2000 International Student Paper Award Winner

Balanced Scorecard for

Projects
Wendy E. Stewart, PMP, 129 Larkin Drive, Nepean, Ontario K2J 1J1 Canada

B olman and Deal, as quoted in Shepko and Douglas (1998), stated the fol-
lowing observations about all organizations:
■ “Organizations are complex. The largest driver of this complexity is centered
around people and the ability to understand and predict their behavior. Addi-
tionally, the interaction between and among individuals complicates the rela-
tionship.
■ Organizations are surprising. Outcomes are not predictable in any organization.
Decisions made today will have an impact on tomorrow’s outcomes.
■ Organizations are deceptive. Once a decision is made, many times the outcomes
are ‘covered over’ because the results are not as expected. This deception creates
another layer of complexity.
■ Organizations are ambiguous. With all of the complexity, surprise, and decep-
tion, it is hard to determine what is really going on in an organization. Perfor-
mance measurement holds the greatest value in addressing this situation.”
“Bolman and Deal cite the following sources of ambiguity in organizations
identified by McCaskey (1982):
■ We are not sure what the problem is.
■ We are not sure what is really happening.
▼
■ We are not sure what we want.
Abstract ■ We do not have the resources that we need.
In order to better manage the ongoing project and ■ We are not sure who is supposed to do what.
provide an organizationwide response to increasing
■ We are not sure how to get what we want.
pressures for excellence in project management, a
“balanced scorecard” (BSC) approach can be ■ We are not sure how to determine if we have succeeded” [emphasis added].
used to perform “health checks” throughout the With a proper performance measurement tool, such as the balanced scorecard
project life cycle. In projects, there is always a (BSC), organizations can clarify their vision through measurable goals and out-
scorecard. Each organization has standards of
success. When project managers look at the four
comes (Shepko & Douglas, 1998). This vision drives the projects that take place
business aspects (financial, organizational, within the organization, aligns them to the organization’s overarching business
customer relationship, and training and strategy, and reveals their successes.
innovation), they will begin to understand the true Projects can be considered “mini-organizations,” requiring the same clarifica-
impact of the project’s success in the entire
organization and see the dependencies to success
tion and benchmarks of the parent organization. Because projects are more struc-
between the project, the corporate project tured and controlled than the organization as a whole, they have accrued a
portfolio, and the organization. reputation of a high failure rate in one or all of the critical success factors. In order
to better manage the project and the overall health of the organization providing
Keywords: customer; business; financial; the services, a BSC approach can be used to perform health checks throughout the
innovation
project life cycle.
©2001 by the Project Management Institute In a 1999 Gartner Group report, Furlonger stated that “a scorecard should con-
2001, Vol. 32, No. 1, 38–53 tain financial, customer, project/internal business and growth and innovation
8756–9728/01/$5.00 per article + $0.50 per page

38 Project Management Journal March 2001

 The Organization’s Vision

Continuous Improvement
Communication
Objectives

Cooperation
Compliance
(Strategic and Tactical)

The Indicators—Outcome Measures

Balanced Scorecard Roll-ups—Performance Drivers

Base Benchmarks (lowest level of metrics)

Figure 1. Implementing the BSC Approach for the Project Portfolio

components.” In this report, the BSC approach is directed at dards against which to be measured, the starting point can be
the organization’s project portfolio, ensuring that: difficult to determine. Once models have been built to use as
■ Projects deliver value to the business the benchmark, it is a matter of continuous evaluation against
■ Projects deliver benefits that the organization needs this benchmark and targeted plans to improve performance.
■ The success of the organization’s projects and areas for The scorecard must be built on four pillars: communica-
improvement tion, compliance, continuous improvement, and coopera-
■ Project “lessons learned/best practices” anticipate future tion that filters throughout the organization—from the
requirements. CEO to the mail clerk, from those who have been in the or-
The BSC approach was first proposed by Robert S. Kaplan ganization since it was formed to the newest recruit. These
in 1992 and espoused in the Harvard Business Review in pillars must pervade the objectives (see Figure 1).
1996. Many business process reengineering consultants pro-
mote this approach to addressing changes in the organiza-
tions with which they work. It is a methodical approach to Objectives
revealing problem areas within the business and pointing All projects are built around standard business objectives for
out areas for improvement. It looks at four key business as- success: achieving high productivity, improving quality, de-
pects, as identified by Kaplan in the following list: livering at the appropriate time, decreasing cycle time (start
1. The financial perspective (earnings per share, revenue to finish of a process), growth of market share, utilizing re-
growth, profit growth, etc.). sources effectively and efficiently, and managing costs.
2. The customer perspective (market share, customer sat- The BSC measurements are chosen by the organization
isfaction, referral rate, customer retention). that is instituting them. It uses the measurements the orga-
3. The internal business process perspective (cycle time, nization establishes to support (see Figure 1) compliance to
cost of services, speed of services, job safety). the objectives, to reinforce communication of those objec-
4. The learning and growing perspective (effectiveness of tives, to provide continuous improvement toward the ob-
change to technology and processes, speed and frequency of jectives through personal goals of all staff, and to obtain the
changes—adaptability, employee satisfaction, willingness to cooperation of the community.
share and gain knowledge). There is no “out-of-the-box” solution possible at this
The goal of every organization is to do more—better, faster, time for managing projects with the BSC. Some examples,
and with less. In order to be able to achieve this goal, organi- which have been put into place to give a general under-
zations need to be able to measure what they are doing and standing of the methods used, are provided in Appendix C.
how well they are achieving their goals against an initial In the trial of the BSC approach to projects within a govern-
benchmark or baseline. One of the key components to any ment organization that is provided in Appendix C, the initi-
scorecard is to have a baseline or benchmark—somewhere ation phase of the project had strict benchmarks as to what
from which to start. If the organization does not have stan- was an acceptable submission in order to receive approval

