Performance Based Management in a Nutshell
Performance Based Management provides
5 practice areas that measurably increase
the probability of success for projects and
programs in every technical and business
domain.
Performance Based Management provides
step–by–step guidance to the
management team and project
stakeholders through 5 process areas
needed for success.
These process areas appear obvious, but
the processes are many times skipped
over during the “heat of the battle” to get
the project out the door.
By applying Performance Based
Management the project team focuses
their efforts on increasing the probability
of success, not just measuring cost and
schedule numbers.
This notion of “increasing the probability
of success” is significantly different than
simply applying a method and thinking
that positive results will be the outcome.
If we do not have a calculated probability
of a successful outcome, we can not
determine if we will actually reach the
end goal of the project – we can not
determine what DONE looks like.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 1

Performance Based Management in a Nutshell
The Customer Bought Outcomes
No matter the customer is, a commercial
firm deploying and enterprise IT solution,
to a government agency, it is the
outcome of the project that was paid for.
The work needed to produce this
outcome, the materials that support the
development of this outcome, all
collateral activities from the project are
not what the customer paid for.
They paid for the beneficial outcome from
their investment in the project.
Performance Based Management starts
with defining what that outcome is in
terms of the capabilities provided by the
project.
These capabilities are the starting point
for the project’s success. They are
defined in Measures of Effectiveness.
These Measures of Effectiveness (MoEs)
are quantitative measures that provide
some insight into how effectively a
product or service is performing. MoE’s
are derived from stakeholder expectation
statements. MoE’s are deemed critical to
the mission or operational success of the
system.
For example a MoE that defines a
capability is: “95% of all work will be
completed within 15 business days or the
negotiated deadline.”
This MoE is a description of what DONE
looks like for the project. The project
provided this capability.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 2

Performance Based Management in a Nutshell
The five immutable principles of project
success are the mechanisms for
increasing the probability of success.
1. Know where you are going by defining
“done” at some point in the future. This
may be far in the future – months or
years from now. Or closer in the future
days or weeks from now.
2. Have some kind of plan to get to where
you are going. This plan can be simple
or it can be complex. The fidelity of the
plan depends on the tolerance for risk
by the users of the plan. The plan
answers the question how long are we
willing to wait before we find out we
are late?
3. Understand the resources needed to
execute the plan. How much time and
money is needed to reach the
destination. This can be fixed or it can
be variable.
4. Identify the impediments to progress
along the way to the destination. Have
some means of removing, avoiding, or
ignoring these impediments.
5. Have some way to measure your
planned progress, not just your
progress. Progress to Plan must be
measured in units of physical percent
complete.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 3

Performance Based Management in a Nutshell
There are 11 practices needed to
generate the data necessary to provide
actionable information to the decision
makers in Performance Based
Management
This information is connected to the 5
Immutable Principles of project
management and the artifacts from the
practices of the these principles.
These 11 criteria are a subset of the 32
criteria of ANSI–748B Earned Value
Management.
While Earned Value is certainty not
necessary for project success, some form
of measuring physical progress to plan is.
Without this ability, only measures of the
passage of time and consumption of
resources remains.
Using these 11 practices, based on
measures of physical percent complete,
real progress to plan can be measured.
This provides visibility into the final cost,
schedule, and technical performance of
the project needed to answer the
question how long are we willing to wait
before we fins out we are late? And
provide sufficient time to take corrective
actions to avoid being late, over budget,
and non–compliant with the technical
performance measures.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 4

Performance Based Management in a Nutshell
The connection between principles of
Performance Based Management and the
11 Practices is shown to the left.
The 5 Immutable Principles of Success
must be connected with artifacts and
outcomes of the 11 Practices that
implement those principles.
If any of the 11 Practices or the 5
Principles are missing the probability of
success is measurably reduced.
Each Principle and each Practice must be
in place for the Probability of Project
Success to increase.
That is the goal of Performance Based
Management – Increase the
Probability of Project Success.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 5

Performance Based Management in a Nutshell
Projects exist in a Domain and a Context
in that Domain. This can be a business of
technical Domain and a Business or
Technical Context in that domain
No matter the Domain and the Context in
that Domain, projects consist of a
collection of problems to be solved and
needs of the stakeholders each seeking to
solution.
Performance Based Management provides
a framework for addressing each of these
elements in a cohesive and consistent
manner, while providing visibility to the
project’s Performance in units of measure
meaningful to the decision maker.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 6

