What Is A Project Baseline In Project Management? Detailed Explanation

project-baselines

It’s critical to have precise benchmarks to compare project performance to in order to monitor its progress. Project baselines serve this purpose. The ability to track progress, respond to changes, and still complete a project on schedule and within budget makes project baselines a crucial component of successful project management. Without project baselining, your project’s trajectory could be negatively impacted. If you are interested in project baselines, please read on for more information.

What Is A Project Baseline In Project Management?

In project management, a baseline refers to the project plan’s clearly stated initial condition. It serves as a constant benchmark against which to gauge and assess the advancement of your project. This makes it possible for you to gauge how well your project is doing over time.

Consider the scenario where your project is scheduled to be completed in six weeks. If your baseline schedule has a four-week completion, you can tell there is a problem and your team might need to make adjustments to hasten your progress.

Types Of Baseline In Project Management

Scope Baseline

In a nutshell, a scope baseline is an approved version of a scope statement, WBS, and it’s related WBS dictionary that we use as a point of comparison to track project progress and assess actual performance against anticipated outcomes. In plain language, a scope baseline also:

  • Defines settled goals, deliverables, and a project work scope,
  • Documents agreement between the stakeholders relevant to the project,
  • Provides a project with a work structure, and
  • offers direction for day-to-day work.

It is a component of the project management plan and consists of the following elements:

  • Project scope statement — describes the project scope, assumptions, major deliverables, and constraints.
  • Work Breakdown Structure (WBS) — a hierarchical decomposition of the total scope of work that the project team must do to accomplish the project objectives and create the required deliverables.
  • Work package — the lowest level of a WBS.
  • Planning package — a component below the control account (the component of WBS that we use for the project cost accounting) and above the work package, which has known work content but lacks specific schedule activities.
  • WBS dictionary — supports the WBS and provides information about the deliverables, activities, and scheduling for each component.

Cost Baseline

The PMI defines a cost baseline as “the approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures.”

A cost baseline also plays a significant role in a project, as it serves as a point of reference for project costs. However, it is not the same as a project budget. Rather, it represents the total cost estimates for all of the tasks in a project schedule. In a perfect world, the cost projections would be on par with or less expensive than the project’s actual costs.

Schedule Baseline

You should think about how long a project will take to finish before you begin. Therefore, you need a project schedule. And, a schedule baseline is the approved project schedule. Its main objective is to provide start and end dates so that we can compare our project progress and evaluate project performance.

The elements of the schedule baseline vary depending on your project. However, the essential ones usually include:

  • A sequence of project activities,
  • Activity durations,
  • Dependencies between activities,
  • Start and finish dates for every activity,
  • Resource requirements,
  • Underlying constraints or assumptions, and
  • additional elements that are crucial for planning the project schedule.

Without a schedule baseline, it is impossible to tell whether progress is being made toward or away from the predicted schedule.

Benefits Of A Project Baseline

There are three main benefits of having an approved project baseline:

  1. Improved estimates: Where a project has under or over-performed can be determined by comparing actual costs, schedules, or scope against a baseline. After that, future project plans and estimates can be enhanced using this knowledge.
  2. Better performance assessments: A baseline, as was already mentioned, offers a benchmark against which to gauge a project’s advancement. Without one, it is challenging to evaluate how a project is doing.
  3. Calculating earned value: You can assess actual performance in relation to your plan using earned value (EV). But it’s more than just a straightforward tool for evaluating performance. You can also use it to analyze project trends and predict whether a project will encounter issues in the future.

What Function Does A Baseline Serve In Project Management?

As was previously mentioned, every project requires a baseline so that project managers can keep track of how well the project is progressing. To find discrepancies, actual performance is compared to baselines for scope, cost, and schedule.

As our points of reference, the project’s scope, schedule, and cost baselines act as a map in the form of a treasure hunt. They assist us in determining how far the project has deviated from the initial baselines and whether or not this deviation is within our acceptable range.

We can consider our project to be successful if there is only a slight departure from our baseline. If deviations from baselines are significant, either the project wasn’t well-executed or the baselines were unrealistic.

Let’s take the $100,000 website development project as an example. When you enter week two of work and discover that you have already spent nearly half of this amount, something is obviously wrong.

project-baselines

Therefore, you ought to review the project’s actual costs using the project baseline to determine what went wrong and when.

What Is Required To Establish A Project Baseline?

Milestones, budget, schedule, and scope are the typical four components you’ll need to establish a project baseline. Let’s explore what these terms mean and how project teams can use them to establish baselines for their work.

  1. Milestones: These are the major milestones in a project that you hope to have attained by a particular date or dates that fall between the project’s start and end dates.
  2. Budget: What you intend to spend on the project is what you call your budget.
  3. Schedule: You and the other team members must be aware of the duration of any project before planning it. The project’s planned timeline is the schedule baseline.
  4. Scope: The scope of a project is the intended results, any deliverables, and the issue they address.