March 2001 Project Management Journal 39

to proceed and for funding. The client was presented with a On a baseball team, the player understands what de-
chart showing the deliverables as either acceptable (green), notes an error and what will gain positive recognition by
needing slight improvement or warning of potential future the coaches and manager. Similarly, in a project, there is al-
problems (yellow), and omissions/major rework required ways a scorecard—whether or not openly acknowledged.
(red). The visual review of the initiation phase allowed Each organization has standards of success. Sometimes,
stakeholders to concentrate their attention on areas for im- these standards are hidden from the project manager and
provement in a timely and concise manner. reflect “dark-side management.” In situations like this, it
Each BSC must be customized to fit the organization in may be the responsibility of the project manager to obtain
which it is used. By employing “best practices” within the the critical success factors that mark the nonverbal corpo-
project/internal business industry, key success factors of rate culture.
project phases, and knowledge and process areas found in A When project managers look at the four business as-
Guide to the Project Management Body of Knowledge (PMBOK® pects—financial, organizational (project/internal business
Guide), a starting point to the BSC for projects can be built. phases and nine key knowledge areas) customer relation-
BSC models use the “stoplight” color scheme of: ship, and training and innovation—they will begin to un-
■ Green (project performance agrees with project plans derstand the true impact of the project’s success to their
and stakeholder expectations) project and the entire organization. They will understand
■ Yellow (deficiencies in project performance have been the correct focus of the project and spend appropriate time
noted, are being monitored, and corrective action will be on issues that directly impact success. This will also assist
implemented in the near future) the project manager in successfully communicating the cor-
■ Red (serious deficiencies have been noted; project is in porate and project-aligned vision to the project team.
jeopardy/crisis). The project manager establishes representative bench-
The “stoplight” approach is readily understood and visu- marks for the individual project, reflecting the organiza-
ally draws the attention to the most needed areas for im- tionwide benchmarks in order to achieve recognition and
provement. Yellow and red scorings are substantiated with success. Once models have been built as the benchmark, it
further detail in order to provide areas for improvement. is a matter of continuous evaluation against this benchmark
The information that is highlighted through the red, to mark progress and pass project gate control points.
yellow, and green scoring is also numerically transferred to The objectives of the BSC are to:
the project graphical (statistical) summary report, showing ■ Ensure that measures support core values and practices
a percentage of compliance/health of the project for execu- of the organization
tive reviews (see Appendix C). ■ Establish meaningful performance measures (benchmarks)
The level of detail that the scorecard can measure can be to assess project health throughout the project life cycle
as detailed or high level as an organization needs or re- ■ Align the measures against the project’s charter (terms of
quires of its project teams. In government projects, for ex- reference)
ample, the project charter and business plan to be ■ Establish measures that are efficient as well as effective,
submitted for approval and funding could be benchmarked consisting of the standard three types of measures: outcome,
by the standards that the approving organization has put action (performance drivers), and diagnostic (why an out-
into place. The department submitting such a charter and come or action measure is at its current level).
business plan would match the established scorecard prior
to submitting its initiating project deliverables. This would
prevent rework and rejections at the earliest possible stage Approach
in the project life cycle. In order to track a project from start to finish, each project
requires inputs and outputs to the phase. The phase outputs
become the inputs of the following phase. The score may be
Critical Success Factors taken when a milestone is met, a key deliverable is com-
In baseball, the game scorecard is blocked into nine innings, pleted, or by a phased approach. Some of the processes,
each with a top and bottom. The objective of the game is to tools, and techniques remain the same throughout the
win—with the best team taking the pennant. Team members project—only their inputs and outputs change.
are observed for “errors,” which are marked for the coach to Phase 1: Initiation. Projects are usually a result of a
work on with the player. A player that doesn’t improve his problem being identified within an organization. This problem
batting average, ability to get on base and to home plate, and could be due to a technological requirement, a business
ability to catch the ball and get a player “out” from a well- reengineering need, an environmental issue, a financial
thrown ball doesn’t stay with the team very long. His “score” woe, or any other host of issues that impact a company. One
is too low to carry the team into the playoffs and to ultimate or more of the BSC perspectives can be the focal point for
success. The players’ (project) successes and failures have a the project’s existence, but should not take precedence over
direct correlation to the team (organization/project office). the remaining three perspectives.

40 Project Management Journal March 2001

 Vision Organization

Project
Deliverables Outcomes

Outputs Project/
Project Portfolio

Figure 2. Vision Drives the Project

Normally, the project is generated in order to keep the Depending on the organization, the gate (end of phase
organization economically alive, socially involved, techno- milestone) may be passed through a successful business case
logically in step with evolution, culturally attuned to its en- and/or a contractual agreement reached in addition to the
vironment, or politically correct, or in order to grow the project charter. The BSC example for the initiation phase for
organization by expanding its market share. the organization’s project portfolio is presented in Appendix C.
The link between the organization’s vision and the project’s Table B1 in Appendix B identifies areas that are normally
expected outcome(s) is established during the initiation phase. addressed during the initiation phase of the project. In
The chief desire of the initiation phase is to take the desired order for the project to be considered healthy, the input and
outcome (target) and plan the outputs (path). In order to output of the phase must be complete, providing the back-
achieve the desired outputs, the project sponsor/team defines ground to the project as well as the direction the project will
the “what,” “how,” “who,” “when,” and “where.” The “why” take. The requirement for a dedicated project manager to be
should align with the corporate vision and with objectives that assigned at the initiation phase allows the project to be con-
drive the project (see Figure 2). sistently and knowledgeably handled from the very begin-
When assessing whether or not the initiation phase is ning and throughout all the project phases.
“healthy” at the project approval gate, the project manager At this phase of the project, the initial BSC measurement
and executives must evaluate whether the outputs link to is taken in order to establish a baseline for the strategic plan.
the outcome, which in turn links to the organization’s vi- The initiation/conceptualization phase of every project de-
sion. Many plans forget the project’s desired outcome when fines where you want to be when the project is completed. It
immersed in the daily routine of managing the project. This also begins to outline the gap between where you are today
omission can result in short-term benefits being met, but and where you want to be. This information is used in the
long-term organizational goals being missed. project “health report” that may be found in Appendix C.
One way to ensure that the vision driving the project is Phase 2: Planning. The project planning phase is con-
communicated throughout the project process phases is to sidered by most project organizations to be critical to the
clearly identify the assumptions on which the project is success of the project: “failing to plan is planning to fail”
built by developing a comprehensive project charter. Within (PMBOK® Guide). This phase develops the solution to the
the charter, the following should be documented: problem identified during the initiation phase and expands
■ Goal (Why—Outcome required that will resolve the problem) on the initial scope and specifications outlined in the
■ Critical success factors (What—Input) charter. A complete plan clearly states what is to be done,
■ Assumptions and constraints (Why—Limitations on inputs) why it is being done, who will do it, when it will be done,
■ Objectives (What outputs are required) what resources are needed, and what criteria must be met in
■ Individuals and groups involved (including contract details) order for the project to be a success and completed. This in-
(Who—Input) formation is used to extend the initial BSC benchmarks that
■ Who is responsible (Who—Input) were established during the initiation phase.
■ Actions by whom (How—Process) In today’s project environment, a static approach to plan-
■ Risks (What—Input) ning does not normally work. With technological advance-
■ Resources (changes to current situation) (What—Input) ments, cultural upheavals, monetary fluctuations, and
■ Dependencies (What—Input) environmental influences, the project plan must be reeval-
■ Costs (What—Input) uated at each phase in order to adjust to changes that oc-
■ Start time (When—Input) curred during the previous phase. Fine-tuning of the BSC
■ Complete by time (When—Input). measurement criteria should be done at each phase start.

