Principles and Practices of Performance-Based Project Management®

CONNECTING THE 5 PRINCIPLES
AND 5 PRACTICES OF
PERFORMANCE-BASED PROJECT
MANAGEMENT®
TO INCREASE THE PROBABILITY
OF PROJECT SUCCESS (POPS)
Both are needed, neither work aloneNiwot Ridge, LLC

§ A basic truth, law, or assumption.
§ An accepted or professed rule of action.
§ Habitual or customary performance.
§ Repeated performance or systematic exercise for the
purpose of acquiring skill or proficiency.
§ Condition arrived at by experience or exercise.
§ All progress to plan measured in tangible evidence.
§ Performance measured in units meaningful to the
decision makers.
Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

Structure of
Performance-Based Project Management®
¨ Detailed handbooks for the 5 practice areas of
Performance Based Management
¤ Identify Capabilities
¤ Define Requirements
¤ Establish Performance Measurement Baseline (PMB)
¤ Execute the PMB
¤ Apply Continuous Risk Management
¨ Work examples for each practice that can be put to
work as a reference design for the actual processes
needed to increase the Probability of Program
Success.
Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014 Performance-Based Project Management® is a register trademark of Niwot Ridge LLC

Our REAL goal is to align all the measures
of performance into a single cohesive
view of the Probability of Success

Motivation for integrating the Principles and
Practices is to increase the probability of success
¨ We need to…
¤ Improve our ability to define an Executable Plan
¤ Improve our ability to track Execution to Plan
¤ Provide better visibility to stakeholders
¤ Provide framework for accurate and timely issue
identification / prediction
¨ …in order to
¤ Reduce cycle time
¤ Get required capability to customer quicker, more
effectively, and within budget

1. What Does DONE Look
Like?
2. What is the path to
DONE?
3. Do We Have Enough
Time, Resources, And
Money To Get To DONE?
4. What Impediments Will
We Encounter Along The
Way To DONE?
5. How Do We Know We
Are Making Progress
Toward DONE?
Five Immutable Principles
Of All Successful Projects …

7
Apply Continuous Risk
Management to each
Performance Based Management
process area
Identify Needed
Capabilities needed to
achieve the project
objectives or the particular
end state for a specific
scenario.
Elicit Technical &
Operational Requirements
needed for the system capabilities
to be fulfilled.
Establish Performance
Measurement Baseline time–
phased network of work
activities describing the
work to be performed
Execute Performance
Measurement Baseline
activities while assuring
technical performance is met
Œ
Ž


The Structure Of This Briefing
¨ For each of the 5 Principles and 5 Practices there is
tangible evidence that the principles are being
applied according to the practice.
¨ The next page shows how the principles and
practices are evidenced through these documents.
¨ The following page shows the Numbers of the top
level documents, 1 through 23.
¨ Each document or series of documents is then
described with a Numbered pages, 1 through 23.
8

5 Immutable
Principles
5 Practices of Performance-Based Project Management®
Identify
Needed
Capabilities
Establish
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going?
ConOps,
SOO, SOW
Technical and
Operational
Based Plan
Incremental
Maturity
Measures
Physical
Percent
Complete
Risk
Identification
How are we
going to get
there? Integrated
Master Plan
(IMP)
Work
Breakdown
Structure Integrated
Master
Schedule
(IMS)
Iterative and
Incremental
Delivery
Risk
Analysis
What do we
need along
the way?
Resource
Management
Plan
Future
Performance
Forecasting
Risk
Planning
What
impediments
will we
encounter
along the
way?
4 Levels of
Uncertainty:
1) Variance,
2) Foreseen,
3) Unforeseen,
4) Chaos
Technical and
Programmatic
Risk handling
assigned to all
WBS
deliverables
Risk
adjustments to
cost and
schedule
measures
Risk adjusted
Performance
Measurement
Baseline
Risk
Tracking
How do we
measure
progress?
Measures of
Effectiveness
(MoE)
Measures of
Performance
(MoP)
Technical
Performance
Measures
(TPM)
Earned Value
Management
(EVM)
Risk
Control

5 Immutable
Principles
5 Practices of Program Success
Identify
Needed
Capabilities
Establish
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going? 1 5 10 14 19
How are we
going to get
there?
2
6
11
15 20
What do we
need along
the way?
7 16 21
What
impediments
will we
encounter?
3 8 12 17 22
How do we
measure
progress?
4 9 13 18 23

Identify Needed Capabilities
“Planning, under uncertainty, to provide capabilities suitable for a
wide range of modern-day challenges and circumstances while
working within an economic framework that necessitates choice.”
By Identifying system capabilities, the elicited technical and
operational requirements can be traced from the Measures of
Effectiveness (MOE) to each deliverable in the Integrated Master
Plan and Schedule. Capabilities state the “why” of the system.

