What is a project baseline & why is it crucial to project management?

Where do all projects start? Well, at the beginning, of course! 😏

That’s the gist of a project baseline: the benchmark project managers set at the project planning phase to effectively monitor project performance over time.

Let’s take a closer look.

What is a project baseline in project management?

A project baseline is a fixed reference point against which progress and performance are measured throughout the project lifecycle. The baseline gives project managers a standard for comparison and assessment of project outcomes with the planned objectives.

There are three types of baselines in project management: schedule, cost, and scope (the three concepts that make up the triple constraint).

1. Scope (or requirement baselines) are the project’s deliverables and estimated work. They establish what the team needs to achieve and how much work is needed to complete these project goals through a work breakdown structure (WBS).
2. Schedule baselines are a project’s estimated timeframe. They help project managers track task durations and milestones, which allows project managers to identify any potential delays.
3. Cost baselines are a project’s estimated budget. They establish an approved budget for the project to help you track actual costs against that budget. This allows project managers to identify potential cost overruns.

Keep in mind that all three baselines affect each other. For example, if you see that the project’s timeline doesn’t follow the schedule baseline, you need to keep an eye on any extra costs because of the delay.

What is a project baseline in agile?

While schedule and cost baselines are generally possible in agile workflows as in traditional project management, the scope varies using an iterative approach.

Agile teams agree on a high-level deliverable (e.g., user stories), but the way to get there is dynamically developed over time. Requirements aren’t meant to be fully fleshed out from the beginning. So, your initial scope baseline is a flexible reference point that captures present requirements. Each release or end of each sprint can be a time to set a scope baseline for the next iteration.

➡️ Learn more about the essentials of agile project management.

Why is having a project baseline important?

A baseline is important because you want a reference to monitor progress over time. You will only know if the project is going according to plan if you have something to compare it with.

By baselining a project, you can translate your project plan into agreed-upon expectations and then use those to see how well your team is meeting project objectives.

Other benefits include:

Better stakeholders alignment

When you have established project baselines, it’s easier to communicate plans and get buy-in from all stakeholders involved. This also helps improve accountability, enhance communication, encourage stakeholder participation, and manage their expectations throughout the project.

Better risk management

Project baselines help project managers catch issues before the project starts. If, for instance, the project’s scope results in longer timelines and higher costs than expected, you may need to adjust the project plan.

Better change management

When things go wrong, you’re not caught off guard and you can make necessary corrections to keep the project on track and on budget. In other words, it’s an essential part of project change management.

Better project documentation

Project baselines can bring visibility into how similar projects were planned and executed in the past. With these details and performance data, you can more accurately estimate the time and resources needed for future projects. It also helps you present accurate and comprehensive information to stakeholders.

How do you create a project baseline?

Developing a complete baseline project plan usually starts with the scope, and moves on to project schedule and costs.

When they’re all created, you can integrate them into a performance measurement baseline (PMB) to track progress.

Here’s the process of baselining a project:

1. Scope baseline: determine purpose and goals

Scope begins by understanding deliverables and overall goals. You’ll already know what these are if you’ve gone through the process of prioritizing ongoing projects or creating and reviewing the project’s proposal.

After you understand what needs to be done, you can complete your scope baseline with a WBS—which is often accompanied by a resource breakdown structure or RBS. These structures are hierarchical representations of what activities the project team needs to complete and what resources are necessary for each work package.

Once you have these, you’ll have your initial scope baseline. This is what you’ll measure progress against to identify issues like the all-too-common scope creep.

If you want some help to get started, take a look at our free project charter templates.

2. Schedule baseline: settle on realistic timelines

For this step, you need to estimate the project's start and end dates, phases, and activities (e.g., tasks). This will result in a complete projection of the project’s timeline (often shown as a Gantt chart), including:

• Activity durations
• Start and end date for the entire project
• Task dependencies
• Lead time and overlap between activities

To determine project timelines, you can use historical data from similar projects and gather information from stakeholders involved in past projects.

If you’re using project planning software, you’ll already have access to reports that tell you how much time tasks and projects take. You can also easily keep an eye on timelines throughout the project.

For example, here’s what a basic schedule baseline for a short 35-day project looks like in Float.

See that little orange dot on January 18? That’s a milestone, an important point for assessing (and celebrating) progress. You can add as many as you need!

To create better schedules, you need to know how much time each task should take and how much capacity your team members have to work on it. With Float, you can see a bird’s eye view of live availability at any point along a project to help you plan better.

3. Cost baseline: estimate project costs

The previous steps have provided two critical pieces of information to determine costs: what resources you need to pay for and for how long. For example, your RBS tells you that you need to hire three designer contractors and your timeline for design work is a month. This means you’ll have to pay hourly rates for X hours per week for one month.

You can estimate costs by adding them all up, which will produce the full project budget and serve as your cost baseline. Cost baselines usually include contingency reserves, too—a critical part of effectively managing costs.

➡️ Take a look at our guide on project cost estimating for more details.

Here is an example of a cost baseline for a construction project:

Project: Renovation of XYZ Building

Project budget: $500,000

Start date: January 1, 2023

End date: December 31, 2023

• Task 1: Demolition - $50,000
• Task 2: Structural work - $150,000
• Task 3: Electrical and plumbing - $100,000
• Task 4: Finishing and decorating - $200,000

<tip>

Pro tip: Set a budget for each project in Float and track it over time

You can add a total budget for the project and then account for each person’s separate hourly rates or set the same hourly rate for everyone. Then track the budget against progress in the reports.

</tip>

Analyze and control

After you have the PMB, you can use it over time to monitor your project progress. Throughout the project, you’ll use the baselines to gain an understanding of how the project is performing relative to the original plan.

The three baselines factor in your variance analysis, flagging when the team faces lags, budget overruns, or other issues.

<pull-quote>

<normal-quote>

<quote>

If the level of costs rises too far above the baseline and starts to exceed the contingency budget, the project team needs to reconsider the project business case and investment appraisal.

</quote>

</pull-quote>

Does the project baseline change over time?

In short, yes. But not haphazardly. You don’t change baselines just because the project is off track or because there are issues and bottlenecks.  But you could change the baseline if an unforeseen event makes the current version obsolete or when there are reasonable change requests.

Whatever happens during the project, a baseline arms you with an essential point of reference and documentation. It’s a great way to ensure you track progress and deviations correctly and apply the proper controls to bring the project back on track!

<cta-box>

<image-color="yellow">

Create realistic project baselines using Float

Start gathering data about your ongoing projects to create accurate baselines for future ones. Using Float, you can track and store data about timelines and costs, helping you create reference points for project performance.

<cta-button>Try for free</cta-button>

</cta-box>