Improving Project Forecasting Accuracy by Developing the Normalised Project Management Baseline

Abstract

Periodic project reporting using Earned Value Management (EVM) and Earned Duration Management (EDM) uses performance metrics to communicate current and forecast future project performance. The likely accuracy ranges of schedule and cost forecasts are commonly expressed as a simple plus or minus percentage or value. This paper introduces the Normalised Project Management Baseline (NPMB), a single (x, y) plot of the normalised EDM and EVM Project Management Baselines to identify whether periodic project forecasts are optimistic (low) or pessimistic (high), as well as informing the magnitude of variation in the forecast. The NPMB is tested using six real-life completed projects and it is shown to be highly suited to identifying schedule forecast optimism, pessimism, and variations, whilst results for cost are highly promising and warrant further investigation. For project practice the NPMB increases awareness of performance variations, improving forecasting accuracy and confidence in final forecast ranges. For academia, the NPMB introduces new research directions by improving forecasting accuracy and early warning processes by improving the accuracy of periodic project performance observations. This paper contributes to project management literature as the NPMB is the first attempt to improve forecasting accuracy by identifying variations in the periodic project performance observations themselves.