5 Immutable
Principles
Identify
Needed
Capabilities
Establish
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going?
ConOps,
SOO, SOW
Technical and
Operational
Based Plan
Incremental
Maturity
Measures
Physical
Percent
Complete
Risk
Identification
How are we
going to get
there? Integrated
Master Plan
(IMP)
Work
Breakdown
Structure
Integrated
Master
Schedule
(IMS)
Iterative and
Incremental
Delivery
Risk
Analysis
What do we
need along
the way?
Resource
Management
Plan
Future
Performance
Forecasting
Risk
Planning
What
impediments
will we
encounter
along the
way?
4 Levels of
Uncertainty
Assessment
Technical and
Programmatic
Risk handling
assigned to all
WBS
deliverables
Risk
adjustments to
cost and
schedule
measures
Risk adjusted
Performance
Measurement
Baseline
Risk
Tracking
How do we
measure
progress?
Measures of
Effectiveness
(MoE)
Measures of
Performance
(MoP)
Technical
Performance
Measures
Earned Value
Management
Risk
Control

§ Partition system capabilities into classes of service within operational scenarios
§ Connect capabilities to system requirements using sysML
§ Define Measures of Effectiveness (MoE) from the customer point of view
§ Define in the delivery schedule the achievement of each Technical Performance Measure
§ Define scenarios for each system capability
§ Connect these scenarios to a Value Stream Map of the increasing maturity of the program
§ Assess value flow through the map for each needed capability
§ Identify capabilities mismatches and make corrections to improve overall value flow
§ Assign costs to a system element using a value model process model
§ Assure risk, probabilistic cost and benefit performance attributes are defined
§ Use cost, schedule and technical performance probabilistic models to forecast
potential risks to program performance
§ Make tradeoffs that connect cost, schedule, and technical performance in a single “trade
space” model
§ Measures of Effectiveness and Measures of Performance are the raw materials for
these tradeoffs
Define the set of capabilities to be employed to achieve desired objectives or a particular end
state for a specific scenario. Take the ConOps and define the details of who, where, and how
it is to be accomplished, employed and executed.
1.0
1.1
1.2
1.3
1.4
Chapter IV13 Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

What Should We Do?
Where Are We Now?
Identifying Needed System Capabilities
Abstracted from:
“Capabilities‒Based Planning – How It Is Intended
To Work And Challenges To Its Successful
Implementation,” Col. Stephen K. Walker, United
States Army, U. S. Army War College, March
2005
I

Concept of Operations, Statement of Objectives,
and Statement of Work
¨ The Concept of Operations (ConOps) tells us why
we are doing the project and what we are going to
do with the products or services that result from the
project.
¨ The ConOps tells the stories of these products and
services using scenarios or use cases.
¨ Theses stories describe the outcomes in terms
meaningful to the recipients of the outcomes from
the project.
1

Integrated Master Plan (IMP)
¨ The IMP is an event-based plan of a hierarchy of
program events, with each event being supported
by specific Specific Accomplishments, and each
Accomplishment Criteria associated with specific
criteria to be satisfied for its completion.
¨ The IMP defines the flow of increasing maturity of
major deliverables through Significant
Accomplishments and Accomplishment Criteria of the
Work Packages producing the products or services
of the project.
2