Performance Based Management in a Nutshell
When we say outcome what do we mean?
We certainly don’t mean the work effort
or the cost absorbed during that work
effort.
We mean something tangible that
benefits the customer. This tangible
outcome must be assessed by the
Measures of Effectiveness (MoE) that are
quantitative measures that provide
insight into how effectively a product or
service is performing.
This product or service must provide the
customer with a capability to do
something tangible, something
measureable, something that benefits the
business or mission.
The outcome must be capable of being
measured in some way as it moves from
left to right in the schedule. As it
increases in its maturity. The outcomes
must be testable in some form. Testable
Requirements are the starting point.
The outcomes are produced through Work
Packages – “units of work.” These Work
Packages are resource loaded, have
specific periods of performance, and
produce a tangible, measureable outcome
that can be traced to the requirements
and further traced to the needed
capabilities.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 7

1. Identify Needed Capabilities that
achieve the program objectives or the
particular end state. Define these
capabilities through scenarios from the
customer point of view in units of
Measures of Effectiveness (MoE)
meaningful to the customer.
2. Define The Technical And
Operational Requirements that
must be fulfilled for the system
capabilities to be available to the
customer. Define these requirements
in terms that are isolated from any
implementation technical products.
Only then bind the requirements with
technology.
3. Build The Performance
Measurement Baseline – describing
the work to be performed, the
budgeted cost for this work, the
organizational elements that produce
the outcomes from this work effort,
and the Measures of Performance
(MoP) showing this work is proceeding
according to cost, schedule, and
technical Performance plan.
4. Execute the PMB’s Work Packages
in the planned order, assuring all
Performance assessments are
0%/100% complete before
proceeding. No rework, no transfer of
activities to the future. Assure every
requirement is traceable to work and
all work is traceable to requirements.
5. Apply Continuous Risk
Management for each Performance
Based Management process area to
Identify, Analyze, Plan, Track, Control,
and Communicate programmatic and
technical risk.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 8

Performance Based Management in a Nutshell
With these five process areas, the next
level of detail is show to the left. These
are a repeat of the Performance Based
Management processes.
A statement of intent is the starting point
for the successful application of each
process area.
This statement is provided in the form of
a question.
1. What are the needed capabilities?
2. What are the technical and operational
requirements?
3. What is the cost and schedule?
4. What are the periodic measures of
performance?
5. What are the impediments to
progress?
By asking and answering these questions
at every juncture of the program, the
participants gain visibility into the
Performance of the program in ways not
found in other approaches to program
management.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 9

Performance Based Management in a Nutshell
Transforming the System Capabilities into
System Requirements begins with the a
narrative description of the needed
Capabilities in some form meaningful to
the customer.
This sounds like a tautology – a Chicken
or the Egg problem. But discovering the
system requirements is difficult in the
absence of some higher level description
of the needed “Capabilities” of the desired
system.
The concept of a “Capability” is a capacity
or potential:
 Provided by a set of resources and
abilities.
 To achieve a measureable result.
 In performing a particular task.
 Under specific conditions.
 To specific Performance standards.
The four steps here result in a Concept of
Operations (ConOps) for the resulting system.
The ConOps describes the systems application
to the problem domain and how the system will
produce measurable value to the user in that
domain.
The ConOps is the story of how the system will
work when it is delivered to the customer.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 10

Performance Based Management in a Nutshell
Here are some examples of capabilities.
They appear obvious.
But in many instances this approach is
missing. The requirements are many time
the starting point for the solution.
In the absence of the capabilities statement and
the Concept of Operations the user community
may have trouble envisioning how the system
will benefit them when it becomes available.
The tendency to start with the requirements
should be avoided. Requirements need a home,
a reason for being.
These examples are from actual projects. They
represent clear and concise statement about
the need for the system, the use of the system
for the business or mission purpose, and how
the end user will benefit from the system.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 11

Performance Based Management in a Nutshell
Requirements are the necessary
attributes defined for an item prior to the
efforts to develop a design for the item.
System requirements analysis is a
structured, or organized, methodology for
identifying an appropriate set of
resources to satisfy a system need (the
needed capabilities) and the requirements
for those resources that provide a sound
basis for the design or selection of those
resources.
Requirements elicitation acts as the
transformation between the customer’s
system needs and the design concept
implemented by the organization’s
engineering resources.
The basic process decomposes a
statement of the customer need through
a systematic exposition of what that
system must do to satisfy that need.
This need is the ultimate system
requirement which all other requirements
and designs flow.
There are two fundamental classes of
requirements.
The Process Performance Requirements
define how the work processes are used
to produce a beneficial outcome to the
customer.
The Product Performance Requirements
define the product specifications and how
they are related to the process
requirements.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 12