March 2001 Project Management Journal 41

 The nine knowledge areas, as defined by the PMBOK® agement fad, institute a major reorganization around this
Guide, cover the key areas that require planning to improve fad, and then realize, upon further investigation, that it can
overall success and ongoing project health. The planning never succeed in the organization. The project that was
phase establishes a better understanding of project objec- started is changed or eliminated mid-stride.
tives for the organization, team members, and stakeholders. The project is impacted by changes the client makes to the
It provides the basis for measuring the planned work scope, time, budget, and/or quality of the product/service.
against the work performed. For this reason, this phase is These changes could identify problems with the initial scoping
tantamount for developing, communicating, and aligning out of the product/service or an organizational change in key
the project team with the framework of the BSC. business needs. One of the areas that should be reflected in the
One of the hardest areas to grasp is customer’s expecta- BSC is the number and size of changes requested—with a root-
tions. These expectations predetermine the outcome (not the cause analysis of why the change is requested. This provides
output) of the projects. Clarification of the critical success management with the key to whether the project definition is
factors that the customer holds to be true improves project at fault, the product/service contracted for, or the customer not
success. Established boundaries for the customer’s expected clearly identifying its strategic needs to the project team.
project outcomes need to be set in order to control and Ongoing During Execution: Monitor and Control.
manage the project as it moves into the execution phase. Quality and change management must permeate the entire
There are inconsistencies in the various stakeholders’ expec- project. Where these management areas are lacking, the or-
tations, depending on the level of influence within the envi- ganization/project team is usually managing “by crisis”—in
ronment. The executives, sponsors, team members, and end a reactive mode rather than a proactive approach.
users all view the project differently. During the planning Managing software projects that have multiple developers
phase, strong risk, change, and communication management working on the same code at the same time, targeting multiple
plans can assist both the organization delivering the project platforms, supporting multiple versions, and releasing various
and those receiving the deliverables in managing the change— statuses of code can be challenging, but can be managed
for all projects bring change to the project-influenced commu- through “configuration management.” Traditional configura-
nity (stakeholders). It is important to identify areas that may tion management has the development shop performing
be problematic in order to build contingencies into the project compilations of the software with strict version controls.
and measure the organization’s ability to manage risk. Source code is “checked in/checked out” in order to manage
The successful signoff of key deliverables should be part access to the code being generated.
of the BSC measurements. Table B2 in Appendix B identifies Another approach is through process management,
the nine knowledge areas and the project inputs and out- which controls the actual software development activities.
puts that may occur during the planning phase. Not all the Change requests are prepared and approved prior to any
tools and techniques are used in every project every time, software being designed, fixed, or enhanced. The change re-
but the use of the more common tools and techniques as- quest also identifies all the required support”—training,
sists project managers in better definition of the project’s re- documentation, testing, etc.—for the “change prior to the
quirements, time frame, budget, communications, etc., to software being released into a production environment. A
improve knowledge and management of the project. combination of both traditional configuration management
Phase 3: Execution. During the execution phase of the and process management lends itself to a healthy project.
project, the planning phase output is implemented. Table B3 Issue (problem) management also assists in the monitor
in Appendix B covers some of the key activities that occur and control processes that drive successful projects.
during the execution phase. Monitoring and control activi- Most design teams ignore quality assurance requirements—
ties are more apparent during this phase (also see Table B4, usually attributing this avoidance to “lack of time.” This results
Appendix B). in poor quality and no continuous improvement of the pro-
During this phase, progress and improvements against duced products. When it results in a dissatisfied customer, the
the initial benchmarks and cycle times are used to compare health of the project is in jeopardy—and potentially the re-
and improve the BSC outcomes. Problems with financial, maining three areas of the BSC also are in jeopardy.
customer, operational, or training/innovation areas are Effective communications is also a requirement for
identified and root-cause analyses are performed in order to quality to be attained. Because quality is a cooperative ef-
improve performance and successfully manage through to fort, everyone on the team must be aware of problems and
project completion. needs, and support the solution.
The quality-assurance/quality-control planning that was Decision-making should be pushed to the lowest level
put into place during the planning phase is exercised, and possible. This allows for project leaders to make timely and
may necessitate a BSC measurement change at a lower level accurate decisions. When team members set their own per-
in order to identify areas of weakness within the planned ac- sonal objectives (to match the project and organizational
tivities and their outputs. BSC), decisions align to the organization’s vision (see Figure
Sometimes the vision of the customer is short-lived, due 2). Table B4 in Appendix B provides a listing of the inputs,
to management changes. Executives read the newest man- processes, and outputs of the knowledge areas generally

