What is Project Baseline and Why is it Important?

A project baseline is a reference point or benchmark all project managers set to compare progress with the plan, adapt to changes, and monitor project performance. This is done via some crucial aspects concerning with the project’s scope, schedule, cost, quality, risk, and performance.

Clearly, project baselines play a critical role in the success of every project as they envelop every factor that affects the project and keeps it on track, finishing it on time and within budget. In this blog, we will learn what is the importance of a baseline in project management, its benefits, and how you can manage your projects efficiently.

What is Project Baseline in Project Management?  

A simple project baseline definition is that it is the starting point for your project plan. According to the Project Management Body of Knowledge (PMBOK), the project baseline meaning is "the approved version of a work product used as a basis for comparison to actual results."

A baseline project plan is created by the stakeholders and is the initial plan without which you can experience overruns or project failures. According to a 2020 study by the Project Management Institute, 46% of projects reached completion within budget, and 39% were completed on time. The experienced organizations completed 63% of projects on time and 67% within budget. 

Project Management courses online help you understand the concept better. A project baseline can also be called a reference point, using which you can compare, measure, analyze, and assess your project’s progress. The key components of a project baseline are schedule, cost, and scope baseline in project management. These components are separately monitored, controlled, and integrated and help understand how a schedule delay will impact project costs. These components: 

• Define the project’s deliverables and estimated work. 
• They establish the amount and quality of work required to complete project goals within an estimated timeframe. 
• They help track task durations and milestones
• They help calculate the project’s estimated budget

Why Setting a Project Baseline is Important?  

Setting a project baseline is important because it gives you a starting reference to monitor progress over time. Only if you can compare the current progress of your project with an approved baseline can you understand whether the project is running according to the set plan. It is imperative to set a baseline because of the following reasons: 

1. Measures the Performance and Progress of Your Project

Whether you are close to completion or have deviated from the project actuals, project baselines help you gather a clearer picture. You can detect problems, evaluate the real-time performance of the project, and ensure it's on track if you have a robust schedule baseline in project management.

2. Helps in Resolving Problems

Project baselines help you tackle challenges like schedule delays, quality management, scarcity of resources, rigorous monitoring and tracking, and cost overruns.

3. Provides Deeper Insights 

A project baseline helps you enhance estimates as you compare your project’s cost, timeline, scope, and progress. This helps you analyze whether the variance is on the positive or negative side. Such calculations help you reduce the margin of error and improve the accuracy of your estimates. 

4. Monitors and Measures Actual Performance

A project baseline helps you assess the earned value of the progress and compare it with the project plan. This eventually lets you focus on performance and project trends and foresee problems. 

5. Encouragement for the Teams

Project baselines help teams to assess how much they have advanced and push them to be efficient and innovative in achieving their goals. So, if you want to manage your project and performance, you must set a project baseline.

Benefits of a Project Baseline:

Before we discuss how to set a project baseline, let us look into the key advantages of setting a project baseline:

Communicate Better with Stakeholders

Project baselines improve accountability, responsibility, answerability, and communication. People understand their jobs well and know what the stakeholders, whether organizational leaders or consumers, expect from them and how they should perform. The success of each project is already demarcated, and teams are expected to reach the projected goals, which are marked in project baselines.

Confront Issues Better

Project baselines help assess and predict future failures, errors, omissions, or challenges. It keeps the teams prepared and helps them adjust and manage accordingly.

Historical Estimates 

The documentation and trail of data recorded in the project baseline are based on historical estimates and reasonable expectations from the current project. This helps you understand what is required from the current one and what the outcome should be

Assess Team Performance 

As understood above, baselines help to measure progress. Thus, it becomes easier for you to monitor team performance and compare it with the requirements. This helps you assess how different teams and employees are performing.

How do you Set a Project Baseline? 

Attending online PMP classes gives you an overview of how you can diligently set project baselines. Before you set a baseline, you must understand its milestones, budget, schedule, and scope. Let us delve into the procedure of setting a project baseline: 

Step 1. Outline the Project Scope

The first step is to understand the critical aspects of the project by breaking down the project into milestones.

Step 2. Develop the Scope Baseline

Create a scope statement where you can describe the need for the project, estimation of deliverables, expected project outcome, challenges that can be resolved, and the right approach to delivery.