§ Authorize each Work Package to start work for the planned period of
performance.
§ Using Work Packages sequences, measures of performance for each
work package established – physical percent complete defined in units
of measure meaningful to the customer
§ Deliverables from each Work Package completion assessed against the
target Technical Performance Measure.
§ Measure other performance metrics – Late Starts, Late Finished, Margin
Erosion, near critical path dependencies, and resource utilization.
§ Adjustments made to Earned Value from the TPM assessments.
Events / Milestones define the
availability of a capability
at this point in the
schedule
Accomplishments define the
entry conditions for each
Event or Milestone
Criteria are the
exit conditions for
each Work Package
Work
Package
Work
Package
Work
Package
Work
Package
Work
Package
Work
Package
Work
Package
Work
package
2 Performance Based Management(sm), Copyright ® Glen B. Alleman, 2012
2

Two Types of Complexity
¨ Task Complexity – the number of interacting and
mutually dependent components of the project.
¤ Coordination is the key challenge in task complexity.
¤ Identifying, sequencing, allocating resources, ensuring
deviations from the critical path are corrected, and
achieving project goals within schedule, budget, and
design boundaries.
¨ Relational Complexity – Conflicting interests lead to
disagreements about project goals and about
priorities among tasks and features of the project
outcome.
3
† “Uncertainty and Project Management: Beyond
the Critical Path,” de Meyer, Loch, and Pich,
INSEAD Working Paper, 2001Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

4 Levels of Uncertainty†
¨ Variational Uncertainty – from many small influences
yields a range of values on a particular activity.
¨ Foreseen Uncertainty – are identifiable and
understood influences that the team cannot be sure
will occur.
¨ Unforeseen Uncertainty – can’t be identified during
project planning. There is no Plan B.
¨ Chaos – the basic structure of the project plan is
uncertain, as is the case when technology is in
upheaval or when research, not development, is the
main goal.
3
† “Managing Project Uncertainty: From Variation
to Chaos,” de Meyer, Loch, and Pich, MIT
Sloan Management Review, Winter, 2002Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

Measures of Effectiveness (MoE)
Measures of Effectiveness …
¨ Are stated in units meaningful to the buyer,
¨ Focus on capabilities independent of any technical
implementation,
¨ Are connected to the mission success.
4

Define Technical and
Operational Requirements
Baselined requirements are the basis of Work Packages and
Planning Packages and the work efforts needed to produce the
deliverables from these Packages.
These deliverables fulfill the technical and operational
requirements needed to deliver the system Capabilities.
Tracing Capabilities to Requirements assures each requirement
has a “home” in the system.

5 Immutable
Principles
Identify
Needed
Capabilities
Establish
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going?
ConOps,
SOO, SOW
Technical and
Operational
Based Plan
Incremental
Maturity
Measures
Physical
Percent
Complete
Risk
Identification
How are we
going to get
there? Integrated
Master Plan
(IMP)
Work
Breakdown
Structure
Integrated
Master
Schedule
(IMS)
Iterative and
Incremental
Delivery
Risk
Analysis
What do we
need along
the way?
Resource
Management
Plan
Future
Performance
Forecasting
Risk
Planning
What
impediments
will we
encounter
along the
way?
4 Levels of
Uncertainty
Assessment
Technical and
Programmatic
Risk Handling
assigned to
all WBS
deliverables
Risk
adjustments to
cost and
schedule
measures
Risk adjusted
Performance
Measurement
Baseline
Risk
Tracking
How do we
measure
progress?
Measures of
Effectiveness
(MoE)
Measures of
Performance
(MoP)
Technical
Performance
Measures
Earned Value
Management
Risk
Control

Define the technical and operational requirements that must be in place for the system
capabilities to be fulfilled. Define these requirements in terms isolated from any
implementation.
2.0
§ Produce an overall statement of the problem in an operational context.
§ Develop the overall operational and technical objectives of the target system.
§ Defined the boundaries and interfaces of the target system.
2.1
§ Gather required system capabilities, functional, nonfunctional and environmental
requirements, and design constraints.
§ Build a Top Down Capabilities and Functional decomposition of the requirements in a flow
down tree using a Requirements Management System.
2.2
§ Answer the question “why do I need this?” in terms of operational benefits.
§ Build a cost benefit / model using probabilistic assessment of all variables and
dependencies.
§ For technical requirements, perform a risk assessment to cost and schedule.
2.3
§ Determine criticality for the functions for the system mission.
§ Determine trade off relationships for all requirements to be used when option decisions
are made.
§ For technical items prioritize on cost and dependency.
2.4
§ Address completeness of requirements by removing all “TBD” items.
§ Validate the requirements agree and are traceable to system capabilities, goals, and
mission.
§ Resolve any requirements inconsistencies and conflicts.
2.5
Chapter V23 Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