42 Project Management Journal March 2001

used during the monitoring and controlling activities of organization’s agenda and culture. The aim of the BSC is not to
projects. control projects, but to communicate and align the organiza-
Phase 4: Closing. During the final project phase (see tion, its projects, and its people with its strategy and vision.
Table B5, Appendix B), all the previous BSC measurements As the BSC is used and measures evaluated, solutions are
are reviewed and documented in the project closeout report applied to the areas where critical measurements are out of
for “best practices,” “lessons learned,” and project outcomes. alignment with the established goals. There is continued re-
This information is also published to the organization’s finement of the measurements, as it takes time to capture rel-
knowledge base in order to communicate it to other project evant and useful data that can be used to measure success.
managers as part of the continuous learning organization. This continuous improvement process is shown in Figure 3.
The BSC for the project itself is fine-tuned prior to the next The Customer Perspective. The customer perspective
project being undertaken. of the BSC approach, as it relates to projects, looks at the
market value of the project deliverable as well as stake-
holder satisfaction in the project outcome (not output). The
Establishing the Balanced Scorecard purpose of the project is not to serve the project team or
Some organizations are using the nine processes, as defined sponsor, but it is the organization’s success in its interna-
by the PMBOK® Guide, to establish and perform scoring on tional environment. The customer view reflects the respon-
projects. This is a different approach, based on the needs of siveness, timeliness, product service, quality, and cost. The
each phase. The processes continue throughout the project question to ask: “Are the organization and project effectively
life cycle, but each phase has its own specific requirements for and successfully providing value?”
the project’s health. In either case, the same end product is The customer values the way she is treated as much as the
produced—a scorecard for project health. This overall score- product and services that the vendor provides. While time to
card provides for strategic planning for future project/internal market or lead-time, quality, performance, and cost are com-
business improvements. ponents into which a customer investigates and tracks a
Project/internal business is built upon goal setting—for vendor, the customer’s expectations are usually a great deal
cost, schedule, performance, and scope. These goals can be bigger than what is delivered by the vendor. How the product
measured (if appropriately stated), targets established, and and service are delivered is as important, or sometimes more
accurate measurement systems created. The measurements important, than who, what, when, where, and why they are de-
provide a baseline from which decision-making in critical livered.
performance areas can be supported as chosen by the orga- According to a customer satisfaction survey by The Mar-
nization, the project sponsor, the project manager, and the keting Science Institute of Cambridge, Massachusetts (Smart
project team. Workplace Practices, 1996), customers want their products
When marking the scorecard, data must be collected con- and services delivered with the following four characteristics:
sistently and at the appropriate times in order to have accu- ■ Reliability—Customers want dependable, accurate, and
rate scores. Documenting these scores should also be done consistent project deliverables and milestones met. They
in such a way as to be easily understood and able to be in- want promises that are made to them to be kept.
terpreted correctly and appropriately. The scores should as- ■ Responsiveness—Prompt delivery and continuous commu-
sist the project manager and project office to: nication are keys to cooperative project/internal business.
■ Monitor critical tasks and capabilities that are required to ■ Assurance—The confidence level of the project team to de-
complete the project successfully liver its project on time, with quality, and within scope comes
■ Assist in tracking factors that are critical to customer sat- from concise knowledge and skill to meet the challenges of
isfaction (not necessarily related to product or services— the product or services offered to the customer.
more with relationship building) ■ Empathy—Project team members need to listen and under-
■ Observe trends across and within projects stand the customer. This implies understanding beyond the
■ Set tolerance levels contractual arrangements. When the project treats the customer
■ Provide boundaries within which projects may work as a partner or team member, increased individual attention is
■ Reveal variances from these established controls given to those that will be receiving the project output.
■ Provide measurements for analysis When customers are treated with indifference, 68% (Rock-
■ Provide early warning signals efeller Foundation, as quoted by Smart Workplace Practices,
■ Assist in planning for continuous improvement in all 1996) find another vendor instead of continuing to purchase
BSC perspectives. from that provider that hasn’t taken care of them the way
The organization/project office establishes the measurements they expected. People who are unhappy with the products or
that will be targeted for each project and the project portfolio to- services tell an average of 12 people (Bizmonthly, 1997) why
gether based on the four perspectives of customers, project/in- they stopped buying from that particular vendor. Customers
ternal business, finance, training, and innovation. Each are an integral part of project management and so have to be
perspective provides an interpretation of the overall corporate vi- focused on through the BSC. A list of possible customer per-
sion so that the perspectives are interrelated approaches to the spective measurements are identified in Figure 4.

March 2001 Project Management Journal 43

 Organization’s
Vision

Team Member’s
Organization’s
BSC
BSC
Obtain Feedback
& Learning

Project
Management Project’s BSC
Office BSC No Project BSC shows
Project BSC shows
Success? Need to Improve?

Translate the Yes

Vision to Project

Finetune BSC Finetune BSC

Communicate
Vision to Team
Document Best Document
Practices Lessons Learned

Link to Project
Objectives
Institute
Celebrate
Corrective
Successes
Measures
Plan BSC Outputs
to Meet Desired
Outcome

Project
Organization’s
Management
BSC
Office BSC

Figure 3. BSC Continuous Improvement Process

The Project (Internal Business) Perspective. Any- formance, and cost from the level of excellence set to be
thing that influences products and services offered by the or- measured against, and the outcomes.
ganization needs to be examined and mapped to a The Financial Perspective. Financial perspectives ex-
continuous improvement process. These are the core compe- amine how the organization looks to shareholders/key
tencies of the organization—what it is built upon. Employee stakeholders. Does the project outcome generate the ex-
skills, productivity, factors affecting cycle time, and quality pected revenue? Did it cost what was budgeted? Are the
all impact the customer’s expectations. maintenance costs what was expected? Past projects can es-
The organization needs to ask itself, “At what do we need tablish the measurement objectives for the current project.
to excel?”, in order to target the areas that are to be included The project must bring value to the organization in order
in the BSC for the project/internal business perspective. If to be rated as successful. The financial perspective of the BSC
the organization is to continue to hold and increase its examines whether or not the project is contributing to the or-
market share, it must establish specific measurements to ganization’s bottom line. It should reflect profitability,
evaluate its excellence and evolutionary trends. growth, and value based on actual cash flow, and not activi-
The project/internal business perspective incorporates ties and processes.
the quality management plan that is developed during the When the other three perspectives are successful, the fi-
planning phase of the project. It utilizes all the processes nancial perspective is influenced positively. Two key financial
that take place within the project life cycle in delivering the benchmarks are payback period and return on investment.
project’s end product. It evaluates the scope, timeliness, per- How long does it take to break even on the investment made

