Review almost any project status report or project portfolio dashboard and apart from the names of the projects, the next most common field is likely to be a health indicator depicting project health using red, amber or green stoplights.
While these indicators might seem like a good visual method to quickly understand the health of an individual project or a portfolio, the flaw with this approach is that this is a subjective evaluation usually conducted by either the project manager or the project sponsor. While one might argue that these are the two roles best positioned to assess a project’s health, they are also the ones who have the most “skin in the game”, hence, depending on organizational culture and project management maturity, the ratings provided may be as suspect as team members’ use of percentage complete for reporting task progress.
At one extreme you’ll find the project managers and sponsors who are eternal optimists or those who fear repercussion if they report their projects as being amber or red – with such individuals, a project’s health will rarely be seen to stray from green until it is past the point of recovery. At the other end of the spectrum are those Chicken Littles who set their project to cherry red the moment they encounter their first issue. Although most people fall somewhere between these two extremes, natural biases make it hard for stakeholders to truly understand project status, and this difficulty increases when the evaluation is done at an overall portfolio level.
To bring objectivity to the health evaluation process, the use of earned value metrics, standardized healthcheck questionnaires to score the health of the project, and other evidence-based inputs such as the number of open high severity issues or risks which don’t have approved response plans in place should all be considered.
However, not all projects are equally important, and a single quantitative health indicator does not help a governance committee to identify which projects truly require assistance. Given this, there is value in considering the use of two separate indicators – the first provides a quantitative health score for the project while the second normalizes this score by incorporating the relative criticality of that project to the overall portfolio.
While colorful health indicators can certainly create artistic dashboards, an objective evaluation of project health can help your leadership team overcome the impacts of rose-colored glasses and color-blind stakeholders!