Identifying Requirements†
†Systems Requirements Practices, Jeffery O. Grady, McGraw Hill, 1993Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014
II

Technical and Operational Based Plan
¨ The Value Stream is the sequence of deliverables
needed to produce the technical and operational
outcomes of the project.
¨ For each deliverable, an assessment of risk, cost,
and schedule to the successful delivery of the
planned value.
¨ Value of each deliverable measures in units
meaningful to the buyer of that value.
5

Work Breakdown Structure (WBS)
¨ The WBS provides a framework for describing
program objectives. Each WBS element provides
logical summary levels for assessing technical
accomplishments, for supporting the required event-
based technical reviews, and for measuring cost
and schedule performance.
¨ The WBS defines the program in terms of
hierarchically-related, product-oriented elements.
¨ The WBS is defined, developed, and maintained
throughout the system life cycle based on a
disciplined application of a systems engineering
process.
6

Resource Management Plan
¨ Identifies all of the resources required to complete
the project successfully.
¨ Starts with the Work Breakdown Structure, add cost
and period of performance elements to each level
of the WBS.
¨ Defines resource categories, types, or other
distinguishing attributes needed to identify
resources for the project.
¨ This plan used to verify project has all the needed
resources to successfully deliver the planned
outcomes.
7

Risks Assigned to Deliverables
¨ Each attribute of each deliverable and the work
needed to produce the deliverable needs a risk
adjusted value.
¨ Each risk has a probability of occurrence, cost
impact if not handled, cost to handle, residual
probability after handling, and residual cost.
¨ The risk registry records this information as well as
the period of exposure, the handling period, and
the period remaining after handling is complete.
8

Risk Handling Assigned to Deliverables
¨ Capture all risk information in a Risk Management Tool,
to be connected to the Integrated Master Schedule.
8

Measures of Performance (MoP)
Measures of Performance are …
¨ Attributes that assure the system has the capability
to perform,
¨ Assessment of the system to assure it meets design
requirements to satisfy the MoE.
9

Establish the Performance
The Performance Measurement Baseline (PMB) assesses progress
to plan through measures of physical percent complete.
Starting at the Work Package level, a pre–defined performance
measure is established.
During the performance period assessment of “progress to plan”
produces measures of Physical Percent Complete

5 Immutable
Principles
Identify
Needed
Capabilities
Establish
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going?
ConOps,
SOO, SOW
Technical and
Operational
Based Plan
Incremental
Maturity
Measures
Physical
Percent
Complete
Risk
Identification
How are we
going to get
there? Integrated
Master Plan
(IMP)
Work
Breakdown
Structure
Integrated
Master
Schedule
(IMS)
Iterative and
Incremental
Delivery
Risk
Analysis
What do we
need along
the way?
Resource
Management
Plan
Future
Performance
Forecasting
Risk
Planning
What
impediments
will we
encounter
along the
way?
4 Levels of
Uncertainty
Assessment
Technical and
Programmatic
Risk handling
assigned to all
WBS
deliverables
Risk adjusted
cost and
schedule
measures
Risk adjusted
Performance
Measurement
Baseline
Risk
Tracking
How do we
measure
progress?
Measures of
Effectiveness
(MoE)
Measures of
Performance
(MoP)
Technical
Performance
Measures
Earned Value
Management
Risk
Control