44 Project Management Journal March 2001

 Balanced Scorecard:
Approach to Evaluating
Project Health
On Time
On Budget
Within Scope
With Quality Performance
Net Present Value Initiation/Conceptualization Customer Satisfaction Index
Earned Value (timeliness, quality, relationships—
responsiveness, reliability, integrity,
Payback Period
empathy, communication, assurance,
Return on Investment trust, understanding of multidimensional

Planning
Return on Assets Financial Customer customer expectations)
Internal Rate of Return Perspective Perspective Economic Value Added

Project
Health

Project Support/Operational Change Team/Supplier Satisfaction

Indices
Close

Best Practices/Lessons Learned Project/

Training & Achievement of Corporate Objectives
Documented, Available and Implemented Internal
Innovation
Team Members Trained in PM and Business Nine Management Areas
Perspective (Procurement, Scope, Time, Cost, Quality,
Specific Field of Expertise Perspective
Human Resource, Communications, Risk,
Information Economics (IE—providing Integration)
better customer service or increased Implementation/Execution
competitiveness)

Figure 4. Examples of Tools for BSC Measurements

by the project? How long before the market share is increased nology required? Did they try new ways, which haven’t been
because of the investment in the project? Did the organiza- used before, of approaching their tasks—developing “best
tion gain repeat business? Do the shareholders value the in- practices”? Is the team/project success continuously improving
vestment as complementary to the organization? to match the changes demanded by the products and services
The Innovative and Learning Culture Perspective. offered by the organization? Did the project make/bring posi-
The organization must continually evolve in the products tive impact or improvements to the organization?
and services it offers if it is to keep pace with the evolu-
tionary business environment. It has to be able to rapidly
and reliably introduce new products at the right price, the Designing the Balanced Scorecard
right place, and the right time to improve penetration into In the PMI® methodology, the inputs and outputs, as are the
new markets. outcomes, are clearly defined. This is a requirement of BSC and
Sometimes this approach does not receive the level of in- any performance measurement system. What is not clearly de-
fluence on an organization that it should, because the orga- fined cannot be measured. The organization also needs to
nization has been successful in its current products and know what it intends to improve within the project/internal
services. Just look at the car industry to see what innovation business system—to set goals for performance improvements.
and learning can achieve as they keep pace with ever- Once these goals have been set, the organization can then eval-
changing customer expectations. Beauty and speed are re- uate its position today in relation to future goals.
placed with economy and safety as baby boomers become Measurements that are taken in any project-based orga-
parents. Successful organizations track the customer culture nization should direct the executives, project managers, and
and match the cultural evolution to its products. team members to progress and improve. The statistics, when
The ability of the organization/project to be innovative and properly applied, should show both strengths and weak-
continue to learn throughout the life cycle of the project re- nesses of the organization, and invoke strategic and tactical
flects the organization’s ability to keep its vision as the focus. planning to encourage excellence.
Were team members provided the training they needed to per- When measurements and diagnoses are correctly ap-
form their assigned tasks, develop their skills, use the tech- plied, team members understand how they fit into the

March 2001 Project Management Journal 45

overall corporate strategy, giving each person a sense of im- the projects are being managed. The BSC approach can im-
portance in the improvement process, whether at the exec- prove: overall understanding of projects to reflect how valu-
utive, management, or team member level. able they are to the organization; the level of benefit
The organization also needs to determine what kind of in- provided by the project to meet business needs; how well the
centives will be provided for improvement and when these in- project is being managed; and how the management could
centives will be awarded. The method of data collection be improved upon, as well as how strategic the project is to
should be simple enough to use, yet provide a level of detail the organization. Is it visionary? The BSC should be used to
and accuracy in order to be valid and useful. Wherever pos- measure an organization’s project portfolio rather than an
sible, the project management tools currently in use should be individual project.
used to provide some measurements without instituting new A project’s minimum measurements should include:
measurements. (Project schedule, budget, and rework are all Financial
measurement tools that are normally used for projects today.) ■ On time (considering that “time is money”)
The measurement process should belong to those people ■ Within budget
doing the work—the project team members. The informa- ■ Variance from original baselined budget and final budget
tion should be useful, firstly, to the project team in order to ■ Project costs as compared to industry standards and or-
know the health of the project and be able to correct any ganizational standards for similar projects
slippage early in the circumstance and, secondly, to the or- ■ Earned value
ganization’s management team in order to evaluate/provide Customer
support where and when required. ■ Project meeting intended objectives
When establishing project-specific BSCs, the following ■ Customer satisfaction (including account payment history)
suggestions are useful: ■ Economic value added (strategic benefits rather than fi-
■ Limit measurements to 20 or less. If more than 20 mea- nancial benefits achieved—referencibility, increased venture
surements are used, the data will be less usable, the effort capital support, etc.)
involved to manage the measurements becomes too great, Project/internal business
and the team will not believe that it is positively influencing ■ Project resource requirements management
its project outcomes. ■ Average management time of project manager related
■ Base measurements on reviews of projects and the orga- to total effort
nization, not on arbitrary numbers. ■ Project portfolio comparatives
■ Link organization’s vision, mission, and goals, and ad- ■ Project cancellation rate
just to changes within these high-level strategies. ■ Project backlog—awaiting startup
■ Look at the past, present, and future tactical and strategic ■ Risk management statistics
objectives and measurements. ■ Contingency time allotted and used
■ Baseline measurements in order to track improvements. ■ Change management statistics (number of change
As in any project scheduling exercise, rebaseline when the records per designated period of time can show whether
previous baseline is no longer valid, due to scope changes, proper project scope has been set, percent change to cus-
and reset targets. tomer/vendor environment impact to scope)
■ Be consistent throughout the organization (top down) to ■ Quality management statistics (rework, issues, mill rate, etc.)
all levels—individuals within the team should have their ■ Project team member satisfaction
own BSC and improvement as well as each project, the cor- Growth and innovation
porate project portfolio, and the organization. ■ Average capabilities per team member and improvement
■ Roll up all the measurements taken within the BSC to a over course of project
single measurement to indicate overall project, portfolio, ■ Development or ongoing improvement of templates,
and organization performance. procedures, tools, etc.
Figure 4 provides a listing of measurements that may be ■ The rate that innovative ideas are developed (new ways of
chosen by the organization in its effort to create a BSC ap- doing things)
proach to projects. The choices that are made should be: ■ Best practices identified
clearly understood by all levels of the organization in order ■ Lessons learned and applied
to be meaningful; “owned” by all; and encourage improve- ■ Positive achievements/impacts to the organization.
ment. The representation of the project health status should One of the axioms of the BSC is the need to ensure greater
also be easy to read and interpret so that everyone who re- balance of cause-and-effect relationship between indicators.
views the BSC results reaches the same conclusions, and it How the statistics are used to improve the overall project/in-
should provide evidence that there is improvement or lack ternal business are listed below:
of improvement from the previous period(s). ■ Evaluate quantitative statistics
Projects in most organizations are measured against the ■ Examine true costs of operation, evaluating impact of
“on-time, on-budget” objectives. This is a quantitative, not project slippage and inadequate support and nonsup-
qualitative, measurement and doesn’t really convey how well port infrastructure costs

