consequences may not be acceptable. The Project Manager may be reminded of a hard deadline, which prevents the 10% increase in the schedule from being practical. In this case, it might be appropriate to jettison some scope, which would involve re-baselining the Scope Statement as well.

Another typical source of re-planning (or re-baselining) is a Change Request. Mostly, Change Requests relate to scope. A stakeholder might ask for extra features, or new regulations demand more stringent quality control. Extra activities need to be added to the schedule and extra staff or equipment needs to be reflected in the budget. If the change and its consequences are accepted, the revised scope, schedule and budget become the baseline plans from which we base the remainder of the project.

There is a temptation during a re-baselining operation to indulge in a certain amount of revisionism and to replace the original estimates of the work done to date with the actual figures. There is an even bigger temptation to delete Version 1.0 altogether and to proceed as if there never was poor estimation or a change to the plan. This is a totally unprofessional approach. Estimates are, by definition, approximations of the time and cost of a particular activity. Using re-baselining as a way of erasing poor estimates from the record prevents lessons being learned and better estimates being produced for later projects.

It is far better to build up a new Work Breakdown Structure, schedule and budget, reflecting actual work accomplished, than to alter the baseline plan by replacing estimates with actuals. Earned Value Management, which PMP® exam students will recall from Project Cost Management, should be used to record the differences between estimates and actuals.

In summary, baselines relate to three project management planning artefacts: scope, schedule and budget. The baseline plans (scope, schedule and budget) are the ones we are following at this point in time. Ideally they should be the original plans, but change requests and variance analysis can dictate changes to the original plans, so the baseline can change during the course of a project.

It is important to record actual progress by building up a new set of artefacts consisting solely of actual figures – work completed and monies spent. When the project is finally closed, the Project Manager can compare the final baseline plans with the actual work done and make an assessment of how effective the plans were. Many lessons can be learned by trying to explain the differences. Using Earned Value Management during the project will help to spot deviations from schedule and budget – possibly triggering change requests and a new set of baseline plans.

Velopi’s project management training courses cover all of the knowledge areas described in the Guide to the Project Management Body of Knowledge (PMBOK® Guide), including Project Scope, Time and Cost Management. If these areas are of interest to you, our project management certification courses are held in Dublin, Cork, Limerick and Galway for your convenience. Find out more by visiting our training page or by contacting us directly.

By Velopi Seamus Collins

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