Baseline in Project Management: Everything You Need to Know

Every journey begins with a single step. In project management, that step should be the establishment of a project baseline.

In this guide, we will define what a project baseline is and identify types of baselines in project management.

On top of that, you will learn how to set a project baseline, followed by an example to illustrate the matter and help you gain a better understanding of this project management concept.

We will also explain its importance and highlight some problems that can arise due to not having a clear project baseline.

Baseline in Project Management- Everything You Need to Know cover
  • A project baseline is a fixed reference used to assess project performance over time.
  • A project baseline is commonly divided into scope, cost, and schedule baselines.
  • A clearly defined baseline can greatly improve project performance.
  • Precise baseline monitoring allows project managers to adapt and test changes.
  • A project baseline can improve reporting and stakeholder relationships.

What is a baseline in project management?

A project baseline is a set reference point by which a manager can monitor and assess the project as it progresses. Project managers use it to compare the scope, cost, and schedule of an ongoing project against set expectations. This allows them to understand if there are any deviations from the initial plan and if so, determine what they can do about them.

For example, a project set to complete in 4 weeks with a budget of $10,000 is going well and will be finished before the deadline, but is close to going over budget halfway through. 

In this case, you can tell your schedule is on point, but there is an obvious issue with cost planning, or with the way the money is being spent. This allows you to take steps to ensure the project is completed successfully, and helps you plan better for the future.

Types of baseline in project management

A project baseline is divided into 3 distinct types of baselines:

  • Scope baseline,
  • Cost baseline, and
  • Schedule baseline.

Scope baseline

A scope baseline is based on the approved version of a project scope, which outlines all the work that is required to complete the project. Sometimes, the scope also explicitly mentions things that aren’t a part of the project.

For example, a project scope by a contractor hired to renovate a residential building might specify that renovating the basement is not a part of the scope, and that the employer is responsible for procuring required materials.

Going by the PMBOK (7th edition) Guide’s definition, a scope baseline is an approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary, and it can only be changed through formal change control procedures.

That said, in simple terms, a scope baseline serves to:

  • Define settled goals, deliverables, and a project work scope,
  • Document agreement between the stakeholders relevant to the project,
  • Provide a project with a work structure, and
  • Provide guidance in daily work and project activities.

Cost baseline

A cost baseline is an estimate of the budget required to successfully complete a project. 

Per the PMBOK guide, it excludes any management reserves, and it can only be changed through established formal control procedures.

In essence, the cost baseline serves to indicate how accurate the project manager’s budget projections were. 

Ideally, the final costs should be below the cost baseline, or at the very least not exceed it significantly. 

Project budget tracking in Plaky
Project budget tracking in Plaky

💡Plaky Pro Tip

Planning a project budget can be one of the most intimidating parts of the job for an inexperienced project manager. If you’d like to learn more about budgeting methods and some specific terminology in the domain of cost planning, check out the articles below:

Schedule baseline

A schedule baseline includes project start and end dates, as well as other dates relevant to the project. 

PMBOK defines this term as an approved version of a schedule model, and once again, highlights that it can only be changed using formal change control procedures.

A schedule baseline can vary greatly based on the nature of your project and the project management methodology you’re using, but among other things, it can include:

  • Start and end of each project phase
  • Dates by which important project milestones should be met,
  • Sequences and durations of specific project activities,
  • Dependencies between activities and teams,
  • Underlying constraints or assumptions, and
  • Other components vital for project schedule planning.

With the help of the schedule baseline and a project roadmap, managers can easily monitor day-to-day activities and avoid delays.

How do you set a project baseline?

Now, when you know the basics related to scope, cost, and schedule baselines, it’s time to explain how we can develop each one and set an efficient project baseline.

Set a scope baseline

First, you have to define a scope statement, including key deliverables.

As stated by the 7th edition of PMBOK, a project scope statement is a description of the project scope, major deliverables, and exclusions.

Create a Work Breakdown Structure (WBS)

The levels of a work breakdown structure
The levels of a work breakdown structure

Once you have set the scope baseline, you need to create a Work Breakdown Structure (WBS).

A Work Breakdown Structure is used to subdivide project work and deliverables into smaller, more manageable components. 

Ultimately, a WBS serves to:

  • Minimize uncertainty,
  • Facilitate schedule planning,
  • Identify project milestones,
  • Identify project risks,
  • Highlight dependencies, and
  • Improve overall organization.

📖 WBS is just one of many terms you should get familiar with if you’re looking to learn more about project management. To read more about important terms and processes, visit our Project Management Glossary of Terms.

Develop a project schedule baseline

The next step is defining a project schedule. Here, you have to identify project resources for all activities and set a final project deadline.

Many project managers use a Gantt chart for this, as it is an efficient way to visualize the project schedule baseline. 