46 Project Management Journal March 2001

 1. Identify Major Steps of Specific 4. Establish Responsibility Matrix
Project and Document in Business Case • How will measurements be used within the
organization, Project Management Office
and Project?
• Who is responsible for BSC reporting results?

2. Create a Comprehensive
Project Implementation Plan
5. Complete and Track to Project Plan

3. Develop BSC Measurements

• Examine PIP. 6. Have Status Reporting and Control
• Identify valid measurements that Meetings and Documentation
align to the organization and
Project Management Office.

Figure 5. Project Steps Using BSC

■ Evaluate organizational change References

■ Evaluate how the change has impacted organization’s Barrett, Paul T. (1997, April). The high cost of losing customers.
business Bizmonthly. Available: http//www.bizmonthly.com/news1997/april/
barrett.shtml
■ Reduce to lowest common denominator Furlonger, J. (1999, Feb. 24). Using the Balanced Scorecard to
■ Review support costs vs. costs of delay per person Measure Project Success. Document #DF-07-1443. GartnerGroup
■ Review actual project costs vs. plans (net present value) Gartner Interactive Research Note. Decision Framework. Available:
■ Review strategic objectives achieved http://gartner4.gartnerweb.com
■ Review qualitative statistics
Shepko, Robert, & Douglas, Brian. (1998, December). Reframing
for crisis [Online]. Available: www.nacubo.org/website/members/
■ Identify unanticipated benefits accrued
bomag/9812/benchmarking.html [Paragraph header: “Why Use a
■ Review attainment or contribution to organizational Model?”]
objectives vs. time commitment Smart Workplace Practices. (1996). 4 “must–have” elements of
■ Review overall business value improvement good service. Smart Workplace Practices (newsletter). Available:
■ Revenue increase/decrease
http://www.smartbiz.com/sbs/arts/swp41.htm
■ Team retention and promotion
■ Increased market share, references.
Additional References
Belford, Charles. (1998, February). Overcoming the oversight chal-
lenge: The buck stops here. Executive Brief, Government Computer.
Summary Bensaou, M., & Earl, Michael. (1998, October). The right mindset
The BSC approach to projects allows “decision-making that for managing information technology. Harvard Business Review.
Brown, Mark Graham. (1996). Keeping score: Using the right met-
is facilitated through unification of disparate information rics to drive world-class performance. New York: Quality Resources.
into a single management report” and helps managers “to Cooper, Kenneth G. (1994, March). The $2,000 hour: How managers
look beyond their internal departmental agendas and make influence project performance through the rework cycle. Project Man-
decisions for the good of the enterprise” (Shepko & Douglas, agement Journal, XXV (1).
1998). It establishes an objective framework for the contin- Dresner, H. (1997, March 28). BI user methodology—Putting
the pieces together. GartnerGroup Gartner Interactive Research
uous assessment of project effectiveness using real data. Note. Strategic Planning. Available: http://gartner4.gartnerweb.com
Organizations that have incorporated a BSC approach to Dresner, H., & Kleinberg, K. (1998, Sept. 14). Balanced score
business have found that they have had to refocus the way card—A new BI buzzword. Commentary, GartnerGroup.
that they do business. The author believes that a BSC ap- Frick, V. (1998, Sept. 16). Measuring TCO and benefits during IT
proach will also refocus the way that projects are managed, decision-making. Inside Gartner Group. GartnerGroup.
Harbour, Jerry L. (1997). The basics of performance measurement.
fine-tuning an organization’s projects and project/internal New York: Quality Resources (Kraus Organization Ltd.).
business processes to align with and meet the core values Harrington, H. James, Esseling, Erik K.C., & van Nimwegen,
and practices of the organization. Harm. (1997). Business process improvement workbook: Documenta-
tion, analysis, design, and management of business process improvement.
New York: McGraw-Hill.

