Leading Indicators to Project Outcome

RT-220 Topic Summary
RT 220

Overview

Over the years, CII has conducted significant research to analyze and measure risks during project development and to develop tools to help predict potential risks to key project outcomes (cost, schedule, quality/operability, safety, stakeholder satisfaction). Perhaps the best known of these is the CII Project Definition Rating Index (PDRI), which is used by owners and contractors during front end planning. Once the PDRI exercise is completed, most tracking during project execution is accomplished with traditional measurements (cost and schedule variance, critical path tracking, performance ratios, earned value, etc.).

Traditional tracking has three drawbacks: 1) the requirement of hard data, 2) the cost of collecting data, and 3) the processing time to report results. The Research Team decided that what was needed was a method, once the front end planning and risk analysis have ended, of identifying indicators that most likely will lead to project success. To supplement traditional tracking, the Team decided to develop a new tool, the Project Health Indicator or PHI, that does not rely on hard data and has broader application because management can utilize it at all levels of the organization to assess project “health.” The tool is for use during the detailed engineering, procurement, and construction phases of a project.

The tool relies on “Leading Indicators” which the Team defined as: Fundamental project characteristics and/or events that reflect or predict project health. Revealed in a timely manner, these indicators allow for proactive management to influence project outcomes.

There are two limitations in using the PHI Tool. The first limitation is that the data collection for the research was generally limited to CII member organizations. Therefore, the projects used in the research were mainly from the industrial and building sectors. The second limitation is that the PHI Tool will not actually measure and quantify a specific amount of risk for a project, but will forecast the potential risk that certain project outcomes will not be met. 

Key Findings and Implementation Tools

1 : Leading Indicators

43 Leading Indicators were identified in the research. A partial list of these indicators is provided below: (IR220-2, p. 3, Table 1)

  1. The project team is lacking in the necessary expertise, experience, breadth, and depth to successfully execute the project.
  2. The project team is experiencing a high turnover rate and instability in team membership.
  3. The project team’s response to Requests for Information, questions, and changing events that can significantly impact the project results is slow, inadequate, or incomplete.
  4. The project team is losing confidence in the accuracy and validity of the schedule.
  5. Project milestones are not being met and are consequently jeopardizing future project milestones.
  6. Construction is awarded before adequate completion of project design, including discipline design packages, resulting in an incomplete scope definition at time of award/start of construction.
  7. Business goals, project objectives and priorities, and critical success factors are not being consistently used by project team members and key stakeholders to guide decisions.
  8. Owner and/or contractor are requesting an excessive number of contract changes and/or scope changes during project execution (detailed design, procurement, construction, and startup).
  9. Significant project scope items are inadvertently omitted from bid packages.
  10. Some project participant companies become financially unstable.

Each of the 43 Leading Indicators has a sheet that more fully describes the indicator and gives considerations for measurement. An example for Leading Indicator 18 is shown below.

Reference: (IR220-2)

2 : Relating Leading Indicators to Outcomes

From the surveys, RT-220 was able to statistically determine which Leading Indicators (LI) had the greatest impact on each of the 5 key project outcomes:

  • Cost
  • Schedule
  • Quality/operability
  • Safety
  • Stakeholder satisfaction
Reference: (IR220-2)

3 : Relating Leading Indicators to Project Practices

The Research Team grouped the 43 Leading Indicators into 8 Project Practices:

  1. Alignment
  2. Change Management
  3. Constructability
  4. Contracting
  5. Quality Management
  6. Safety Practices
  7. Project Controls
  8. Team Building
Reference: (RS220-1)

4 : Implementation Tool #1

IR220-2, Project Health Indicator Tool

The PHI is an Excel spreadsheet based tool and contains 2 outputs. The first output is the score that reflects the risk related to project outcomes, or a measure of project health. The second output is the correlation to project practices to help identify areas that should be improved to lower the risk of undesirable outcomes. The PHI tool is intended as a complement to traditional project controls and as an early warning system to identify problems earlier tan by traditional methods.
 
Reference: (IR220-2)
rt-220

Key Performance Indicators

Improved cost, Improved schedule, Improved safety, Improved customer satisfaction, Improved predictability

Research Publications

Forecasting Potential Risks Through Leading Indicators to Project Outcome - RR220-11

Publication Date: 12/2006 Type: Research Report Pages: 324 Status: Reference

Leading Indicators during Project Execution - RS220-1

Publication Date: 10/2006 Type: Research Summary Pages: 23 Status: Supporting Product

Project Health Indicator (PHI) Tool: Assessing Project Health during Project Execution - IR220-2

Publication Date: 10/2006 Type: Implementation Resource Pages: 107 Status: Tool


Presentations from CII Events

Plenary Session - Leading Indicators to Project Outcome

Publication Date: 06/2006 Presenter: Number of Slides: 17 Event Code: AC06

Implementation Session - Leading Indicators to Project Outcome

Publication Date: 06/2006 Presenter: Number of Slides: 35 Event Code: AC06


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