Build a time–phased network of schedule activities describing the work to be performed, the
budgeted cost for this work, the organizational elements that produce the deliverables, and
the performance measures showing this work is proceeding according to plan.
3.0
Decompose the Project Scope into a product based Work Breakdown Structure (WBS), then
further into Work Packages describing the production of all deliverables traceable to the
requirements
3.1
Assign Responsibility to Work Packages (the groupings of deliverables) for the named
owner accountable for the management of resource allocation and cost baseline and
technical delivery
3.2
Arrange the Work Packages in a well formed network with defined deliverables,
milestones, internal and external dependencies, appropriate schedule and cost
margin.
3.3
Develop a Time–Phased Budgeted Cost for Work Scheduled (BCWS) from labor and
material costs in each Work Package and the Project as a whole. Assure proper resource
allocations can be met and budget profiles match expectations of the program sponsor
3.4
Assign objective Measures of Performance (MOP) and Measures of Effectiveness (MOE) for
each Work Package and summarize these for the Project as a whole
3.5
Establish a Performance Measurement Baseline (PMB) used to forecast Work Package
and Project ongoing and completion cost and schedule metrics
3.6
Chapter VI33 Performance Based Management(sm), Copyright ® Glen B. Alleman, 2012Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

Establishing the Three Elements of the
Performance Measurement Baseline
Cost Baseline
Schedule Baseline
Technical Baseline
Determine
Scope and
Approach
Develop
Technical
Logic
Develop
Technical
Baseline
Develop
WBS
Define
Activities
Estimate
Time
Durations
Sequence
Activities
Finalize
Schedule
Identify
Apportioned
Milestones
Determine
Resource
Requirement
Prepare
Cost
Estimate
Resource
Load
Schedule
Finalize
Apportioned
Milestones
Determine
Funding
Constraints
Approve
PMB
Perform
Functional
Analysis
III

Incremental Maturity Assessments
¨ Maturity measures are defined through their
technical performance measures appropriate for
the stage of the project.
¤ Target performance – throughput, speed, reliability
¤ Target physical characteristics – mass, size
¨ Fidelity of a measure increases as the project
moved from left to right.
¤ Broader bands early in the project, narrow bands as
the delivery date nears.
10

Integrated Master Schedule (IMS)
¨ The Integrated Master Schedule (IMS) is an integrated
schedule containing the networked, detailed tasks
necessary to ensure successful program execution.
¨ The IMS is vertically traceable to the Integrated Master
Plan (IMP) (if applicable), the Contract Work
Breakdown Structure (CWBS), and the Statement of
Work (SOW).
¨ The IMS shall be used to verify attainability of contract
objectives, to evaluate progress toward meeting
program objectives, and to integrate the program
schedule activities with all related components.
11

Risk Adjusted Cost and Schedule
¨ Single point estimates of cost and duration are
wrong without the underlying statistical variance.
¨ Cost risk is related to duration risk as well as
inherent cost risk drivers. But these relationships are
rarely linear and are always probabilistic in nature.
¨ All margin for cost and schedule must be derived
from the model or some credible source.
¨ Management of this margin is embedded in the
program controls processes.
12

Monte Carlo Risk analysis starts with a credible schedule and
defines the probabilistic behavior of each activities and how it
drives the deliverables
12
The Risk+ tool sets the upper and lower bounds of the durationsPerformance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014

It shows 40% chance of completing on or before
2/10/03, the target completion date.
Date: 2/25/2009 3:34:12 PM
Samples: 300
Unique ID: 30
Name: Final Testing
Completion Std Deviation: 5.51d
95% Confidence Interval: 0.62d
Each bar represents 2d
Completion Date
Frequency
CumulativeProbability
Tue 2/11/03Mon 1/20/03 Mon 3/3/03
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16 Completion Probability Table
Prob ProbDate Date
0.05 Wed 1/29/03
0.10 Fri 1/31/03
0.15 Tue 2/4/03
0.20 Wed 2/5/03
0.25 Wed 2/5/03
0.30 Thu 2/6/03
0.35 Fri 2/7/03
0.40 Mon 2/10/03
0.45 Mon 2/10/03
0.50 Tue 2/11/03
0.55 Wed 2/12/03
0.60 Thu 2/13/03
0.65 Fri 2/14/03
0.70 Fri 2/14/03
0.75 Mon 2/17/03
0.80 Tue 2/18/03
0.85 Wed 2/19/03
0.90 Thu 2/20/03
0.95 Tue 2/25/03
1.00 Mon 3/3/03
12
This 40% chance is not likely to be acceptable, so something needed to be done to increase the
probability of success. This is the role of technical and programmatic management