Performance Based Management in a Nutshell
Poorly formed requirements have been
shown to contribute as much as 25% to
the failure modes of programs and
projects.
Requirements engineering can be
decomposed into the activities of
requirements elicitation, specification,
and validation.
Most of the requirements techniques and
tools today focus on specification, i.e.,
the representation of the requirements.
The Performance Based Management
method concentrates instead on
elicitation.
This method addresses problems found
with requirements engineering that are
not adequately addressed by specification
techniques.
This Performance Based Management
method incorporates advantages of
existing elicitation techniques while
addressing the activities performed
during requirements elicitation.
These activities include fact–finding,
requirements gathering, evaluation and
rationalization, prioritization, and
integration.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 13

Performance Based Management in a Nutshell
The Performance Measurement Baseline
(PMB) is the primary assessment
document for assuring the credibility of a
project plan. The PMB is the baseline of
the cost, schedule and outcomes for each
Work Package in the plan.
Constructing the PMB requires knowledge
of the business requirements, skill in
developing the Work Packages that
produce the outcomes for these
requirements, and discipline in
assembling the cost, schedule and
relationships between the Work Packages.
It is the discipline that requires the most
focus for the planners and project
controls staff. Without this discipline, the
development of a credible baseline is
simply not possible.
The concept of a producing measureable
outcomes is at the core of the
Performance Measurement Baseline
(PMB).
 Outcomes are the units of measure of
progress to plan.
 Outcomes are what the customer has
paid money for.
 Outcomes contain the business
capabilities, the associated value that
fulfill the requirements of the business
plan
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 14

Performance Based Management in a Nutshell
The critical success factor in building the
Performance Measurement Baseline
(PMB) is the decomposition of the system
requirements into technical capabilities,
then into outcomes that enable those
technical capabilities, and finally into the
Work Packages (WP)that produce those
outcomes.
Performance Based Management using
WPs includes:
 Defining the decomposed outcomes
from the needed system capabilities in a
Work Breakdown Structure. This
decomposition process MUST be
iterative and incremental. Assessment
of the validity of this decomposition
requires thought. The first
decomposition is likely not the best
approach.
 Estimating the duration and work effort
for each WP. Duration and effort
estimating is iterative and incremental,
it cannot be a one–time effort. The
initial estimate MUST be assessed after
the assembly of the WPs into the
Activity Network with inter–work stream
dependencies. Only then can they be
considered credible.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 15

Performance Based Management in a Nutshell
With the Performance Measurement
Baseline established, its execution
becomes critically important.
The execution process is called the
“project rhythm.” this means the
processes are performed in a repeated
manner – at least on a monthly basis and
many times on a weekly basis.
This business rhythm must create
actionable information for the program
manager on a time scale that allows
actions to be taken.
These tangible, physical outcomes must
be defined in the work packaged created
during the Planning process of
Performance Based Management.
The measures of physical percent
complete can be applied on weekly
boundaries in a variety of ways:
1. Have weekly outcomes.
2. Have apportioned milestones for each
week.
3. Have tasks that are one week long
and record 0%/100% complete at the
end of each week.
In all cases, a measure of physical
percent complete is mandatory if the
program manager is to receive actionable
information.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 16

Performance Based Management in a Nutshell
The focus of Performance Measurement
Baseline execution steps is to physically
assess the progress of the program in
units reflecting the progress using the
three independent variables: C,S,P
 Cost
 Schedule
 Performance both technical and
programmatic
The traditional Earned Value Management
approach uses three data sources, the
budget (or planned) expenditures
(BCWS), the actual expenditures (ACWP),
and the Earned Value (BCWP) captured
from the Work Package Manager. The
comparison of budget versus actual
expenditures indicates what was planned
to be spent versus what was actually
spent at any given time. The use of
Earned Value (BCWP) indicates what was
produced for that expenditure.
With this approach the use of physical
percent complete for the amount of work
performed is a starting point. It does not
indicate anything about the conformance
to specification of the work produced for
the amount of money spent.
By adding Technical Performance
Measures (TPM) to the analysis of Earned
Value Management, the program
manager can assess the actual progress
of the program. Non–compliance with the
planned Technical Performance Measures
dilutes the Earned Value proportionally.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 17

