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Early Warning Systems in the Project Management

Conclusions are that the early recognition of achieving the project objects or deviations of it can secure success. The monitoring of the project goals represent the foundation of project management which is supported by the Early Warning System.

One of the most important tasks, not only in project controlling, is the implementation of an Early Warning System. An Early Warning System must provide information about relevant changes in the internal area, in the business environment and make them available to analyse it. Information out of the Early Warning System is used for the detection of situations which use opportunities and avert risks.

Various forms of Early Warning Systems are available. They differ concerning the period in which the incident is recognised:

  • Extrapolation based Early Warning Systems
    Extrapolations out of realised values – target/actual comparison are based on a continuous development of the observed or calculated value.
    Example: EAC, Estimate at Completion out of the Earned Value Analysis.

  • Indicators based Early Warning Systems
    By means of early warning indicators, conclusions about the expected events are taken and they are applicable in a short and long-term.
    Example: Incoming orders can provide useful conclusions about the expected turnover.

  • "Strategic Radar"
    Key performance indicators which are derived from the strategy, are provided with early warning indicators. In this way the strategy implementation can be controlled at the basis.
    Example: Balanced Scorecard list "improved project cost control" as target. The (daily) time recording in time is checked by an early warning indicator (enforced).

The information that has to be collected is determined jointly by the authorities and stakeholders. All involved persons must have a serious interest in the achievement of the goals. Only then can a beneficial Early Warning System be developed.

No indicator will develop linear or according scheme black and white. Therefore makes sense to set a tolerance range for each indicator. The Early Warning System must inform only if the desired tolerance range is exceeded or fall below.

Whether an Early Warning System can reach its intended value or not in the enterprise also depends on how and when the critical information reaches the decision-makers, so that they can take timely corrective actions. Example: A traffic light system with built-in alarm system reports deviations timely and transparent.

Our advice for you is: Just start with a few indicators. This helps you gathering experience and gives you time to test the actual value of each indicator.