March 2001 Project Management Journal 47

 Ibbs, C. William, & Kwak, Young-Hoon. (1997). The Benefits of Performance Measurement in the Public Sector at
Project Management: Financial and Organizational Rewards to Cor- http://www.governor.state.ut.us/planning/perform.htm
porations. Newtown Square, PA: Project Management Institute. The Accountability Scorecard at
Inglis, Norm. (1998). Managing IT projects for success. Canadian http://home.att.net/~nickols/scorecrd.htm
Government Executive, 4 (1). Balancing the Scorecard: Beyond the Bottom Line at
Kaplan, Robert S., & Norton, David P. (1993, September–Oc- http://www.cpaonline.com.au
tober). Putting the balanced scorecard to work. Harvard Business Re- From Gutter Balls to Strikes: UCSD’s Balanced Scorecard
view on Measuring Corporate Performance. Boston: Harvard Press. Program, and Reframing for Crisis at
Kaplan, Robert S., & Norton, David P. (1992, January–February). The http://www.nacubo.org/website/members/bomag/00/11
balanced scorecard—Measures that drive performance. Harvard Busi- The Making of a Marriage: The Balanced Scorecard at
ness Review on Measuring Corporate Performance. Boston: Harvard Press. http://www.outsourcing-journal.com
Kaplan, Robert S., & Norton, David P. (1996, January–February). Balanced Scorecard at http://www.gentia.com
Using the Balanced Scorecard as a Strategic Management System. Developing the New IT Scorecard at
Harvard Business Review on Measuring Corporate Performance. Boston: http://www.esi.es/Publications/Articles/Art/96AAA01.html
Harvard Press. Measuring and Improving Corporate Information Technology
Kerzner, Harold. (1998). In search of excellence in project manage- Through the Balanced Scorecard at http://is.twi.tudelft.nl
ment: Successful practices in high performance organizations. New York: Serving the American Public: Best Practices in Performance
John Wiley & Sons, Inc. Management at http://www.npr.gov
Pendlebury, John, Grouard, Benoit, & Meston, Francis. (1998).
The ten keys to successful change management. New York: John Wiley
& Sons, Inc.
Sparrius, Ad. (1994, March). You can’t manage what you don’t
understand. Project Management Journal, XXV (1).
Spendolini, Michael J. (1992). The benchmarking book. New York:
AMA. Wendy E. Stewart, PMP, works in the public and for-
Spitzer, Quinn, & Evans, Ron. (1997). Heads you win: How the profit and not-for-profit private sectors in general man-
best companies think. New York: Simon & Schuster. agement and project management, with a concentration
Tregoe, Benjamin B., & Zimmerman, John W. (1980). Top man- in software development, deployment, and support ser-
agement strategy: What it is and how to make it work. New York: vices. She provides instruction in project management,
Kepner-Tregoe. project management tools, computer hardware, software, and cus-
Truax, Jean. (1997). Investing with benefits in mind: Curing invest- tomer service to community groups and within the organizations where
ment myopia (White Paper). Montreal: DMR Montreal. she works. She currently works in the project office of Eftia OSS Solu-
tions, Inc., designing processes and implementing templates, reports,
and tools to support the project managers and senior executives. She
Websites trains the organization’s project managers on MS Project 2000 and
Best Practices in Project Management at http://www.4pm.com provides project audits on customer projects for continuous improve-
Performance Improvement and Balanced Scorecard at ment. She is a member of the PMI Ottawa Valley Outaouais Chapter.
http://www.bma.com.au

Appendix A. Examples of Measurement Criteria

Employee Satisfaction Index Customer Satisfaction Index Quality Index

Normally taken every six months: Measurements taken on: Measure:
■ Measurements taken on ■ Customer surveys ■ Accuracy
■ Employee morale ■ Customer focus group feedback and ■ Completeness
■ Absenteeism participation ■ Conformance to specifications
■ Focus group feedback ■ Complaints/legal suits ■ Conformance to methodology,
■ Hours worked per week ■ Contract renewals processes, policies
■ Retention ■ Type and level of communication ■ Timeliness
■ Complaints/grievances ■ References ■ Rate of change
■ Requests for transfer ■ Sales and marketing surveys ■ Rate of improvements made
■ Quality reviews ■ Usability
■ Delivery statistics ■ Rework required
■ Performance improvement metrics ■ Percentage/cost of scrap
■ Differentiation from the competition ■ Aesthetics
(what makes the organization unique) ■ Appearance

Appendix B. Project Phase Tables (Selected Knowledge Areas)

The following tables identify possible measurements that may be established for project benchmarks, based on the nine
knowledge areas of the PMBOK® Guide, in a phased approach. Each chosen output should be represented in the BSC mea-
surements to ensure that gating requirements for phase completions are met.

48 Project Management Journal March 2001

 Management Process Input Tools and Techniques Output
Scope Product description Project selection methods Project charter
Strategic plan Expert judgment Project manager
identified/assigned
Project selection criteria Constraints
Historical information Assumptions
Organizational policies Critical success factors
Other planning outputs Dependencies (other projects
within the organization)

Table B1. Initiation Phase

Management Process Input Tools and Techniques Output

Scope Project charter Project planning methodologies Scope definition
Project manager Project management information system Work breakdown structure
Constraints Stakeholder skills and knowledge Risk plan
Assumptions Product analysis Resource plan
Dependencies Benefit/cost analysis Project budget
Time Major milestones and activities Alternatives identification Organization/Governance plan
Quality High-level deliverables WBS templates Quality plan
Communications Resource requirements Decomposition Communications plan
Time Resource capabilities Precedence diagramming method Procurement plan
Calendars Arrow diagramming method Project schedule
Resource pool description Conditional diagramming method Project network diagram
Organizational policies Network templates Activity list and duration updates
Resource rates Analogous estimating Basis of estimates
Activity duration estimates Simulation Schedule management plan
Cost Chart of accounts Project management software Resource requirement updates
Quality policy Resource leveling heuristics Cost estimates
Standards and regulations Alternatives identification Cost management plan
Other process outputs Parametric modeling Operational definitions
Bottom-up estimating Checklists
Computerized tools Inputs to other processes
Cost estimating tools and techniques
Quality Benchmarking
Flow-charting
Design of experiments
Human Resource Project interfaces Templates Role and responsibility assignments
Staffing requirements Human resource practices Staffing management plan
Performance reports Organizational theory Organizational chart
External feedback Stakeholder analysis Supporting detail
Staffing management plan Negotiations Project staff assigned
Staffing pool description Pre-assignment Project team directory
Recruitment practices Procurement
Team-building activities
Reward and recognition systems Performance improvements
Co-location Input to performance appraisals
Training
Risk Stakeholder risk tolerances Interviewing Sources of risk
Sources of risk Expected monetary value Potential risk events
Potential risk events Statistical sums Risk symptoms
Decision trees Inputs to other processes
Opportunities to pursue,
threats to respond to
Opportunities to ignore,
threats to accept
Opportunities to pursue, Insurance Contingency plans
threats to respond to
Opportunities to ignore, Contingency planning Reserves
threats to accept
Contractual agreements
Procurement Procurement resources Make-or-buy analysis Statement(s) of work
Market conditions Contract type selection Proposals
Statement(s) of work Standard forms Procurement documents
Qualified sellers lists Bidders conference Evaluation criteria
Procurement documents Advertising Statement of work updates

Table B2. Planning Phase

March 2001 Project Management Journal 49

 Process Input Tools and Techniques Output
Scope Work results Inspection Formal acceptance
Product description
Project Implementation Plan General management skills Validation of plan
Supporting detail Product skills and knowledge Scope verification
Human Resource Organizational policies Work authorization system Quality assurance
Corrective action Status review meetings Team development
Cost Cost management plan Formal acceptance
Cost baseline Project management information system Communication
Quality Quality management plan Organizational procedures Work results
Operational definitions Inspection Change requests
Results of quality control measurements Quality planning tools and techniques Contracting procedures
Quality audits Quality improvement
Communications Communications requirements Communication skills Project records
Communications technology Information retrieval systems Performance reports
Procurement Proposals Contract negotiation Contract
Evaluation criteria Weighting system
Organizational policies Screening system
Independent estimates
Integration Work authorization system
Status review meetings

