Many projects and programmes use RAG status reporting but what are the advantages and disadvantages of using Red, Amber, Green reporting. Can we trust project and programme managers to be honest when using RAG reporting for their projects? What do we mean when a project has a red status? How should senior managers respond when a project flags a red status? In this post we will explore the practicalities of using RAG status reporting for projects.
What is RAG Status Reporting?
RAG status reporting is used when project managers are asked to indicate, how well a project is doing using the series traffic lights. A red traffic light indicates problems, Amber the everything is okay, green things going well. Some status reports just use one traffic light to indicate the overall project status, but typically project status report will include indicators the things such as performance against the budget, timescales, quality, and resources. Typically RAG status reports are used to summarise more qualitative data based on planned expenditure and the project schedule. The RAG reports given instant indication to senior management of the status the project and the need to intervene if the project is going out of control.
Why Use RAG Status Reporting?
RAG status reporting is extremely effective in a program or portfolio environment because it enables the organization to relate to create a summary report that consolidates all the status reports from a number of projects into one simple spreadsheet. This can be used by the senior management in the organization to quickly identify those projects which are in trouble and need support from the organization to address weaknesses. The dangers of this approach is it relies on the project managers being confident enough to give genuine reports on project status. This raises a cultural issue about the way we use RAG status reports as part of a project management environment and the reactions of the organisation when a project manager sets project to red. Everyone in the organisation needs a clear indication of what red means and then they need to behave in an appropriate way to address the underlying problems in the project not just “shoot the messenger“.
Rag Status Indicators and Actions
Ideally defining tolerances which can guide the selection of the appropriate rag status . These rag status indicators can be linked to the critical success criteria for the project . In this way the organisation can get confidence that the rag status reports are based on more than just a subjective assessment of the project status. In the table below we define some typical RAG status indicators based on performance against time, cost, quality, resources and stakeholder satisfaction. Clearly these indicators will be different different organisations because they have different sensitivities to overspends or delays in project delivery depending on the market the organisation serves.
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A red indicator usually means one or more of the following
A significant forecast overspend against the budget of say more than 10%.
Delays against critical milestones more than say four weeks.
Problems with quality that lead to significantly work additional cost.
Significant lack of resources which cannot be resolved by the project manager.
Dissatisfaction or resistance from stakeholders that mean acceptance may be delayed all the benefits not achieved.
Senior management should review the project with the project manager to identify the root causes of the red status and identify action plan required to prevent further deterioration and minimise the damage caused to the overall organisation.
An amber indicator usually means one or more of the following
A significant forecast overspend against the budget of say more than 5%.
Delays against critical milestones more than say two weeks.
Problems with quality but not causing delay.
Lack of resources which can be resolved by the project manager.
Dissatisfaction or resistance from stakeholders adddressed by the project manager
Senior management should maintain a watching brief over Amber projects not necessarily intervening bookkeeping an eye on the potential for the project to move into the red.
An green indicator usually means one or more of the following
A forecast expenditure is on budget
Project on plan to complete on time
Quality at expected levels.
No resource problems
Stakeholders satisfied with the outcome.
Senior management can relax and let the project manager progress with the delivery the project. However they need assurance from the underlying data that the project is truly green.
Disadvantage of RAG reporting
One of the main disadvantages RAG reporting is lack of trust in the traffic lights reported by project managers. This stems from two factors first project managers may not have the confidence or the understanding of the project status to identify will project is heading to red. This may be because they lack information from the project control systems or there is ineffective reporting from the work package managers and/or contractors. One way which project managers can get confidence in information now been provided is by doing project assurance reviews and surveillance reviews to make sure the information been provided to the project manager is fair and accurate. Without this confidence in information project managers have then is a tendency to play safe and report project is green when in fact it should really be amber or red. This is another example of optimism bias which the natural tendency to assume things are going to turn out for the good in the absence of direct evidence the contrary. A second reason why project managers may resist setting a project to red is that they fear the reaction of senior managers to the news that the project has gone out of control. They feel it’s better to stay on green so they can sort out the problems themselves than highlight the project as red which will generate lots of additional interest and questions about the project. To counter this senior managers need to respond an appropriate way to the traffic light red. This should adopt a problem-solving approach working with the project manager to identify the root causes of the difficulties facing the project. Often these root causes lie outside the direct control of the project manager such as interference external stakeholders, lack of resources or failure of another project in my organisation to produce deliverables on which this project depends.
Practical Hints and Tips
So if you want to use RAG reporting for your projects, portfolios or programmes while the steps to follow.
Step one define a template RAG status report including indicators of the levels for Red Amber Green. Some organisations call this project on page. And typically it includes rag status indicators and the underlying data such as budget and schedule performance.
Step two seek agreement from senior managers and project managers of the behaviours to be expected when a project reports using rag status reporting
Step three establish a consistent reporting cycle which all projects submit status reports are in the same timeframe
Step four establish an assurance program to confirm the status reports being presented are a true and fair representation project status.