Project Management Planning and Risk

Balanced Scorecard Flexibility One of the characteristics of the balanced scorecard model is that it is largely flexible and easy to customize to fit a wide range of different applications in a variety of different industries. The Tesco 'Steering Wheel', for example, includes the four main components but then adds a fifth perspectives -- capturing their commitment to the community in addition to their tradition balanced scorecard metrics along the lines of financial, customer, operations and people aspects in their operations.

The model has also been adapted to meet some of the unique challenges that lie with the non-profit industry as well as the service industry. Another unique application has been within the field of project management. Project management requires a significant amount of customization since projects are unique by nature and only occur once.

Despite the challenges of adapting the balanced scorecard model to fit the project format, many project managers have been able to use the balanced scorecard principles to develop metrics and indicators that can help guide complex projects. This analysis will discuss how the balanced scorecard can be used in a variety of ways in project management.

Discussion The Balance Scorecard provides a means to clarify, articulate and communicate strategy and it can be used as a shorthand way of putting all key measures into a 'dashboard' that can be used to monitor results; furthermore, by including non-financial measures, it can be used to show how the non-financial aspects of performance, such as customer satisfaction, drive financial performance (CGMA, 2013). In different industries and different management perspectives, the non-financial factors that are important to the organization can be substantially different.

However, being able to identify important links between financial performance and the underlying customer, internal processes and organizational metric can create a mechanism for translating the strategic vision into concrete actions necessary to achieve success in a wide variety of situations. Heathrow Terminal 5 was a major project management initiative that began was completed in March of 2008 that represented a major step in the transformation of Heathrow airport. The project had to utilize a different design and create new metrics given the size, proximity, and the complexity of the project.

It also had to find an optimal balance point between difficult management concepts such as short-term and long-term objectives as well as financial measures vs. non-financial measures. For example, the project was the one of Europe's largest construction project and was expected to carry roughly thirty million passengers per year as well as add terminal and aircraft parking capabilities (Basu, LIttle, & Millard, 2009). However, many of the benefits of such a project are entirely intangible.

For example, having a well-designed and functional airport would support growth of all businesses in London. Furthermore, the airport would also support leisure and recreational opportunities for the citizens as well as increase tourism to London. Thus the traditional project management financial metrics were simply deemed too limited to apply to the intangible aspects of the project. Therefore, the executive management team looked to the balanced scorecard model to help develop the metrics for the T5 project.

They decided that the metrics that were used had to first have a rigor in purpose or be inline or consistent with the objectives of the project. They must also have rigor in measurement and have the opportunity for effective data collection so the metric can be relevant. Finally, the metrics must also have rigor in application so that the data can improve and sustain performance.

Performance indicators that follow these three basic guidelines can help to paint a clear picture of what is important as well as the ability to measure and maintain these values. The project used this starting point to attempt customize a balanced scorecard model to build the projects metrics. Since the project has a specific end date, some of the traditional aspects of the balanced scorecard are not relevant such as the learning and growth aspect.

The learning and growth perspective could only be applied on a short-term basis through the duration of the project. Therefore, as opposed to growth and learning, the project team focused more on assuring compliance and that a non-conformance resolution and cost (NCR) plan was in place to handle issues in an efficient manner. Furthermore, they guided the project's culture in interesting ways.

One of the strategies that helped to tackle issues at the earliest point possible was to insure the project collectively, under one insurance policy that covered the liability for everyone. Therefore, the individual contractors would be more likely to be open and honest about any compliance issues.