The Balanced Scorecard & Project Management


I have just finished reading a book on Project Management titled The Project Management Scorecard: Measuring The Success of Project Management Solutions by Jack J. Philips, Timothy W. Bothell & G. Lynne Snead.

Once we assuage our conscience by calling something a "necessary evil", it begins to look more and more necessary and less and less evil. –Sydney J. Harris, journalist (1917-1986)

The  idea of a scorecard to track management practices, their results and continuous improvement in a closed loop system is not novel to me.

I am sure that Kaplan’s Balanced Scorecard Methodology, that looks at 4 perspectives namely Financial, Process, Development & Customer, is well-known to most managers.

A scorecard is a way of tracking a firm’s performance and the BSC is a format for describing the activities of an organization utilizing a number of measures for each of the perspectives mentioned earlier. These measures may be linked to each other.

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To recap, the BSC looks at the following 4 perspectives of a business:

1> The Financial Perspective or the traditional perspective which focuses on  the financial measure such as ROI, profitability, growth, D/E etc. These are the measures that a shareholder would be interested and are available via the financial statements released by the company ( if it is a publicly held company).

2> The Process Perspective that looks at the processes of the company, their efficiency and more importantly their effectiveness.

3> The Development (or Learning) perspective that looks at learning new skills. knowledge enhancement and improvement of employee morale as a by-product.

4> The Customer Perspective that looks at how the customer perceives the organization: customer satisfaction, the no. of new clients, customer loyalty et al.

The scorecard is a Balanced Scorecard because it combines both external and internal aspects of the business. Finally, there exists linkages between the perspectives -the measures used allow us to reflect on the strength of these linkages and the cause-and-effect cycle of assumptions. The assumptions are our beliefs as to the causes of the effects, desirable or undesirable, though we would idealize the former.

So why would Project Management need a scorecard?

As mentioned earlier, scorecards indicate performance – they measure performance and are also a vehicle for communicating performance.

A project is a temporary organization or endeavor to achieve a defined result or goal within a specified time. So there are definitely parallels and hence a Project Management scorecard does make eminent sense.

Project performance is, of course, measured in an organization that handles or undertakes multiple projects. But the approach  outlined  to measure the tangibles and intangibles in a systematic manner is what sets this book apart from other approaches to project management.

The BSC is about implementing strategy using measures on the 4 perspectives of finance,process,learning&innovation and customers.

A similar scorecard that project management would require would need to tackle the following 4 perspectives:

1> Financial: What is the expected ROI from the project? Tangible and intangible benefits. What kind of measures would be used?

2> Processes: Are the project management processes in place both efficient & effective?

3> Learning: What are the lessons taken from the project? What are the benefits to the project manager & team members? Can these be quantified? Are lessons learnt incorporated to assist other projects? What is the effect on morale of the project team members? What is the effect on attrition? Does employee churn reduce?

4> Customer: What is the customer reaction to the project? How is our organization perceived by our customer? Is there repeat business? Is customer loyalty inspired?

An example of the use of a virtuous circle in ...

Image via Wikipedia

So yes, a scorecard could be applied to a project and especially a projectized organization. And that’s what the book The Project Management Scorecard: Measuring The Success of Project Management Solutions by Jack J. Philips, Timothy W. Bothell & G. Lynne Snead is all about.

Have a great week!

PS: The book does not mention the Balanced Scorecard but you’ll get the drift!

The Project Management Scorecard: Measuring the Success of Project Management Solutions (Improving Human Performance)

Google Books

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