Tie risk retirement to the Integrated Master
Schedule
¨ Each risk reduction
activity must be
defined in the IMS,
showing dates of
reduction and
dependencies to
produce this
reduction in risk.
¨ This integration
provides credible
evidence that risk is
actually being
managed.
12

Cost probability distributions change as a
function of the weighted cost drivers
12
$
Cost Driver (Weight)
Cost = a + bXc
Cost
Estimate
Historical data point
Cost estimating relationship
Standard percent error boundsTechnical Uncertainty
Combined Cost Modeling
and Technical Uncertainty
Cost Modeling Uncertainty

Managing margin from the Monte Carlo model
means having Plan B not delay beyond Plan A
12
§ Plan the risk alternatives that
“might” be needed
§ Each mitigation has a Plan B
branch
§ Keep alternatives as simple as
possible (maybe one task)
§ Assess probability of the
alternative occurring
§ Assign duration and resource
estimates to both branches
§ Turn off for alternative for a
“success” path assessment
§ Turn off primary for a “failure” path
assessment
30% Probability
of failure
70% Probability
of success
Plan B
Plan A Current Margin Future Margin
80% Confidence for completion
with current margin
Duration of Plan B Plan A + Margin£

Margin management means reusing margin
on future work activities
12
§ Programmatic Margin is added
between Development, Production
and Integration & Test phases
§ Risk Margin is added to the IMS
where risk alternatives are identified
§ Margin that is not used in the IMS for
risk mitigation will be moved to the
next sequence of risk alternatives
– This enables us to buy back schedule
margin for activities further
downstream
– This enables us to control the ripple
effect of schedule shifts on Margin
activities
5 Days Margin
5 Days Margin
Plan B
Plan A
Plan B
Plan AFirst Identified Risk Alternative in IMS
Second Identified Risk
Alternative in IMS
3 Days Margin Used
Downstream
Activities shifted to
left 2 days
Duration of Plan B < Plan A + Margin
2 days will be added
to this margin task
to bring schedule
back on track

Technical Performance Measures (TPM)
Technical Performance Measures …
¨ Assess increasing maturity of the design progress
¨ Define compliance to performance requirements
¨ Identify technical risks and their handling strategies
¨ Are limited to critical thresholds for program success
¨ Include projected performance adherence within
these critical thresholds
13

Technical Performance Measures (TPM)13
Variance
Planned Value
Planned Profile
Current Estimate
Milestones
Threshold
Upper Limit
Lower Limit
Mean To Between Failure
Time = Program Maturity
Achieved to Date
TPM

Execute the Performance
Using the Performance Measurement Baseline (PMB), each Work
Package must start as planned, complete on or near the planned
date, and produce the planned technical performance.
This is the key to success for any credible Performance Base
Management plan.
In the absence of this, the program is behind schedule, over
budget, and non–compliant with the technical goals.

Execute the Performance Measurement
Baseline (PMB)
IV

Physical Percent Complete
¨ Physical Percent Complete means tangible evidence
of progress to plan.
¨ This evidence is defined before the work starts in
units of measure meaningful to the decision makers.
¤ Number of units
¤ A Technical Performance Measure
¤ A compliance with specification, within error bands
¤ 0%/100% means defining what 100% means upfront
14

Iterative and Incremental Delivery
¨ Answer the question how long are you willing to wait
before you find out you’re late?
¨ The primary role of iterative and incremental
delivery is to provide sufficient time to correct any
deficiencies in the deliverables before they show up
late.
¨ Other advantages exist
¤ Feedback from users for technical improvement
¤ Adaptive requirements
¤ Rapid deployment of incremental usability
15

Future Performance Forecasting
¨ Using past performance and probabilistic modeling
produce a forecast of future performance of cost,
schedule, and technical performance.
¨ All forecasting is based on probabilistic confidence
intervals for the project’s variables.
¨ These probabilistic estimates are driven by the
underlying statistical processes of cost, schedule,
and technical performance.
16

Risk Adjusted PMB
¨ All numbers in the Performance Measurement
Baseline (PMB) are drawn from an underlying
probability distribution.
¨ Making adjustments for the probabilistic nature of
cost, schedule, and technical performance is
mandated by good management practices.
¨ Monte Carlo Simulation of cost, schedule, and
performance provides insight into the Probability of
Program Success (PoPS).
17