To further elaborate on each of these steps, you might also want to add other project documents, such as the work breakdown structure (WBS), activity or task list, and more, in addition to these four.

How Do You Establish A Project Baseline?

Now that you are aware of the fundamentals relating to the scope, cost, and schedule baselines, it is time to explain how we can create each one and establish an effective project baseline. Relax; it’s not that difficult. You should take the following steps:

  • Set a scope baseline,
  • Create a Work Breakdown Structure,
  • Create a cost baseline,
  • Organize a meeting with project stakeholders, and
  • Keep track of and document the project baseline.

Set A Scope Baseline

A scope statement that identifies the main deliverables must be defined first. As stated by the sixth edition of the PMBOK Guide, a project scope statement is a description of:

  • A project scope,
  • Major deliverables,
  • Assumptions, and
  • Constraints.

Create A Work Breakdown Structure (WBS)

A Work Breakdown Structure (WBS) must be developed after the project scope statement has been developed.

As was already mentioned, using a WBS allows you to break down project work and deliverables into smaller, more manageable components. WBS creation is advantageous because it offers a framework for what must be delivered. The next step is to create a baseline project schedule.

Develop A Project Schedule Baseline

The resources for every project activity must be identified in this step, along with the activities’ due dates and the project’s overall deadline. A Gantt chart is a popular tool used by project managers because it effectively displays the baseline project schedule. The next step involves establishing a cost baseline after the baseline for the project schedule has been established.

Create A Cost Baseline

Spend some time planning your project’s costs and developing a cost baseline that will act as a benchmark for determining whether your project is on track or if you are overspending. You must estimate the project’s overall costs in this step. Remember all the tasks and materials you need to complete them as you do that. Some costs you should plan may include:

  • Labor costs,
  • Material,
  • Equipment.

Next, link your schedule to your budget plan to make sure they are in sync. To ensure there are no issues during project development, compare the project budget to the cost baseline.

Organize A Meeting With Project Stakeholders

You will need stakeholder buy-in following the completion of all these steps. In other words, you need the project stakeholders’ blessing before you take any action. Set up a meeting to discuss the cost, schedule, and scope baselines in more detail.

Make sure to describe baselines in the meeting so that everyone is clear on how they’re used to assess whether the project is progressing as planned. Additionally, this is the time to respond to any stakeholder concerns and implement any necessary adjustments.

Document And Control The Project Baseline

A baseline for the project needs to be tracked and documented. If something important changes, it might alter. Then we must release an updated, new version. To prevent losing all historical information, we should save the previous version.

It is not recommended to alter a project baseline without first following formal change control procedures, such as a change request form and approval process.

project-baselines

Example Of A Project Baseline

Take this social media marketing campaign as a simple project baseline example:

To coincide with the release of a new product, your employer has asked you to develop a social media campaign. Building brand recognition and promoting early sales of the product are your objectives as you are given a project budget.

Therefore, your project baseline could look something like this:

  • Scope/deliverables: 500 direct sales
  • Schedule: One month
  • Cost: €1,000

You must first list all the steps required in this project baseline example in order to raise your conversion rate and reach the target of 500 sales. Plans for social media posts on various platforms, complete with copy and design briefs, would be included.

Following that, you can create a content calendar with your schedule and the best times and dates for each post. Create a thorough budget to allocate your expenses among different areas, such as., For Facebook ads, PPC costs.

Problems Caused By Not Having A Project Baseline

There are at least six possible problems that may occur when a strong project baseline is absent:

  1. Inadequate resourcing: Without a schedule, you might not know which resources you’ll need and when.
  2. Delays in the schedule (caused by improper timing of procurement, material delivery, etc.): It’s challenging to make sure material is ordered in time if you don’t know when you need it, particularly if you need to order something weeks or months in advance.
  3. Issues with quality management: Subpar quality may be the outcome of a vague scope baseline. For instance, if you know paint is required but are unsure of the color or finish, the result might not meet the customer’s standards for quality.
  4. A lack of proper change management: It is challenging to monitor and manage changes without baselines in place. It can be difficult to determine whether your outcome differs from what you initially anticipated because there is no benchmark to compare it to.
  5. The inability to accurately report progress: Similar to the previous example, without a baseline to compare against, it can be challenging to determine whether you’re behind schedule.
  6. Customer and/or sponsor dissatisfaction: Any of the aforementioned five issues can lead to subpar project performance, which will result in dissatisfied stakeholders, including your client and/or sponsor.

Conclusions

Project managers require a project baseline just as sailors require GPS. Since your project plan’s outlined beginning is known as a baseline in project management, it makes sense. Baselines for scope, cost, and schedule are used as a point of comparison and aid in keeping our projects on schedule.

Without a baseline, your project plan is incomplete if you’re managing a big project. It’s a trustworthy starting point that makes it simple to see if and when things went off course, enabling you to quickly adjust to and get past any unforeseen problems and obstacles.