As we continue working on the development of the Uruk Platform, many questions come up. Some of these questions are about terminology and using terms out of context. For example, when you hear the term ‘project cost,’ estimated cost, budget, approved plan, forecast, or actual? The same thing for the project duration or the completion date. How to ensure a properly working software, without ambiguity? How to ensure consistency of terms for the various project management metrics and dashboards? Further, in a software solution, we have to be careful and consistent. Consequently, we need a glossary of terms, which is what we are, including in the Uruk Development Guidelines. Further, this post covers one of those areas of potential confusion.
Project Management Terminology
One of the first areas of confusion is related to the terms: Estimate, Budget, Forecast, and Actual and how to use them. To understand these terms, we need to think about where we are on the project life cycle.
While the project is still in the Front End, we use the term estimates for cost and schedule (duration and completion date). The term ‘estimate’ is a common practice because the project is still not approved to proceed to implementation and the delivery phase. In other words, this would be before final approval of the plan. Typically, this would be from concept to Stage Gate 5, per the CAMMP™ Standard Model.
The Front End is the early stages along the Project Life Cycle
Budget – Approved Plan
The term budget is used so loosely that it is almost impossible to know what it means unless we have a clear definition. For example, is the budgeted cost, an estimate, or the approved budget? In the SUKAD Way and the Uruk Platform, we prefer to use the term ‘Approved Plan’ since this would clearly tell us that this is approved, sanctioned by management. Also, we can use this term for cost, duration, and completion dates. Therefore, once management approves the project, the estimates will become “Approved Plans,” i.e., approved budget and approved schedule.
This would be the BAC (Budget at Completion) for the cost (for those who follow the PMI Framework). However, I am not aware of a similar term for Project Duration or Completion Date.
Once the project is approved, and we have an Approved Plan, that typically means the team is authorized to go into implementation and delivery (per CAMMP). Therefore, after the approval point, we will have actuals for what passed and estimates for what to come. Consequently, we label the combined value a forecast.
Forecast = Actuals to Date + Estimate of what Remains
Therefore, a forecast is a prediction of the final status, and it would change as the project progresses based on various variables.
During the Delivery Phase, we will have Approved Plan as the “baseline” and the Forecast.
Once again, for PMI followers, this would be EAC – Estimate at Completion.
This is easy, once the project is complete, we use the term “actual.”
These distinctions are essential for the dashboards and metrics that we plan to use in the Uruk Platform. It is critical to define the specific fields that a metric would depend on. The distinction is also relevant in project reporting.