Performance Based Management in a Nutshell
Continuous Risk Management is based on
the underlying principles, concepts, and
functions of risk management and
provides guidance on how to implement it
as a continuous practice in projects and
organizations.
Risk management is used to continuously
assess what can go wrong in projects,
determine which of these risks are most
important, and implement strategies to
deal with these risks.
These principles are based on proven
practices confirmed through research,
field testing, and direct work with clients.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 18

Performance Based Management in a Nutshell
Continuous Risk Management, when
performed successfully, provides a
number of benefits:
 Prevents problems before they occur –
indentifies potential problems and deals
with them when it is easier and cheaper
to do so – before they are problems.
 Improves product or service quality –
focuses on the project’s objectives and
consciously looks for things that may
effect quality throughout the project
lifecycle.
 Enables better use of resources – allows
the early identification of potential
problems – proactive management –
and provides input into management
decisions regarding resource allocation.
 Promotes teamwork – involves
personnel at all levels of the program.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 19

Performance Based Management in a Nutshell
Traditional project management methods
are usually focused on the activities of
the project management method. Process
Groups and Knowledge Areas of PMBOK®.
These Groups and Knowledge Areas are
necessary for project success.
But they may not be sufficient.
Using these baseline processes, project
management activities are guided by field
proven examples.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 20

Performance Based Management in a Nutshell
Using traditional project management
process groups and knowledge areas,
Performance Based Management adds the
concept of Capabilities.
As well the integration of Cost, Schedule,
and Technical Performance Measures
(TPM) in the Performance Measurement
Baseline (PMB).
The Work Packages (WP) of the PMB
contain the measures of Physical Percent
Complete for the individual outcomes of
each Work Package.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 21

Performance Based Management is a
comprehensive approach to managing
cost, schedule, and technical performance
of programs and projects by assessing
the interaction between programmatic
and technical processes.
The method starts by capturing the
technical and operational needs of the
proposed system. These are stated in a
Concept of Operations describing how the
system operates, how it fulfills the stated
mission, what major components
comprise the system, and how they
interact with each other.
From the capabilities description of the
Concept of Operation, technical and
operational requirements are elicited.
These requirements define the
development progress of the outcomes
captured in the Performance
Measurement Baseline (PMB).
This PMB is constructed from a collection
of Work Packages, arranged in a logical
network describing the increasing
maturity of the products or services
needed to deliver the stated capabilities.
Measures of physical percent complete
are used for each Work Package and the
outcomes they produce. Performance
Based Management is a Systems
Engineering approach to program and
project management [INCOSE],
[Stevens].
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 22

This method incorporates all three
aspects of a program performance
measurement process – Cost, Schedule,
and Technical Performance Measures
(TPM).
Conventional approaches use the cost
and schedule baseline and the variances
generate the values for Earned Value.
Performance Based Management,
measures of Physical Percent Complete
derived from pre–defined targets of
Technical Performance.
The Earned Value variables are
augmented with adjustments from the
Technical Performance compliance for
each outcome to produce a true
assessment of progress.
Technical Performance Measures
integrate technical achievement with
earned value using risk assessments that
provides a robust program management
tool to identify early technical and
programmatic disruptions to a program.
[Pisano] TPMs:
 Provide an integrated view across all
programmatic and technical elements.
 Support distributed empowerment
implicit in the IPT approach, through
interface definitions.
 Logically organizes data resulting from
systems engineering, risk
management, and earned value
processes.
 Provide a "real time" indication of
contract performance and future cost
and schedule risk.
 Support the development of systems
thinking within an integrated program
model focused on the interface
definitions.
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 23

Performance Based Management in a Nutshell
Performance Based Management provides
tools, processes, and training needed to
increase the probability of success of a
projects.
This approach is unique in its integration
of the critical success factors for projects,
no matter the domain.
Our approach answers the following 5
immutable principles:
1. Where are we going?
 Do we have a definitive
description of the needed
capabilities and the requirements
needed to deliver those
capabilities?
2. How do we get there?
 What is the sequence of the work
efforts to achieve the plan?
3. Do we have enough time,
resources, and money to get
there?
 Are the resources properly
allocated to the sequence of work
activities?
4. What impediments will we
encounter along the way?
 Have we captured the risks and
their handling plans for all the
critical work activities?
5. How do we know we are making
progress?
 Can we measure progress to plan
in units meaningful to the
decision makers?
Copyright ©, Glen B. Alleman, Niwotridge Consulting, 2011 24