Earned Value Management
¨ Assign a Planned Value (PV)(BCWS) to each
element of work for all costs associated with
developing the outcomes.
¨ Measure physical percent complete to calculate the
Earned Value (EV)(BCWP) for that outcome at the
planned time of completion.
¨ Record the Actual Cost (AC)(ACWP) to perform the
work that produced the Earned Value.
¨ Calculate the Earned Value metrics needed to make
management decisions.
18

Perform Continuous Risk
Management
This section is extracted from the Software Engineering Institute’s
Continuous Risk Management (CRM) Guidebook. The CRM
describes the underlying principles, concepts, and functions of risk
management and provides guidance on how to implement it as a
continuous practice in projects and organizations.

5 Immutable
Principles
Identify
Needed
Capabilities
Define
Requirements
Baseline
Performance
Measurement
Baseline (PMB)
Execute the
PMB
Continuous
Risk
Management
Where are we
going?
ConOps,
SOO, SOW
Technical and
Operational
Based Plan
Incremental
Maturity
Measures
Physical
Percent
Complete
Risk
Identification
How are we
going to get
there? Integrated
Master Plan
(IMP)
Work
Breakdown
Structure
Integrated
Master
Schedule
(IMS)
Iterative and
Incremental
Delivery
Risk
Analysis
What do we
need along
the way?
Resource
Management
Plan
Future
Performance
Forecasting
Risk
Planning
What
impediments
will we
encounter
along the
way?
4 Levels of
Uncertainty
Assessment
Technical and
Programmatic
Risk handling
assigned to all
WBS
deliverables
Risk
adjustments to
cost and
schedule
measures
Risk adjusted
Performance
Measurement
Baseline
Risk
Tracking
How do we
measure
progress?
Measures of
Effectiveness
(MoE)
Measures of
Performance
(MoP)
Technical
Performance
Measures
Earned Value
Management
Risk
Control

Perform Continuous Risk Management
V

Risk Identification
¨ Transform uncertainties and issues about the
program into distinct and tangible risks that can be
described, assessed, and measured.
¨ Identify risks associated with technical and
programmatic attributes of each deliverable and
the associated processes.
¨ Two activities are involved in risk identification:
¤ Capture a statement of risk.
¤ Capturing the context of the risk.
19

A Well Written Risk Statement
¨ A well-written risk statement contains three components:
¤ Cause – The negative conditions that currently exist relative
to the risk
n Identification of root cause(s) of the risk
n This provides justification that a risk exists
¤ Probability of Occurrence – The likelihood of the occurrence
of the risk
n Within a future time frame
n Or a future event
¤ Consequence – The effect(s), negative impact(s) to the
program(s) in case the risk occurs
n The consequence should be related to at least cost, schedule,
scope and performance
n Consequence could also result in opportunities that may surface in
correcting the problems
19

Risk Analysis
¨ Determine probability of occurrence and cost
exposure.
¨ Examine risks in detail to determine the extent of
the risks and how they relate to each other.
¨ Determine which risks are important.
¨ Analyzing risks has three activities: evaluate
attributes of the risk, classify the risk, and rank the
risk.
20

Risk Planning
¨ Make sure the consequences and sources (root
cause) of risks are known.
¨ Develop effective risk plans to address not just the
risk, but the root cause.
¨ Plan efficiently to handle the risk.
¨ Produce the correct set of actions that minimize risk
and impacts.
¤ Buy down the risk – retirement plan
¤ Remove the root cause
21

Risk Tracking
¨ Collect accurate, timely, and relevant risk
information.
¨ Present this information in a clear and easily
understood manner appropriate to the groups
receiving the status report.
22

Risk Control
¨ Correct for deviations from the risk handling plans.
¨ Update probability of occurrence, impact, and
residual probability from the handling outcomes.
¨ Reassess risk ranking and handling plans after
corrections have occurred.
23

63 Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013, 2014
Performance-Based Project Management® is a registered trademark of Niwot Ridge LLC
Performance-Based Project Management: Increasing the Probability of Project Success, is Copyright
2014, American Management Association, ISBN 978-0-8144-3330-0

Principles and Practices of Performance-Based Project Management®

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