Baseline Target Actual Comparison

The Baseline/Target/Actual Comparison You have certainly heard of the Target/Actual comparison. In the project environment, many people talk about the Target/Actual comparison when they probably mean the Baseline/Actual comparison. A project baseline is defined when the original plan (original scope, cost and schedule) of the project is frozen, whereas the project schedule is a living document. The baseline is used to measure how performance deviates from the plan. The project’s baseline must be completely defined and documented before project execution and control activities can  begin. Is Target the same as Baseline? In a business sense, one speaks of Target Cost when it comes to the costs that should be incurred at the achieved level of performance according to plan. In engineering, the Target Value is a predetermined value, which should be achieved by a dynamic value – the actual actual value. Now what exactly exactly is the meaning of Target Value in the project environment? In project control, one tries to go one step further with the Baseline/Target/Actual comparison than with the usual Baseline/Actual-comparison. Here, the project progress is measured and analyzed not only qualitatively but also quantitatively. The analysis of the differences and the calculation of the Residual Values then provide the basis for predicting the final cost of the project. Figure 1 shows what exactly is meant by the Baseline/Target/Actual comparison. Here, the Baseline/Target/Actual values have the following meanings:

      t      s      o       C

Baseline Time now

Target

Actual Time Past

 

Future

Figure 1: The BASELINE/TARGET/ACTUAL BASELINE/TARGET/ACTUAL comparison of projects

The Baseline Values  correspond to the values of the frozen base planning. They apply to the whole project duration; this implies left and right of the reporting date (time now). The Baseline Values are only changed at an “exceptional case", e.g., if the project scope changes. The Actual Values   correspond to the Actual Costs, which were entered in the accounting system. The Actual Values can only be obtained for the past. Therefore, they are left of “Time now.” The Residual Values  are not shown in Figure 1. They correspond to the Remaining Cost of the still unfinished work, until the work package or project is finished. The Remaining Costs

are estimated by the project manager or the work package manager according to the remaining work. The Target Values correspond to the sum of the Actual Costs and the Residual Values. The Target Values are predictions. Therefore, they are right of “Time now,” meaning in the future. They define the “current planning.” From this description you will see that on the left of “Time now” only the comparison of the Baseline and Actual Values is possible. In the future, which is on the right side of “Time now,” only Baseline and Target Values can be compared with each other. Only on “Time now,” can Baseline, Actual and Target Values be compared. This corresponds to the "real" Baseline/Actual/Target comparison in the commercial sense. Following, you will find a simple example of a Baseline/Actual/Target calculation. Phase

Planned Cost

Actual Cost

Residual Cost

Target Cost

Conceptual Design

200

220

0

220

Program Specification

300

330

0

330

Coding

600

400

220

620

Documentation

100

20

70

90

User Manual Production

400

0

400

400

Debugging

500

0

500

500

Sum

2100

970

1190

2160

Figure 2: Example of a Baseline/Actual/Target calculation at a software project At this point, you might ask: “What else do we need? This way, we know exactly the Actual status of the project and what is still ahead of us.” I admit: Using the Baseline/Actual/Target comparison, you can obviously make better predictions, as you determine the Residual Values and obtain the Target costs. But even the Baseline/Actual/Target comparison does not provide you with enough reliable data. What you lack is the current physical completed work, i.e., the physical degree of completion and the resulting calculated completion value, which corresponds to the Earned Value. The Residual Values are mostly based on subjective estimates and are often too optimistic, in other words too low. To obtain better conclusions about the project status, you can use the Earned Value and the performance figures of Earned Value Management. With these, you get more reliable conclusions about the current project status and more reliable predictions.