Table B3. Execution Phase

Management Process Input Tools and Techniques Output

Scope WBS Scope changes
Scope management plan Corrective action
Project plan Change control system Change control
Performance Reports Configuration management Schedule control
Change requests Performance measurement Cost control
Time Schedule management plan Additional planning Quality control
Project schedule Project management information system Performance reporting
Cost Cost baseline Project management software Risk response control
Cost management plan Computerized tools Project plan updates
Quality Work results Inspection Schedule updates
Quality management plan Control charts Corrective actions
Operational definitions Pareto diagrams Lessons learned
Checklists Statistical sampling Revised cost estimates
Configuration management plan Flowcharting Budget updates
Trend analysis Estimates at completion
Quality improvement
Acceptance decisions
Rework
Completed checklists
Process adjustments
Human Resource Teambuilding activities
Reward and recognition systems Performance improvements
Co-location Input to performance appraisals
Training
Communication Work results Information distribution systems Performance reports
Other project records Performance reviews
Variance analysis
Earned value analysis
Information distribution tools and
techniques
Risk Risk management plan Workarounds Corrective action
Actual risk events Additional risk response development Updates to risk management plan
Additional risk identification
Procurement Contract Payment system Correspondence
Seller invoices Contract changes
Payment requests

Table B4. Ongoing Monitoring and Project Control

50 Project Management Journal March 2001

 Management Process Input Tools and Techniques Output
Quality Performance measurement Performance reporting tools and Achievements/Outcomes
document techniques
Documentation of the product of User acceptance tests Formal acceptance
the project (User acceptance
criteria)
Other project records Project archives
Scope Critical success factors Checklists, control charts, Lessons learned
financial budget to actuals, etc.
Output Satisfaction indices, output/outcomes Performance improvement
areas
Scorecard results Best practices
Procurement Contract documentation Procurement audits Contract file
Administrative close
Formal acceptance and
closure of contract

Table B5. Project Close

Appendix C. BSC Examples

Project Gate requirements were above 80% compliance to standards for Business Case and Charter. Examples are taken from
a government department’s IT project portfolio during the initiation phase of the project. (Editor’s note: Red, Green, and
Yellow are shown as Black, Gray, and White, respectively.)

Project Overall Format

Project Overview Project Approach
and Language

Overall Compliance
Name

to Standard
Project Facilities and

Process Options and

Outstanding Issues

Document Change
Organizational and

Project Monitoring
Risk Management
Quality Objectives

Table of Contents
Plans for Support
Deliverables and

Effort Estimate
Stages/Phases

Quality Control
Dependencies

Cost Estimate
Responsibility
Terminology

and Control
References

Resources

Deviations
Objectives

Title Page
Approvals

Schedule
Activities

Activities
Purpose

Control
Scope

Other
Project A R G G G G Y G Y G G R R Y R Y R R R G Y G G G Y 58%

Project B G Y G R R R R R G R Y R G G G Y R G R R G G G G 52%

Project C G G Y R R R R R R R R R R R R R R G R R R G R R 19%

Project Portfolio Average Compliance 43%

Calculation of Overall Compliance to Charter Standards Project Charter Compliance to Standard

Legend:
Compliant with Out of a total of 24 criteria, perfect score is 48.
requirements G=2 Project A
Example: Red = 0, Yellow = 7, Green = 24 58% 52%
(0 + 7 = 24) = 31/48 = 65% Compliant 60%
Requires monitoring Project B
and minor corrections Y=1 50%
19% Project C
Requires immediate 40%
attention and correction R=0
30%
20% Project C
10% Project B
Percentage
0% Project A Compliance
Project
Name

Figure C1. Project Charter Standard

March 2001 Project Management Journal 51

 Legend:
Compliant with
requirements G=2 Calculation of Overall Compliance to Charter Standards

Requires monitoring
and minor corrections Y=1 Total of 20 criteria (122 subcategories are rolled up)

Requires immediate
attention and correction R=0

Project Name
Context Detail
Project A Project B Project C

1.0 Executive Summary Define problem or opportunity Y G Y

2.0 Purpose Statement Approach to solution G G G

3.0 Project Description Aims and objectives, financing required, future plans G G G

4.0 Background History What led to this requirement? G G G

5.0 Management Background, responsibilities, qualifications R Y R

Governance and Project Champion, Project Sponsor and their

6.0 Responsiblity expected involvement
R G R

Details of product/service and respective costs,

7.0 Marketing Analysis market research conducted, cost-benefit analysis, Y G R
promotions and publicity campaigns

Target audience, aim for culture, changes expected,

8.0 Audience how to be promoted Y G Y

9.0 Competition G G R

10.0 Realization Plan Where benefits of investment will be realized G G G

Reviews expected to be employed (independent, internal peer, external

11.0 Quality Assurance peer, project team sanity checks, oversight, investment), timeframes, Y R R
how changes will be handled due to reviews

12.0 Risks Risk management (identification, assessment, strategies, etc.) R G G

13.0 Expected Outcomes Critical success factors, deliverables leading and aligning to outcomes Y G G

Cash flow forecast, involvement of stakeholders, partnerships,

14.0 Financial Proposal requirements Y G G

Stakeholders, organizational association and structure, project

15.0 Operational Data methodology, growth potential, etc. R G G

16.0 Support All stakeholders and their level of support G G G

17.0 Summary Summary of business and outlook for the future G G G

18.0 Conclusion Summarize business objectives R G R

19.0 Appendices Supporting documentation, references, terminology used G G G

Cover page, document version control, table of contents, headers,

20.0 Overall Presentation footers, footnotes, etc. Y Y R

Overall Business Case Compliance is 73% 71% 93% 54%

Figure C2. Project Business Case

52 Project Management Journal March 2001

 93%

100%
71%
80% 54%

60%
40% Project A
Project C
20% Project B
Project B Percentage
0% Project A Project C
Compliance
Project
Name

Figure C3. Project Business Case Compliance

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