Step 3. Divide Milestones into Tasks

The next step is to break down the milestone structure into tasks and assign them diligently according to skill, expertise, knowledge, and experience.

Step 4. Develop a Task Schedule and Cost Baselines

Once the tasks are identified, you can create a schedule and cost baselines which are based on estimations about how long each task will take to complete. 

Step 5. Assign Roles and Responsibilities

Choose the right person for the right job, explain how long it should take to complete the task, and how and when to deliver the scope of work. 

Step 6. Establish KPIs

Key Performance Indicators help track performance; thus, it is crucial to use KPIs and set standards against which the actual performance of each staff member or employee can be measured.

Step 7. Review the Baseline

Before you execute the baseline, you must review it and revise it in case of immediate changes in schedule, costs, and people involved. 

Step 8. Get it Approved by the Stakeholders

It is paramount to have the stakeholders’ approval as it is important for them to understand the project, its cost, and its timeline. You can illustrate your baseline in the form of visuals or create documents and be open to revising your project baseline according to the suggestions/demands of the stakeholders.

Types of Baselines in Project Management

You can make three different types of baselines in project management on scope, schedule, and cost: 

Scope Project Baseline

This project baseline depends on the tasks that should be completed by the teams. This revolves around the requirements of the project, set milestones, and the role of each team member involved. The scope baseline comprises

• A scope statement is about the characteristics, objectives, and deliverables of the project.
• Work Breakdown Structure (WBS) breaks down the milestones into smaller activities and hence helps compare approved project deliverables with the actual performance of the project.

Schedule Project Baseline

A schedule baseline is about the start and end date of the project timeline, the time taken to complete the project, and the roles and responsibilities assigned to teams.

Cost Project Baseline

This baseline is an estimate of the cost and the basic expenditure of the project. There will be an approved budget, and this baseline will provide information as to how much can be spent at each stage and the measures that can be taken to eliminate waste or reduce expenses.

How do you Make a Project Baseline Plan? 

A step-by-step procedure has already been laid out for setting a project baseline plan. The PRINCE2 certification course can help you theoretically and practically understand important factors to consider before you make a project baseline plan. These are: 

Understand your Teams Well- before you create a baseline, understand the gist of the project and communicate transparently with your teams. It is important to assess which job should be assigned to which team member.

Prepare an Initial Project Charter- Use different project baseline templates and frame a charter on project opening, schedule, milestones, challenges, and project closure templates. Digital documents can help you create an internal platform, which can be accessible to all, and can also be attached to the project board. 

Ensure that Project Phases and Milestones are Robust- Solidify the flow of the project, minute details, and other high-level phases like research, design, prototyping, etc. Then build logical and realistic milestones around these phases.

Ensure that the Budget and Schedule can be Realistically Achieved- Accuracy in baselines is a must. When deciding on costs, you must consider tools, equipment, payroll, insurance, and all kinds of fees. 

When constructing the schedule, you should be realistic in assessing the average time it can take for a human to handle a specific project-related job. Focus on activity durations, start and end dates for the entire project, task dependencies, and the lead time and overlap between activities.

Work on Visualization of your Project- Learn how to create responsive Gantt charts, PPTs, excel charts, and other diagrammatic forms of expression that can help you communicate the project baselines with your respective teams.

Go Digital- It is the need of the hour to digitalize your project using intuitive and flexible software. This helps you update key parameters on real-time bases and also keeps project stakeholders in the loop without leaving the platform.

Templates of Project Closure  

Every good project baseline must come to an end. Before you close a project baseline, you must ensure that you define completion criteria, transfer the right documentation to the right people, and have the required documents/reports signed and finalized. This final stage of your project should have the following:

• Document information, history, and approvals
• A signed project charter 
• Archived Projects

Some of the project closure and project baseline templates that can help you understand the concept better are:

1. Lesson Learned Template
2. Change Log Template
3. Project Budget Template

Conclusion  

As you’ve read, a project baseline might be the very first stage, but it helps decide the future of your project. If it is well-defined, it can direct your project toward success, team motivation, and consumer satisfaction. The core objective of a project baseline is to overcome obstacles and convert a project into a success story. A baseline is a reliable reference point that you can easily adapt to and create an estimate of resources, time, and money required. 

It is important to get formally trained on project baselines. You must follow the KnowledgeHut Project Management certification path and learn everything about project baselines.