A balanced scorecard is a way to monitor progress against a set of key, agreed measures. Companies typically have goals to focus on each year, such as revenue growth or health and safety targets.
It’s called a balanced scorecard because there are different measures on it and the company has to balance performance across the whole piece – it’s no good having amazing customer satisfaction scores if your staff costs are spiralling out of control, for example.
This model is in use in many businesses and it’s really helpful to scale it down for projects too. It is a sensible and standard way of monitoring your progress monthly. How do you start? Here’s a quick guide.
1. Identify your measures
The items that you want to include on your project scorecard should be the things that matter to you and your stakeholders, and that will persist throughout the life of the project.
They should be metrics that are available to you (or that you can make available). It’s no good including ‘impact on company revenue’ if you are never going to be able to find out what impact your project has made.
Financial information and quality targets are good starting points, and it is sensible to group measures into categories. One way to do it would be something like this:
- Project quality: audit results, project benefits, quality targets
- Project budget: Earned Value measures, project running costs
- Project delivery: milestones, customer satisfaction
- Project team: staffing levels, resource allocation, staff satisfaction or engagement.
The measures you choose should be things that are meaningful to your team and sponsor. There’s not much point, for example, in assessing your progress against project benefits if you know your project won’t deliver any benefits until a good few months after it has finished.
How many categories to have?
Four categories is my preferred number because you can then display each category as a quarter of a circle, and have a nice circle diagram to represent your scores for that month.
But if you don’t want to do that, a spreadsheet makes a great alternative and is probably easier to populate! Think about who is going to be reading it and what they would find most easy to use.
Personally I’m a fan of presenting information in a graphical format because that’s how I find it easier to digest numerical data, but you know your team best so lay out your scorecard however suits you.
Choose easily measurable categories
Finally, your measures should be things that you can measure easily. Your scorecard should be a neat way of monitoring your progress monthly, an addendum to your project report and something you can use when you are communicating up to your project sponsor. So you don’t want to spend hours pulling it together.
2. Agree your targets
What makes your project red, amber (yellow) or green on a particular measure? Set measures for what Red means, or what makes a project Green.
Even if you are using something that is commonly understood in the business, it is still worth defining what it means. Every measure might have something slightly different. Here’s an example:
- Project quality: Red = All modules failed last verification, Amber = Over 20 modules failed last verification, Green = Under 20 modules failed last verification
- Timescales: Red = currently on track to miss published end date and/or more than 3 milestones on the critical path, Amber = currently not on track but expect to be able to still hit published end date and no critical path milestones impacted, Green = on track
As you can see, Red is defined differently for each measure.
Read next: Real-life tips for managing Red projects and getting back to Green
Use the targets across all measures
This all sounds quite time consuming but once you’ve set it up, you can use it for practically any project. Also, not only does this make it clear for everyone reading your scorecard, it takes away some of the work from you. You don’t have to apply your critical judgement every month as you’ve done it once and now you simply refer to the targets to see exactly where you are.
Share what the targets mean
You’ll have to find a way to communicate this – once is probably enough as long as people know where to find the data if they need a reminder. Try to avoid using footnotes in the document itself as people often don’t bother to read them and they make the page look cluttered. A page on the project’s intranet site or in the wiki might be a good place to store them.
Using RAG on the scorecard
My preference is to mark each area of the scorecard as red, amber or green as this contributes to the visual look and feel of it and helps you see areas in trouble at a glance.
This works because we use RAG scoring mechanisms on other areas of the project (such as the risk log) so everyone understands it.
If you use something different, or your stakeholders are used to information being evaluated in a different way – like with smiley faces, on a 1-10 scale or something different – then use that. Make it as easy for them as you can.
3. Collate and share the results
A balanced scorecard is a great communication tool. Now you have your model set up, your diagram or spreadsheet prepared, the next step is of course to assess your project against your targets.
Gather your data, populate your balanced scorecard template and produce your first version of it. With the results collated, you should have a good graphical snapshot of the project’s progress to be able to share with your key stakeholders and the project team.
Ask for feedback
You’ll most likely get some useful feedback the first few times that you share the scorecard results with everyone. Think about how you could incorporate this to make the model clearer or to include measures that your project sponsor thinks are essential (but forgot to tell you about the first time).
Of course, you may also get feedback that you can’t incorporate, so explain why. That should stop people asking you for the same changes again next month.
Act on the results
Remember, the point of doing this is to record key measures and project performance, so it’s also important to build in some time to do something about the results.
If any of your project measures are reporting as Red (or a sad face, or 0 out of 10 or whatever) then what are you going to do about it? It’s pretty pointless to go to the effort of measuring performance if you aren’t then going to take action to put right anything that is identified as underperforming.
While the scorecard is a great communication tool, it’s also a performance management tool to help you manage the project more effectively, so use it.
4. Track trends
Gathering a set of standard monthly data items on a regular basis gives you the information you need to track trends on your project. Looking at the scorecard data might help you identify where your project team is struggling. An element that goes from Green to Amber is likely to go to Red next month unless you do something about it.
Positive trends are also good for internal trumpet-blowing! Look at your dashboard figures and see what you can shout about. You’ll have turned something around or have a good news story in there somewhere, so share your positive results with your colleagues.
Using scorecards for the PMO
While project scorecards are great tools for project managers, you can also use them at the Project Management Office level to monitor the health of your project portfolio overall.
The measures you put on the scorecard are likely to be similar to those in use on a project scorecard, but you would want to pay more attention to things that are important to the PMO such as resourcing.
Here are some ideas for metrics that you could use:
- Percent of projects with complete project information or documentation
- Percent of staff working on more than one project
- Project team member churn rates
- Percent of projects with overallocated resources
- Percent of projects with red indicators (maybe in comparison to last month, so you’d show an increase or decrease against the last reported figure).
A PMO-level scorecard could take a sub-set of dashboard measures that you are already collecting. Or it could roll up the scorecards from all the projects and report at a consolidated level. This could give you an interesting picture for the organisation as a whole and help you identify business-wide weaknesses.
For example, if across all projects the project managers are reporting Red indicators against financial measures, then you can target training at boosting their budget handling skills.
Numbers never tell the whole story!
However good your measurements remember that they don’t replace your judgement (either at a project or PMO level). Numbers never tell the whole story: context is everything. A Red score might not be that much of a problem in the grand scheme of things and equally reporting a measure as Green, while technically correct, might hide some other issues on the project.
Scorecards are a good visual way of communicating progress, tracking trends and showing the snapshot status of a project but they aren’t a replacement for solid project management skills.
And, as I have said, anyone can report but it takes someone to act on the data and improve the results. As a project manager, that should be your job. The scorecard is simply there to highlight problems. Metrics help you manage projects and performance but the actual ‘management’ is down to you.