💡Plaky Pro Tip

Things rarely go according to the original plan, so project managers usually plan for extra time that might be necessary for a task to be completed due to unforeseen factors. Learn more about this below:

Create a cost baseline

Next is the cost baseline, which is used to gauge the project’s financial performance. 

Here, you need to estimate the total project costs. This means accounting for the costs of all the tasks necessary to complete the project successfully, including:

  • Labor costs,
  • Materials, and
  • Equipment.

It’s important to connect the budget plan to your schedule to ensure they are aligned. Track the project budget against the cost baseline to ensure no problems occur during project development.

💡Plaky Pro Tip

Looking to learn more about how project managers determine, track, and optimize budgets? Take a look at the following articles:

Organize a meeting with project stakeholders

Once the project plan is laid out, the next step is to get the project stakeholders to approve it.

At this relatively simple step, you need to organize a meeting with all the key stakeholders and present your plan in a way that is comprehensive and easy to understand.

During the meeting, make sure to explain how baselines are used to determine whether or not the project is proceeding as planned.

This is also the right moment to address any stakeholder concerns and make any necessary changes they require.

Document and control the project baseline

A project baseline should be documented and controlled as the project progresses since significant changes can take place as time goes on.

In the event of such changes, the project baseline may have to be updated. However, project managers should always retain any older versions of the project baseline for reference.

However, changing a project baseline is no minor undertaking, and it should always follow the established change control procedures.

Example of a project baseline 

Now that we’ve gone over the general steps to establishing a project baseline, let’s take a look at a simple IT example of a project baseline.

Suppose your company is launching a new app.

Your task is to create a paid ads campaign using Google Ads and paid ads on LinkedIn and Facebook to:

  • Promote the launch, 
  • Build awareness, and 
  • Generate leads.

You are assigned a project budget, and your goal is to encourage subscriptions for early access on a dedicated landing page.

In this case, your project baseline could look like this: 

Scope baselineSchedule baselineCost baseline
1,500 subscriptions for early accessOne month$9,000

The first task is to outline all you need in order to achieve your goal of 1,500 subscriptions in one month. 

You should ask yourself the following questions:

  • How can I improve the conversion rate?
  • What kind of copy and design do I need to attract our target customer base? 

Then, you need to prepare a schedule containing dates when each ad will be launched and how long it will be active.

Finally, you have to determine and divide costs for Google, Facebook, and LinkedIn ads.

In this particular case, having scope, cost, and schedule baselines determined helps us to:

  • Understand what we want to achieve with our campaign — so we can compare actual results to the estimated ones.
  • Know how long our campaign will last — enables us to plan promotional activities on different platforms.
  • Know how much money we can spend — if we don’t know the limit and don’t track expenses dedicated to the campaign, we may spend more than predicted.

What is the importance of a baseline in project management?

With the above in mind, it’s easy to see why setting a project baseline ranks high among a project manager’s responsibilities.

Most importantly, a project baseline allows managers to:

  • Accurately monitor project performance,
  • Avoid scope creep,
  • Identify points of uncertainty,
  • Adapt quickly and effectively if the project strays from the baseline,
  • Use the performance as a reference for lessons learned from a project, and
  • Maintain a healthy relationship with the stakeholders.

Minor deviations from the baseline indicate that the project is going well and that planning was handled appropriately.

On the other hand, major deviations suggest a problem in planning or execution, and the project manager can more easily identify the issue based on whether it’s happening in the domain of the scope, the costs, or the schedule.

What are the problems caused by not having a project baseline?

It’s clear how important a project baseline is for most projects, but what are some specific examples of issues that can arise due to a lack of an established baseline?

Among other things, you might encounter:

  • Schedule delays — delays are never good for the budget or the morale of the project team, and are all the more problematic in larger projects. The more moving parts there are, the more significant the consequences of unplanned delays can be.
  • Poor resource allocation — without consistent monitoring, you might run out of crucial resources, or they might be allocated inefficiently.
  • Subpar status reporting — without established baselines, reporting progress can be difficult, and stakeholders might not have a clear understanding of the project’s progress. This could make delays appear worse than they are, or make it more difficult to recognize good performance.
  • Improper change management — with inadequate tracking, it can be difficult to determine when changes need to be made, how they should be made, and whether the change has had a positive enough impact on the project.

Use a project baseline to plot the project’s course and Plaky to keep it on track

All in all, a project baseline is a reference point that serves to plot a course for the project and keep it on track until the finish line. 

Scope, cost, and schedule baselines all serve to measure progress, provide early warning signs of potential issues, and help you gauge whether your initial plan and any subsequent changes are effective.

A project management tool like Plaky can greatly help with setting and tracking your baselines, and it can boost your overall productivity by allowing you to:

  • Manage project boards and tasks,
  • Easily review deadlines and costs,
  • Choose between table and Kanban view modes,
  • Create custom fields, and more.
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Plaky project view with timeline and cost overview

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